<PAGE> 1
As filed with the Securities and Exchange Commission on May 11, 1995
Registration No. 33-26305
- --------------------------------------------------------------------------------
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. 15 /x/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
AMENDMENT NO. 17 /x/
------------------------------
THE PNC(R) FUND
(Formerly, NCP Funds)
(Exact Name of Registrant as Specified in Charter)
Bellevue Corporate Center Edward J. Roach
400 Bellevue Parkway Bellevue Corporate Center
Suite 100 400 Bellevue Parkway
Wilmington, Delaware 19809 Suite 100
(Address of Principal Executive Wilmington, Delaware 19809
Offices) (Name and Address of Agent
Registrant's Telephone Number: for Service)
(302) 792-2555
Copies to:
Morgan R. Jones, Esq.
DRINKER BIDDLE & REATH
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
----------------------------
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on __________________ pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
/x/ 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) 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.
Registrant has previously registered an indefinite number of shares of
beneficial interest under the Securities Act of 1933, as amended, pursuant to
Rule 24f-2 under the Investment Company Act of 1940, as amended. Registrant's
initial 24f-2 Notice for its fiscal year ended September 30, 1994 was filed on
October 7, 1994.
<PAGE> 2
THE PNC(R) FUND
(SERVICE SHARES OF THE MONEY MARKET
PORTFOLIO, MUNICIPAL MONEY MARKET PORTFOLIO,
GOVERNMENT MONEY MARKET PORTFOLIO, OHIO MUNICIPAL
MONEY MARKET PORTFOLIO, PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO,
NORTH CAROLINA MUNICIPAL MONEY MARKET, VIRGINIA
MUNICIPAL MONEY MARKET PORTFOLIO AND NEW JERSEY
MUNICIPAL MONEY MARKET PORTFOLIO)
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A ITEM LOCATION
- -------------- --------
<S> <C> <C>
PART A PROSPECTUS
1. Cover page . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expense Table
3. Condensed Financial Information . . . . . . . . . . . . . . . . . Financial Highlights
4. General Description of Registrant . . . . . . . . . . . . . . . . Cover Page; Investment
Policies;
Description of
Shares
5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . Management
6. Capital Stock and Other Securities . . . . . . . . . . . . . . . . Cover Page; Dividends
and Distributions;
Description of
Shares
7. Purchase of Securities Being Offered . . . . . . . . . . . . . . . Purchase and Redemption
of Shares and
Management
8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . . Purchase and Redemption
of Shares -
Redemption of
Shares
9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
</TABLE>
<PAGE> 3
THE MONEY MARKET PORTFOLIOS
SERVICE CLASS
The PNC(R) Fund (the "Fund") consists of twenty-six investment portfolios.
This Prospectus relates to eight classes of shares ("Service Shares" or
"Shares") representing interests in seven of those portfolios (collectively, the
"Portfolios") with the following objectives:
MONEY MARKET PORTFOLIO--to provide as high a level of current interest
income as is consistent with maintaining liquidity and stability of
principal. It pursues this objective by investing primarily in short-term,
high quality, U.S. dollar-denominated money market instruments.
MUNICIPAL MONEY MARKET PORTFOLIO--to provide as high a level of current
interest income exempt from Federal income taxes as is consistent with
maintaining liquidity and stability of principal. It pursues this objective
by investing substantially all of its assets in a diversified portfolio of
short-term obligations issued by or on behalf of states, territories and
possessions of the United States, the District of Columbia, and their
political subdivisions, agencies, instrumentalities and authorities and
tax-exempt derivative securities relating thereto ("Municipal Obligations").
GOVERNMENT MONEY MARKET PORTFOLIO--to provide as high a level of current
interest income as is consistent with maintaining liquidity and stability of
principal. It pursues this objective by investing primarily in short-term
U.S. Treasury bills, notes and other obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities and repurchase
agreements relating to such obligations.
OHIO MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level of
current income exempt from Federal and, to the extent possible, from Ohio
income tax as is consistent with maintaining liquidity and stability of
principal. It pursues this objective by investing primarily in short-term
municipal obligations issued by the State of Ohio and its political
subdivisions, agencies, instrumentalities and authorities and tax-exempt
derivative securities relating thereto ("Ohio Municipal Obligations").
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level
of current income exempt from Federal and, to the extent possible, from
Pennsylvania income tax as is consistent with maintaining liquidity and
stability of principal. It pursues this objective by investing primarily in
short-term municipal obligations issued by the Commonwealth of Pennsylvania
and its political subdivisions, agencies, instrumentalities and authorities
and tax-exempt derivative securities relating thereto ("Pennsylvania
Municipal Obligations").
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level
of current interest income exempt from Federal and, to the extent possible,
from North Carolina income tax as is consistent with maintaining liquidity
and stability of principal. It pursues this objective by investing primarily
in short-term municipal obligations issued by the State of North Carolina
and its political subdivisions, agencies, instrumentalities and authorities
and tax-exempt derivative securities relating thereto ("North Carolina
Municipal Obligations").
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level of
current income exempt from Federal and, to the extent possible, from
Virginia income tax as is consistent with maintaining liquidity and
stability of principal. It pursues this objective by investing primarily in
short-term municipal obligations issued by the Commonwealth of Virginia and
its political sub-divisions, agencies, instrumentalities and authorities and
tax-exempt derivative securities relating thereto ("Virginia Municipal
Obligations").
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level of
current income exempt from Federal and, to the extent possible, from New
Jersey income tax as is consistent with maintaining liquidity and stability
of principal. It pursues this objective by investing primarily in short-term
municipal obligations issued by the State of New Jersey and its political
subdivisions, agencies, instrumentalities and authorities and tax-exempt
derivative securities relating thereto ("New Jersey Municipal Obligations").
Service Shares are sold by the Fund's distributor to institutional investors
("Institutions") acting on behalf of their customers ("Customers"). These
Customers, which may include individuals, trusts, partnerships and corporations,
must maintain accounts (such as custody, trust or escrow accounts) with the
Institutions. Service Shares are sold and redeemed at net asset value without
any purchase or redemption charge imposed by the Fund, although the Institutions
may receive compensation from the Fund for providing various shareholder
services and may charge their customer accounts for services provided in
connection with the purchase or redemption of Shares.
Shares of the Ohio Municipal Money Market, Pennsylvania Municipal Money
Market, North Carolina Municipal Money Market, Virginia Municipal Money Market
and New Jersey Municipal Money Market Portfolios are intended for residents of
Ohio, Pennsylvania, North Carolina, Virginia and New Jersey, respectively.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, PNC BANK, NATIONAL ASSOCIATION OR ANY OTHER BANK AND SHARES ARE NOT
FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENTS IN SHARES OF THE
FUND INVOLVE INVESTMENTS RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED. THERE CAN BE NO ASSURANCE THAT THE PORTFOLIOS WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus contains information that a prospective investor needs to
know before investing. Please keep it for future reference. A Statement of
Additional Information currently dated , 1995 has been filed with the
Securities and Exchange Commission (the "SEC"). The current Statement of
Additional Information may be obtained upon request free of charge from the Fund
by calling (800) 422-6538. The Statement of Additional Information, as it may be
supplemented from time to time, is incorporated by reference in this Prospectus.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS , 1995
<PAGE> 4
EXPENSE TABLE
ANNUAL FUND OPERATING EXPENSES FOR SERVICE SHARES AFTER FEE WAIVERS
AS A PERCENTAGE OF DAILY NET ASSETS
<TABLE>
<CAPTION>
NORTH NEW
OHIO PENNSYLVANIA CAROLINA VIRGINIA JERSEY
MUNICIPAL GOVERNMENT MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
MONEY MONEY MONEY MONEY MONEY MONEY MONEY MONEY
MARKET MARKET MARKET MARKET MARKET MARKET MARKET MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------- --------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory
fees(1)...... .06% .06% .06% .06% .06% .06% .05% .05%
Other operating
expenses..... .52 .52 .52 .52 .52 .52 .53 .53
--- --- ---- --- ----- --- --- ---
Administration
fees(1).... .13 .11 .12 .10 .12 .05 .02 .02
Shareholder
servicing
fee........ .15 .15 .15 .15 .15 .15 .15 .15
Other
expenses(1)(2)... .24 .26 .25 .27 .25 .32 .36 .36
----
---- ----- ---- ------- ---- ---- ----
Total fund
operating
expenses..... .58% .58% .58% .58% .58% .58% .58% .58%
=== === === === === === === ===
</TABLE>
- ------------------
(1) Advisory fees are net of fee waivers of .38%, .39%, .39%, .39%, .39%, .39%,
.40% and .40% and administration fees are net of waivers of .01%, .04%,
.03%, .05%, .03%, .10%, .13% and .13% for the Money Market, Municipal Money
Market, Government Money Market, Ohio Municipal Money Market, Pennsylvania
Municipal Money Market, North Carolina Municipal Money Market, Virginia
Municipal Money Market and New Jersey Municipal Money Market Portfolios,
respectively. PIMC and the Administrators are under no obligation to waive
or continue waiving such fees, but have informed the Fund that they expect
to waive or continue waiving such fees as necessary to maintain the
Portfolios' total operating expenses during the current fiscal year at the
levels set forth in the table. The expenses noted above under "Other
expenses" are estimated based on the level of such expenses for the Fund's
most recent fiscal year.
(2) Institutions may charge their clients additional fees for account services.
EXAMPLE
An investor in Service Shares would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Money Market Portfolio................................. $6 $19 $ 32 $73
Municipal Money Market Portfolio....................... 6 19 32 73
Government Money Market Portfolio...................... 6 19 32 73
Ohio Municipal Money Market Portfolio.................. 6 19 32 73
Pennsylvania Municipal Money Market Portfolio.......... 6 19 32 73
North Carolina Municipal Money Market Portfolio........ 6 19 32 73
Virginia Municipal Money Market Portfolio.............. 6 19 32 73
New Jersey Municipal Money Market Portfolio............ 6 19
</TABLE>
The foregoing Expense Table and Example are intended to assist investors in
understanding the expenses the Portfolios will pay. Investors bear these
expenses since they reduce the amount of income paid by the Portfolios to
investors as dividends. The information in the table for the Money Market,
Municipal Money Market, Government Money Market, Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market and
Virginia Municipal Money Market Portfolios is based on the advisory fees,
administration fees and other expenses payable after fee waivers by the
particular Portfolio for the fiscal year ended September 30, 1994, as restated
to reflect fees relating to the Service Plan and fees for other shareholder
support activities borne by Service Shares and revised fee waivers. The table
estimates fees, expenses, waivers and assets for the New Jersey Municipal Money
Market Portfolio for the current fiscal year. Total operating expenses would
have been .97%, 1.01%, 1.00%, 1.02%, 1.00%, 1.01%, 1.11% and 1.11%, for Service
Shares of the Money Market, Municipal Money Market, Government Money Market,
Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North Carolina
Municipal Money Market, Virginia Municipal Money Market and New Jersey Municipal
Money Market Portfolios, respectively, without such fee waivers and with fees
relating to the Service Plan and fees for other shareholder support activities.
See Footnote 1 to the Expense Table, "Financial Highlights--Background,"
"Management" and "Description of Shares" for a further description of operating
expenses.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND OPERATING
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
2
<PAGE> 5
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
BACKGROUND
The Fund currently offers three classes of shares in each
Portfolio--Service, Series A Investor and Institutional Shares--and a fourth
class of shares in the Money Market Portfolio--Series B Investor Shares. The
shares of each class in a Portfolio represent equal pro rata interests in such
Portfolio, except that they bear different expenses which reflect the difference
in the range of services provided to them. Under the Fund's Service Plan,
Service Shares bear the expense of fees at an annual rate not to exceed .15% of
the average daily net asset value of each Portfolio's outstanding Service
Shares. Service Shares also bear the expense of a service fee at an annual rate
not to exceed .15% of the average daily net asset value of each Portfolio's
outstanding Service Shares for other shareholder support activities provided by
service organizations. See "Management--Shareholder Servicing" for a description
of the Service Plan and shareholder support activities. Series A Investor Shares
bear the expense of the Fund's Distribution and Service Plan at an annual rate
not to exceed .55% of the average daily net asset value of each Portfolio's
outstanding Series A Investor Shares. Series B Investor Shares bear the expense
of the Fund's Series B Distribution Plan and Series B Service Plan at annual
rates not to exceed .75% and .25%, respectively, of the average daily net asset
value of each Portfolio's outstanding Series B Investor Shares. See "Description
of Shares" for a description of the Distribution and Service Plan, the Series B
Distribution Plan and the Series B Service Plan. Institutional Shares bear no
shareholder servicing or distribution fees.
During periods in which fees relating to the Service Plan and shareholder
support activities and to the Distribution and Service Plan were not charged to
a Portfolio's Service Shares or Series A Investor Shares, respectively, the
financial data in the tables below pertaining to Service Shares or Series A
Investor Shares of such Portfolio are identical to the financial data relating
to Institutional Shares of the Portfolio for such periods or to what such
financial data would have been had Institutional Shares in the Portfolio been
outstanding for such periods (except, in each case, for the number of Service
and Series A Investor Shares outstanding).
The SEC requires that this Prospectus contain Financial Highlights for each
class of each Portfolio described herein. Because the public offering of Series
A Investor Shares of the Virginia Municipal Money Market Portfolio and of Series
B Investor Shares of the Money Market Portfolio had not commenced during the six
month period ended March 31, 1995, the tables below present only information
pertaining to Service Shares and Institutional Shares of the Virginia Municipal
Money Market Portfolio and to Service Shares, Series A Investor Shares and
Institutional Shares of the Money Market Portfolio. No shares of the New Jersey
Municipal Money Market Portfolio were issued prior to the date of this
Prospectus.
Except for the financial data relating to the six month period ended March
31, 1995, the financial data included in the tables below has been derived from
the financial statements incorporated by reference in the Statement of
Additional Information and has been audited by Coopers & Lybrand, L.L.P., the
Fund's independent accountants. This financial data should be read in
conjunction with such financial statements. Further information about the
performance of the Portfolios is available in the annual report to shareholders.
Both the Statement of Additional Information and the annual report to
shareholders may be obtained from the Fund free of charge by calling the number
on the front cover of this Prospectus.
3
<PAGE> 6
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------
INSTITUTIONAL
CLASS SERVICE CLASS
----------------------------------- -----------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 8/2/93(1) ENDED YEAR YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94 9/30/93
----------- -------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- -------- --------
Income from investment operations
Net investment income................... 0.0274 0.0359 0.0054 0.0259 0.0333 0.0274
Net realized gain (loss) on
investments............................ -- -- -- -- -- --
----------- -------- -------- ----------- -------- --------
Total from investment operations..... 0.0274 0.0359 0.0054 0.0259 0.0333 0.0274
----------- -------- -------- ----------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0274) (0.0359) (0.0054) (0.0259) (0.0333) (0.0274)
Distributions from net realized capital
gains.................................. -- -- -- -- -- --
----------- -------- -------- ----------- -------- --------
Total distributions.................. (0.0274) (0.0359) (0.0054) (0.0259) (0.0333) (0.0274)
----------- -------- -------- ----------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ========== ======== ========
Total return............................... 2.77% 3.64% 0.54% 2.61% 3.37% 2.77%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $ 593,948 $502,972 $435,586 $ 605,220 $575,948 $415,328
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.25%2 0.25% 0.27%(2) 0.55%(2) 0.51% 0.59%
Before advisory/administration fee
waivers.............................. 0.62%2 0.66% 0.38%(2) 0.922 0.92% 0.70%
Ratios of net investment income to
average net assets
After advisory/administration fee
waivers.............................. 5.51%(2) 3.64% 3.01%(2) 5.19%(2) 3.35% 2.73%
Before advisory/administration fee
waivers.............................. 5.13%(2) 3.23% 2.90%(2) 4.82%(2) 2.95% 2.62%
<CAPTION>
MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------
SERIES A
SERVICE CLASS INVESTOR CLASS
----------------------------------- -----------------------------------
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
YEAR YEAR 10/4/89(1) ENDED YEAR 1/13/93(1)
ENDED ENDED THROUGH 3/31/95 ENDED THROUGH
9/30/92 9/30/91 9/30/90 (UNAUDITED) 9/30/94 9/30/93
-------- -------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ----------- -------- --------
Income from investment operations
Net investment income................... 0.0391 0.0645 0.0778 0.0249 0.0308 0.0188
Net realized gain (loss) on
investments............................ -- -- -- -- -- --
-------- -------- -------- ----------- -------- --------
Total from investment operations..... 0.0391 0.0645 0.0778 0.0249 0.0308 0.0188
-------- -------- -------- ----------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0391) (0.0645) (0.0778) (0.0249) (0.0308) (0.0188)
Distributions from net realized capital
gains.................................. -- -- -- -- -- --
-------- -------- -------- ----------- -------- --------
Total distributions.................. (0.0391) (0.0645) (0.0778) (0.0249) (0.0308) (0.0188)
-------- -------- -------- ----------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========== ======== ========
Total return............................... 4.05% 6.64% 8.07% 2.51% 3.12% 1.89%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $838,012 $637,076 $628,075 $ 7,302 $ 4,342 $ 49
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.61% 0.62% 0.62%(2) 0.75%(2) 0.75% 0.67%(2)
Before advisory/administration fee
waivers.............................. 0.66% 0.67% 0.70%(2) 1.12%(2) 1.16% 0.78%(2)
Ratios of net investment income to
average net assets
After advisory/administration fee
waivers.............................. 3.86% 6.45% 7.83%(2) 5.04%(2) 3.39% 2.62%(2)
Before advisory/administration fee
waivers.............................. 3.81% 6.40% 7.75%(2) 4.67%(2) 2.98% 2.51%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
4
<PAGE> 7
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------
INSTITUTIONAL
CLASS SERVICE CLASS
----------------------------------- -----------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 8/2/93(1) ENDED YEAR YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94 9/30/93
----------- -------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- -------- --------
Income from investment operations
Net investment income................... 0.0176 0.0246 0.0040 0.0161 0.0219 0.0205
Net realized gain (loss) on
investments............................ -- -- -- -- -- --
----------- -------- -------- ----------- -------- --------
Total from investment operations..... 0.0176 0.0246 0.0040 0.0161 0.0219 0.0205
----------- -------- -------- ----------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0176) (0.0246) (0.0040) (0.0161) (0.0219) (0.0205)
Distributions from net realized capital
gains.................................. -- -- -- -- -- --
----------- -------- -------- ----------- -------- --------
Total distributions.................. (0.0176) (0.0246) (0.0040) (0.0161) (0.0219) (0.0205)
----------- -------- -------- ----------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ========== ======== ========
Total return............................... 1.78% 2.48% 0.40% 1.62% 2.20% 2.10%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $ 34,747 $ 30,608 $ 39,148 $ 190,789 $133,358 $ 93,937
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.25%(2) 0.25% 0.25%(2) 0.55%(2) 0.51% 0.61%
Before advisory/administration fee
waivers.............................. 0.69%(2) 0.73% 0.36%(2) 0.99%(2) 0.99% 0.72%
Ratios of net investment income to
average
net assets
After advisory/administration fee
waivers.............................. 3.51%(2) 2.48% 2.45%(2) 3.25%(2) 2.18% 2.02%
Before advisory/administration fee
waivers.............................. 3.07%(2) 2.01% 2.34%(2) 2.81%(2) 1.71% 1.91%
<CAPTION>
MUNICIPAL MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------
SERIES A
SERVICE CLASS INVESTOR CLASS
----------------------------------- -----------------------------------
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
YEAR YEAR 11/1/89(1) ENDED YEAR 11/2/92(1)
ENDED ENDED THROUGH 3/31/95 ENDED THROUGH
9/30/92 9/30/91 9/30/90 (UNAUDITED) 9/30/94 9/30/93
-------- -------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ----------- -------- --------
Income from investment operations
Net investment income................... 0.0281 0.0438 0.0486 0.0151 0.0193 0.0181
Net realized gain (loss) on
investments............................ -- -- -- -- -- --
-------- -------- -------- ----------- -------- --------
Total from investment operations..... 0.0281 0.0438 0.0486 0.0151 0.0193 0.0181
-------- -------- -------- ----------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0281) (0.0438) (0.0486) (0.0151) (0.0193) (0.0181)
Distributions from net realized capital
gains.................................. -- -- -- -- -- --
-------- -------- -------- ----------- -------- --------
Total distributions.................. (0.0281) (0.0438) (0.0486) (0.0151) (0.0193) (0.0181)
-------- -------- -------- ----------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========== ======== ========
Total return............................... 2.85% 4.47% 4.97% 1.52% 1.95% 1.83%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $125,152 $ 89,312 $112,108 $ 29 $ 41 $ 15
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.63% 0.65% 0.65%(2) 0.75%(2) 0.75% 0.72%(2)
Before advisory/administration fee
waivers.............................. 0.68% 0.70% 0.70%(2) 1.19%(2) 1.23% 0.83%(2)
Ratios of net investment income to
average
net assets
After advisory/administration fee
waivers.............................. 2.78% 4.40% 5.31%(2) 3.00%(2) 2.05% 2.23%(2)
Before advisory/administration fee
waivers.............................. 2.73% 4.35% 5.26%(2) 2.56%(2) 1.58% 2.12%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
5
<PAGE> 8
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------
INSTITUTIONAL
CLASS SERVICE CLASS
----------------------------------- -----------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 8/2/93(1) ENDED YEAR YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94 9/30/93
----------- -------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- -------- --------
Income from investment operations
Net investment income................... 0.0269 0.0357 0.0049 0.0254 0.0331 0.0269
Net realized gain (loss) on
investments............................ -- -- -- -- -- --
----------- -------- -------- ----------- -------- --------
Total from investment operations..... 0.0269 0.0357 0.0049 0.0254 0.0331 0.0269
----------- -------- -------- ----------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0269) (0.0357) (0.0049) (0.0254) (0.0331) (0.0269)
Distributions from net realized capital
gains.................................. -- -- -- -- -- --
----------- -------- -------- ----------- -------- --------
Total distributions.................. (0.0269) (0.0357) (0.0049) (0.0254) (0.0331) (0.0269)
----------- -------- -------- ----------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ========== ======== ========
Total return............................... 2.72% 3.63% 0.49% 2.57% 3.36% 2.72%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $ 113,707 $ 37,519 $ 13,513 $ 505,356 $372,883 $185,400
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.25%(2) 0.25% 0.25%(2) 0.55%(2) 0.52% 0.60%
Before advisory/administration fee
waivers.............................. 0.66%(2) 0.70% 0.38%(2) 0.96%(2) 0.97% 0.73%
Ratios of net investment income to
average
net assets
After advisory/administration fee
waivers.............................. 5.53%(2) 3.69% 3.01%(2) 5.14%(2) 3.42% 2.68%
Before advisory/administration fee
waivers.............................. 5.12%(2) 3.24% 2.88%(2) 4.72%(2) 2.97% 2.55%
<CAPTION>
GOVERNMENT MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------
SERIES A
SERVICE CLASS INVESTOR CLASS
----------------------------------- -------------------------------------
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
YEAR YEAR 11/1/89(1) ENDED YEAR 1/14/93(1)
ENDED ENDED THROUGH 3/31/95 ENDED THROUGH
9/30/92 9/30/91 9/30/90 (UNAUDITED) 9/30/94 9/30/93
-------- -------- -------- ----------- -------- --------
<S> <C<C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ----------- -------- --------
Income from investment operations
Net investment income................... 0.0394 0.0627 0.0697 0.0245 0.0309 0.0183
Net realized gain (loss) on
investments............................ -- -- -- -- -- --
-------- -------- -------- ----------- -------- --------
Total from investment operations..... 0.0394 0.0627 0.0697 0.0245 0.0309 0.0183
-------- -------- -------- ----------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0394) (0.0627) (0.0697) (0.0245) (0.0309) (0.0183)
Distributions from net realized capital
gains.................................. -- -- -- -- -- --
-------- -------- -------- ----------- -------- --------
Total distributions.................. (0.0394) (0.0627) (0.0697) (0.0245) (0.0309) (0.0183)
-------- -------- -------- ----------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========== ======== ========
Total return............................... 4.01% 6.46% 7.29% 2.47% 3.11% 1.85%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $160,269 $180,776 $146,148 $ 2,400 $ 1,656 $ 50
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.62% 0.65% 0.65%(2) 0.75%(2) 0.75% 0.65%(2)
Before advisory/administration fee
waivers.............................. 0.67% 0.70% 0.70%(2) 1.16%(2) 1.20% 0.78%(2)
Ratios of net investment income to
average
net assets
After advisory/administration fee
waivers.............................. 3.91% 6.27% 7.62%(2) 4.93%(2) 3.60% 2.57%(2)
Before advisory/administration fee
waivers.............................. 3.86% 6.22% 7.57%(2) 4.51%(2) 3.14% 2.44%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
6
<PAGE> 9
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
--------------------------------------------------------------------
INSTITUTIONAL SERVICE
CLASS CLASS
------------------------------------- ------------------------
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 6/10/93(1) ENDED YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94
----------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- --------
Income from investment operations
Net investment income................................ 0.0174 0.0252 0.0073 0.0159 0.0225
Net realized gain (loss) on investments.............. -- -- -- -- --
----------- -------- -------- ----------- --------
Total from investment operations................. 0.0174 0.0252 0.0073 0.0159 0.0225
----------- -------- -------- ----------- --------
Less distributions
Distributions from net investment income............. (0.0174) (0.0252) (0.0073) (0.0159) (0.0225)
Distributions from net realized capital gains........ -- -- -- -- --
----------- -------- -------- ----------- --------
Total distributions.............................. (0.0174) (0.0252) (0.0073) (0.0159) (0.0225)
----------- -------- -------- ----------- --------
Net asset value at end of period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ========== =========
Total return............................................ 1.76% 2.55% 0.73% 1.60% 2.27%
Ratios/Supplemental data
Net assets at end of period (in thousands)........... $ 12,191 $ 10,521 $ 12,026 $ 47,993 $ 44,066
Ratios of expenses to average net assets
After advisory/administration fee waivers.......... 0.25%(2) 0.13% 0.10%(2) 0.55%(2) 0.40%
Before advisory/administration fee waivers......... 0.73%(2) 0.77% 0.83%(2) 1.03%(2) 1.04%
Ratios of net investment income to average net assets
After advisory/administration fee waivers.......... 3.54%(2) 2.56% 2.45%(2) 3.21%(2) 2.29%
Before advisory/administration fee waivers......... 3.06%(2) 1.93% 1.72%(2) 2.74%(2) 1.65%
<CAPTION>
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
---------------------------------------
SERVICE SERIES A
CLASS INVESTOR CLASS
--------- ------------------------
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
6/1/93(1) ENDED 10/5/93(1)
THROUGH 3/31/95 THROUGH
9/30/93 (UNAUDITED) 9/30/94
-------- ----------- --------
<S> <C> <C> <C>
Net asset value at beginning of period.................. $ 1.00 $ 1.00 $ 1.00
-------- ----------- --------
Income from investment operations
Net investment income................................ 0.0074 0.0150 0.0199
Net realized gain (loss) on investments.............. -- -- --
-------- ----------- --------
Total from investment operations................. 0.0074 0.0150 0.0199
-------- ----------- --------
Less distributions
Distributions from net investment income............. (0.0074) (0.0150) (0.0199)
Distributions from net realized capital gains........ -- -- --
-------- ----------- --------
Total distributions.............................. (0.0074) (0.0150) (0.0199)
-------- ----------- --------
Net asset value at end of period........................ $ 1.00 $ 1.00 $ 1.00
========= ========== =========
Total return............................................ 0.75% 1.50% 2.01%
Ratios/Supplemental data
Net assets at end of period (in thousands)........... $ 15,239 $ 5 $ 28
Ratios of expenses to average net assets
After advisory/administration fee waivers.......... 0.23%(2) 0.75%(2) 0.62%(2)
Before advisory/administration fee waivers......... 0.96%(2) 1.22%(2) 1.26%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers.......... 2.23%(2) 2.94%(2) 1.94%(2)
Before advisory/administration fee waivers......... 1.50%(2) 2.47%(2) 1.30%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
7
<PAGE> 10
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
--------------------------------------------------------------------
INSTITUTIONAL SERVICE
CLASS CLASS
------------------------------------- ------------------------
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 6/1/93(1) ENDED YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94
----------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- --------
Income from investment operations
Net investment income............................... 0.0170 0.0247 0.0078 0.0156 0.0221
Net realized gain (loss) on investments............. -- -- -- -- --
----------- -------- -------- ----------- --------
Total from investment operations................ 0.0170 0.0247 0.0078 0.0156 0.0221
----------- -------- -------- ----------- --------
Less distributions
Distributions from net investment income............ (0.0170) (0.0247) (0.0078) (0.0156) (0.0221)
Distributions from net realized capital gains....... -- -- -- -- --
----------- -------- -------- ----------- --------
Total distributions............................. (0.0170) (0.0247) (0.0078) (0.0156) (0.0221)
----------- -------- -------- ----------- --------
Net asset value at end of period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ========== =========
Total return........................................... 1.72% 2.49% 0.78% 1.57% 2.24%
Ratios/Supplemental data
Net assets at end of period (in thousands).......... $ 187,858 $158,102 $ 2,242 $ 137,297 $ 60,560
Ratios of expenses to average net assets
After advisory/administration fee waivers......... 0.25%(2) 0.16% 0.09%(2) 0.55%(2) 0.42%
Before advisory/administration fee waivers........ 0.66%(2) 0.73% 0.97%(2) 0.96%(2) 0.99%
Ratios of net investment income to average net
assets
After advisory/administration fee waivers......... 3.41%(2) 2.64% 2.15%(2) 3.17%(2) 2.31%
Before advisory/administration fee waivers........ 3.00%(2) 2.07% 1.27%(2) 2.76%(2) 1.75%
<CAPTION>
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
---------------------------------------------
SERVICE SERIES A
CLASS INVESTOR CLASS
----------- -----------------------------
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
6/11/93(1) ENDED 12/28/93(1)
THROUGH 3/31/95 THROUGH
9/30/93 (UNAUDITED) 9/30/94
-------- ----------- ---------
<S> <C> <C> <C>
Net asset value at beginning of period................. $ 1.00 $ 1.00 $ 1.00
-------- ----------- ---------
Income from investment operations
Net investment income............................... 0.0074 0.0146 0.0153
Net realized gain (loss) on investments............. -- -- --
-------- ----------- ---------
Total from investment operations................ 0.0074 0.0146 0.0153
-------- ----------- ---------
Less distributions
Distributions from net investment income............ (0.0074) (0.0146) (0.0153)
Distributions from net realized capital gains....... -- -- --
-------- ----------- ---------
Total distributions............................. (0.0074) (0.0146) (0.0153)
-------- ----------- ---------
Net asset value at end of period....................... $ 1.00 $ 1.00 $ 1.00
========= ========== =========
Total return........................................... 0.74% 1.47% 1.58%
Ratios/Supplemental data
Net assets at end of period (in thousands).......... $ 8,919 $ 105 $ 139
Ratios of expenses to average net assets
After advisory/administration fee waivers......... 0.32%(2) 0.75%(2) 0.65%(2)
Before advisory/administration fee waivers........ 1.20%(2) 1.16%(2) 1.22%(2)
Ratios of net investment income to average net
assets
After advisory/administration fee waivers......... 2.42%(2) 2.91%(2) 2.11%(2)
Before advisory/administration fee waivers........ 1.54%(2) 2.50%(2) 1.54%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
8
<PAGE> 11
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NORTH CAROLINA
MUNICIPAL MONEY MARKET PORTFOLIO
-----------------------------------------------------------------
INSTITUTIONAL SERVICE
CLASS CLASS
----------------------------------- -----------------------
FOR THE
FOR THE FOR THE PERIOD FOR THE
SIX MONTHS PERIOD 11/01/94 PERIOD
ENDED YEAR 5/4/93(1) THROUGH 4/29/94(1)
3/31/95 ENDED THROUGH 3/31/95 THROUGH
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94
----------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- --------
Income from investment operations
Net investment income................................ 0.0174 0.0249 0.0097 0.0135 0.0099
Net realized gain (loss) on investments.............. -- -- -- -- --
----------- -------- -------- ----------- --------
Total from investment operations.................. 0.0174 0.0249 0.0097 0.0135 0.0099
----------- -------- -------- ----------- --------
Less distributions
Distributions from net investment income............. (0.0174) (0.0249) (0.0097) (0.0135) (0.0099)
Distributions from net realized capital gains........ -- -- -- -- --
----------- -------- -------- ----------- --------
Total distributions............................... (0.0174) (0.0249) (0.0097) (0.0135) (0.0099)
----------- -------- -------- ----------- --------
Net asset value at end of period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ========== ========
Total return............................................ 1.75% 2.52% 0.97% 1.35% 0.99%
Ratios/Supplemental data
Net assets at end of period (in thousands)........... $ 118,224 $ 69,673 $ 34,135 $ 406(4) $ --(3)
Ratios of expenses to average net assets
After advisory/administration fee waivers........... 0.16%(2) 0.10% 0.10%(2) 0.53%(2) 0.36%(2)
Before advisory/administration fee waivers.......... 0.71%(2) 0.76% 0.81%(2) 1.19%(2) 1.02%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers........... 3.52%(2) 2.53% 2.35%(2) 3.30%(2) 2.54%(2)
Before advisory/administration fee waivers.......... 2.97%(2) 1.87% 1.64%(2) 2.64%(2) 1.87%(2)
<CAPTION>
NORTH
CAROLINA
MUNICIPAL
MONEY
MARKET VIRGINIA
PORTFOLIO MUNICIPAL MONEY MARKET PORTFOLIO
---------- --------------------------------------------
INVESTOR A INSTITUTIONAL SERVICE
CLASS CLASS CLASS
----------- -------------------------- -----------
FOR THE FOR THE
PERIOD FOR THE FOR THE PERIOD
2/14/95(1) SIX MONTHS PERIOD 10/11/94(1)
THROUGH ENDED 7/25/94(1) THROUGH
3/31/95 3/31/95 THROUGH 3/31/95
(UNAUDITED) (UNAUDITED) 9/30/94 (UNAUDITED)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value at beginning of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- -----------
Income from investment operations
Net investment income................................ 0.0041 0.0171 0.0053 0.0149
Net realized gain (loss) on investments.............. -- -- -- --
----------- ----------- ----------- -----------
Total from investment operations.................. 0.0041 0.0171 0.0053 0.0149
----------- ----------- ----------- -----------
Less distributions
Distributions from net investment income............. (0.0041) (0.0171) (0.0053) (0.0149)
Distributions from net realized capital gains........ -- -- -- --
----------- ----------- ----------- -----------
Total distributions............................... (0.0041) (0.0171) (0.0053) (0.0149)
----------- ----------- ----------- -----------
Net asset value at end of period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ==========
Total return............................................ 0.41% 1.72% 0.53% 1.50%
Ratios/Supplemental data
Net assets at end of period (in thousands)........... $ 3 $ 18,634 $ 13,831 $ 400
Ratios of expenses to average net assets
After advisory/administration fee waivers........... 0.66%(2) 0.10%(2) 0.10%(2) 0.40%(2)
Before advisory/administration fee waivers.......... 2.99%(2) 0.70%(2) 1.02%(2) 1.00%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers........... 3.32%(2) 3.44%(2) 2.89%(2) 3.23%(2)
Before advisory/administration fee waivers.......... 1.00%(2) 2.84%(2) 1.97%(2) 2.63%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) There were no Service Shares outstanding as of September 30, 1994.
(4) Reissuance of shares.
9
<PAGE> 12
INVESTMENT POLICIES
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Portfolio obligations held by the Portfolio will have maturities of 13
months or less as determined in accordance with the rules of the SEC. The
Portfolio invests in a broad range of short-term, high quality, U.S.
dollar-denominated instruments, such as government, bank, commercial and other
obligations, that may be available in the money markets ("Money Market
Instruments"). The following descriptions illustrate types of Money Market
Instruments in which the Portfolio may invest.
BANK OBLIGATIONS. The Portfolio may purchase bank obligations, such as
certificates of deposit, bankers' acceptances and demand and time deposits,
including U.S. dollar-denominated instruments issued or supported by the credit
of U.S. or foreign banks or savings institutions having total assets at the time
of purchase in excess of $1 billion. The Portfolio may invest substantially in
obligations of foreign banks or foreign branches of U.S. banks where the adviser
deems the instrument to present minimal credit risks. Such investments may
include Eurodollar Certificates of Deposit ("ECDs") which are U.S.
dollar-denominated certificates of deposit issued by offices of foreign and
domestic banks located outside the United States; Eurodollar Time Deposits
("ETDs") which are U.S. dollar-denominated deposits in a foreign branch of a
U.S. bank or a foreign bank; Canadian Time Deposits ("CTDs") which are
essentially the same as ETDs except they are issued by Canadian offices of major
Canadian banks; and Yankee Certificates of Deposit ("Yankee Cds") which are U.S.
dollar-denominated certificates of deposit issued by a U.S. branch of a foreign
bank and held in the United States. The Portfolio may also make interest-bearing
savings deposits in commercial and savings banks in amounts not in excess of 5%
of its total assets.
Investments in obligations issued by foreign banks and foreign branches of
U.S. banks may involve risks that are different from investments in obligations
of domestic branches of U.S. banks. These risks may include future unfavorable
political and economic developments, possible withholding taxes on interest
income, seizure or nationalization of foreign deposits, currency controls,
interest limitations, or other governmental restrictions which might affect the
payment of principal or interest on the securities held by the Portfolio.
Additionally, these institutions may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting and recordkeeping
requirements than those applicable to domestic branches of U.S. banks.
COMMERCIAL PAPER. The Portfolio may purchase commercial paper rated (at the
time of purchase) in the two highest rating categories of a nationally
recognized statistical rating organization ("NRSRO"). The Portfolio may also
purchase unrated commercial paper determined to be of comparable quality at the
time of purchase by the adviser. Commercial paper issues in which the Portfolio
may invest include securities issued by corporations without registration under
the Securities Act of 1933 (the "1933 Act") in reliance on the exemption from
such registration afforded by Section 3(a)(3) thereof, and commercial paper
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)
paper"). Section 4(2) paper is restricted as to disposition under the Federal
securities laws in that any resale must similarly be made in an exempt
transaction. Section 4(2) paper is normally resold to other institutional
investors through or with the assistance of investment dealers which make a
market in Section 4(2) paper, thus providing liquidity.
The Portfolio may also invest in Canadian Commercial Paper ("CCP"), which
is U.S. dollar-denominated commercial paper issued by a Canadian corporation or
a Canadian counterpart of a U.S. corporation, and in Europaper, which is U.S.
dollar-denominated commercial paper of a foreign issuer, subject to the criteria
stated above for other commercial paper issuers.
10
<PAGE> 13
U.S. GOVERNMENT OBLIGATIONS. The Portfolio may purchase obligations issued
or guaranteed by the U.S. Government or its agencies and instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government are
backed by the full faith and credit of the United States. Others are backed by
the right of the issuer to borrow from the U.S. Treasury or are backed only by
the credit of the agency or instrumentality issuing the obligation. See
"Investment Policies--Government Money Market Portfolio" for examples of the
types of U.S. Government obligations that the Portfolio may purchase.
MUNICIPAL OBLIGATIONS. The Portfolio may, when deemed appropriate by the
adviser, invest without limitation in high quality Municipal Obligations (other
than tax-exempt derivative securities) issued by state and local governmental
issuers, the interest on which may be taxable or tax-exempt for Federal income
tax purposes, provided that such obligations carry yields that are competitive
with those of other types of Money Market Instruments of comparable quality. See
"Investment Policies--Municipal Money Market Portfolio" for a more complete
discussion of Municipal Obligations.
GUARANTEED INVESTMENT CONTRACTS. The Portfolio may invest up to 5% of its
total assets in guaranteed investment contracts ("GICs") issued by highly-rated
U.S. insurance companies. Pursuant to such contracts, the Portfolio makes cash
contributions to a deposit fund of the insurance company's general account. The
insurance company then credits to the Portfolio on a monthly basis guaranteed
interest which is based on an index (in most cases this index is expected to be
the Salomon Brothers CD Index). GICs provide that this guaranteed interest will
not be less than a certain minimum rate. A GIC is a general obligation of the
issuing insurance company and not a separate account. The purchase price paid
for a GIC becomes part of the general assets of the insurance company, and the
contract is paid from the general assets of the insurance company. The Portfolio
will only purchase GICs from insurance companies which, at the time of purchase,
are rated "A+" by A.M. Best Company, have assets of $1 billion or more and meet
quality and credit standards established by the adviser pursuant to guidelines
approved by the Board of Trustees. Generally, GICs are not assignable or
transferable without the permission of the issuing insurance companies, and an
active secondary market in GICs does not currently exist.
SECURITIES LENDING. To increase income on its investments, the Portfolio
may lend its portfolio securities with an aggregate value up to 30% of its total
assets to broker/dealers and other institutional investors pursuant to
agreements requiring that the loans be continuously secured by collateral equal
at all times in value to at least the market value of the securities loaned.
Collateral for such loans may include cash, securities of the U.S. Government or
its agencies or instrumentalities or an irrevocable letter of credit issued by a
bank which meets the Portfolio's investment standards. There may be risks of
delay in receiving additional collateral or in recovering the securities loaned
or even a loss of rights in the collateral should the borrower of the securities
fail financially. See "Investment Policies--Common Investment Policies" for a
description of other investment policies.
------------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio invests substantially all of its assets in a diversified
portfolio of Municipal Obligations, the interest on which, in the opinion of
bond counsel or counsel to the issuer or sponsor, is exempt from the regular
Federal income tax and which have remaining maturities of 13 months or less as
determined in accordance with the rules of the SEC. Purchasable Municipal
Obligations are determined by the sub-adviser to present minimal credit risks
pursuant to guidelines established by the Board of Trustees and at the time of
purchase are rated in one of the two highest rating categories by an NRSRO or
are unrated securities determined at the time of purchase to be of comparable
quality by the
11
<PAGE> 14
sub-adviser pursuant to guidelines approved by the Board of Trustees. The
applicable Municipal Obligations ratings are described in an Appendix to the
Statement of Additional Information.
The two principal classifications of Municipal Obligations are "general
obligation" securities and "revenue" securities. General obligation securities
are secured by the issuer's pledge of its full faith, credit and taxing power
for the payment of principal and interest. Revenue securities are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise tax or other specific
revenue source such as the user of the facility being financed. Revenue
securities include private activity bonds which are not payable from the
unrestricted revenues of the issuer. Consequently, the credit quality of private
activity bonds is usually directly related to the credit standing of the
corporate user of the facility involved. Municipal Obligations may also include
"moral obligation" bonds, which are normally issued by special purpose public
authorities. If the issuer of moral obligation bonds is unable to meet its debt
service obligations from current revenues, it may draw on a reserve fund, the
restoration of which is a moral commitment but not a legal obligation of the
state or municipality which created the issuer.
Also included within the general category of Municipal Obligations are
participation certificates in a lease, an installment purchase contract, or a
conditional sales contract ("lease obligations") entered into by a state or
political subdivision to finance the acquisition or construction of equipment,
land, or facilities. Although lease obligations do not constitute general
obligations of the issuer for which the lessee's unlimited taxing power is
pledged, certain lease obligations are backed by the lessee's covenant to
appropriate money to make the lease obligation payments. However, under certain
lease obligations, the lessee has no obligation to make these payments in future
years unless money is appropriated on a yearly basis. Although
"non-appropriation" lease obligations are secured by the leased property,
disposition of the property in the event of foreclosure might prove difficult.
These securities represent a relatively new type of financing that is not yet as
marketable as more conventional securities.
------------------------------------
GOVERNMENT MONEY MARKET PORTFOLIO
During normal market periods, not less than 65% of the Portfolio's assets
will be invested in U.S. Government obligations (or repurchase agreements
relating to such obligations). Instruments held by the Portfolio will have
maturities of 13 months or less as determined in accordance with the rules of
the SEC. Treasury obligations differ only in their interest rates, maturities,
and times of issuance. Obligations of certain agencies and instrumentalities of
the U.S. Government such as the Government National Mortgage Association
("GNMA") are supported by the United States' full faith and credit; others, such
as those of the Federal National Mortgage Association ("FNMA") and the Student
Loan Marketing Association, are supported by the right of the issuer to borrow
from the Treasury; others, such as those of the Federal Farm Credit Banks or the
Federal Home Loan Mortgage Corporation, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored agencies or
instrumentalities if it is not obligated to do so by law.
To increase income on its investments, the Portfolio may lend its portfolio
securities with an aggregate value up to 30% of its total assets to
broker/dealers and other institutional investors pursuant to agreements
requiring that the loans be continuously secured by collateral equal at all
times in value to at least the market value of the securities loaned. Collateral
for such loans may include cash, securities of the U.S. Government or its
agencies or instrumentalities or an irrevocable letter of credit issued by a
bank which meets the Portfolio's investment standards. There may be risks of
delay in receiving additional collateral or in recovering the securities loaned
or even a loss of rights in the
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collateral should the borrower of the securities fail financially. See
"Investment Policies--Common Investment Policies" for a description of other
investment policies.
------------------------------------
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in Ohio Municipal Obligations. The
Portfolio may also invest in Municipal Obligations (including related tax-exempt
derivative securities) in which the Municipal Money Market Portfolio may invest.
See "Investment Policies--Municipal Money Market Portfolio" for a description of
Municipal Obligations. Portfolio obligations held by the Portfolio will have
maturities of 13 months or less as determined in accordance with the rules of
the SEC.
The concentration of investments in Ohio Municipal Obligations raises
special investment considerations. While diversifying more into the service and
other non-manufacturing areas, the economy of Ohio continues to rely in part on
durable goods manufacturing largely concentrated in motor vehicles and
equipment, steel, rubber products and household appliances. As a result, general
economic activity in Ohio, as in many other industrially developed states, tends
to be more cyclical than in some other states and in the nation as a whole.
Agriculture is an important segment of the Ohio economy, with over half the
State's area devoted to farming and approximately 15% of total employment in
agribusiness. In prior years, the State's overall unemployment rate was commonly
somewhat higher than the national figure. For example, the reported 1990 average
monthly State rate was 5.7%, compared to the national figure of 5.5%. However,
for 1991, 1992 and 1993 the State rates (6.4%, 7.2% and 6.5%) were below the
national rates (6.7%, 7.4% and 6.8%). The unemployment rate and its effects vary
among particular geographic areas of the State. There can be no assurance that
future national, regional or state-wide economic difficulties and the resulting
impact on State or local government finances will not adversely affect the
market value of Ohio Municipal Obligations held in the Portfolio or the ability
of the respective obligors to make timely payments of debt service on (or lease
payments relating to) those obligations. See the Statement of Additional
Information for further discussions of investment considerations associated with
Ohio Municipal Obligations and see "Investment Policies--Common Investment
Policies" for a description of other securities in which the Portfolio may
invest.
------------------------------------
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in Pennsylvania Municipal Obligations.
The Portfolio may also invest in Municipal Obligations (including related
tax-exempt derivative securities) in which the Municipal Money Market Portfolio
may invest. See "Investment Policies--Municipal Money Market Portfolio" for a
description of Municipal Obligations. Portfolio obligations held by the
Portfolio will have maturities of 13 months or less as determined in accordance
with the rules of the SEC.
The concentration of investments in Pennsylvania Municipal Obligations
raises special investment considerations. In particular, changes in the economic
condition and governmental policies of the Commonwealth of Pennsylvania and its
political subdivisions, agencies, instrumentalities and authorities could
adversely affect the value of the Portfolio and its portfolio securities.
Although the General Fund of the Commonwealth (the principal operating fund of
the Commonwealth) experienced deficits in fiscal 1990 and 1991, tax increases
and spending decreases helped return the General Fund balance to a surplus at
June 30, 1992 of $87.5 million and at June 30, 1993 of $698.9 million. The
deficit
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in the Commonwealth's unreserved/undesignated funds of prior years also was
reversed to a surplus of $64.4 million as of June 30, 1993. Rising unemployment,
a relatively high proportion of persons 65 and older in the Commonwealth and
court ordered increases in healthcare reimbursement rates place increased
pressures on the tax resources of the Commonwealth and its municipalities. See
the Statement of Additional Information for further discussion of investment
considerations associated with Pennsylvania Municipal Obligations and see
"Investment Policies--Common Investment Policies" for a description of other
investment policies.
------------------------------------
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in North Carolina Municipal
Obligations. The Portfolio may also invest in Municipal Obligations (including
related tax-exempt derivative securities) in which the Municipal Money Market
Portfolio may invest. See "Investment Policies--Municipal Money Market
Portfolio" for a description of Municipal Obligations. Portfolio obligations
held by the Portfolio will have maturities of 13 months or less as determined in
accordance with the rules of the SEC.
The concentration of investments in North Carolina Municipal Obligations
raises special investment considerations. In particular, changes in the economic
condition and governmental policies of North Carolina and its political
subdivisions, agencies, instrumentalities and authorities could adversely affect
the value of the Portfolio and its portfolio securities. Growth of North
Carolina tax revenues slowed considerably during fiscal 1990-92 requiring tax
increases and budget adjustments, including hiring freezes and restrictions,
spending constraints, changes in the timing of certain collections and payments,
and other short-term budget adjustments, that were needed to comply with North
Carolina's constitutional mandate for a balanced budget. Fiscal years 1993 and
1994, however, ended with a positive General Fund balance of approximately $500
million each year on a budgetary basis. By law, 25% of such positive fund
balance was required to be reserved in the General Fund of North Carolina as
part of a "Savings Reserve" (subject to a maximum reserve of 5% of the preceding
fiscal year's operating appropriation). An additional portion of such positive
fund balance was reserved in the General Fund as part of a "Reserve for Repair
and Renovation of State Facilities," leaving the remaining unrestricted fund
balance at the end of each such year available for future appropriations. See
the Statement of Additional Information for further discussion of investment
considerations associated with North Carolina Municipal Obligations and see
"Investment Policies--Common Investment Policies" for a description of other
investment policies of the Portfolio.
------------------------------------
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in Virginia Municipal Obligations. The
Portfolio may also invest in Municipal Obligations (including related tax-exempt
derivative securities) in which the Municipal Money Market Portfolio may invest.
See "Investment Policies--Municipal Money Market Portfolio" for a description of
Municipal Obligations. Instruments held by the Portfolio will have maturities of
13 months or less as determined in accordance with the rules of the SEC.
The Portfolio may also purchase obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities. Obligations of certain
agencies and instrumentalities of the U.S. Government are backed by the full
faith and credit of the United States. Others are backed by the right of the
issuer to borrow from the U.S. Treasury or
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are backed only by the credit of the agency or instrumentality issuing the
obligation. See "Investment Policies-- Government Money Market Portfolio" for
examples of the types of U.S. Government obligations that the Portfolio may
purchase.
The Virginia Municipal Money Market Portfolio will invest primarily in
Virginia Municipal Obligations. For this reason, the Portfolio is affected by
political, economic, regulatory or other developments that constrain the taxing,
revenue-collecting and spending authority of Virginia issuers or otherwise
affect the ability of Virginia issuers to pay interest, repay principal, or any
premium. Certain of these developments are described herein. The rate of
economic growth in the Commonwealth of Virginia slowed in 1990 and 1991, but has
increased steadily over the past decade. From 1984 to 1993, the Commonwealth's
4.8% rate of growth in per capita personal income was slightly ahead of the
national rate of growth of 4.7%. During 1990, 1991 and 1992, Virginia's per
capita personal income grew at a slightly lower rate than the U.S. average. Per
capita income in Virginia has been consistently above national levels over the
past decade and, in 1993, was $21,634 compared with the national level of
$20,817. The services sector in Virginia generates the largest number of jobs,
followed by wholesale and retail trade, government employment and manufacturing.
Because of Virginia's proximity to Washington, D.C. and the concentration of
military installations in the Commonwealth (the largest such concentration in
the United States), the Federal government has a greater economic impact on
Virginia relative to its size than on any of the other states except Alaska and
Hawaii. It is unclear what effect the current efforts by the Federal government
to restructure the defense budget will have on the long-term economic conditions
of the Commonwealth. According to statistics published by the U.S. Department of
Labor, the Commonwealth typically has one of the lowest unemployment rates in
the nation. This is generally attributed to the balance among the various
sectors represented in the economy. During 1993, an average of 5.9% of
Virginians were unemployed as compared with the national average of 6.8%. The
population of the Commonwealth has continued to grow over the last decade at a
rate that is substantially higher than the national average. The rate of
increase in such population growth has declined since reaching a high of 2.1%
annually in 1987 and, in 1993, was approximately 1.8%. Virginia is one of twenty
states with a right-to-work law and is generally regarded as having a favorable
business climate marked by few strikes or work stoppages. Virginia is also one
of the least unionized among the industrialized states. See "Special
Considerations Regarding Investment in Virginia Municipal Obligations" in the
Statement of Additional Information. See also "Investment Policies--Common
Investment Policies" for a description of other investment policies.
------------------------------------
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in New Jersey Municipal Obligations.
The Portfolio may also invest in Municipal Obligations (including related
tax-exempt derivative securities) in which the Municipal Money Market Portfolio
may invest. See "Investment Policies--Municipal Money Market Portfolio" for a
description of Municipal Obligations. Portfolio obligations held by the
Portfolio will have maturities of 13 months or less as determined in accordance
with the rules of the SEC.
The concentration of investments by the New Jersey Municipal Money Market
Portfolio in New Jersey Municipal Obligations raises special investment
considerations. The State of New Jersey generally has a diversified economic
base consisting of, among others, commerce and service industries, selective
commercial agriculture, insurance, tourism, petroleum refining and
manufacturing, although New Jersey's manufacturing industry has experienced a
downward trend in the last few years. New Jersey is major recipient of Federal
assistance and, of all the states, is among the highest in the amount of Federal
aid received. Therefore, a decrease in Federal financial assistance may
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<PAGE> 18
adversely affect the financial condition of New Jersey and its political
subdivisions and instrumentalities. While New Jersey's economic base has become
more diversified over time and thus its economy appears to be less vulnerable
during recessionary periods, a recurrence of high levels of unemployment could
adversely affect New Jersey's overall economy and the ability of New Jersey and
its political subdivisions and instrumentalities to meet their financial
obligations. In addition, because New Jersey maintains a balanced budget which
restricts total appropriation increases to only 5% annually with respect to any
municipality or county, the balanced budget plan may actually adversely affect a
particular municipality's or county's ability to repay its obligations. See the
Statement of Additional Information for further discussion of investment
considerations associated with New Jersey Municipal Obligations and see
"Investment Policies--Common Investment Policies" for a description of other
securities in which the Portfolio may invest.
------------------------------------
COMMON INVESTMENT POLICIES
This section describes certain investment policies that are common to
Portfolios. Each Portfolio's investment objective and policies may be changed by
the Board of Trustees without shareholder approval.
MORTGAGE-RELATED SECURITIES. Each Portfolio other than the Municipal Money
Market, Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Virginia Municipal Money Market and New Jersey
Municipal Money Market Portfolios (collectively, the "Municipal Portfolios") may
invest in mortgage-related securities issued by the U.S. Government or its
agencies or instrumentalities or issued by private companies. Such
mortgage-related securities may include collateralized mortgage obligations
("CMOs") issued by the Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation or other U.S. Government agencies or instrumentalities
or issued by private companies. The average life of mortgage-related securities
is likely to be less than the original maturity of the mortgage pools underlying
the securities as a result of mortgage prepayments. For this and other reasons,
a mortgage-related security's stated maturity may be shortened and, therefore,
it may be difficult to predict precisely the security's total return to the
particular Portfolio. In addition, in periods of falling interest rates, the
rate of mortgage prepayments tends to increase. During such periods, the
reinvestment of prepayment proceeds by the particular Portfolio will generally
be at lower rates than the rates on the prepaid obligations.
REPURCHASE AGREEMENTS. Each Portfolio other than the Municipal Portfolios
may agree to purchase securities from financial institutions subject to the
seller's agreement to repurchase them at an agreed-upon time and price
("repurchase agreements"). The securities held subject to a repurchase agreement
may have stated maturities exceeding 13 months, provided the repurchase
agreement itself matures in less than 13 months. Default by or bankruptcy of the
seller would, however, expose the Portfolio to possible loss because of adverse
market action or delays in connection with the disposition of the underlying
obligations.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Each Portfolio may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions involve a commitment by a
Portfolio to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), and permit a
Portfolio to lock-in a price or yield on a security it owns or intends to
purchase, regardless of future changes in interest rates. When-issued and
forward commitment transactions involve the risk, however, that the price or
yield obtained in a transaction may be less favorable than the price or yield
available in the market when the delivery takes place. Each Portfolio's
when-issued purchases and forward commitments are not expected to exceed 25% of
the value of its total assets absent unusual market conditions. The Portfolios
do not intend to engage in when-issued purchases and forward commitments for
speculative purposes but only in furtherance of their investment objectives.
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REVERSE REPURCHASE AGREEMENTS. Each Portfolio other than the Municipal
Portfolios may enter into reverse repurchase agreements with respect to
portfolio securities for temporary purposes (such as to obtain cash to meet
redemption requests when the liquidation of portfolio securities is deemed
disadvantageous or inconvenient by the adviser or sub-adviser). A reverse
repurchase agreement involves a sale by a Portfolio of securities that it holds
concurrently with an agreement by the Portfolio to repurchase the same
securities at an agreed-upon price and date. Reverse repurchase agreements
involve the risk that the market value of the securities sold by the Portfolio
may decline below the price of the securities the Portfolio is obligated to
repurchase. Reverse repurchase agreements are considered to be borrowings by a
Portfolio under the Investment Company Act of 1940 (the "1940 Act").
INVESTMENT COMPANIES. In connection with the management of their daily cash
positions, each Portfolio may invest in securities issued by other investment
companies which invest in short-term, high quality debt securities and which
determine their net asset value per share based on the amortized cost or
penny-rounding method of valuation. Securities of other investment companies
will be acquired by a Portfolio within the limits prescribed by the 1940 Act.
Each Portfolio currently intends to limit its investments so that, as determined
immediately after a securities purchase is made: (i) not more than 5% of the
value of its total assets will be invested in the securities of any one
investment company; (ii) 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 (iii) not more than 3% of the outstanding voting stock of any one investment
company will be owned by the Portfolio or by the Fund as a whole. As a
shareholder of another investment company, a Portfolio would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory fees and other expenses the Portfolio bears directly in connection with
its own operations.
VARIABLE AND FLOATING RATE INSTRUMENTS. Each Portfolio may purchase rated
and unrated variable and floating rate instruments, which may have a stated
maturity in excess of 13 months but will, in any event, permit a Portfolio to
demand payment of the principal of the instrument at least once every 13 months
upon not more than thirty days' notice (unless the instrument is guaranteed by
the U.S. Government or an agency or instrumentality thereof). Such instruments
may include variable amount master demand notes that permit the indebtedness
thereunder to vary in addition to providing for periodic adjustments in the
interest rate. Issuers of unrated variable and floating rate instruments must
satisfy the same criteria as set forth above for the particular Portfolio, and
will be determined to present minimal credit risks by the adviser. The absence
of an active secondary market with respect to particular variable and floating
rate instruments, however, could make it difficult for a Portfolio to dispose of
a variable or floating rate instrument if the issuer defaulted on its payment
obligation or during periods when a Portfolio is not entitled to exercise its
demand rights, and a Portfolio could, for these or other reasons, suffer a loss
with respect to such instruments.
TAX-EXEMPT DERIVATIVES AND OTHER MUNICIPAL OBLIGATIONS. The Municipal
Portfolios may invest in tax-exempt derivative securities relating to Municipal
Obligations, including tender option bonds, participations, beneficial interests
in trusts and partnership interests.
Opinions relating to the validity of Municipal Obligations and to the
exemption of interest thereon from Federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance, and opinions relating
to the validity of and the tax-exempt status of payments received by the
Portfolios from tax-exempt derivative securities are rendered by counsel to the
respective sponsors of such securities. The Fund and its investment adviser will
rely on such opinions and will not review independently the underlying
proceedings relating to the issuance of Municipal Obligations, the creation of
any tax-exempt derivative securities, or the bases for such opinions.
UNINVESTED CASH RESERVES. Each Portfolio may hold uninvested cash reserves
pending investment during temporary defensive periods. Each Municipal Portfolio
may also hold uninvested cash reserves if, in the opinion of its
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sub-adviser, suitable obligations bearing tax-free interest are unavailable.
During normal market periods, no more than 20% of a Portfolio's assets will be
held uninvested. Uninvested cash reserves will not earn income.
ILLIQUID SECURITIES. No Portfolio will knowingly invest more than 10% of
the value of its net assets in securities that are illiquid. Variable and
floating rate instruments that cannot be disposed of within seven days, GICs,
and repurchase agreements and time deposits that do not provide for payment
within seven days after notice, without taking a reduced price, are subject to
this 10% limit. Each Portfolio may purchase securities which are not registered
under the 1933 Act but which can be sold to "qualified institutional buyers" in
accordance with Rule 144A under the 1933 Act. Any such security will not be
considered illiquid so long as it is determined by the adviser or sub-adviser,
acting under guidelines approved and monitored by the Board, that an adequate
trading market exists for that particular security. This investment practice
could have the effect of increasing the level of illiquidity in a Portfolio
during any period that qualified institutional buyers become uninterested in
purchasing these restricted securities.
MUNICIPAL MONEY MARKET, OHIO MUNICIPAL MONEY MARKET, PENNSYLVANIA MUNICIPAL
MONEY MARKET, NORTH CAROLINA MUNICIPAL MONEY MARKET, VIRGINIA MUNICIPAL MONEY
MARKET AND NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIOS. During normal market
conditions, up to 20% of each Municipal Portfolio's net assets may be invested
in securities which are not Municipal Obligations and at least 65% of the total
net assets of each of Ohio Municipal Money Market, Pennsylvania Municipal Money
Market, North Carolina Municipal Money Market, Virginia Municipal Money Market
and New Jersey Municipal Money Market Portfolios will be invested in Ohio,
Pennsylvania, North Carolina, Virginia and New Jersey Municipal Obligations,
respectively. During temporary defensive periods, each Municipal Portfolio may
invest without limitation in obligations which are not Municipal Obligations and
may hold without limitation uninvested cash reserves. Such securities may
include, without limitation, bonds, notes, variable rate demand notes and
commercial paper, provided such securities are rated within the relevant
categories applicable to Municipal Obligations set forth above, or if unrated,
are of comparable quality as determined by the adviser or sub-adviser, and may
also include, without limitation, other debt obligations, such as bank
obligations. Each Municipal Portfolio may acquire "stand-by commitments" with
respect to Municipal Obligations held by it. Under a stand-by commitment, a
dealer agrees to purchase at the Portfolio's option specified Municipal
Obligations at a specified price. The acquisition of a stand-by commitment may
increase the cost, and thereby reduce the yield, of the Municipal Obligation to
which such commitment relates. Each Municipal Portfolio will acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes.
The Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Virginia Municipal Money Market and New Jersey
Municipal Money Market Portfolios may invest without limitation in private
activity bonds the interest on which is an item of tax preference for purposes
of the Federal alternative minimum tax ("AMT Paper"). The Municipal Money Market
Portfolio may invest up to 20% of its total assets in AMT Paper when added
together with any taxable investments held by the Portfolio. Interest on AMT
Paper that is received by taxpayers subject to the Federal alternative minimum
tax is taxable. Investors should also be aware of the possibility of state and
local alternative minimum or minimum income tax liability on interest from AMT
Paper. To the extent a Portfolio's assets are invested in Municipal Obligations
payable from the revenues of similar projects or are invested in private
activity bonds, the Portfolio will be subject to the peculiar risks presented by
the laws and economic conditions relating to such projects and bonds to a
greater extent than it would be if its assets were not so invested. Each
Municipal Portfolio may invest 25% or more of its net assets in Municipal
Obligations the interest on which is paid solely from revenues of similar
projects. The amount of information regarding the financial condition of issuers
of Municipal Obligations may not be as extensive as that which is made available
by public corporations, and the secondary market for Municipal Obligations may
be less liquid than that for taxable obligations. Accordingly, the ability of a
Municipal Portfolio to buy and sell tax-exempt securities may, at any particular
time and with respect to any particular securities, be limited.
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The Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Virginia Municipal Money Market and New Jersey
Municipal Money Market Portfolios are classified as non-diversified under the
1940 Act. Investment returns on a non-diversified portfolio typically are
dependent upon the performance of a smaller number of securities relative to the
number held in a diversified portfolio. Consequently, the change in value of any
one security may affect the overall value of a non-diversified portfolio more
than it would a diversified portfolio. Additionally, a non-diversified portfolio
may be more susceptible to economic, political and regulatory developments than
a diversified portfolio with similar objectives.
ADDITIONAL QUALITY AND DIVERSIFICATION REQUIREMENTS. The Portfolios may
only invest in: (i) securities in the two highest rating categories of an NRSRO,
provided that if they are rated by more than one NRSRO, at least one other NRSRO
rates them in one of its two highest categories; and (ii) unrated securities
determined to be of comparable quality at the time of purchase (collectively,
"Eligible Securities"). Except for the Municipal Portfolios, a Portfolio may not
invest more than 5% of its assets in Eligible Securities that are not "First
Tier Securities" (as defined below). The rating symbols of the NRSROs which the
Portfolios may use are described in an Appendix to the Statement of Additional
Information. Each Portfolio other than the Municipal Portfolios will limit its
purchases of any one issuer's securities (other than U.S. Government obligations
and customary demand deposits) to 5% of the Portfolio's total assets, except
that it may invest more than 5% (but no more than 25%) of its total assets in
"First Tier Securities" of one issuer for a period of up to three business days.
First Tier Securities include: (i) securities in the highest rating category by
the only NRSRO rating them, (ii) securities in the highest rating category of at
least two NRSROs, if more than one NRSRO has rated them, (iii) securities that
have no short-term rating, but have been issued by an issuer that has other
outstanding short-term obligations that have been rated in accordance with (i)
or (ii) above and are comparable in priority and security to such securities,
and (iv) certain unrated securities that have been determined to be of
comparable quality to such securities. In addition, each Portfolio other than
the Municipal Portfolios will limit its purchases of "Second Tier Securities"
(Eligible Securities that are not First Tier Securities) of one issuer to the
greater of 1% of its total assets or $1 million.
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
Each Portfolio is subject to the fundamental investment limitations stated
in this section, which may not be changed as to a Portfolio except upon the
affirmative vote of the holders of a majority of the Portfolio's outstanding
shares.
1. Each of the Money Market, Municipal Money Market and Government
Money Market Portfolios may not purchase securities of any one issuer
(other than securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities or certificates of deposit for any such
securities) if more than 5% of the value of the Portfolio's total assets
(taken at current value) would be invested in the securities of such
issuer, or more than 10% of the issuer's outstanding voting securities
would be owned by the Portfolio or the Fund, except that up to 25% of the
value of the Portfolio's total assets (taken at current value) may be
invested without regard to these limitations. For purposes of this
limitation, a security is considered to be issued by the entity (or
entities) whose assets and revenues back the security. A guarantee of a
security is not deemed to be a security issued by the guarantor when the
value of all securities issued and guaranteed by the guarantor, and owned
by the Portfolio, does not exceed 10% of the value of the Portfolio's total
assets.
2. No Portfolio may borrow money or issue senior securities, except
that each Portfolio may borrow from banks and (other than a Municipal
Portfolio) enter into reverse repurchase agreements for temporary purposes
in amounts up to one-third of the value of its total assets at the time of
such borrowing; or mortgage, pledge or
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hypothecate any assets, except in connection with any such borrowing and
then in amounts not in excess of one-third of the value of the Portfolio's
total assets at the time of such borrowing. No Portfolio will purchase
securities while its aggregate borrowings (including reverse repurchase
agreements and borrowings from banks) in excess of 5% of its total assets
are outstanding. Securities held in escrow or separate accounts in
connection with a Portfolio's investment practices are not deemed to be
pledged for purposes of this limitation.
3. In addition, each of the Municipal Money Market, Government Money
Market, Ohio Municipal Money Market, Pennsylvania Municipal Money Market,
North Carolina Municipal Money Market, Virginia Municipal Money Market and
New Jersey Municipal Money Market Portfolios may not purchase securities
which would cause 25% or more of the value of its total assets at the time
of purchase to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry. The
Money Market Portfolio, on the other hand, may not purchase any securities
which would cause, at the time of purchase, less than 25% of the value of
its total assets to be invested in the obligations of issuers in the
banking industry, or in obligations, such as repurchase agreements, secured
by such obligations (unless the Portfolio is in a temporary defensive
position) or which would cause, at the time of purchase, more than 25% of
the value of its total assets to be invested in the obligations of issuers
in any other industry. In applying the investment limitations stated in
this paragraph, (i) there is no limitation with respect to the purchase of
(a) instruments issued (as defined in investment limitation number 1 above)
or guaranteed by the United States, any state, territory or possession of
the United States, the District of Columbia or any of their authorities,
agencies, instrumentalities or political subdivisions, (b) instruments
issued by domestic banks (which may include U.S. branches of foreign banks)
and (c) repurchase agreements secured by the instruments described in
clauses (a) and (b); (ii) 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 the parents; and (iii) utilities
will be divided according to their services, for example, gas, gas
transmission, electric and gas, electric and telephone will be each
considered a separate industry.
4. Each of the Ohio Municipal Money Market, Pennsylvania Municipal
Money Market, North Carolina Municipal Money Market, Virginia Municipal
Money Market and New Jersey Municipal Money Market Portfolios will invest
at least 80% of its net assets in AMT Paper and instruments the interest on
which is exempt from regular Federal income tax, except during defensive
periods or during periods of unusual market conditions.
5. Finally, the Municipal Money Market Portfolio will invest at least
80% of its net assets in instruments the interest on which is exempt from
regular Federal income tax and is not an item of tax preference for
purposes of Federal alternative minimum tax, except during defensive
periods or during periods of unusual market conditions.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
a Portfolio's investments will not constitute a violation of such limitation,
except that any borrowing by a Portfolio that exceeds the fundamental investment
restrictions stated above must be reduced to meet such restrictions within the
period required by the 1940 Act (currently three days).
In order to permit the sale of its shares in certain states, the Fund may
make commitments more restrictive than the investment policies and limitations
described in this Prospectus. Should the Fund determine that any such commitment
is no longer in the best interests of the Fund, it will revoke the commitment by
terminating sales of its shares in the state involved.
* * *
For information on additional investment limitations relating to the
Portfolios, see the Fund's Statement of Additional Information.
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PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
DISTRIBUTOR
Shares of each Portfolio are offered on a continuous basis for the Fund by
the distributor, Provident Distributors, Inc. (the "Distributor"). The
Distributor is a registered broker/dealer with principal offices at 259
Radnor-Chester Road, Suite 120, Radnor, Pennsylvania 19087.
PURCHASE OF SHARES
Shares are offered without a sales load on a continuous basis to
Institutions acting on behalf of their Customers. Service Shares will normally
be held of record by Institutions or in the names of nominees of Institutions.
All Share purchases are effected through a Customer's account at an Institution
through procedures established in connection with the requirements of the
account. Confirmations of Share purchases and redemptions will be sent to the
Institutions. Beneficial ownership of Shares will be recorded by the
Institutions and reflected in the account statements provided by such
Institutions to their Customers. Investors wishing to purchase Shares should
contact their Institutions.
Service Shares are sold at the net asset value per share next determined
after an order is received by PFPC Inc. ("PFPC"), the Fund's transfer agent.
Shares may be purchased by Institutions on any Business Day. A "Business Day" is
any weekday that the New York Stock Exchange (the "NYSE") and the Federal
Reserve Bank of Philadelphia (the "FRB") are open for business.
Purchase orders for Shares of each Portfolio except the Government Money
Market Portfolio may be transmitted by telephoning PFPC at (800) 441-7379 no
later than 12:00 noon (Eastern Time) on any Business Day. Orders received before
noon will be executed at noon. If payment for such orders is not received by
4:00 p.m., the order will be cancelled and notice thereof will be given to the
Institution placing the order. Orders received after 12:00 noon will not be
accepted. The Fund may in its discretion reject any order for Shares.
Purchase orders for Shares of the Government Money Market Portfolio may be
transmitted by telephoning PFPC at (800) 441-7379 no later than 4:00 p.m.
(Eastern Time) on any Business Day. Orders received before noon will be executed
at noon; orders received after noon but before 4:00 p.m. will be executed at
4:00 p.m. If payment for such orders is not received by 4:00 p.m., the order
will be cancelled and notice thereof will be given to the Institution placing
the order. Orders will not be accepted after 4:00 p.m. Under certain
circumstances, the Fund may reject large individual purchase orders received
after 12:00 noon. The Fund may in its discretion reject any order for Shares.
Payment for Service Shares may be made only in Federal funds or other funds
immediately available to the Fund's custodian. The minimum initial investment by
an Institution is $5,000; however, Institutions may set a higher minimum for
their Customers. There is no minimum subsequent investment requirement.
Conflict of interest restrictions may apply to an Institution's receipt of
compensation paid by the Fund in connection with the investment of fiduciary
funds in Shares. Institutions, including banks regulated by the Comptroller of
the Currency and investment advisers and other money managers subject to the
jurisdiction of the SEC, the Department of Labor or state securities
commissions, are urged to consult their legal advisers before investing
fiduciary funds in Service Shares. See also "Management--Shareholder Servicing."
REDEMPTION OF SHARES
A Customer may redeem all or part of his Service Shares in accordance with
the instructions and limitations pertaining to his account at an Institution.
These procedures will vary according to the type of account and the
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<PAGE> 24
Institution involved, and Customers should consult their account managers in
this regard. It is the responsibility of Institutions to transmit redemption
orders to PFPC and credit their Customers' accounts with the redemption proceeds
on a timely basis. In the case of shareholders holding share certificates, the
certificates must accompany the redemption request.
Institutions may transmit redemption orders to PFPC by telephone at (800)
441-7379. Shares are redeemed at the net asset value per share next determined
after PFPC's receipt of the redemption order. THE FUND, THE ADMINISTRATORS AND
THE DISTRIBUTOR WILL NOT BE LIABLE FOR ANY LOSS, LIABILITY, COST OR EXPENSE FOR
ACTING UPON TELEPHONE INSTRUCTIONS THAT ARE REASONABLY BELIEVED TO BE GENUINE.
IN ATTEMPTING TO CONFIRM THAT TELEPHONE INSTRUCTIONS ARE GENUINE, THE FUND WILL
USE SUCH PROCEDURES AS ARE CONSIDERED REASONABLE, INCLUDING RECORDING THOSE
INSTRUCTIONS AND REQUESTING INFORMATION AS TO ACCOUNT REGISTRATION (SUCH AS THE
NAME IN WHICH AN ACCOUNT IS REGISTERED, THE ACCOUNT NUMBER, RECENT TRANSACTIONS
IN THE ACCOUNT, AND THE ACCOUNT HOLDER'S SOCIAL SECURITY NUMBER, ADDRESS AND/OR
BANK). While the Fund intends to use its best efforts to maintain each
Portfolio's net asset value per share at $1.00, the proceeds paid upon
redemption may be more or less than the amount invested depending upon a Share's
net asset value at the time of redemption.
Payment for redeemed Shares for which a redemption order is received by
PFPC before 12:00 noon (Eastern Time) on a Business Day is normally made in
Federal funds wired to the redeeming shareholder on the same Business Day,
provided that the Fund's custodian is also open for business. Payment for
redemption orders received between 12:00 noon (Eastern Time) and 4:00 p.m.
(Eastern Time) or on a day when the Fund's custodian is closed is normally wired
in Federal funds on the next Business Day following redemption on which the
Fund's custodian is open for business. The Fund reserves the right to wire
redemption proceeds within seven days after receiving a redemption order if, in
the judgment of the investment adviser, an earlier payment could adversely
affect a Portfolio. No charge for wiring redemption payments is imposed by the
Fund, although Institutions may charge Customer accounts for redemption
services. Information relating to such redemption services and charges, if any,
should be obtained by Customers from their Institution.
During periods of substantial economic or market change, telephone
redemptions may be difficult to complete. If any Institution is unable to
contact PFPC by telephone, the Institution may also deliver the redemption
request to PFPC by mail at 400 Bellevue Parkway, Wilmington, DE 19809.
A shareholder of record may be required to redeem Shares in any Portfolio
if the balance in such shareholder's account in that Portfolio drops below
$5,000 as the result of a redemption request and the shareholder does not
increase the balance to at least $5,000 upon thirty days' written notice. If a
Customer has agreed with an Institution to maintain a minimum balance in his
account with the Institution, and the balance in the account falls below that
minimum, the Customer may be obligated to redeem all or part of his Shares in
the Portfolios to the extent necessary to maintain the minimum balance required.
The Fund may suspend the right of redemption or postpone the date of
payment upon redemption (as well as suspend the recordation of the transfer of
Shares) for such periods as are permitted under the 1940 Act. The Fund may also
redeem Shares involuntarily or make payment for redemption in securities or
other property if it appears appropriate to do so in light of the Fund's
responsibilities under the 1940 Act. See "Purchase and Redemption Information"
in the Statement of Additional Information for examples of when such redemption
might be appropriate.
It is the responsibility of the Institutions to provide their Customers
with account statements with respect to Share transactions made for accounts
maintained at the Institutions.
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<PAGE> 25
NET ASSET VALUE
- --------------------------------------------------------------------------------
The net asset value for each Service Share of each Portfolio for the
purpose of pricing purchase and redemption orders is determined twice each day,
once as of 12:00 noon (Eastern Time) and once as of 4:00 p.m. (Eastern Time) on
each Business Day. Each Portfolio's net asset value per share is calculated by
adding the value of all securities, cash and other assets of the Portfolio,
subtracting the liabilities and dividing the result by the number of Shares
outstanding. The net asset value per Share of each Portfolio is determined
independently of the other Portfolios.
The Fund seeks to maintain for each of the Portfolios a net asset value of
$1.00 per share for purposes of purchases and redemptions and values their
portfolio securities on the basis of the amortized cost method of valuation
described in the Statement of Additional Information under "Valuation of
Shares." There can be no assurance that net asset value per share will not vary.
A Portfolio may use a pricing service, bank or broker/dealer experienced in
such matters to value the Portfolio's securities. A more detailed discussion of
net asset value and security valuation is contained in the Statement of
Additional Information.
MANAGEMENT
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES
The business and affairs of the Fund and each Portfolio are managed under
the direction of the Fund's Board of Trustees. The Statement of Additional
Information contains the name of each trustee and background information
regarding the trustees.
INVESTMENT ADVISER AND SUB-ADVISER
PNC Institutional Management Corporation ("PIMC"), an indirect wholly-owned
subsidiary of PNC Bank, National Association ("PNC Bank"), serves as the
investment adviser for each of the Portfolios. PIMC was organized in 1977 by PNC
Bank to perform advisory services for investment companies, and has its
principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809. PNC Bank
serves as the sub-adviser for each of the Portfolios. PNC Bank, whose principal
business address is Broad and Chestnut Streets, Philadelphia, Pennsylvania
19107, is a subsidiary of PNC Bank Corp. PNC Bank Corp. is a multi-bank holding
company.
As adviser, PIMC is responsible for the overall investment management of
each Portfolio. In addition, PIMC is responsible for all purchases and sales of
portfolio securities for the Portfolios. PNC Bank, as sub-adviser for each of
the Portfolios, provides research and credit analysis and certain other
services. In entering into portfolio transactions for a Portfolio with a
broker/dealer, the investment adviser and sub-adviser may take into account the
sale by such broker/dealer of shares of the Fund, subject to the requirements of
best execution.
For the services provided and expenses assumed by it for the benefit of the
Portfolios, PIMC is entitled to receive from each Portfolio a fee, computed
daily and payable monthly, at an annual rate of .45% of the first $1 billion of
each Portfolio's average daily net assets, .40% of the next $1 billion of each
Portfolio's average daily net assets, .375% of the next $1 billion of each
Portfolio's average daily net assets and .35% of the average daily net assets of
each Portfolio in excess of $3 billion. The Fund paid PIMC advisory fees at
annual rates of .35%, .35%, .35%, .44% and .40% of the average daily net assets
of the Money Market, Municipal Money Market, Government Money Market, Ohio
Municipal Money Market and Pennsylvania Municipal Money Market Portfolios,
respectively, for the year ended September 30, 1994, and PIMC waived advisory
fees at the annual rates of .10%, .10%, .10%, .01% and .05% of the average daily
net assets of such respective Portfolios for that year. For the year ended
September 30, 1994, PIMC waived all advisory
23
<PAGE> 26
fees with respect to the North Carolina Municipal Money Market Portfolio. For
the period ended September 30, 1994, PIMC waived all advisory fees with respect
to the Virginia Municipal Money Market Portfolio. During the same periods, PIMC
reimbursed expenses at the annual rates of .04%, .02%, .05% and .24% of the
average daily net assets of the Pennsylvania Municipal Money Market, Ohio
Municipal Money Market, North Carolina Municipal Money Market and Virginia
Municipal Money Market Portfolios, respectively. See "Management--Expenses" for
a discussion of PIMC's voluntary fee waiver.
For its sub-advisory services, PNC Bank is entitled to receive from PIMC a
fee, computed daily and payable monthly, at an annual rate of .05% of the
average daily net assets of each Portfolio. Such sub-advisory fees have no
effect on the advisory fees payable by each Portfolio to PIMC. For the year
ended September 30, 1994, PNC Bank waived all sub-advisory fees with respect to
the Money Market, Municipal Money Market, Government Money Market, Ohio
Municipal Money Market, Pennsylvania Municipal Money Market and North Carolina
Municipal Money Market Portfolios. For the period ended September 30, 1994, PNC
Bank waived all sub-advisory fees for the Virginia Municipal Money Market
Portfolio. See "Management--Expenses" for a discussion of the sub-adviser's fee
waivers.
------------------------------------
ADMINISTRATORS
PFPC Inc. ("PFPC"), whose principal business address is 400 Bellevue
Parkway, Wilmington, Delaware, 19809, and Provident Distributors, Inc. ("PDI"),
whose principal business address is 259 Radnor-Chester Road, Suite 120, Radnor,
Pennsylvania 19087 (together, the "Administrators"), serve as administrators for
the Fund. PFPC is an indirect wholly-owned subsidiary of PNC Bank Corp. A
majority of the outstanding stock of PDI is owned by its officers and the
remaining outstanding stock is owned by Pennsylvania Merchant Group Ltd.
The Administrators generally assist the Fund in all aspects of its
administration and operation, including matters relating to the maintenance of
financial records and fund accounting. As compensation for their services, the
Administrators are entitled to receive a combined fee, computed daily and
payable monthly, at an annual rate of .15% of the first $500 million of each
Portfolio's average daily net assets, .13% of the next $500 million of each
Portfolio's average daily net assets, .11% of the next $1 billion of each
Portfolio's average daily net assets and .10% of each Portfolio's average daily
net assets in excess of $2 billion. The Fund paid the Administrators combined
administration fees at the annual rates of .08%, .03%, .05%, .01% and .01% of
the average daily net assets of the Money Market, Municipal Money Market,
Government Money Market, Ohio Municipal Money Market and Pennsylvania Municipal
Money Market Portfolios, respectively, for the year ended September 30, 1994,
and the Administrators waived combined administration fees at annual rates of
.06%, .12%, .10%, .14% and .14% of the average daily net assets of such
respective Portfolios for that year. The Administrators waived all combined
administration fees with respect to the North Carolina Municipal Money Market
Portfolio for the year ended September 30, 1994. The Administrators waived all
combined administration fees with respect to the Virginia Municipal Money Market
Portfolio for the period ended September 30, 1994. During the same periods, the
Administrators reimbursed expenses at the annual rates of .01%, .01%, .02%, and
.08% of the average daily net assets of the Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market and
Virginia Municipal Money Market Portfolios, respectively. See
"Management--Expenses" for a discussion of the Administrators' voluntary fee
waiver.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND CUSTODIAN
PNC Bank serves as the Fund's custodian and PFPC serves as the Fund's
transfer agent and dividend disbursing agent.
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<PAGE> 27
------------------------------------
SHAREHOLDER SERVICING
The Fund intends to enter into service agreements with Institutions
(including PNC Bank and its affiliates) pursuant to which Institutions will
render certain support services to Customers who are the beneficial owners of
Service Shares. Such services will be provided to Customers who are the
beneficial owners of Service Shares and are intended to supplement the services
provided by the Fund's Administrators and transfer agent to the Fund's
shareholders of record. In consideration for payment of up to .15% (on an
annualized basis) of the average daily net asset value of Service Shares owned
beneficially by their Customers, Institutions may provide one or more of the
following services to such Customers: processing purchase and redemption
requests from Customers and placing orders with the Fund's transfer agent or the
Distributor; processing dividend payments from the Fund on behalf of Customers;
providing sub-accounting with respect to Service Shares beneficially owned by
Customers or the information necessary for sub-accounting; and other similar
services. In consideration for payment of up to a separate
.15% (on an annualized basis) of the average daily net asset value of Service
Shares owned beneficially by their Customers, Institutions may provide one or
more of these additional services to such Customers: responding to Customer
inquiries relating to the services performed by the Institution and to Customer
inquiries concerning their investments in Service Shares; providing information
periodically to Customers showing their positions in Service Shares; and other
similar shareholder liaison services. Customers who are beneficial owners of
Service Shares should read this Prospectus in light of the terms and fees
governing their accounts with Institutions. These fees are not paid to
Institutions with respect to other classes of shares of the Portfolios ("Series
A Investor Shares," "Series B Investor Shares" and "Institutional Shares"). See
"Description of Shares."
------------------------------------
EXPENSES
Expenses are deducted from the total income of each Portfolio before
dividends and distributions are paid. These expenses include, but are not
limited to, fees paid to PIMC and the Administrators, transfer agency fees, fees
and expenses of officers and trustees who are not affiliated with PIMC or the
Distributor or any of their affiliates, taxes, interest, legal fees, custodian
fees, auditing fees, 12b-1 fees, servicing fees, certain fees and expenses in
registering and qualifying the Portfolio and its Shares for distribution under
Federal and state securities laws, expenses of preparing prospectuses and
statements of additional information and of printing and distributing
prospectuses and statements of additional information to existing shareholders,
the expense of reports to shareholders, shareholders' meetings and proxy
solicitations, fidelity bond and trustees and officers liability insurance
premiums, the expense of using independent pricing services and other expenses
which are not expressly assumed by PIMC or the Administrators under their
respective agreements with the Fund. Any general expenses of the Fund that are
not readily identifiable as belonging to a particular investment portfolio will
be allocated among all investment portfolios by or under the direction of the
Board of Trustees in a manner the Board determines to be fair and equitable. Any
expenses relating only to a particular class of shares within a Portfolio (such
as fees relating to the Fund's Service Plan for Service Shares) will be borne
solely by such Shares.
PIMC and PNC Bank expect to waive voluntarily a portion of their respective
advisory and sub-advisory fees. In addition, if the total expenses borne by any
Portfolio in any fiscal year exceed the expense limitations imposed by
applicable state securities regulations, PIMC, PNC Bank and the Administrators
will bear the amount of such excess to the extent required by such regulations
in proportion to the advisory and administration fees otherwise payable to them
for such year. Such amount, if any, will be estimated and accrued daily and paid
on a monthly basis.
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------------------------------------
BANKING LAWS
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered open-end investment company continuously
engaged in the issuance of its shares, and prohibit banks generally from
underwriting securities, but such banking laws and regulations do not prohibit
such a holding company or affiliate or banks generally from acting as investment
adviser, administrator, transfer agent or custodian to such an investment
company, or from purchasing shares of such a company as agent for and upon the
order of customers. PNC Bank, PIMC, PFPC and Institutions that are banks or bank
affiliates are subject to such banking laws and regulations. In addition, state
securities laws on this issue may differ from the interpretations of Federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of such companies in connection with the provision of
services on behalf of the Fund and the holders of Service Shares, the Fund might
be required to alter materially or discontinue its arrangements with such
companies and change its method of operations with respect to the Service
Shares. It is not anticipated, however, that any such change would affect a
Portfolio's net asset value per share or result in a financial loss to any
Customer.
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
Shareholders of each Portfolio are entitled to dividends and distributions
arising from the net income and capital gains, if any, earned on investments
held by the particular Portfolio involved. Each Portfolio's net income is
declared daily as a dividend (i) to shareholders of record immediately prior to
the determination of net asset value made as of the close of regular trading
hours on the NYSE on days on which net asset value is determined, or (ii) to
shareholders of record immediately prior to 4:00 p.m. (Eastern Time) on days on
which there is no determination of net asset value. Consequently, shareholders
whose purchase orders are executed at 12:00 noon (Eastern Time) receive
dividends for that day. On the other hand, shareholders whose redemption orders
have been received by 12:00 noon (Eastern Time) do not receive dividends for
that day, while shareholders of each Portfolio whose redemption orders are
received after 12:00 noon (Eastern Time) do receive dividends for that day.
Because purchase and redemption orders with respect to Shares of the Government
Money Market Portfolio are executed at 12:00 noon and at 4:00 p.m., shareholders
whose purchase orders have been received by 4:00 p.m. will receive a dividend
for that day. For dividend purposes, a Portfolio's investment income available
for distribution to holders of Service Shares is reduced by accrued expenses
directly attributable to that Portfolio and the general expenses of the Fund
prorated to that Portfolio on the basis of its relative net assets. A
Portfolio's net investment income available for distribution to the holders of
Service Shares will be reduced by the amount of other expenses allocated to that
Portfolio's Service Shares, including fees payable under the Fund's Service
Plan. See "Purchase and Redemption of Shares" and "Management--Shareholder
Servicing".
Dividends are paid monthly by check, or by wire transfer if requested in
writing by the shareholder, within five business days after the end of the
month. Net short-term capital gains, if any, will be distributed at least
annually. The period for which dividends are payable and the time for payment of
such dividends are subject to change by the Fund's Board of Trustees. The
Portfolios do not expect to realize net long-term capital gains.
All dividends paid with respect to a Portfolio are reinvested in the form
of additional full and fractional Service Shares of such Portfolio, unless an
Institution elects to receive dividends in cash. Such election, or any
revocation thereof, must be made in writing to PFPC, and will become effective
with respect to dividends paid after its receipt by PFPC.
26
<PAGE> 29
TAXES
- --------------------------------------------------------------------------------
The following discussion is only a brief summary of some of the important
tax considerations generally affecting the Portfolios and their shareholders and
is not intended as a substitute for careful tax planning. Accordingly, investors
in the Portfolios should consult their tax advisers with specific reference to
their own tax situation.
Each Portfolio will elect to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). So long as a Portfolio qualifies for this tax treatment, it generally
will be relieved of Federal income tax on amounts distributed to shareholders,
but shareholders, unless otherwise exempt, will pay income or capital gains
taxes on amounts so distributed (except distributions that constitute "exempt
interest dividends" or that are treated as a return of capital), regardless of
whether such distributions are paid in cash or reinvested in additional shares.
None of the Portfolios intends to make distributions that will be eligible for
the corporate dividends received deduction.
Distributions paid out of the "net capital gain" (the excess of net
long-term capital gain over net short-term capital loss), if any, of any
Portfolio will be taxed to shareholders as long-term capital gain regardless of
the length of time a shareholder has held his Shares. All other distributions,
to the extent they are taxable, are taxed to shareholders as ordinary income.
Each Municipal Portfolio intends to pay substantially all of its dividends
as "exempt interest dividends." Investors in these Portfolios should note,
however, that taxpayers are required to report the receipt of tax-exempt
interest and "exempt interest dividends" on their Federal income tax returns for
informational purposes and that in two circumstances such amounts, while exempt
from regular Federal income tax, are taxable to persons subject to alternative
minimum and environmental taxes. First, tax-exempt interest and "exempt interest
dividends" derived from certain private activity bonds issued after August 7,
1986 generally will constitute an item of tax preference for corporate and
noncorporate taxpayers in determining alternative minimum tax liability and for
corporate taxpayers in determining environmental tax liability. Each of the
Ohio, Pennsylvania, North Carolina, Virginia and New Jersey Municipal Money
Market Portfolios may invest without limitation, and the Municipal Money Market
Portfolio up to 20% of its net assets, in such private activity bonds. Second,
tax-exempt interest and "exempt interest dividends" derived from all other
Municipal Obligations must be taken into account by corporate taxpayers in
determining certain adjustments for alternative minimum and environmental tax
purposes. In addition, investors should be aware of the possibility of state and
local alternative minimum or minimum income tax liability on interest from such
private activity bonds. Shareholders who are recipients of Social Security Act
or Railroad Retirement Act benefits should further note that tax-exempt interest
and "exempt interest dividends" derived from all types of Municipal Obligations
will be taken into account in determining the taxability of their benefit
payments.
Each Municipal Portfolio will determine annually the percentages of its net
investment income which are exempt from the regular Federal income tax, which
constitute an item of tax preference for purposes of the Federal alternative
minimum tax, and which are fully taxable. Such percentages will apply uniformly
to all distributions declared from net investment income during that year. These
percentages may differ significantly from the actual percentages for any
particular day.
The Fund will send written notices to shareholders annually regarding the
tax status of distributions made by each Portfolio. Dividends declared in
October, November or December of any year payable to shareholders of record as
of a specified date in those months will be deemed to have been received by the
shareholders on December 31, if the dividends are paid during the following
January.
27
<PAGE> 30
Any loss upon the sale or exchange of shares of a Portfolio held for six
months or less will be disallowed for Federal income tax purposes to the extent
of any exempt interest dividends received by the shareholder. For the Ohio
Municipal Money Market and North Carolina Municipal Money Market Portfolios, the
loss will be disallowed for state tax purposes to the same extent, even though,
for state income tax purposes, some portion of such dividends actually may have
been subject to state income tax.
Future legislative or administrative changes or court decisions may
materially affect the tax consequences of investing in one or more Portfolios of
the Fund. Shareholders also are urged to consult their tax advisers concerning
the application of state and local income taxes to investments in the Portfolios
which may differ from the Federal income tax consequences described above. In
particular, dividends paid by each Portfolio may be taxable to investors under
state or local law as dividend income even though all or a portion of such
dividends may be derived from interest on obligations which, if realized
directly, would be exempt from such income taxes. Shareholders who are
nonresident alien individuals, foreign trusts or estates, foreign corporations
or foreign partnerships may be subject to different U.S. Federal income tax
treatment and should consult their tax advisers.
OHIO TAX CONSIDERATIONS. Individuals and estates that are subject to Ohio
personal income tax or municipal or school district income taxes in Ohio will
not be subject to such taxes on distributions from the Ohio Municipal Money
Market Portfolio to the extent that such distributions consist of interest on
Ohio Municipal Obligations or obligations issued by the U.S. Government, its
agencies, instrumentalities or territories (if the interest on such obligations
is exempt from state income taxation under the laws of the United States) ("U.S.
Obligations"), provided that the Portfolio continues to qualify as a regulated
investment company for federal income tax purposes and that at all times at
least 50% of the value of the total assets of the Ohio Municipal Money Market
Portfolio consists of Ohio Municipal Obligations or similar obligations of other
states or their subdivisions. (It is assumed for purposes of this discussion of
Ohio tax considerations that these requirements are satisfied.) Corporations
that are subject to the Ohio corporation franchise tax will not have to include
distributions from the Ohio Municipal Money Market Portfolio in their net income
base for purposes of calculating their Ohio corporation franchise tax liability
to the extent that such distributions either constitute exempt-interest
dividends or consist of interest on Ohio Municipal Obligations or U.S.
Obligations. However, shares of the Ohio Municipal Money Market Portfolio will
be included in a corporation's net worth base for purposes of calculating the
Ohio corporation franchise tax. Distributions consisting of gain on the sale,
exchange or other disposition of Ohio Municipal Obligations will not be subject
to the Ohio personal income tax, or municipal or school district income taxes in
Ohio and will not be included in the net income base of the Ohio corporation
franchise tax. Distributions attributable to other sources will be subject to
the Ohio personal income tax and the Ohio corporation franchise tax. For
additional Ohio tax considerations, see "Taxes" above.
PENNSYLVANIA TAX CONSIDERATIONS. Income received by a shareholder
attributable to interest realized by the Pennsylvania Municipal Money Market
Portfolio from Pennsylvania Municipal Obligations or attributable to insurance
proceeds on account of such interest is not taxable to individuals, estates or
trusts under the Personal Income Tax imposed by Article III of the Tax Reform
Code of 1971 (in the case of insurance proceeds, to the extent they are exempt
for Federal Income Tax purposes); to corporations under the Corporate Net Income
tax imposed by Article IV of the Tax Reform Code of 1971 (in the case of
insurance proceeds, to the extent they are exempt for Federal Income Tax
purposes); nor to individuals under the Philadelphia School District New Income
Tax ("School District Tax") imposed on Philadelphia resident individuals under
authority of the Act of August 9, 1963, P.L. 640.
Income received by a shareholder attributable to gain on the sale or other
disposition by the Pennsylvania Municipal Money Market Portfolio of Pennsylvania
Municipal Obligations is taxable under the Personal Income Tax, the Corporate
Net Income Tax, and, unless these assets were held by the Pennsylvania Municipal
Money Market Portfolio for more than six months, the School District Tax.
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<PAGE> 31
No opinion is expressed regarding the extent, if any, to which shares, or
interest and gain thereon, is subject to, or included in the measure of, the
special taxes imposed by the Commonwealth of Pennsylvania on banks and other
financial institutions or with respect to any privilege, excise, franchise or
other tax imposed on business entities not discussed herein (including the
Corporate Capital Stock/Foreign Franchise Tax.)
Shareholders of the Pennsylvania Municipal Money Market Portfolio are not
subject to any of the personal property taxes currently in effect in
Pennsylvania to the extent that the Portfolio is comprised of Pennsylvania
Municipal Obligations. The taxes referred to include the County Personal
Property Tax imposed on residents of Pennsylvania by the Act of June 17, 1913,
P.L. 507, as amended.
NORTH CAROLINA TAX CONSIDERATIONS. Interest received in the form of
dividends from the North Carolina Municipal Money Market Portfolio is exempt
from North Carolina state income tax to the extent the distributions represent
interest on direct obligations of the U.S. Government or North Carolina
Municipal Obligations. Distributions derived from interest earned on obligations
of political subdivisions of Puerto Rico, Guam and the U.S. Virgin Islands,
including the governments thereof and their agencies, instrumentalities and
authorities, are also exempt from North Carolina state income tax. Distributions
paid out of interest earned on obligations that are merely backed or guaranteed
by the U.S. Government (e.g., GNMAs, FNMAs), on repurchase agreements
collateralized by U.S. Government securities or on obligations of other states
(which the Portfolio may acquire and hold for temporary or defensive purposes)
are not exempt from North Carolina state income tax.
Any distributions of net realized gain earned by the North Carolina
Municipal Money Market Portfolio on the sale or exchange of certain obligations
of the State of North Carolina or its subdivisions will also be exempt from
North Carolina income tax to the Portfolio's shareholders. Distributions of
gains earned by the North Carolina Municipal Money Market Portfolio on the sale
or exchange of all other obligations will be subject to North Carolina income
tax.
Shares of the North Carolina Municipal Money Market Portfolio will not be
subject to the North Carolina intangibles personal property tax so long as
certain filings are made with the North Carolina Department of Revenue and on
December 31 of each year the Portfolio is composed entirely of North Carolina
Municipal Obligations and obligations of the United States (including the
District of Columbia and U.S. possessions), and at least 80% of the fair market
value of the Portfolio's assets consists of North Carolina Municipal
Obligations. For all years in which this portfolio-composition requirement is
met, the North Carolina Municipal Money Market Portfolio will file with the
North Carolina Department of Revenue a certification in order for shareholders
to qualify for this exemption. If the portfolio-composition requirement is not
met, shareholders may reduce for North Carolina intangibles personal property
tax purposes the value of their investment in the Portfolio in direct proportion
to the percentage of the Portfolio's assets invested in exempt U.S. Government
(including U.S. possessions) or North Carolina obligations as of December 31.
Shareholders also should note that the future of the North Carolina
intangibles personal property tax is uncertain. A challenge to the
constitutionality of such tax presently is on appeal to the United States
Supreme Court. In addition, several bills were introduced in recent State
legislative sessions that would have either repealed the North Carolina
intangibles personal property tax in total or significantly amended its
provisions. The Governor of North Carolina has also proposed that the
legislature repeal this tax. Although no such legislation has yet been enacted,
further attempts may be made to repeal or modify this tax in the future.
Accordingly, no assurance can be given that an investment in the North Carolina
Municipal Money Market Portfolio while it owns exempt U.S. government
obligations or North Carolina Municipal Obligations will in future years provide
shareholders with any reductions from the North Carolina intangibles personal
property tax that they otherwise might owe.
VIRGINIA TAX CONSIDERATIONS. Subject to the provisions discussed below,
dividends paid to shareholders by the Virginia Municipal Money Market Portfolio
and derived from interest on obligations of the Commonwealth of Virginia or of
any political subdivision or instrumentality of the Commonwealth or derived from
interest or dividends on obligations
29
<PAGE> 32
of the United States excludable from Virginia taxable income under the laws of
the United States, which obligations are issued in the exercise of the borrowing
power of the Commonwealth or the United States and are backed by the full faith
and credit of the Commonwealth or the United States ("Virginia or U.S.
Obligations"), will be exempt from the Virginia income tax. Dividends paid to
shareholders by the Portfolio and derived from interest on debt obligations of
certain territories and possessions of the United States (those issued by Puerto
Rico, the Virgin Islands and Guam) will be exempt from the Virginia income tax.
To the extent a portion of the dividends are derived from interest on debt
obligations other than those described above, such portion will be subject to
the Virginia income tax even though it may be excludable from gross income for
Federal income tax purposes.
Generally, dividends distributed to shareholders by the Portfolio and
derived from capital gains from the disposition of Virginia or U.S. Obligations
will be taxable to the shareholders. To the extent any portion of the dividends
are derived from taxable interest for Virginia purposes or from net short-term
capital gains, such portion will be taxable to the shareholders as ordinary
income. The character of long-term capital gains realized and distributed by the
Portfolio will flow through to its shareholders regardless of how long the
shareholders have held their shares. Capital gains distributed to shareholders
derived from Virginia obligations issued pursuant to special Virginia enabling
legislation which provides a specific exemption for such gains will be exempt
from Virginia income tax. Generally, interest on indebtedness incurred by
shareholders to purchase or carry shares of the Portfolio will not be deductible
for Virginia income tax purposes.
As a regulated investment company, the Portfolio may distribute dividends
that are exempt from the Virginia income tax to its shareholders if the
Portfolio satisfies all requirements for conduit treatment under Federal law
and, at the close of each quarter of its taxable year, at least 50% of the value
of its total assets consists of obligations the interest on which is exempt from
taxation under Federal law. The Portfolio intends to qualify under the above
requirements so that it can distribute Virginia exempt interest dividends. If
the Portfolio fails to qualify, no part of its dividends will be exempt from the
Virginia income tax.
When taxable income of a regulated investment company is commingled with
exempt income, all distributions of the income are presumed taxable to the
shareholders unless the portion of income that is exempt from Virginia income
tax can be determined with reasonable certainty and substantiated. Generally,
this determination must be made for each distribution to each shareholder. The
Virginia Department of Taxation has adopted a policy, however, of allowing
shareholders to exclude from their Virginia taxable income the exempt portion of
distributions from a regulated investment company even though the shareholders
receive distributions monthly but receive reports substantiating the exempt
portion of such distributions at less frequent intervals. Accordingly, if the
Portfolio receives taxable income, the Portfolio must determine the portion of
income that is exempt from Virginia income tax and provide such information to
the shareholders in accordance with the foregoing so that the shareholders may
exclude from Virginia taxable income the exempt portion of the distribution from
the Portfolio.
The foregoing is only a summary of some of the important Virginia income
tax considerations generally affecting the shareholders, and does not address
any Virginia taxes other than the income tax. This discussion is not intended as
a substitute for careful planning. Potential investors in the Portfolio should
consult their tax advisers with specific reference to their own tax situations.
NEW JERSEY TAX CONSIDERATIONS. It is anticipated that substantially all
dividends paid by the New Jersey Municipal Money Market Portfolio will not be
subject to New Jersey personal income tax. In accordance with the provisions of
New Jersey law as currently in effect, distributions paid by a "qualified
investment fund" will not be subject to the New Jersey personal income tax to
the extent that the distributions are attributable to income received as
interest or gain from New Jersey Municipal Obligations, or as interest or gain
from direct U.S. Government obligations. Distributions by a qualified investment
fund that are attributable to most other sources will be subject to the New
Jersey personal
30
<PAGE> 33
income tax. If the New Jersey Municipal Money Market Portfolio qualifies as a
qualified investment fund under New Jersey law, any gain on the redemption or
sale of the Portfolio's shares will not be subject to the New Jersey personal
income tax. To be classified as a qualified investment fund, at least 80% of the
Portfolio's investments must consist of New Jersey Municipal Obligations or
direct U.S. Government obligations; it must have no investments other than
interest-bearing obligations, obligations issued at a discount, and cash and
cash items (including receivables); and it must satisfy certain reporting
obligations and provide certain information to its shareholders. Shares of the
Portfolio are not subject to property taxation by New Jersey or its political
subdivisions. To the extent that a shareholder is subject to state or local
taxes outside New Jersey, dividends earned by an investment in the New Jersey
Municipal Money Market Portfolio may represent taxable income.
The New Jersey personal income tax is not applicable to corporations. For
all corporations subject to the New Jersey Corporation Business Tax, dividends
and distributions from a "qualified investment fund" are included in the net
income tax base for purposes of computing the Corporation Business Tax.
Furthermore, any gain upon the redemption or sale of shares by a corporate
shareholder is also included in the net income tax base for purposes of
computing the Corporation Business Tax.
The foregoing is only a summary of certain New Jersey tax considerations
generally affecting the Portfolio and its shareholders, and is not intended as a
substitute for careful tax planning. Shareholders are urged to consult their tax
advisers with specific reference to their own tax situations.
DESCRIPTION OF SHARES
- --------------------------------------------------------------------------------
The Fund was organized as a Massachusetts business trust on December 22,
1988 and is registered under the 1940 Act as an open-end management investment
company. The Declaration of Trust authorizes the Board of Trustees to classify
and reclassify any unissued shares into one or more classes of shares. Pursuant
to such authority, the Board of Trustees has authorized the issuance of an
unlimited number of shares in each of 97 classes (19 classes of "Series B
Investor Shares" and 26 classes each of "Service Shares," "Series A Investor
Shares" and "Institutional Shares") representing interests in each of the Fund's
investment portfolios. This Prospectus describes eight Portfolios of the Fund
which, except for the Ohio, Pennsylvania, North Carolina, Virginia Municipal
Money Market and New Jersey Municipal Money Market Portfolios, are classified as
diversified companies under the 1940 Act. The Money Market, Municipal Money
Market and Government Money Market Portfolios were each established with only
one class of shares. In each case, the original class of shares was available to
all investors until the subsequent establishment of multiple classes in the
Portfolio. In addition, the Board of Trustees has also authorized the issuance
of additional classes of shares representing interests in other investment
portfolios of the Fund. For information regarding these other portfolios,
contact the Distributor by phone at (800) 998-7633 or at the address listed in
"Purchase and Redemption of Shares--Distributor."
Each share of an investment portfolio has a par value of $.001, represents
an equal proportionate interest in the particular portfolio and is entitled to
such dividends and distributions earned on such portfolio's assets as are
declared in the discretion of the Board of Trustees. The Fund's shareholders are
entitled to one vote for each full share held and proportionate fractional votes
for fractional shares held, and will vote in the aggregate and not by class,
except where otherwise required by law or when the Board of Trustees determines
that the matter to be voted upon affects only the interests of the shareholders
of a particular class or investment portfolio. Under Massachusetts law, the
Fund's state of organization, and the Fund's Declaration of Trust and Code of
Regulations, the Fund is not required and does not currently intend to hold
annual meetings of shareholders for the election of trustees (except as required
under the 1940 Act). For a further discussion of the voting rights of
shareholders, see "Additional Information Concerning Shares" in the Statement of
Additional Information.
31
<PAGE> 34
Holders of Service Shares bear the fees described under
"Management--Shareholder Servicing" that are paid to Institutions under the
Fund's Service Plan. Similarly, holders of a Portfolio's Series A Investor
Shares and Series B Investor Shares (collectively, "Investor Shares") will bear
the payments described in the prospectus for such shares that are paid under the
Fund's Distribution and Service Plan and Series B Distribution Plan,
respectively (collectively, the "Distribution Plans"). Under the Distribution
Plans, the Distributor is entitled to payments by each Portfolio for: (i) direct
out-of-pocket promotional expenses incurred in connection with advertising and
marketing Investor Shares; and (ii) payments to broker/dealers that are not
affiliated with the Distributor ("Service Organizations") for distribution
assistance such as advertising and marketing of Investor Shares. In addition,
payments under the Series B Distribution Plan will be used to pay for or finance
sales commissions and other fees payable to Service Organizations and other
broker/dealers who sell Series B Investor Shares. Service Organizations may also
provide support services such as establishing and maintaining accounts and
records relating to shareholders of Investor Shares for whom the Service
Organizations are the dealer of record or holder of record for shareholders with
whom the Service Organizations have a servicing relationship. The Distribution
and Service Plan provides for payments to the Distributor at an annual rate not
to exceed .55% of the average daily net asset value of each Portfolio's
outstanding Series A Investor Shares. The Series B Distribution Plan provides
for payments to the Distributor at an annual rate not to exceed .75% of the
average daily net asset value of each Portfolio's outstanding Series B Investor
Shares. In addition, holders of Series B Investor Shares bear the expense of
fees described in the prospectus for such shares that are paid under the Fund's
Series B Service Plan. Payments under the Series B Service Plan will cover
expenses relating to the support services provided to the beneficial owners of
Series B Investor Shares by certain Service Organizations and sometimes by the
Distributor. Such services are intended to supplement the services provided by
the Fund's Administrators and transfer agent. In consideration for payments
aggregating up to .25% (on an annualized basis) of the average daily net asset
value of Series B Investor Shares owned beneficially by their customers, Service
Organizations and the Distributor may provide one or more of the following
services to such customers: establishing and maintaining accounts and records
relating to customers that invest in Series B Shares; processing dividend and
distribution payments from the Fund on behalf of customers; arranging for bank
wires; providing sub-accounting with respect to Series B Shares beneficially
owned by customers or the information necessary for sub-accounting; forwarding
shareholder communications from the Fund (such as proxies, shareholder reports,
annual and semi-annual financial statements and dividend, distribution and tax
notices) to customers; assisting in processing purchase, exchange and redemption
requests from customers and in placing such orders with the Fund's service
contractors; assisting customers in changing dividend options, account
designations and addresses; providing customers with a service that invests the
assets of their accounts in Series B Shares pursuant to specific or
preauthorized instructions; providing information periodically to customers
showing their positions in Series B Shares and integrating such statements with
those of other transactions and balances in customers' other accounts with the
Service Organization; responding to customer inquiries relating to the services
performed by the Service Organization or the Distributor; responding to customer
inquiries concerning their investments in Series B Shares; and providing other
similar shareholder liaison services. Institutional Shares bear no shareholder
servicing or distribution fees. As a result of these different fees, the net
yields on the Fund's Institutional Shares will generally be higher than those on
the Fund's Service Shares, the net yields on the Fund's Service Shares will
generally be higher than those on the Fund's Series A Investor Shares, and the
net yields on the Fund's Series A Investor Shares will generally be higher than
those on the Fund's Series B Investor Shares if payments by the Portfolios under
the Service Plan, the Distribution and Service Plan, the Series B Distribution
Plan and the Series B Service Plan are made at the maximum rates. Standardized
yield quotations will be computed separately for each class of Shares. Series A
Investor Shares of the Portfolios are exchangeable at the option of the holder
for Series A Investor Shares in another money market Portfolio and for Series A
or Series B Investor Shares in the Fund's non-money market investment
portfolios. Series B Investor Shares of the Money Market Portfolio may only be
exchanged for Series B Investor Shares of the Fund's non-money market
portfolios.
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<PAGE> 35
On April 28, 1995, PNC Bank held of record approximately % of the Fund's
outstanding shares, and may be deemed a controlling person of the Fund under the
1940 Act. PNC Bank is a subsidiary of PNC Bank Corp., a multi-bank holding
company.
THIS PROSPECTUS RELATES PRIMARILY TO THE FUND'S SERVICE SHARES AND
DESCRIBES ONLY THE INVESTMENT OBJECTIVES, POLICIES, OPERATIONS, CONTRACTS AND
OTHER MATTERS PERTAINING TO THE SERVICE SHARES.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time each Portfolio may advertise its "yield" and "effective
yield" for Service Shares. Both yield
figures are based on historical earnings and are not intended to indicate future
performance. "Yield" refers to the income generated by an investment in a
Portfolio's Service Shares over a seven-day period (which period will be stated
in the advertisement). This income is then "annualized." That is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of the investment.
"Effective yield" is calculated similarly but, when annualized, the income
earned by an investment in a Portfolio's Service Shares is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. A Municipal
Portfolio's "tax-equivalent yield" may also be quoted from time to time for
Service Shares of a Municipal Portfolio, which shows the level of taxable yield
needed to produce an after-tax equivalent to such Portfolio's tax-free yield for
Service Shares. This is done by increasing such Portfolio's yield for Service
Shares (calculated as above) by the amount necessary to reflect the payment of
Federal (and state and local for the Ohio, Pennsylvania, North Carolina,
Virginia and New Jersey Municipal Money Market Portfolios) income tax at a
stated tax rate.
Performance data for Service Shares of a Portfolio may be compared to that
of other mutual funds with similar investment objectives and to other relevant
indexes or to ratings or rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual funds.
In addition, certain indexes may be used to illustrate historic performance of
select asset classes. For example, the yield of Service Shares of a Portfolio
may be compared to data prepared by Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc. and Weisenberger Investment Company Service.
Performance information may also include evaluations of the Portfolios published
by nationally recognized ranking services and information as reported by
financial publications such as Business Week, Fortune, Institutional Investor,
Money Magazine, Forbes, Barron's, The Wall Street Journal and The New York
Times, or in publications of a local or regional nature, may also be used in
comparing the performance of Service Shares of a Portfolio.
The yield of any investment is generally a function of portfolio quality
and maturities, type of investment and operating expenses. The yields on Service
Shares will fluctuate and are not necessarily representative of future results.
Any fees charged by Institutions directly to their Customers in connection with
investments in Service Shares are not reflected in the yields of the Service
Shares, and such fees, if charged, will reduce the actual return received by
such Customers on their investments.
REPORTS AND INQUIRIES
Shareholders will receive unaudited semi-annual financial statements and
annual financial statements audited by independent accountants. Shareholder
inquiries should be addressed to the Fund c/o PFPC, P.O. Box 8950, Wilmington,
Delaware 19885-9628, toll-free (800) 441-7762 (in Delaware call collect (302)
791-1111).
* * *
33
<PAGE> 36
===============================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Expense Table............................................................ 2
Financial Highlights..................................................... 3
Investment Policies...................................................... 10
Investment Limitations................................................... 19
Purchase and Redemption of Shares........................................ 21
Net Asset Value.......................................................... 23
Management............................................................... 23
Dividends and Distributions.............................................. 26
Taxes.................................................................... 27
Description of Shares.................................................... 31
Performance Information.................................................. 33
Reports and Inquiries.................................................... 33
</TABLE>
INVESTMENT ADVISER
PNC Institutional Management Corporation
Wilmington, Delaware
SUB-ADVISER AND CUSTODIAN
PNC Bank, National Association
Philadelphia, Pennsylvania
CO-ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
CO-ADMINISTRATOR
Provident Distributors, Inc.
Radnor, Pennsylvania
DISTRIBUTOR
Provident Distributors, Inc.
Radnor, Pennsylvania
COUNSEL
Drinker Biddle & Reath
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
Philadelphia, Pennsylvania
PNCS-P-001
===============================================================================
===============================================================================
THE MONEY
MARKET
PORTFOLIOS
SERVICE CLASS
PROSPECTUS
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
GOVERNMENT
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
OHIO MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
PENNSYLVANIA MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
NORTH CAROLINA MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
VIRGINIA MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
NEW JERSEY
MUNICIPAL MONEY MARKET PORTFOLIO
- -----------------------------------------------------
, 1995
===============================================================================
<PAGE> 37
THE PNC(R) FUND
(SERIES A AND SERIES B INVESTOR SHARES OF THE MONEY MARKET
PORTFOLIO, AND SERIES A INVESTOR SHARES OF THE MUNICIPAL MONEY MARKET
PORTFOLIO,
GOVERNMENT MONEY MARKET PORTFOLIO, OHIO MUNICIPAL
MONEY MARKET PORTFOLIO, PENNSYLVANIA MUNICIPAL MONEY MARKET
PORTFOLIO, NORTH CAROLINA MUNICIPAL MONEY MARKET, VIRGINIA
MUNICIPAL MONEY MARKET PORTFOLIO AND
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO)
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A ITEM LOCATION
- -------------- --------
<S> <C> <C>
PART A PROSPECTUS
1. Cover page . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expense Table
3. Condensed Financial Information . . . . . . . . . . . . . . . . . Financial Highlights
4. General Description of Registrant . . . . . . . . . . . . . . . . Cover Page; Investment
Policies;
Description of
Shares
5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . Management
6. Capital Stock and Other Securities . . . . . . . . . . . . . . . . Cover Page; Dividends
and Distributions;
Description of
Shares
7. Purchase of Securities Being Offered . . . . . . . . . . . . . . . How to Purchase Shares;
How to Redeem Shares;
Management
8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . . How to Redeem
Shares
9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
</TABLE>
<PAGE> 38
THE MONEY MARKET PORTFOLIOS
INVESTOR CLASS
The PNC(R) Fund (the "Fund") consists of twenty-six investment portfolios.
This Prospectus relates to eight of those portfolios (collectively, the
"Portfolios") with the following objectives:
MONEY MARKET PORTFOLIO--to provide as high a level of current interest
income as is consistent with maintaining liquidity and stability of
principal. It pursues this objective by investing primarily in short-term,
high quality, U.S. dollar-denominated money market instruments.
MUNICIPAL MONEY MARKET PORTFOLIO--to provide as high a level of current
interest income exempt from Federal income taxes as is consistent with
maintaining liquidity and stability of principal. It pursues this objective
by investing substantially all of its assets in a diversified portfolio of
short-term obligations issued by or on behalf of states, territories and
possessions of the United States, the District of Columbia, and their
political subdivisions, agencies, instrumentalities and authorities and
tax-exempt derivative securities relating thereto ("Municipal Obligations").
GOVERNMENT MONEY MARKET PORTFOLIO--to provide as high a level of current
interest income as is consistent with maintaining liquidity and stability of
principal. It pursues this objective by investing primarily in short-term
U.S. Treasury bills, notes and other obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities and repurchase
agreements relating to such obligations.
OHIO MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level of
current income exempt from Federal and, to the extent possible, from Ohio
income tax as is consistent with maintaining liquidity and stability of
principal. It pursues this objective by investing primarily in short-term
municipal obligations issued by the State of Ohio and its political
subdivisions, agencies, instrumentalities and authorities and tax-exempt
derivative securities relating thereto ("Ohio Municipal Obligations").
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level
of current income exempt from Federal and, to the extent possible, from
Pennsylvania income tax as is consistent with maintaining liquidity and
stability of principal. It pursues this objective by investing primarily in
short-term municipal obligations issued by the Commonwealth of Pennsylvania
and its political subdivisions, agencies, instrumentalities and authorities
and tax-exempt derivative securities relating thereto ("Pennsylvania
Municipal Obligations").
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level
of current interest income exempt from Federal and, to the extent possible,
from North Carolina income tax as is consistent with maintaining liquidity
and stability of principal. It pursues this objective by investing primarily
in short-term municipal obligations issued by the State of North Carolina
and its political subdivisions, agencies, instrumentalities and authorities
and tax-exempt derivative securities relating thereto ("North Carolina
Municipal Obligations").
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level of
current income exempt from Federal and, to the extent possible, from
Virginia income tax as is consistent with maintaining liquidity and
stability of principal. It pursues this objective by investing primarily in
short-term municipal obligations issued by the Commonwealth of Virginia and
its political sub-divisions, agencies, instrumentalities and authorities and
tax-exempt derivative securities relating thereto ("Virginia Municipal
Obligations").
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level of
current income exempt from Federal and, to the extent possible, from New
Jersey income tax as is consistent with maintaining liquidity and stability
of principal. It pursues this objective by investing primarily in short-term
municipal obligations issued by the State of New Jersey and its political
subdivisions, agencies, instrumentalities and authorities and tax-exempt
derivative securities relating thereto ("New Jersey Municipal Obligations").
This Prospectus relates to Series A Investor Shares ("Series A Shares")
representing interests in each Portfolio and to Series B Investor Shares
("Series B Shares" and, collectively with Series A Shares, "Investor Shares" or
"Shares") representing interests in the Money Market Portfolio. Series A Shares
of the Portfolios are sold and redeemed at net asset value without any purchase
or redemption charge imposed by the Fund. Series A Shares of the Ohio Municipal
Money Market, Pennsylvania Municipal Money Market, North Carolina Municipal
Money Market, Virginia Municipal Money Market and New Jersey Municipal Money
Market Portfolios are intended for residents of Ohio, Pennsylvania, North
Carolina, Virginia and New Jersey, respectively. Series B Shares in the Money
Market Portfolio are available only to the holders of Series B Investor Shares
in the Fund's non-money market investment portfolios who wish to exchange their
Series B Investor Shares in such portfolios for Series B Investor Shares in the
Money Market Portfolio.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, PNC BANK, NATIONAL ASSOCIATION OR ANY OTHER BANK AND SHARES ARE NOT
FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENTS IN SHARES OF THE
FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED. THERE CAN BE NO ASSURANCE THAT THE PORTFOLIOS WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus contains information that a prospective investor needs to
know before investing. Please keep it for future reference. A Statement of
Additional Information currently dated , 1995 has been filed with the
Securities and Exchange Commission (the "SEC"). The current Statement of
Additional Information may be obtained upon request free of charge from the Fund
by calling (800)422-6538. The Statement of Additional Information, as it may be
supplemented from time to time, is incorporated by reference in this Prospectus.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS , 1995
<PAGE> 39
EXPENSE TABLE
ANNUAL FUND OPERATING EXPENSES FOR INVESTOR SHARES AFTER FEE WAIVERS
AS A PERCENTAGE OF DAILY NET ASSETS
<TABLE>
<CAPTION>
NORTH NEW
OHIO PENNSYLVANIA CAROLINA VIRGINIA JERSEY
MUNICIPAL GOVERNMENT MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
MONEY MONEY MONEY MONEY MONEY MONEY MONEY MONEY
MARKET MARKET MARKET MARKET MARKET MARKET MARKET MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------ --------- ---------- --------- ------------ --------- --------- ---------
SERIES A SERIES B SERIES A SERIES A SERIES A SERIES A SERIES A SERIES A SERIES A
-------- -------- --------- ---------- --------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory fees(1)....... .06% .06 % .06% .06% .06% .06% .06% .05% .05%
12b-1 fees(2).......... .50 .75 .50 .50 .50 .50 .50 .50 .50
Other operating
expenses............. .29 .54 .29 .29 .29 .29 .29 .30 .30
-------- -------- --------- ---------- --------- ------------ --------- --------- ---------
Administration
fees(1)........... .13 .13 .11 .12 .10 .12 .05 .02 .02
Service fees......... None .25 None None None None None None None
Other expenses(1).... .16 .16 .18 .17 .19 .17 .24 .28 .28
-------- -------- --------- ---------- --------- ------------ --------- --------- ---------
Total operating
expenses............. .85% 1.35 % .85% .85% .85% .85% .85% .85% .85%
======= ======= ======= ======== ======= ========= ======= ======= =======
</TABLE>
- ------------------
(1) Advisory Fees are net of waivers of .38%, .39%, .39%, .39%, .39%, .39%, .40%
and .40% and administration fees are net of waivers of .01%, .04%, .03%,
.05%, .03%, .10% .13% and .13% for the Money Market, Municipal Money Market,
Government Money Market, Ohio Municipal Money Market, Pennsylvania Municipal
Money Market, North Carolina Municipal Money Market, Virginia Municipal
Money Market and New Jersey Municipal Money Market Portfolios, respectively.
PIMC and the Administrators are under no obligation to waive or continue
waiving such fees, but have informed the Fund that they expect to waive or
continue waiving such fees as necessary to maintain the Portfolios' total
operating expenses during the current fiscal year at the levels set forth in
the table. The expenses noted above under "Other expenses" are estimated
based on the level of such expenses for the Fund's most recent fiscal year.
Securities dealers, financial institutions and other industry professionals
may charge their clients additional fees for account services.
(2) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers, Inc.
EXAMPLE
An investor in Investor Shares would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Money Market Portfolio (Series A)............ $ 9 $27 $ 47 $ 105
Money Market Portfolio (Series B)*........... 14 43 74 136**
Municipal Money Market Portfolio............. 9 27 47 105
Government Money Market Portfolio............ 9 27 47 105
Ohio Municipal Money Market Portfolio........ 9 27 47 105
Pennsylvania Municipal Money Market
Portfolio.................................. 9 27 47 105
North Carolina Municipal Money Market
Portfolio.................................. 9 27 47 105
Virginia Municipal Money Market Portfolio.... 9 27 47 105
New Jersey Municipal Money Market
Portfolio.................................. 9 27
</TABLE>
- ------------------
* These expense figures do not reflect the imposition of the deferred sales
charge which may be deducted upon the redemption of Series B Shares of the
Money Market Portfolio received in an exchange transaction for Series B
Shares of a non-money market investment portfolio of the Fund. See
"Description of Shares."
** Based on the conversion of the Series B Shares to Series A Shares after six
years. See "How to Purchase Shares--General."
The foregoing Expense Table and Example are intended to assist investors in
understanding the expenses the Portfolios will pay. Investors bear these
expenses since they reduce the amount of income paid by the Portfolios to
investors as dividends. The information in the table for the Money Market,
Municipal Money Market, Government Money Market, Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market and
Virginia Municipal Money Market Portfolios is based on the advisory fees,
administration fees and other expenses payable after fee
2
<PAGE> 40
waivers by the particular Portfolio for the fiscal year ended September 30,
1994, as restated to reflect 12b-1 fees borne by Investor Shares and service
fees borne by Series B Shares and to reflect revised fee waivers. The table
estimates fees, expenses, waivers and assets for the New Jersey Municipal Money
Market Portfolio for the current fiscal year. Total operating expenses would
have been 1.24%, 1.28%, 1.27%, 1.29%, 1.27%, 1.34%, 1.38% and 1.38% for Series A
Investor Shares of the Money Market, Municipal Money Market, Government Money
Market, Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Virginia Municipal Money Market and New Jersey
Municipal Money Market Portfolios, respectively, and 1.74% for Series B Investor
Shares of the Money Market Portfolio without such fee waivers. See Footnote 1 to
the Expense Table, "Financial Highlights--Background", "Management",
"Distribution of Shares" and "Description of Shares" for a further description
of operating expenses.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND OPERATING
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
BACKGROUND
The Fund currently offers three classes of shares in each
Portfolio--Service, Series A Investor and Institutional Shares--and a fourth
class of shares in the Money Market Portfolio--Series B Investor Shares. Series
B Investor Shares in the Money Market Portfolio are available only to the
holders of Series B Investor Shares in the Fund's non-money market investment
portfolios who wish to exchange their Series B Investor Shares in such
portfolios for Series B Investor Shares in the Money Market Portfolio. See
"Investor Programs--Exchange Privilege." The shares of each class in a Portfolio
represent equal pro rata interests in such Portfolio, except that they bear
different expenses which reflect the difference in the range of services
provided to them. Under the Fund's Service Plan, Service Shares bear the expense
of fees at an annual rate not to exceed .15% of the average daily net asset
value of each Portfolio's outstanding Service Shares. Service Shares also bear
the expense of a service fee at an annual rate not to exceed .15% of the average
daily net asset value of each Portfolio's outstanding Service Shares for other
shareholder support activities provided by service organizations. See
"Description of Shares" for a description of the Service Plan and shareholder
support activities. Series A Investor Shares bear the expense of the Fund's
Distribution and Service Plan at an annual rate not to exceed .55% of the
average daily net asset value of each Portfolio's outstanding Series A Investor
Shares. Series B Investor Shares bear the expense of the Fund's Series B
Distribution Plan and Series B Service Plan at annual rates not to exceed .75%
and .25%, respectively, of the average daily net asset value of each Portfolio's
outstanding Series B Investor Shares. See "Distribution of Shares" for a
description of the Distribution and Service Plan and the Series B Distribution
Plan, and see "Shareholder Servicing" for a description of the Series B Service
Plan. Institutional Shares bear no shareholder servicing or distribution fees.
During periods in which fees relating to the Service Plan and shareholder
support activities and to the Distribution and Service Plan were not charged to
a Portfolio's Service Shares or Series A Investor Shares, respectively, the
financial data in the tables below pertaining to Service Shares or Series A
Investor Shares of such Portfolio are identical to the financial data relating
to Institutional Shares of the Portfolio for such periods or to what such
financial data would have been had Institutional Shares in the Portfolio been
outstanding for such periods (except, in each case, for the number of Service
and Series A Investor Shares outstanding).
The SEC requires that this Prospectus contain Financial Highlights for each
class of each Portfolio described herein. Because the public offering of Series
A Investor Shares of the Virginia Municipal Money Market Portfolio and of Series
B Investor Shares of the Money Market Portfolio had not commenced during the six
month period ended March 31, 1995, the tables below present only information
pertaining to Service Shares and Institutional Shares of the Virginia Municipal
Money Market Portfolio and to Service Shares, Series A Investor Shares and
Institutional Shares of the Money Market Portfolio. No shares of the New Jersey
Municipal Money Market Portfolio were issued prior to the date of this
Prospectus.
Except for the financial data relating to the six month period ended March
31, 1995, the financial data included in the tables below has been derived from
financial statements incorporated by reference in the Statement of Additional
Information and has been audited by Coopers & Lybrand, L.L.P., the Fund's
independent accountants. This financial data should be read in conjunction with
such financial statements. Further information about the performance of the
Portfolios is available in the annual report to shareholders. Both the Statement
of Additional Information and the annual report to shareholders may be obtained
from the Fund free of charge by calling the number on the front cover of this
Prospectus.
3
<PAGE> 41
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
----------------------------------------------------------------------------------------------
INSTITUTIONAL
CLASS SERVICE CLASS
--------------------------------- -------------------------------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 8/2/93(1) ENDED YEAR YEAR YEAR YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED ENDED ENDED ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94 9/30/93 9/30/92 9/30/91
----------- -------- -------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- -------- -------- -------- --------
Income from investment operations
Net investment income.......... 0.0274 0.0359 0.0054 0.0259 0.0333 0.0274 0.0391 0.0645
Net realized gain (loss)
on investments............... -- -- -- -- -- -- -- --
----------- -------- -------- ----------- -------- -------- -------- --------
Total from investment
operations................ 0.0274 0.0359 0.0054 0.0259 0.0333 0.0274 0.0391 0.0645
----------- -------- -------- ----------- -------- -------- -------- --------
Less distributions
Distributions from net
investment income............ (0.0274) (0.0359) (0.0054) (0.0259) (0.0333) (0.0274) (0.0391) (0.0645)
Distributions from net realized
capital gains................ -- -- -- -- -- -- -- --
----------- -------- -------- ----------- -------- -------- -------- --------
Total distributions........ (0.0274) (0.0359) (0.0054) (0.0259) (0.0333) (0.0274) (0.0391) (0.0645)
----------- -------- -------- ----------- -------- -------- -------- --------
Net asset value at end of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ========== ========= ========= ========= =========
Total return...................... 2.77% 3.64% 0.54% 2.61% 3.37% 2.77% 4.05% 6.64%
Ratios/Supplemental data
Net assets at end of period
(in thousands)............... $ 593,948 $502,972 $435,586 $ 605,220 $575,948 $415,328 $838,012 $637,076
Ratios of expenses to average
net assets
After advisory/administration
fee waivers................ 0.25%(2) 0.25% 0.27%(2) 0.55%(2) 0.51% 0.59% 0.61% 0.62%
Before
advisory/administration
fee waivers................ 0.62%(2) 0.66% 0.38%(2) 0.92%(2) 0.92% 0.70% 0.66% 0.67%
Ratios of net investment income
to average net assets
After advisory/administration
fee waivers................ 5.51%(2) 3.64% 3.01%(2) 5.19%(2) 3.35% 2.73% 3.86% 6.45%
Before
advisory/administration
fee waivers................ 5.13%(2) 3.23% 2.90%(2) 4.82%(2) 2.95% 2.62% 3.81% 6.40%
<CAPTION>
MONEY MARKET PORTFOLIO
-------------------------------------------------
SERVICE SERIES A
CLASS INVESTOR CLASS
---------- ----------------------------------
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
10/4/89(1) ENDED YEAR 1/13/93(1)
THROUGH 3/31/95 ENDED THROUGH
9/30/90 (UNAUDITED) 9/30/94 9/30/93
-------- ----------- -------- --------
<S> <C> <C> <C> <C>
Net asset value at beginning of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ----------- -------- --------
Income from investment operations
Net investment income.......... 0.0778 0.0249 0.0308 0.0188
Net realized gain (loss)
on investments............... -- -- -- --
-------- ----------- -------- --------
Total from investment
operations................ 0.0778 0.0249 0.0308 0.0188
-------- ----------- -------- --------
Less distributions
Distributions from net
investment income............ (0.0778) (0.0249) (0.0308) (0.0188)
Distributions from net realized
capital gains................ -- -- -- --
-------- ----------- -------- --------
Total distributions........ (0.0778) (0.0249) (0.0308) (0.0188)
-------- ----------- -------- --------
Net asset value at end of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========= =========
Total return...................... 8.07% 2.51% 3.12% 1.89%
Ratios/Supplemental data
Net assets at end of period
(in thousands)............... $628,075 $ 7,302 $ 4,342 $ 49
Ratios of expenses to average
net assets
After advisory/administration
fee waivers................ 0.62%(2) 0.75%(2) 0.75% 0.67%(2)
Before
advisory/administration
fee waivers................ 0.70%(2) 1.12%(2) 1.16% 0.78%(2)
Ratios of net investment income
to average net assets
After advisory/administration
fee waivers................ 7.83%(2) 5.04%(2) 3.39% 2.62%(2)
Before
advisory/administration
fee waivers................ 7.75%(2) 4.67%(2) 2.98% 2.51%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
4
<PAGE> 42
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET PORTFOLIO
----------------------------------------------------------------------------------------------
INSTITUTIONAL
CLASS SERVICE CLASS
--------------------------------- -------------------------------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 8/2/93(1) ENDED YEAR YEAR YEAR YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED ENDED ENDED ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94 9/30/93 9/30/92 9/30/91
----------- -------- -------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- -------- -------- -------- --------
Income from investment operations
Net investment income.......... 0.0176 0.0246 0.0040 0.0161 0.0219 0.0205 0.0281 0.0438
Net realized gain (loss)
on investments............... -- -- -- -- -- -- -- --
----------- -------- -------- ----------- -------- -------- -------- --------
Total from investment
operations................ 0.0176 0.0246 0.0040 0.0161 0.0219 0.0205 0.0281 0.0438
----------- -------- -------- ----------- -------- -------- -------- --------
Less distributions
Distributions from net
investment income............ (0.0176) (0.0246) (0.0040) (0.0161) (0.0219) (0.0205) (0.0281) (0.0438)
Distributions from net realized
capital gains................ -- -- -- -- -- -- -- --
----------- -------- -------- ----------- -------- -------- -------- --------
Total distributions........ (0.0176) (0.0246) (0.0040) (0.0161) (0.0219) (0.0205) (0.0281) (0.0438)
----------- -------- -------- ----------- -------- -------- -------- --------
Net asset value at end of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ========== ========= ========= ========= =========
Total return...................... 1.78% 2.48% 0.40% 1.62% 2.20% 2.10% 2.85% 4.47%
Ratios/Supplemental data
Net assets at end of period
(in thousands)............... $ 34,747 $ 30,608 $ 39,148 $ 190,789 $133,358 $ 93,937 $125,152 $ 89,312
Ratios of expenses to average
net assets
After advisory/administration
fee waivers................ 0.25%(2) 0.25% 0.25%(2) 0.55%(2) 0.51% 0.61% 0.63% 0.65%
Before
advisory/administration
fee waivers................ 0.69%(2) 0.73% 0.36%(2) 0.99%(2) 0.99% 0.72% 0.68% 0.70%
Ratios of net investment income
to average net assets
After advisory/administration
fee waivers................ 3.51%(2) .48% 2.45%(2) 3.25%(2) 2.18% 2.02% 2.78% 4.40%
Before
advisory/administration
fee waivers................ 3.07%(2) 2.01% 2.34%(2) 2.81%(2) 1.71% 1.91% 2.73% 4.35%
<CAPTION>
MUNICIPAL MONEY MARKET PORTFOLIO
---------------------------------------------------
SERIES A
SERVICE CLASS INVESTOR CLASS
------------- ---------------------------------
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
11/1/89(1) ENDED YEAR 11/2/92(1)
THROUGH 3/31/95 ENDED THROUGH
9/30/90 (UNAUDITED) 9/30/94 9/30/93
-------- ----------- -------- --------
<S> <C> <C> <C> <C>
Net asset value at beginning of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ----------- -------- --------
Income from investment operations
Net investment income.......... 0.0486 0.0151 0.0193 0.0181
Net realized gain (loss)
on investments............... -- -- -- --
-------- ----------- -------- --------
Total from investment
operations................ 0.0486 0.0151 0.0193 0.0181
-------- ----------- -------- --------
Less distributions
Distributions from net
investment income............ (0.0486) (0.0151) (0.0193) (0.0181)
Distributions from net realized
capital gains................ -- -- -- --
-------- ----------- -------- --------
Total distributions........ (0.0486) (0.0151) (0.0193) (0.0181)
-------- ----------- -------- --------
Net asset value at end of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========= =========
Total return...................... 4.97% 1.52% 1.95% 1.83%
Ratios/Supplemental data
Net assets at end of period
(in thousands)............... $112,108 $ 29 $ 41 $ 15
Ratios of expenses to average
net assets
After advisory/administration
fee waivers................ 0.65%(2) 0.75%(2) 0.75% 0.72%(2)
Before
advisory/administration
fee waivers................ 0.70%(2) 1.19%(2) 1.23% 0.83%(2)
Ratios of net investment income
to average net assets
After advisory/administration
fee waivers................ 5.31%(2) 3.00%(2) 2.05% 2.23%(2)
Before
advisory/administration
fee waivers................ 5.26%(2) 2.56%(2) 1.58% 2.12%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
5
<PAGE> 43
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET PORTFOLIO
----------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
--------------------------------- -------------------------------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 8/2/93(1) ENDED YEAR YEAR YEAR YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED ENDED ENDED ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94 9/30/93 9/30/92 9/30/91
----------- -------- -------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- -------- -------- -------- --------
Income from investment operations
Net investment income.......... 0.0269 0.0357 0.0049 0.0254 0.0331 0.0269 0.0394 0.0627
Net realized gain (loss)
on investments............... -- -- -- -- -- -- -- --
----------- -------- -------- ----------- -------- -------- -------- --------
Total from investment
operations................ 0.0269 0.0357 0.0049 0.0254 0.0331 0.0269 0.0394 0.0627
----------- -------- -------- ----------- -------- -------- -------- --------
Less distributions
Distributions from net
investment income............ (0.0269) (0.0357) (0.0049) (0.0254) (0.0331) (0.0269) (0.0394) (0.0627)
Distributions from net realized
capital gains................ -- -- -- -- -- -- -- --
----------- -------- -------- ----------- -------- -------- -------- --------
Total distributions........ (0.0269) (0.0357) (0.0049) (0.0254) (0.0331) (0.0269) (0.0394) (0.0627)
----------- -------- -------- ----------- -------- -------- -------- --------
Net asset value at end of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ========== ========= ========= ========= =========
Total return...................... 2.72% 3.63% 0.49% 2.57% 3.36% 2.72% 4.01% 6.46%
Ratios/Supplemental data
Net assets at end of period
(in thousands)............... $ 113,707 $ 37,519 $ 13,513 $ 505,356 $372,883 $185,400 $160,269 $180,776
Ratios of expenses to average
net assets
After advisory/administration
fee waivers................ 0.25%(2) 0.25% 0.25%(2) 0.55%(2) 0.52% 0.60% 0.62% 0.65%
Before
advisory/administration fee
waivers.................... 0.66%(2) 0.70% 0.38%(2) 0.96%(2) 0.97% 0.73% 0.67% 0.70%
Ratios of net investment income
to average net assets
After advisory/administration
fee waivers................ 5.53%(2) 3.69% 3.01%(2) 5.14%(2) 3.42% 2.68% 3.91% 6.27%
Before
advisory/administration fee
waivers.................... 5.12%(2) 3.24% 2.88%(2) 4.72%(2) 2.97% 2.55% 3.86% 6.22%
<CAPTION>
GOVERNMENT MONEY MARKET PORTFOLIO
-------------------------------------------------
SERVICE SERIES A
CLASS INVESTOR CLASS
--------- ---------------------------------
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
11/1/89(1) ENDED YEAR 1/14/93(1)
THROUGH 3/31/95 ENDED THROUGH
9/30/90 (UNAUDITED) 9/30/94 9/30/93
-------- ----------- -------- --------
<S> <C> <C> <C> <C>
Net asset value at beginning of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ----------- -------- --------
Income from investment operations
Net investment income.......... 0.0697 0.0245 0.0309 0.0183
Net realized gain (loss)
on investments............... -- -- -- --
-------- ----------- -------- --------
Total from investment
operations................ 0.0697 0.0245 0.0309 0.0183
-------- ----------- -------- --------
Less distributions
Distributions from net
investment income............ (0.0697) (0.0245) (0.0309) (0.0183)
Distributions from net realized
capital gains................ -- -- -- --
-------- ----------- -------- --------
Total distributions........ (0.0697) (0.0245) (0.0309) (0.0183)
-------- ----------- -------- --------
Net asset value at end of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========= =========
Total return...................... 7.29% 2.47% 3.11% 1.85%
Ratios/Supplemental data
Net assets at end of period
(in thousands)............... $146,148 $ 2,400 $ 1,656 $ 50
Ratios of expenses to average
net assets
After advisory/administration
fee waivers................ 0.65%(2) 0.75%(2) 0.75% 0.65%(2)
Before
advisory/administration fee
waivers.................... 0.70%(2) 1.16%(2) 1.20% 0.78%(2)
Ratios of net investment income
to average net assets
After advisory/administration
fee waivers................ 7.62%(2) 4.93%(2) 3.60% 2.57%(2)
Before
advisory/administration fee
waivers.................... 7.57%(2) 4.51%(2) 3.14% 2.44%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
6
<PAGE> 44
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
--------------------------------------------------------------------
INSTITUTIONAL SERVICE
CLASS CLASS
------------------------------------- ------------------------
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 6/10/93(1) ENDED YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94
----------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- --------
Income from investment operations
Net investment income................................ 0.0174 0.0252 0.0073 0.0159 0.0225
Net realized gain (loss) on investments.............. -- -- -- -- --
----------- -------- -------- ----------- --------
Total from investment operations................. 0.0174 0.0252 0.0073 0.0159 0.0225
----------- -------- -------- ----------- --------
Less distributions
Distributions from net investment income............. (0.0174) (0.0252) (0.0073) (0.0159) (0.0225)
Distributions from net realized capital gains........ -- -- -- -- --
----------- -------- -------- ----------- --------
Total distributions.............................. (0.0174) (0.0252) (0.0073) (0.0159) (0.0225)
----------- -------- -------- ----------- --------
Net asset value at end of period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ========== ========
Total return............................................ 1.76% 2.55% 0.73% 1.60% 2.27%
Ratios/Supplemental data
Net assets at end of period (in thousands)........... $ 12,191 $ 10,521 $ 12,026 $ 47,993 $ 44,066
Ratios of expenses to average net assets
After advisory/administration fee waivers.......... 0.25%(2) 0.13% 0.10%(2) 0.55%(2) 0.40%
Before advisory/administration fee waivers......... 0.73%(2) 0.77% 0.83%(2) 1.03%(2) 1.04%
Ratios of net investment income to average net assets
After advisory/administration fee waivers.......... 3.54%(2) 2.56% 2.45%(2) 3.21%(2) 2.29%
Before advisory/administration fee waivers......... 3.06%(2) 1.93% 1.72%(2) 2.74%(2) 1.65%
<CAPTION>
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
--------------------------------------
SERIES A
SERVICE INVESTOR
CLASS CLASS
--------- ----------------------
FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD
6/1/93(1) 10/5/93(1) 10/5/93(1)
THROUGH THROUGH THROUGH
9/30/93 9/30/94 9/30/94
-------- --------- --------
<S> <C> <C> <C>
Net asset value at beginning of period.................. $ 1.00 $ 1.00 $ 1.00
-------- --------- --------
Income from investment operations
Net investment income................................ 0.0074 0.0199 0.0199
Net realized gain (loss) on investments.............. -- -- --
-------- --------- --------
Total from investment operations................. 0.0074 0.0199 0.0199
-------- --------- --------
Less distributions
Distributions from net investment income............. (0.0074) (0.0199) (0.0199)
Distributions from net realized capital gains........ -- -- --
-------- --------- --------
Total distributions.............................. (0.0074) (0.0199) (0.0199)
-------- --------- --------
Net asset value at end of period........................ $ 1.00 $ 1.00 $ 1.00
======== ========= ========
Total return............................................ 0.75% 2.01% 2.01%
Ratios/Supplemental data
Net assets at end of period (in thousands)........... $ 15,239 $ 28 $ 28
Ratios of expenses to average net assets
After advisory/administration fee waivers.......... 0.23%(2) 0.62%(2) 0.62%(2)
Before advisory/administration fee waivers......... 0.96%(2) 1.26%(2) 1.26%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers.......... 2.23%(2) 1.94%(2) 1.94%(2)
Before advisory/administration fee waivers......... 1.50%(2) 1.30%(2) 1.30%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
7
<PAGE> 45
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
--------------------------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
------------------------------------- ------------------------
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 6/1/93(1) ENDED YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94
----------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- --------
Income from investment operations
Net investment income............................... 0.0170 0.0247 0.0078 0.0156 0.0221
Net realized gain (loss) on investments............. -- -- -- -- --
----------- -------- -------- ----------- --------
Total from investment operations................ 0.0170 0.0247 0.0078 0.0156 0.0221
----------- -------- -------- ----------- --------
Less distributions
Distributions from net investment income............ (0.0170) (0.0247) (0.0078) (0.0156) (0.0221)
Distributions from net realized capital gains....... -- -- -- -- --
----------- -------- -------- ----------- --------
Total distributions............................. (0.0170) (0.0247) (0.0078) (0.0156) (0.0221)
----------- -------- -------- ----------- --------
Net asset value at end of period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ========== =========
Total return........................................... 1.72% 2.49% 0.78% 1.57% 2.24%
Ratios/Supplemental data
Net assets at end of period (in thousands).......... $ 187,858 $158,102 $ 2,242 $ 137,297 $ 60,560
Ratios of expenses to average net assets
After advisory/administration fee waivers......... 0.25%(2) 0.16% 0.09%(2) 0.55%(2) 0.42%
Before advisory/administration fee waivers........ 0.66%(2) 0.73% 0.97%(2) 0.96%(2) 0.99%
Ratios of net investment income to average net
assets
After advisory/administration fee waivers......... 3.41%(2) 2.64% 2.15%(2) 3.17%(2) 2.31%
Before advisory/administration fee waivers........ 3.00%(2) 2.07% 1.27%(2) 2.76%(2) 1.75%
<CAPTION>
PENNSYLVANIA MUNICIPAL MONEY
MARKET PORTFOLIO
----------------------------------------
SERVICE SERIES A
CLASS INVESTOR CLASS
------- -------------------------
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
6/11/93(1) ENDED 12/28/93(1)
THROUGH 3/31/95 THROUGH
9/30/93 (UNAUDITED) 9/30/94
-------- ----------- ---------
<S> <C> <C> <C>
Net asset value at beginning of period................. $ 1.00 $ 1.00 $ 1.00
-------- ----------- ---------
Income from investment operations
Net investment income............................... 0.0074 0.0146 0.0153
Net realized gain (loss) on investments............. -- -- --
-------- ----------- ---------
Total from investment operations................ 0.0074 0.0146 0.0153
-------- ----------- ---------
Less distributions
Distributions from net investment income............ (0.0074) (0.0146) (0.0153)
Distributions from net realized capital gains....... -- -- --
-------- ----------- ---------
Total distributions............................. (0.0074) (0.0146) (0.0153)
-------- ----------- ---------
Net asset value at end of period....................... $ 1.00 $ 1.00 $ 1.00
========= ========== =========
Total return........................................... 0.74% 1.47% 1.58%
Ratios/Supplemental data
Net assets at end of period (in thousands).......... $ 8,919 $ 105 $ 139
Ratios of expenses to average net assets
After advisory/administration fee waivers......... 0.32%(2) 0.75%(2) 0.65%(2)
Before advisory/administration fee waivers........ 1.20%(2) 1.16%(2) 1.22%(2)
Ratios of net investment income to average net
assets
After advisory/administration fee waivers......... 2.42%(2) 2.91%(2) 2.11%(2)
Before advisory/administration fee waivers........ 1.54%(2) 2.50%(2) 1.54%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
8
<PAGE> 46
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
VIRGINIA
MUNICIPAL
MONEY
MARKET
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO PORTFOLIO
-------------------------------------------------------------------- -----------
INSTITUTIONAL SERVICE INVESTOR A
CLASS CLASS CLASS
------------------------------------- ------------------------ -----------
FOR THE FOR THE
FOR THE FOR THE PERIOD FOR THE PERIOD
SIX MONTHS PERIOD 11/01/94 PERIOD 2/14/95(1)
ENDED YEAR 5/4/93(1) THROUGH 4/29/94(1) THROUGH
3/31/95 ENDED THROUGH 3/31/95 THROUGH 3/31/95
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94 (UNAUDITED)
----------- -------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of
period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- -------- -----------
Income from investment operations
Net investment income........... 0.0174 0.0249 0.0097 0.0135 0.0099 0.0041
Net realized gain (loss)
on investments................ -- -- -- -- -- --
----------- -------- -------- ----------- -------- -----------
Total from investment
operations................. 0.0174 0.0249 0.0097 0.0135 0.0099 0.0041
----------- -------- -------- ----------- -------- -----------
Less distributions
Distributions from net
investment income............. (0.0174) (0.0249) (0.0097) (0.0135) (0.0099) (0.0041)
Distributions from net realized
capital gains................. -- -- -- -- -- --
----------- -------- -------- ----------- -------- -----------
Total distributions......... (0.0174) (0.0249) (0.0097) (0.0135) (0.0099) (0.0041)
----------- -------- -------- ----------- -------- -----------
Net asset value at end of period... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ========== ========= ==========
Total return....................... 1.75% 2.52% 0.97% 1.35% 0.99% 0.41%
Ratios/Supplemental data
Net assets at end of period
(in thousands)................ $ 118,224 $ 69,673 $ 34,135 $ 406(4) $ --(3) $ 3
Ratios of expenses to average
net assets
After advisory/administration
fee waivers................. 0.16%(2) 0.10% 0.10%(2) 0.53%(2) 0.36%(2) 0.66%(2)
Before advisory/administration
fee waivers................. 0.71%(2) 0.76% 0.81%(2) 1.19%(2) 1.02%(2) 2.99%(2)
Ratios of net investment income
to
average net assets
After advisory/administration
fee waivers................. 3.52%(2) 2.53% 2.35%(2) 3.30%(2) 2.54%(2) 3.32%(2)
Before advisory/administration
fee waivers................. 2.97%(2) 1.87% 1.64%(2) 2.64%(2) 1.87%(2) 1.00%(2)
<CAPTION>
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO
--------------------------------------------------
INSTITUTIONAL SERVICE
CLASS CLASS
---------------------------------- -----------
FOR THE
FOR THE FOR THE PERIOD
SIX MONTHS PERIOD 10/11/94(1)
ENDED 7/25/94(1) THROUGH
3/31/95 THROUGH 3/31/95
(UNAUDITED) 9/30/94 (UNAUDITED)
----------- ------------------ -----------
<S> <C> <C> <C>
Net asset value at beginning of
period............................ $ 1.00 $ 1.00 $ 1.00
----------- ------- -----------
Income from investment operations
Net investment income........... 0.0171 0.0053 0.0149
Net realized gain (loss)
on investments................ -- -- --
----------- ------- -----------
Total from investment
operations................. 0.0171 0.0053 0.0149
----------- ------- -----------
Less distributions
Distributions from net
investment income............. (0.0171) (0.0053) (0.0149)
Distributions from net realized
capital gains................. -- -- --
----------- ------- -----------
Total distributions......... (0.0171) (0.0053) (0.0149)
----------- ------- -----------
Net asset value at end of period... $ 1.00 $ 1.00 $ 1.00
========== ============= ==========
Total return....................... 1.72% 0.53% 1.50%
Ratios/Supplemental data
Net assets at end of period
(in thousands)................ $ 18,634 $ 13,831 $ 400
Ratios of expenses to average
net assets
After advisory/administration
fee waivers................. 0.10%(2) 0.10%(2) 0.40%(2)
Before advisory/administration
fee waivers................. 0.70%(2) 1.02%(2) 1.00%(2)
Ratios of net investment income
to
average net assets
After advisory/administration
fee waivers................. 3.44%(2) 2.89%(2) 3.23%(2)
Before advisory/administration
fee waivers................. 2.84%(2) 1.97%(2) 2.63%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) There were no Service Shares outstanding as of September 30, 1994.
(4) Reissuance of shares.
9
<PAGE> 47
INVESTMENT POLICIES
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Portfolio obligations held by the Portfolio will have maturities of 13
months or less as determined in accordance with the rules of the SEC. The
Portfolio invests in a broad range of short-term, high quality, U.S.
dollar-denominated instruments, such as government, bank, commercial and other
obligations, that may be available in the money markets ("Money Market
Instruments"). The following descriptions illustrate types of Money Market
Instruments in which the Portfolio may invest.
BANK OBLIGATIONS. The Portfolio may purchase bank obligations, such as
certificates of deposit, bankers' acceptances and demand and time deposits,
including U.S. dollar-denominated instruments issued or supported by the credit
of U.S. or foreign banks or savings institutions having total assets at the time
of purchase in excess of $1 billion. The Portfolio may invest substantially in
obligations of foreign banks or foreign branches of U.S. banks where the adviser
deems the instrument to present minimal credit risks. Such investments may
include Eurodollar Certificates of Deposits ("ECDs") which are U.S.
dollar-denominated certificates of deposit issued by offices of foreign and
domestic banks located outside the United States; Eurodollar Time Deposits
("ETDs") which are U.S. dollar-denominated deposits in a foreign branch of a
U.S. bank or a foreign bank; Canadian Time Deposits ("CTDs") which are
essentially the same as ETDs except they are issued by Canadian offices of major
Canadian banks; and Yankee Certificates of Deposit ("Yankee Cds") which are U.S.
dollar-denominated certificates of deposit issued by a U.S. branch of a foreign
bank and held in the United States. The Portfolio may also make interest-bearing
savings deposits in commercial and savings banks in amounts not in excess of 5%
of its total assets.
Investments in obligations issued by foreign banks and foreign branches of
U.S. banks may involve risks that are different from investments in obligations
of domestic branches of U.S. banks. These risks may include future unfavorable
political and economic developments, possible withholding taxes on interest
income, seizure or nationalization of foreign deposits, currency controls,
interest limitations, or other governmental restrictions which might affect the
payment of principal or interest on the securities held by the Portfolio.
Additionally, these institutions may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting and recordkeeping
requirements than those applicable to domestic branches of U.S. banks.
COMMERCIAL PAPER. The Portfolio may purchase commercial paper rated (at the
time of purchase) in the two highest rating categories of a nationally
recognized statistical rating organization ("NRSRO"). The Portfolio may also
purchase unrated commercial paper determined to be of comparable quality at the
time of purchase by the adviser. Commercial paper issues in which the Portfolio
may invest include securities issued by corporations without registration under
the Securities Act of 1933 (the "1933 Act") in reliance on the exemption from
such registration afforded by Section 3(a)(3) thereof, and commercial paper
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)
paper"). Section 4(2) paper is restricted as to disposition under the Federal
securities laws in that any resale must similarly be made in an exempt
transaction. Section 4(2) paper is normally resold to other institutional
investors through or with the assistance of investment dealers which make a
market in Section 4(2) paper, thus providing liquidity.
The Portfolio may also invest in Canadian Commercial Paper ("CCP"), which
is U.S. dollar-denominated commercial paper issued by a Canadian corporation or
a Canadian counterpart of a U.S. corporation, and in Europaper, which is U.S.
dollar-denominated commercial paper of a foreign issuer, subject to the criteria
stated above for other commercial paper issuers.
10
<PAGE> 48
U.S. GOVERNMENT OBLIGATIONS. The Portfolio may purchase obligations issued
or guaranteed by the U.S. Government or its agencies and instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government are
backed by the full faith and credit of the United States. Others are backed by
the right of the issuer to borrow from the U.S. Treasury or are backed only by
the credit of the agency or instrumentality issuing the obligation. See
"Investment Policies--Government Money Market Portfolio" for examples of the
types of U.S. Government obligations that the Portfolio may purchase.
MUNICIPAL OBLIGATIONS. The Portfolio may, when deemed appropriate by the
adviser, invest without limitation in high quality Municipal Obligations (other
than tax-exempt derivative securities) issued by state and local governmental
issuers, the interest on which may be taxable or tax-exempt for Federal income
tax purposes, provided that such obligations carry yields that are competitive
with those of other types of Money Market Instruments of comparable quality. See
"Investment Policies--Municipal Money Market Portfolio" for a more complete
discussion of Municipal Obligations.
GUARANTEED INVESTMENT CONTRACTS. The Portfolio may invest up to 5% of its
total assets in guaranteed investment contracts ("GICs") issued by highly-rated
U.S. insurance companies. Pursuant to such contracts, the Portfolio makes cash
contributions to a deposit fund of the insurance company's general account. The
insurance company then credits to the Portfolio on a monthly basis guaranteed
interest which is based on an index (in most cases this index is expected to be
the Salomon Brothers CD Index). GICs provide that this guaranteed interest will
not be less than a certain minimum rate. A GIC is a general obligation of the
issuing insurance company and not a separate account. The purchase price paid
for a GIC becomes part of the general assets of the insurance company, and the
contract is paid from the general assets of the insurance company. The Portfolio
will only purchase GICs from insurance companies which, at the time of purchase,
are rated "A+" by A.M. Best Company, have assets of $1 billion or more and meet
quality and credit standards established by the adviser pursuant to guidelines
approved by the Board of Trustees. Generally, GICs are not assignable or
transferable without the permission of the issuing insurance companies, and an
active secondary market in GICs does not currently exist.
SECURITIES LENDING. To increase income on its investments, the Portfolio
may lend its portfolio securities with an aggregate value up to 30% of its total
assets to broker/dealers and other institutional investors pursuant to
agreements requiring that the loans be continuously secured by collateral equal
at all times in value to at least the market value of the securities loaned.
Collateral for such loans may include cash, securities of the U.S. Government or
its agencies or instrumentalities or an irrevocable letter of credit issued by a
bank which meets the Portfolio's investment standards. There may be risks of
delay in receiving additional collateral or in recovering the securities loaned
or even a loss of rights in the collateral should the borrower of the securities
fail financially. See "Investment Policies--Common Investment Policies" for a
description of other investment policies.
------------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio invests substantially all of its assets in a diversified
portfolio of Municipal Obligations the interest on which, in the opinion of bond
counsel or counsel to the issuer or sponsor, is exempt from the regular Federal
income tax and which have remaining maturities of 13 months or less as
determined in accordance with the rules of the SEC. Purchasable Municipal
Obligations are determined by the sub-adviser to present minimal credit risks
pursuant to guidelines established by the Board of Trustees and at the time of
purchase are rated in one of the two highest rating categories by an NRSRO or
are unrated securities determined at the time of purchase to be of comparable
quality by the
11
<PAGE> 49
sub-adviser pursuant to guidelines approved by the Board of Trustees. The
applicable Municipal Obligations ratings are described in an Appendix to the
Statement of Additional Information.
The two principal classifications of Municipal Obligations are "general
obligation" securities and "revenue" securities. General obligation securities
are secured by the issuer's pledge of its full faith, credit and taxing power
for the payment of principal and interest. Revenue securities are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise tax or other specific
revenue source such as the user of the facility being financed. Revenue
securities include private activity bonds which are not payable from the
unrestricted revenues of the issuer. Consequently, the credit quality of private
activity bonds is usually directly related to the credit standing of the
corporate user of the facility involved. Municipal Obligations may also include
"moral obligation" bonds, which are normally issued by special purpose public
authorities. If the issuer of moral obligation bonds is unable to meet its debt
service obligations from current revenues, it may draw on a reserve fund, the
restoration of which is a moral commitment but not a legal obligation of the
state or municipality which created the issuer.
Also included within the general category of Municipal Obligations are
participation certificates in a lease, an installment purchase contract, or a
conditional sales contract ("lease obligations") entered into by a state or
political subdivision to finance the acquisition or construction of equipment,
land, or facilities. Although lease obligations do not constitute general
obligations of the issuer for which the lessee's unlimited taxing power is
pledged, certain lease obligations are backed by the lessee's covenant to
appropriate money to make the lease obligation payments. However, under certain
lease obligations, the lessee has no obligation to make these payments in future
years unless money is appropriated on a yearly basis. Although
"non-appropriation" lease obligations are secured by the leased property,
disposition of the property in the event of foreclosure might prove difficult.
These securities represent a relatively new type of financing that is not yet as
marketable as more conventional securities.
------------------------------------
GOVERNMENT MONEY MARKET PORTFOLIO
During normal market periods, not less than 65% of the Portfolio's assets
will be invested in U.S. Government obligations (or repurchase agreements
relating to such obligations). Instruments held by the Portfolio will have
maturities of 13 months or less as determined in accordance with the rules of
the SEC. Treasury obligations differ only in their interest rates, maturities,
and times of issuance. Obligations of certain agencies and instrumentalities of
the U.S. Government such as the Government National Mortgage Association
("GNMA") are supported by the United States' full faith and credit; others, such
as those of the Federal National Mortgage Association ("FNMA") and the Student
Loan Marketing Association, are supported by the right of the issuer to borrow
from the Treasury; others, such as those of the Federal Farm Credit Banks or the
Federal Home Loan Mortgage Corporation, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored agencies or
instrumentalities if it is not obligated to do so by law.
To increase income on its investments, the Portfolio may lend its portfolio
securities with an aggregate value up to 30% of its total assets to
broker/dealers and other institutional investors pursuant to agreements
requiring that the loans be continuously secured by collateral equal at all
times in value to at least the market value of the securities loaned. Collateral
for such loans may include cash, securities of the U.S. Government or its
agencies or instrumentalities or an irrevocable letter of credit issued by a
bank which meets the Portfolio's investment standards. There may be risks of
delay in receiving additional collateral or in recovering the securities loaned
or even a loss of rights in the
12
<PAGE> 50
collateral should the borrower of the securities fail financially. See
"Investment Policies--Common Investment Policies" for a description of other
investment policies.
------------------------------------
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in Ohio Municipal Obligations. The
Portfolio may also invest in Municipal Obligations (including related tax-exempt
derivative securities) in which the Municipal Money Market Portfolio may invest.
See "Investment Policies--Municipal Money Market Portfolio" for a description of
Municipal Obligations. Portfolio obligations held by the Portfolio will have
maturities of 13 months or less as determined in accordance with the rules of
the SEC.
The concentration of investments in Ohio Municipal Obligations raises
special investment considerations. While diversifying more into the service and
other non-manufacturing areas, the economy of Ohio continues to rely in part on
durable goods manufacturing largely concentrated in motor vehicles and
equipment, steel, rubber products and household appliances. As a result, general
economic activity in Ohio, as in many other industrially developed states, tends
to be more cyclical than in some other states and in the nation as a whole.
Agriculture is an important segment of the Ohio economy, with over half the
State's area devoted to farming and approximately 15% of total employment in
agribusiness. In prior years, the State's overall unemployment rate was commonly
somewhat higher than the national figure. For example, the reported 1990 average
monthly State rate was 5.7%, compared to the national figure of 5.5%. However,
for 1991, 1992 and 1993 the State rates (6.4%, 7.2% and 6.5%) were below the
national rates (6.7%, 7.4% and 6.8%). The unemployment rate and its effects vary
among particular geographic areas of the State. There can be no assurance that
future national, regional or state-wide economic difficulties and the resulting
impact on State or local government finances will not adversely affect the
market value of Ohio Municipal Obligations held in the Portfolio or the ability
of the respective obligors to make timely payments of debt service on (or lease
payments relating to) those obligations. See the Statement of Additional
Information for further discussions of investment considerations associated with
Ohio Municipal Obligations and see "Investment Policies--Common Investment
Policies" for a description of other securities in which the Portfolio may
invest.
------------------------------------
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in Pennsylvania Municipal Obligations.
The Portfolio may also invest in Municipal Obligations (including related
tax-exempt derivative securities) in which the Municipal Money Market Portfolio
may invest. See "Investment Policies--Municipal Money Market Portfolio" for a
description of Municipal Obligations. Portfolio obligations held by the
Portfolio will have maturities of 13 months or less as determined in accordance
with the rules of the SEC.
The concentration of investments in Pennsylvania Municipal Obligations
raises special investment considerations. In particular, changes in the economic
condition and governmental policies of the Commonwealth of Pennsylvania and its
political subdivisions, agencies, instrumentalities and authorities could
adversely affect the value of the Portfolio and its portfolio securities.
Although the General Fund of the Commonwealth (the principal operating fund of
the Commonwealth) experienced deficits in fiscal 1990 and 1991, tax increases
and spending decreases helped return the General Fund balance to a surplus at
June 30, 1992 of $87.5 million and at June 30, 1993 of $698.9 million. The
deficit
13
<PAGE> 51
in the Commonwealth's unreserved/undesignated funds of prior years also was
reversed to a surplus of $64.4 million as of June 30, 1993. Rising unemployment,
a relatively high proportion of persons 65 and older in the Commonwealth and
court ordered increases in healthcare reimbursement rates place increased
pressures on the tax resources of the Commonwealth and its municipalities. See
the Statement of Additional Information for further discussion of investment
considerations associated with Pennsylvania Municipal Obligations and see
"Investment Policies--Common Investment Policies" for a description of other
investment policies.
------------------------------------
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in North Carolina Municipal
Obligations. The Portfolio may also invest in Municipal Obligations (including
related tax-exempt derivative securities) in which the Municipal Money Market
Portfolio may invest. See "Investment Policies--Municipal Money Market
Portfolio" for a description of Municipal Obligations. Portfolio obligations
held by the Portfolio will have maturities of 13 months or less as determined in
accordance with the rules of the SEC.
The concentration of investments in North Carolina Municipal Obligations
raises special investment considerations. In particular, changes in the economic
condition and governmental policies of North Carolina and its political
subdivisions, agencies, instrumentalities and authorities could adversely affect
the value of the Portfolio and its portfolio securities. Growth of North
Carolina tax revenues slowed considerably during fiscal 1990-92 requiring tax
increases and budget adjustments, including hiring freezes and restrictions,
spending constraints, changes in the timing of certain collections and payments,
and other short-term budget adjustments, that were needed to comply with North
Carolina's constitutional mandate for a balanced budget. Fiscal years 1993 and
1994, however, ended with a positive General Fund balance of approximately $500
million each year on a budgetary basis. By law, 25% of such positive fund
balance was required to be reserved in the General Fund of North Carolina as
part of a "Savings Reserve" (subject to a maximum reserve of 5% of the preceding
fiscal year's operating appropriation). An additional portion of such positive
fund balance was reserved in the General Fund as part of a "Reserve For Repair
and Renovation of State Facilities," leaving the remaining unrestricted fund
balance at the end of each such year available for future appropriations. See
the Statement of Additional Information for further discussion of investment
considerations associated with North Carolina Municipal Obligations and see
"Investment Policies--Common Investment Policies" for a description of other
investment policies of the Portfolio.
------------------------------------
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in Virginia Municipal Obligations. The
Portfolio may also invest in Municipal Obligations (including related tax-exempt
derivative securities) in which the Municipal Money Market Portfolio may invest.
See "Investment Policies--Municipal Money Market Portfolio" for a description of
Municipal Obligations. Instruments held by the Portfolio will have maturities of
13 months or less as determined in accordance with the rules of the SEC.
The Portfolio may also purchase obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities. Obligations of certain
agencies and instrumentalities of the U.S. Government are backed by the full
faith and credit of the United States. Others are backed by the right of the
issuer to borrow from the U.S. Treasury or
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are backed only by the credit of the agency or instrumentality issuing the
obligation. See "Investment Policies-- Government Money Market Portfolio" for
examples of the types of U.S. Government obligations that the Portfolio may
purchase.
The Virginia Municipal Money Market Portfolio will invest primarily in
Virginia Municipal Obligations. For this reason, the Portfolio is affected by
political, economic, regulatory or other developments that constrain the taxing,
revenue-collecting and spending authority of Virginia issuers or otherwise
affect the ability of Virginia issuers to pay interest, repay principal, or any
premium. Certain of these developments are described herein. The rate of
economic growth in the Commonwealth of Virginia slowed in 1990 and 1991, but has
increased steadily over the past decade. From 1984 to 1993, the Commonwealth's
4.8% rate of growth in per capita personal income was slightly ahead of the
national rate of growth of 4.7%. During 1990, 1991 and 1992, Virginia's per
capita personal income grew at a slightly lower rate than the U.S. average. Per
capita income in Virginia has been consistently above national levels over the
past decade and, in 1993, was $21,634 compared with the national level of
$20,817. The services sector in Virginia generates the largest number of jobs,
followed by wholesale and retail trade, government employment and manufacturing.
Because of Virginia's proximity to Washington, D.C. and the concentration of
military installations in the Commonwealth (the largest such concentration in
the United States), the Federal government has a greater economic impact on
Virginia relative to its size than on any of the other states except Alaska and
Hawaii. It is unclear what effect the current efforts by the Federal government
to restructure the defense budget will have on the long-term economic conditions
of the Commonwealth. According to statistics published by the U.S. Department of
Labor, the Commonwealth typically has one of the lowest unemployment rates in
the nation. This is generally attributed to the balance among the various
sectors represented in the economy. During 1993, an average of 5.9% of
Virginians were unemployed as compared with the national average of 6.8%. The
population of the Commonwealth has continued to grow over the last decade at a
rate that is substantially higher than the national average. The rate of
increase in such population growth has declined since reaching a high of 2.1%
annually in 1987 and, in 1993, was approximately 1.8%. Virginia is one of twenty
states with a right-to-work law and is generally regarded as having a favorable
business climate marked by few strikes or work stoppages. Virginia is also one
of the least unionized among the industrialized states. See "Special
Consideration Regarding Investment in Virginia Municipal Obligations" in the
Statement of Additional Information. See also "Investment Policies--Common
Investment Policies" for a description of other investment policies.
------------------------------------
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in New Jersey Municipal Obligations.
The Portfolio may also invest in Municipal Obligations (including related
tax-exempt derivative securities) in which the Municipal Money Market Portfolio
may invest. See "Investment Policies--Municipal Money Market Portfolio" for a
description of Municipal Obligations. Portfolio obligations held by the
Portfolio will have maturities of 13 months or less as determined in accordance
with the rules of the SEC.
The concentration of investments by the New Jersey Municipal Money Market
Portfolio in New Jersey Municipal Obligations raises special investment
considerations. The State of New Jersey generally has a diversified economic
base consisting of, among others, commerce and service industries, selective
commercial agriculture, insurance, tourism, petroleum refining and
manufacturing, although New Jersey's manufacturing industry has experienced a
downward trend in the last few years. New Jersey is a major recipient of Federal
assistance and, of all the states, is among the highest in the amount of Federal
aid received. Therefore, a decrease in Federal financial assistance may
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adversely affect the financial condition of New Jersey and its political
subdivisions and instrumentalities. While New Jersey's economic base has become
more diversified over time and thus its economy appears to be less vulnerable
during recessionary periods, a recurrence of high levels of unemployment could
adversely affect New Jersey's overall economy and the ability of New Jersey and
its political subdivisions and instrumentalities to meet their financial
obligations. In addition, because New Jersey maintains a balanced budget which
restricts total appropriation increases to only 5% annually with respect to any
municipality or county, the balanced budget plan may actually adversely affect a
particular municipality's or county's ability to repay its obligations. See the
Statement of Additional Information for further discussion of investment
considerations associated with New Jersey Municipal Obligations and see
"Investment Policies--Common Investment Policies" for a description of other
securities in which the Portfolio may invest.
------------------------------------
COMMON INVESTMENT POLICIES
This section describes certain investment policies that are common to
Portfolios. Each Portfolio's investment objective and policies may be changed by
the Board of Trustees without shareholder approval.
MORTGAGE-RELATED SECURITIES. Each Portfolio other than the Municipal Money
Market, Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Virginia Municipal Money Market and New Jersey
Municipal Money Market Portfolios (collectively, the "Municipal Portfolios") may
invest in mortgage-related securities issued by the U.S. Government or its
agencies or instrumentalities or issued by private companies. Such
mortgage-related securities may include collateralized mortgage obligations
("CMOs") issued by the Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation or other U.S. Government agencies or instrumentalities
or issued by private companies. The average life of mortgage-related securities
is likely to be less than the original maturity of the mortgage pools underlying
the securities as a result of mortgage prepayments. For this and other reasons,
a mortgage-related security's stated maturity may be shortened and, therefore,
it may be difficult to predict precisely the security's total return to the
particular Portfolio. In addition, in periods of falling interest rates, the
rate of mortgage prepayments tends to increase. During such periods, the
reinvestment of prepayment proceeds by the particular Portfolio will generally
be at lower rates than the rates on the prepaid obligations.
REPURCHASE AGREEMENTS. Each Portfolio other than the Municipal Portfolios
may agree to purchase securities from financial institutions subject to the
seller's agreement to repurchase them at an agreed-upon time and price
("repurchase agreements"). The securities held subject to a repurchase agreement
may have stated maturities exceeding 13 months, provided the repurchase
agreement itself matures in less than 13 months. Default by or bankruptcy of the
seller would, however, expose the Portfolio to possible loss because of adverse
market action or delays in connection with the disposition of the underlying
obligations.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Each Portfolio may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions involve a commitment by a
Portfolio to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), and permit a
Portfolio to lock-in a price or yield on a security it owns or intends to
purchase, regardless of future changes in interest rates. When-issued and
forward commitment transactions involve the risk, however, that the price or
yield obtained in a transaction may be less favorable than the price or yield
available in the market when the delivery takes place. Each Portfolio's
when-issued purchases and forward commitments are not expected to exceed 25% of
the value of its total assets absent unusual market conditions. The
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Portfolios do not intend to engage in when-issued purchases and forward
commitments for speculative purposes but only in furtherance of their investment
objectives.
REVERSE REPURCHASE AGREEMENTS. Each Portfolio other than the Municipal
Portfolios may enter into reverse repurchase agreements with respect to
portfolio securities for temporary purposes (such as to obtain cash to meet
redemption requests when the liquidation of portfolio securities is deemed
disadvantageous or inconvenient by the adviser or sub-adviser). A reverse
repurchase agreement involves a sale by a Portfolio of securities that it holds
concurrently with an agreement by the Portfolio to repurchase the same
securities at an agreed-upon price and date. Reverse repurchase agreements
involve the risk that the market value of the securities sold by the Portfolio
may decline below the price of the securities the Portfolio is obligated to
repurchase. Reverse repurchase agreements are considered to be borrowings by a
Portfolio under the Investment Company Act of 1940 (the "1940 Act").
INVESTMENT COMPANIES. In connection with the management of their daily cash
positions, each Portfolio may invest in securities issued by other investment
companies which invest in short-term, high quality debt securities and which
determine their net asset value per share based on the amortized cost or
penny-rounding method of valuation. Securities of other investment companies
will be acquired by a Portfolio within the limits prescribed by the 1940 Act.
Each Portfolio currently intends to limit its investments so that, as determined
immediately after a securities purchase is made: (i) not more than 5% of the
value of its total assets will be invested in the securities of any one
investment company; (ii) 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 (iii) not more than 3% of the outstanding voting stock of any one investment
company will be owned by the Portfolio or by the Fund as a whole. As a
shareholder of another investment company, a Portfolio would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory fees and other expenses the Portfolio bears directly in connection with
its own operations.
VARIABLE AND FLOATING RATE INSTRUMENTS. Each Portfolio may purchase rated
and unrated variable and floating rate instruments, which may have a stated
maturity in excess of 13 months but will, in any event, permit a Portfolio to
demand payment of the principal of the instrument at least once every 13 months
upon not more than thirty days' notice (unless the instrument is guaranteed by
the U.S. Government or an agency or instrumentality thereof). Such instruments
may include variable amount master demand notes that permit the indebtedness
thereunder to vary in addition to providing for periodic adjustments in the
interest rate. Issuers of unrated variable and floating rate instruments must
satisfy the same criteria as set forth above for the particular Portfolio, and
will be determined to present minimal credit risks by the adviser. The absence
of an active secondary market with respect to particular variable and floating
rate instruments, however, could make it difficult for a Portfolio to dispose of
a variable or floating rate instrument if the issuer defaulted on its payment
obligation or during periods when a Portfolio is not entitled to exercise its
demand rights, and a Portfolio could, for these or other reasons, suffer a loss
with respect to such instruments.
TAX-EXEMPT DERIVATIVES AND OTHER MUNICIPAL OBLIGATIONS. The Municipal
Portfolios may invest in tax-exempt derivative securities relating to Municipal
Obligations, including tender option bonds, participations, beneficial interests
in trusts and partnership interests.
Opinions relating to the validity of Municipal Obligations and to the
exemption of interest thereon from Federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance, and opinions relating
to the validity of and the tax-exempt status of payments received by the
Portfolios from tax-exempt derivative securities are rendered by counsel to the
respective sponsors of such securities. The Fund and its investment adviser will
rely on such opinions and will not review independently the underlying
proceedings relating to the issuance of Municipal Obligations, the creation of
any tax-exempt derivative securities, or the bases of such opinions.
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UNINVESTED CASH RESERVES. Each Portfolio may hold uninvested cash reserves
pending investment during temporary defensive periods. Each Municipal Portfolio
may also hold uninvested cash reserves if, in the opinion of its sub-adviser,
suitable obligations bearing tax-free interest are unavailable. During normal
market periods, no more than 20% of a Portfolio's assets will be held
uninvested. Uninvested cash reserves will not earn income.
ILLIQUID SECURITIES. No Portfolio will knowingly invest more than 10% of
the value of its net assets in securities that are illiquid. Variable and
floating rate instruments that cannot be disposed of within seven days, GICs,
and repurchase agreements and time deposits that do not provide for payment
within seven days after notice, without taking a reduced price, are subject to
this 10% limit. Each Portfolio may purchase securities which are not registered
under the 1933 Act but which can be sold to "qualified institutional buyers" in
accordance with Rule 144A under the 1933 Act. Any such security will not be
considered illiquid so long as it is determined by the adviser or sub-adviser,
acting under guidelines approved and monitored by the Board, that an adequate
trading market exists for that particular security. This investment practice
could have the effect of increasing the level of illiquidity in a Portfolio
during any period that qualified institutional buyers become uninterested in
purchasing these restricted securities.
MUNICIPAL MONEY MARKET, OHIO MUNICIPAL MONEY MARKET, PENNSYLVANIA MUNICIPAL
MONEY MARKET, NORTH CAROLINA MUNICIPAL MONEY MARKET, VIRGINIA MUNICIPAL MONEY
MARKET AND NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIOS. During normal market
conditions, up to 20% of each Municipal Portfolio's net assets may be invested
in securities which are not Municipal Obligations and at least 65% of the total
net assets of each of Ohio Municipal Money Market, Pennsylvania Municipal Money
Market, North Carolina Municipal Money Market, Virginia Municipal Money Market
and New Jersey Municipal Money Market Portfolios will be invested in Ohio,
Pennsylvania, North Carolina, Virginia and New Jersey Municipal Obligations,
respectively. During temporary defensive periods, each Municipal Portfolio may
invest without limitation in obligations which are not Municipal Obligations and
may hold without limitation uninvested cash reserves. Such securities may
include, without limitation, bonds, notes, variable rate demand notes and
commercial paper, provided such securities are rated within the relevant
categories applicable to Municipal Obligations set forth above, or if unrated,
are of comparable quality as determined by the adviser or sub-adviser, and may
also include, without limitation, other debt obligations, such as bank
obligations. Each Municipal Portfolio may acquire "stand-by commitments" with
respect to Municipal Obligations held by it. Under a stand-by commitment, a
dealer agrees to purchase at the Portfolio's option specified Municipal
Obligations at a specified price. The acquisition of a stand-by commitment may
increase the cost, and thereby reduce the yield, of the Municipal Obligation to
which such commitment relates. Each Municipal Portfolio will acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes.
The Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Virginia Municipal Money Market and New Jersey
Municipal Money Market Portfolios may invest without limitation in private
activity bonds the interest on which is an item of tax preference for purposes
of the Federal alternative minimum tax ("AMT Paper"). The Municipal Money Market
Portfolio may invest up to 20% of its total assets in AMT Paper when added
together with any taxable investments held by the Portfolio. Interest on AMT
Paper that is received by taxpayers subject to the Federal alternative minimum
tax is taxable. Investors should also be aware of the possibility of state and
local alternative minimum or minimum income tax liability on interest from AMT
Paper. To the extent a Portfolio's assets are invested in Municipal Obligations
payable from the revenues of similar projects or are invested in private
activity bonds, the Portfolio will be subject to the peculiar risks presented by
the laws and economic conditions relating to such projects and bonds to a
greater extent than it would be if its assets were not so invested. Each
Municipal Portfolio may invest 25% or more of its net assets in Municipal
Obligations the interest on which is paid solely from revenues of similar
projects. The amount of information regarding the financial condition of issuers
of Municipal Obligations may not be as extensive as that which is made available
by public corporations, and the secondary market for Municipal Obligations may
be less liquid than that for taxable obligations. Accordingly, the ability
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of a Municipal Portfolio to buy and sell tax-exempt securities may, at any
particular time and with respect to any particular securities, be limited.
The Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Virginia Municipal Money Market and New Jersey
Municipal Money Market Portfolios are classified as non-diversified under the
1940 Act. Investment returns on a non-diversified portfolio typically are
dependent upon the performance of a smaller number of securities relative to the
number held in a diversified portfolio. Consequently, the change in value of any
one security may affect the overall value of a non-diversified portfolio more
than it would a diversified portfolio. Additionally, a non-diversified portfolio
may be more susceptible to economic, political and regulatory developments than
a diversified portfolio with similar objectives.
ADDITIONAL QUALITY AND DIVERSIFICATION REQUIREMENTS. The Portfolios may
only invest in: (i) securities in the two highest rating categories of an NRSRO,
provided that if they are rated by more than one NRSRO, at least one other NRSRO
rates them in one of its two highest categories; and (ii) unrated securities
determined to be of comparable quality at the time of purchase (collectively,
"Eligible Securities"). Except for the Municipal Portfolios, a Portfolio may not
invest more than 5% of its assets in Eligible Securities that are not "First
Tier Securities" (as defined below). The rating symbols of the NRSROs which the
Portfolios may use are described in an Appendix to the Statement of Additional
Information. Each Portfolio other than the Municipal Portfolios will limit its
purchases of any one issuer's securities (other than U.S. Government obligations
and customary demand deposits) to 5% of the Portfolio's total assets, except
that it may invest more than 5% (but no more than 25%) of its total assets in
"First Tier Securities" of one issuer for a period of up to three business days.
First Tier Securities include: (i) securities in the highest rating category by
the only NRSRO rating them, (ii) securities in the highest rating category of at
least two NRSROs, if more than one NRSRO has rated them, (iii) securities that
have no short-term rating, but have been issued by an issuer that has other
outstanding short-term obligations that have been rated in accordance with (i)
or (ii) above and are comparable in priority and security to such securities,
and (iv) certain unrated securities that have been determined to be of
comparable quality to such securities. In addition, each Portfolio other than
the Municipal Portfolios will limit its purchases of "Second Tier Securities"
(Eligible Securities that are not First Tier Securities) of one issuer to the
greater of 1% of its total assets or $1 million.
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
Each Portfolio is subject to the fundamental investment limitations stated
in this section, which may not be changed as to a Portfolio except upon the
affirmative vote of the holders of a majority of the Portfolio's outstanding
shares.
1. Each of the Money Market, Municipal Money Market and Government
Money Market Portfolios may not purchase securities of any one issuer
(other than securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities or certificates of deposit for any such
securities) if more than 5% of the value of the Portfolio's total assets
(taken at current value) would be invested in the securities of such
issuer, or more than 10% of the issuer's outstanding voting securities
would be owned by the Portfolio or the Fund, except that up to 25% of the
value of the Portfolio's total assets (taken at current value) may be
invested without regard to these limitations. For purposes of this
limitation, a security is considered to be issued by the entity (or
entities) whose assets and revenues back the security. A guarantee of a
security is not deemed to be a security issued by the guarantor when the
value of all securities issued and guaranteed by the guarantor, and owned
by the Portfolio, does not exceed 10% of the value of the Portfolio's total
assets.
2. No Portfolio may borrow money or issue senior securities, except
that each Portfolio may borrow from banks and (other than a Municipal
Portfolio) enter into reverse repurchase agreements for temporary purposes
in
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amounts up to one-third of the value of its total assets at the time of
such borrowing; or mortgage, pledge or hypothecate any assets, except in
connection with any such borrowing and then in amounts not in excess of
one-third of the value of the Portfolio's total assets at the time of such
borrowing. No Portfolio will purchase securities while its aggregate
borrowings (including reverse repurchase agreements and borrowings from
banks) in excess of 5% of its total assets are outstanding. Securities held
in escrow or separate accounts in connection with a Portfolio's investment
practices are not deemed to be pledged for purposes of this limitation.
3. In addition, each of the Municipal Money Market, Government Money
Market, Ohio Municipal Money Market, Pennsylvania Municipal Money Market,
North Carolina Municipal Money Market, Virginia Municipal Money Market and
New Jersey Municipal Money Market Portfolios may not purchase securities
which would cause 25% or more of the value of its total assets at the time
of purchase to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry. The
Money Market Portfolio, on the other hand, may not purchase any securities
which would cause, at the time of purchase, less than 25% of the value of
its total assets to be invested in the obligations of issuers in the
banking industry, or in obligations, such as repurchase agreements, secured
by such obligations (unless the Portfolio is in a temporary defensive
position) or which would cause, at the time of purchase, more than 25% of
the value of its total assets to be invested in the obligations of issuers
in any other industry. In applying the investment limitations stated in
this paragraph, (i) there is no limitation with respect to the purchase of
(a) instruments issued (as defined in investment limitation number 1 above)
or guaranteed by the United States, any state, territory or possession of
the United States, the District of Columbia or any of their authorities,
agencies, instrumentalities or political subdivisions, (b) instruments
issued by domestic banks (which may include U.S. branches of foreign banks)
and (c) repurchase agreements secured by the instruments described in
clauses (a) and (b); (ii) 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 the parents; and (iii) utilities
will be divided according to their services, for example, gas, gas
transmission, electric and gas, electric and telephone will be each
considered a separate industry.
4. Each of the Ohio Municipal Money Market, Pennsylvania Municipal
Money Market, North Carolina Municipal Money Market, Virginia Municipal
Money Market and New Jersey Municipal Money Market Portfolios will invest
at least 80% of its net assets in AMT Paper and instruments the interest on
which is exempt from regular Federal income tax, except during defensive
periods or during periods of unusual market conditions.
5. Finally, the Municipal Money Market Portfolio will invest at least
80% of its net assets in instruments the interest on which is exempt from
regular Federal income tax and is not an item of tax preference for
purposes of Federal alternative minimum tax, except during defensive
periods or during periods of unusual market conditions.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
a Portfolio's investments will not constitute a violation of such limitation,
except that any borrowing by a Portfolio that exceeds the fundamental investment
restrictions stated above must be reduced to meet such restrictions within the
period required by the 1940 Act (currently three days).
In order to permit the sale of its shares in certain states, the Fund may
make commitments more restrictive than the investment policies and limitations
described in this Prospectus. Should the Fund determine that any such commitment
is no longer in the best interests of the Fund, it will revoke the commitment by
terminating sales of its shares in the state involved.
* * *
For information on additional investment limitations relating to the
Portfolios, see the Fund's Statement of Additional Information.
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HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------
GENERAL
Series A Shares in the Portfolios may be purchased without a sales load
through PNC Bank, National Association ("PNC Bank"), PNC Bank, Ohio, National
Association ("PNC Bank Ohio"), institutional investors and registered
broker-dealers ("Authorized Dealers"), or by completing and forwarding the
application included in this Prospectus, through any one of them, to the Fund's
transfer agent. Subsequent purchases of Series A Shares may be effected through
PNC Bank, PNC Bank Ohio, institutional investors and Authorized Dealers or by
mailing a check or Federal Reserve Draft, payable to the order of "The PNC Fund"
c/o PFPC, P.O. Box 8907, Wilmington, Delaware 19899-8907. The name of the
Portfolio for which Series A Shares are being purchased must also appear on the
check or Federal Reserve Draft. Federal Reserve Drafts are available at national
banks or any state bank which is a member of the Federal Reserve System. Initial
investments in any Portfolio must be at least $500, except that such minimum
investment requirement is: (i) $100 for employees of the Fund, the Fund's
adviser, sub-adviser, distributor or transfer agent or employees of any such
service providers' affiliate; and (ii) $50 for investors purchasing Series A
Shares under the automatic investing program described in "Investor
Programs--Automatic Investing." Subsequent investments must be at least $100.
The Fund reserves the right to reject any purchase order. Certificates for
Series A Shares will be issued only upon request. No certificates will be issued
for Series B Shares.
Investor Shares may be purchased on any Business Day. A "Business Day" is
any weekday that the New York Stock Exchange (the "NYSE") and the Federal
Reserve Bank of Philadelphia (the "FRB") are open for business.
Series A Shares are sold at the net asset value per share of the Portfolios
next computed after an order is received by PFPC Inc. ("PFPC"), the Fund's
transfer agent. It is the responsibility of Provident Distributors, Inc. ("PDI"
or "Distributor"), PNC Bank, PNC Bank Ohio, institutional investors and the
Authorized Dealers to transmit orders received by them from investors to the
Fund's transfer agent in a timely manner. Orders of less than $500 may be mailed
by PNC Bank, PNC Bank Ohio, institutional investors and Authorized Dealers to
the transfer agent.
Purchase orders for shares of each Portfolio except the Government Money
Market Portfolio that are received before noon will be executed at noon. If
payment for such orders is not received by 4:00 p.m., the order will be
cancelled and notice thereof will be given to the institution placing the order.
Orders received after 12:00 noon will not be accepted. The Fund may in its
discretion reject any order for shares.
Purchase orders for Shares of the Government Money Market Portfolio that
are received before noon will be executed at noon; purchase orders for Shares of
the Government Money Market Portfolio that are received after noon but before
4:00 p.m. will be executed at 4:00 p.m. If payment for such orders is not
received by 4:00 p.m., the order will be cancelled and notice thereof will be
given to the institution placing the order. Orders will not be accepted after
4:00 p.m. Under certain circumstances, the Fund may reject large individual
purchase orders received after 12:00 noon. The Fund may in its discretion reject
any order for Shares.
Series B Shares in the Money Market Portfolio are available only to the
holders of Series B Investor Shares in the Fund's non-money market portfolios
who wish to exchange their Series B Investor Shares in such portfolios for
Series B Investor Shares in the Money Market Portfolio. See "Investor
Programs--Exchange Privilege." Six years after the date of purchase of the
exchanged Series B Shares, Series B Shares of the Money Market Portfolio will
automatically convert to Series A Shares. The purpose of the conversion is to
relieve the holders of Series B Shares of the higher operating expenses charged
to Series B Shares. The conversion from Series B Shares to Series A Shares will
take place at the net asset value of each class of Shares at the time of the
conversion. Upon such conversion, an investor would hold Series A Shares subject
to the operating expenses for Series A Shares discussed below. Upon each
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conversion of Series B Shares that were not acquired through reinvestment of
dividends or distributions, a proportionate amount of Series B Shares that were
acquired through reinvestment of dividends or distributions will likewise
automatically convert to Series A Shares.
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
REDEMPTION
Shareholders may redeem for cash some or all of their Shares of the
Portfolios at any time. To do so, a written request in proper form must be sent
directly to The PNC Fund c/o PFPC, P.O. Box 8907, Wilmington, Delaware
19899-8907. Except for the contingent deferred sales charge that may be charged
with respect to Series B Shares of the Money Market Portfolio, there is no
charge for a redemption. See "Investor Programs--Exchange Privilege."
Shareholders may also place redemption requests through an Authorized Dealer,
but the Authorized Dealer might charge a fee for this service.
WHEN REDEEMING INVESTOR SHARES IN THE MONEY MARKET PORTFOLIO, SHAREHOLDERS
SHOULD INDICATE WHETHER THEY ARE REDEEMING SERIES A SHARES OR SERIES B SHARES.
In the event a redeeming shareholder owns both Series A and Series B Shares in
the Money Market Portfolio, the Series A Shares will be redeemed first unless
the shareholder indicates otherwise.
Except as noted below, a request for redemption must be signed by all
persons in whose names the Shares are registered. Signatures must conform
exactly to the account registration. If the proceeds of the redemption would
exceed $25,000, or if the proceeds are not to be paid to the record owner at the
record address, or if the shareholder is a corporation, partnership, trust or
fiduciary, signature(s) must be guaranteed by an eligible guarantor institution
as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. Eligible
guarantor institutions generally include banks, broker/dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations.
Generally, a properly signed written request with any required signature
guarantee is all that is required for a redemption. In some cases, however,
other documents may be necessary. In the case of shareholders holding Series A
Share certificates, the certificates for the Series A Shares being redeemed must
accompany the redemption request. Additional documentary evidence of authority
is required by PFPC in the event redemption is requested by a corporation,
partnership, trust, fiduciary, executor or administrator.
REDEMPTION BY CHECK. Upon request, the Fund will provide the holders of
Series A Shares with checkwriting privileges. An investor wishing to use this
checkwriting redemption procedure must complete the checkwriting application and
signature card when completing the account application. Investors interested in
obtaining the checkwriting option on existing accounts may contact the Fund's
transfer agent at (800) 441-7762 and application forms will be provided. The
checkwriting option is not available in connection with the redemption of Series
B Shares.
Upon receipt of the checkwriting application and signature card by PFPC,
checks will be forwarded to the investor.
The minimum amount of a check is $100. Checks may be made payable to anyone
and are negotiated according to bank clearing procedures. If more than one
shareholder owns the account, each shareholder must sign each check, unless an
election has been made to permit checkwriting by a limited number of signatures
and such election is on file with PFPC.
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Series A Shares represented by a check redemption will continue to earn
daily income until the check is presented for payment. The bank, as the
investor's agent, will cause the Fund to redeem a sufficient number of Series A
Shares owned to cover the check.
When redeeming Series A Shares by check, an investor should make certain
that there is an adequate number of Series A Shares in the account to cover the
amount of the check. If an insufficient number of Series A Shares is held or
if checks are not properly endorsed, they may not be honored and a service
charge may be incurred.
Checks may not be presented for cash payments at the offices of the bank.
This limitation does not affect checks used for the payment of bills or cash at
other banks.
EXPEDITED REDEMPTIONS
If a shareholder has given authorization for expedited redemption, Shares
can be redeemed by telephone and the proceeds sent by check to the shareholder
or by Federal wire transfer to a single previously designated bank account. Once
authorization is on file, PFPC will honor requests by any person by telephone at
(800) 441-7762 (in Delaware call collect (302) 791-1194) or other means. The
minimum amount that may be sent by check is $500, while the minimum amount that
may be wired is $10,000. The Fund reserves the right to change these minimums or
to terminate these redemption privileges. If the proceeds of a redemption would
exceed $25,000, the redemption request must be in writing and will be subject to
the signature guarantee requirement described above in "How to Redeem Shares--
Redemption." This privilege may not be used to redeem Series A Shares in
certificated form.
During periods of substantial economic or market change, telephone
redemptions may be difficult to complete. If a shareholder is unable to contact
the transfer agent by telephone, the shareholder may also deliver the redemption
request to the transfer agent by mail at PFPC Inc., P.O. Box 8907, Wilmington,
DE 19899-8907.
The Fund is not responsible for the efficiency of the Federal wire system
or the shareholder's firm or bank. The Fund does not currently charge for wire
transfers. The shareholder is responsible for any charges imposed by the
shareholder's bank. To change the name of the single designated bank account to
receive wire redemption proceeds, it is necessary to send a written request
(with a guaranteed signature as described under "How to Redeem Shares--
Redemption") to The PNC Fund c/o PFPC, P.O. Box 8907, Wilmington, Delaware
19899-8907.
The Fund reserves the right to refuse a telephone redemption if it believes
it advisable to do so. Neither the Fund nor PFPC will be responsible for the
authenticity of redemption instructions received by telephone. The Fund, PFPC,
PDI (collectively with PFPC, the "Administrators") and the Distributor will not
be liable for any loss, liability, cost or expense for acting upon telephone
instructions reasonably believed to be genuine. See "How to Purchase Shares--
Exchange Privilege" for a description of the Fund's policy on telephone
instructions.
ACCOUNTS WITH LOW BALANCES
The Fund reserves the right to redeem a shareholder's account in any
Portfolio at any time the net asset value of the account in such Portfolio falls
below the minimum initial investment requirement amount as the result of a
redemption or an exchange request. A shareholder will be notified in writing
that the value of the shareholder's account in a Portfolio is less than the
required amount and will be allowed 30 days to make additional investments
before the redemption is processed.
PAYMENT OF REDEMPTION PROCEEDS
The redemption price for Series A and Series B Shares of a Portfolio is the
net asset value per share of the Portfolio next determined after the request for
redemption is received in proper form by The PNC Fund c/o PFPC,
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<PAGE> 61
P.O. Box 8907, Wilmington, Delaware 19899-8907. While the Fund intends to use
its best efforts to maintain each Portfolio's net asset value per share at
$1.00, the proceeds paid upon redemption may be more or less than the amount
invested depending on a Share's net asset value at the time of redemption. The
proceeds from the redemption of Series B Shares will be reduced by the amount of
any applicable deferred sales charge. See "Description of Shares."
Payment for Shares redeemed is made by check mailed within seven days after
acceptance by PFPC of the request and any other necessary documents in proper
order. Such payment may be postponed or the right of redemption suspended as
provided by the rules of the SEC. If the Shares to be redeemed have been
recently purchased by check, the Fund's transfer agent may delay the payment of
redemption proceeds, which may be a period of up to 15 days after the purchase
date, pending a determination that the check has cleared.
INVESTOR PROGRAMS
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EXCHANGE PRIVILEGE
After appropriate authorization, a shareholder may exchange Shares of a
Portfolio for Investor Shares of any other investment portfolio of the Fund at
the net asset value per share of each class of shares next determined after the
transfer agent's receipt of a request for an exchange, plus any applicable sales
charge. Unless an exception applies, a front-end sales charge or a contingent
deferred sales charge will be charged in connection with exchanges of Shares for
Series A Investor Shares and Series B Investor Shares, respectively, of the
Fund's non-money market portfolios. Series B Investor Shares of the Money Market
Portfolio are only exchangeable for Series B Investor Shares of the Fund's
non-money market investment portfolios. Series B Shares are exchangeable without
the payment of any contingent deferred sales charge at the time the exchange is
made. In determining the holding period for calculating the contingent deferred
sales charge payable on redemption of Series B Shares, the holding period of the
Series B Shares originally held will be added to the holding period of the
Series B Shares acquired through exchange. See "Description of Shares." No
exchange fee is imposed by the Fund.
Shareholders who wish to exchange Series A Shares of a Portfolio for
Investor Shares of a non-money market investment portfolio of the Fund may
choose between Series A Investor Shares and Series B Investor Shares. Series A
Investor Shares of a portfolio are sold at the net asset value for Series A
Investor Shares of the portfolio plus the applicable front-end sales charge.
Series A Investor Shares of the Fund's non-money market portfolios bear the
expense of payments under the Distribution and Service Plan at an annual rate
not to exceed .55% of the average daily net asset value of each portfolio's
outstanding Series A Investor Shares. See "Distribution of Shares." Series B
Investor Shares of a portfolio are sold at the net asset value for Series B
Investor Shares of the portfolio. A deferred sales charge is deducted if Series
B Investor Shares are redeemed within six years of purchase. The deferred sales
charge deducted upon the redemption of Series B Investor Shares decreases over
time. Series B Investor Shares of the Fund's non-money market portfolios bear
the expense of payments under the Series B Distribution Plan at an annual rate
not to exceed .75% of the average daily net asset value of each portfolio's
outstanding Series B Investor Shares. Series B Investor Shares of the Fund's
non-money market portfolios also bear the expense of the Series B Service Plan
at an annual rate not to exceed .25% of each portfolio's outstanding Series B
Investor Shares. See "Description of Shares," "Shareholder Servicing" and
"Description of Shares." Shareholders should read the prospectus for the
non-money market portfolios of the Fund before exchanging Shares of a Portfolio
for Series A Investor Shares or Series B Investor Shares of a non-money market
portfolio. The public offering of Series B Investor Shares in certain investment
portfolios of the Fund may not commence on the date of this Prospectus.
Prospectuses for the other portfolios of the Fund and information on the
availability of Series B Investor Shares of such portfolios can be obtained by
calling the Fund's Distributor at (800) 422-6538.
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<PAGE> 62
A shareholder wishing to make an exchange may do so by sending a written
request to PFPC at the address given above in "How to Purchase Shares--General".
Shareholders are automatically provided with telephone exchange privileges when
opening an account, unless they indicate on the Application that they do not
wish to use this privilege. Shareholders holding share certificates are not
eligible to exchange Series A Shares by phone because share certificates must
accompany all exchange requests. To add this feature to an existing account that
previously did not provide for this option, a Telephone Exchange Authorization
Form must be filed with PFPC. This form is available from PFPC. Once this
election has been made, the shareholder may simply contact PFPC by telephone at
(800) 441-7762 (in Delaware call collect (302) 791-1194) to request the
exchange. During periods of substantial economic or market change, telephone
exchanges may be difficult to complete and shareholders may have to submit
exchange requests to PFPC in writing.
If the exchanging shareholder does not currently own shares of the
investment portfolio whose shares are being acquired, a new account will be
established with the same registration, dividend and capital gain options and
Authorized Dealer of record as the account from which shares are exchanged,
unless otherwise specified in writing by the shareholder with all signatures
guaranteed by an eligible guarantor institution as defined above. In order to
participate in the automatic investment program or establish a systematic
withdrawal plan for the new account, however, an exchanging shareholder must
file a specific written request. The exchange privilege may be modified or
terminated at any time, or from time to time, by the Fund on 60 days' notice to
affected Portfolio shareholders. THE FUND, THE ADMINISTRATORS AND THE
DISTRIBUTOR WILL NOT BE LIABLE FOR ANY LOSS, LIABILITY, COST OR EXPENSE FOR
ACTING UPON TELEPHONE INSTRUCTIONS THAT ARE REASONABLY BELIEVED TO BE GENUINE.
IN ATTEMPTING TO CONFIRM THAT TELEPHONE INSTRUCTIONS ARE GENUINE, THE FUND WILL
USE SUCH PROCEDURES AS ARE CONSIDERED REASONABLE, INCLUDING RECORDING THOSE
INSTRUCTIONS AND REQUESTING INFORMATION AS TO ACCOUNT REGISTRATION (SUCH AS THE
NAME IN WHICH AN ACCOUNT IS REGISTERED, THE ACCOUNT NUMBER, RECENT TRANSACTIONS
IN THE ACCOUNT, AND THE ACCOUNT HOLDER'S SOCIAL SECURITY NUMBER, ADDRESS AND/OR
BANK).
In establishing a new account by exchange, the dollar value of shares
acquired must equal or exceed the investment portfolio's minimum for a new
account; if making an exchange to an existing account, the dollar value must
equal or exceed the Fund's minimum for subsequent investments. If any amount
remains in the investment portfolio from which the exchange is being made, such
amount must not drop below the minimum account value required by the Fund.
AUTOMATIC INVESTING
Investments in Series A Shares may be made automatically by authorizing the
Fund's transfer agent to withdraw funds from your bank account. An initial
minimum investment of $50 per Portfolio, and subsequent investments of
at least $50, are required. Investors desiring to participate in the automatic
investing program should call PFPC at (800) 441-7762 (in Delaware call collect
(302) 791-1194) to obtain the appropriate forms.
RETIREMENT PLANS
Portfolio Shares may be purchased in conjunction with individual retirement
accounts ("IRAs") and rollover IRAs where PNC Bank or any of its affiliates acts
as custodian. For further information as to applications and annual fees,
contact the Distributor or an Authorized Dealer. To determine whether the
benefits of an IRA are available and/or appropriate, a shareholder should
consult with a tax adviser.
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<PAGE> 63
SYSTEMATIC WITHDRAWAL PLAN
If your account in a Portfolio has a value of at least $10,000, you may
establish a Systematic Withdrawal Plan with respect to the Portfolio and receive
regular periodic payments. A request to establish a Systematic Withdrawal Plan
must be submitted in writing to The PNC Fund c/o PFPC, P.O. Box 8907,
Wilmington, Delaware 19899-8907. Shareholders holding Series A Share
certificates are not eligible to establish a Systematic Withdrawal Plan because
Series A Share certificates must accompany all withdrawal requests. Each
withdrawal redemption may, at the shareholder's election, be processed either
monthly, every other month, quarterly, three times a year, semi-annually or
annually on or about the 25th of the month and mailed as soon as possible
thereafter. There are no service charges for maintenance. The minimum amount
that you may withdraw each period is $100. (This is merely the minimum amount
allowed and should not be mistaken for a recommended amount.) THE AMOUNT OF
REGULAR PERIODIC PAYMENTS SPECIFIED BY HOLDERS OF SERIES B SHARES PURSUANT TO A
SYSTEMATIC WITHDRAWAL PLAN WILL BE REDUCED BY ANY APPLICABLE DEFERRED SALES
CHARGE. The holder of a Systematic Withdrawal Plan will have any income
dividends and any capital gains distributions reinvested in full and fractional
Shares at net asset value. To provide funds for payment, Shares of the Portfolio
involved will be redeemed in such amount as is necessary to make the payment.
Redemption of Shares may reduce or possibly exhaust the Shares in your account,
particularly in the event of a market decline. As with other redemptions, a
redemption to make a withdrawal payment is a sale for Federal income tax
purposes. Payments made pursuant to a Systematic Withdrawal Plan cannot be
considered as actual yield or income since part of such payments may be a return
of capital.
You will ordinarily not be allowed to make additional investments of less
than the aggregate annual withdrawals under the Systematic Withdrawal Plan
during the time you have the Systematic Withdrawal Plan in effect and, while a
Systematic Withdrawal Plan is in effect, you may not make periodic investments
under Automatic Investing. THE MAINTENANCE OF A SYSTEMATIC WITHDRAWAL PLAN MAY
ALSO BE DISADVANTAGEOUS FOR HOLDERS OF SERIES B SHARES DUE TO THE EFFECT OF THE
CONTINGENT DEFERRED SALES CHARGE. You will receive a confirmation of each
transaction showing the sources of the payment and the Share and cash balance
remaining in your Systematic Withdrawal Plan. The Systematic Withdrawal Plan may
be terminated on written notice by the shareholder or by the Fund with respect
to the applicable Portfolio and it will terminate automatically if all Shares
are liquidated or withdrawn from the account or upon the death or incapacity of
the shareholder. You may change the amount and schedule of withdrawal payments
or suspend such payments by giving written notice to PFPC at least seven
business days prior to the end of the month preceding a scheduled payment.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The net asset value for each Investor Share of each Portfolio for the
purpose of pricing purchase and redemption orders is determined twice each day,
once as of 12:00 noon (Eastern Time) and once as of 4:00 p.m. (Eastern Time) on
each Business Day. Each Portfolio's net asset value per share is calculated by
adding the value of all securities, cash and other assets of the Portfolio,
subtracting the liabilities and dividing the result by the number of Shares
outstanding. The net asset value per Share of each Portfolio is determined
independently of the other Portfolios.
The Fund seeks to maintain for each of the Portfolios a net asset value of
$1.00 per share for purposes of purchases and redemptions and values their
portfolio securities on the basis of the amortized cost method of valuation
described in the Statement of Additional Information under "Valuation of
Shares." There can be no assurance that net asset value per share will not vary.
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<PAGE> 64
A Portfolio may use a pricing service, bank or broker/dealer experienced in
such matters to value the Portfolio's securities. A more detailed discussion of
net asset value and security valuation is contained in the Statement of
Additional Information.
MANAGEMENT
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES
The business and affairs of the Fund and each Portfolio are managed under
the direction of the Fund's Board of Trustees. The Statement of Additional
Information contains the name of each trustee and background information
regarding the trustees.
INVESTMENT ADVISER AND SUB-ADVISER
PNC Institutional Management Corporation ("PIMC"), an indirect wholly-owned
subsidiary of PNC Bank, National Association ("PNC Bank"), serves as the
investment adviser for each of the Portfolios. PIMC was organized in 1977 by PNC
Bank to perform advisory services for investment companies, and has its
principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809. PNC Bank
serves as the sub-adviser for each of the Portfolios. PNC Bank, whose principal
business address is Broad and Chestnut Streets, Philadelphia, Pennsylvania
19107, is a subsidiary of PNC Bank Corp. PNC Bank Corp. is a multi-bank holding
company.
As adviser, PIMC is responsible for the overall investment management of
each Portfolio. In addition, PIMC is responsible for all purchases and sales of
portfolio securities for the Portfolios. PNC Bank, as sub-adviser for each of
the Portfolios, provides research and credit analysis and certain other
services. In entering into portfolio transactions for a Portfolio with a
broker/dealer, the investment adviser and sub-adviser may take into account the
sale by such broker/dealer of shares of the Fund, subject to the requirements of
best execution.
For the services provided and expenses assumed by it for the benefit of the
Portfolios, PIMC is entitled to receive from each Portfolio a fee, computed
daily and payable monthly, at an annual rate of .45% of the first $1 billion of
each Portfolio's average daily net assets, .40% of the next $1 billion of each
Portfolio's average daily net assets, .375% of the next $1 billion of each
Portfolio's average daily net assets and .35% of the average daily net assets of
each Portfolio in excess of $3 billion. The Fund paid PIMC advisory fees at
annual rates of .35%, .35%, .35%, .44% and .40% of the average daily net assets
of the Money Market, Municipal Money Market, Government Money Market, Ohio
Municipal Money Market and Pennsylvania Municipal Money Market Portfolios,
respectively, for the year ended September 30, 1994, and PIMC waived advisory
fees at the annual rates of .10%, .10%, .10%, .01% and .05% of the average daily
net assets of such respective Portfolios for that year. For the year ended
September 30, 1994, PIMC waived all advisory fees with respect to the North
Carolina Municipal Money Market Portfolio. For the period ended September 30,
1994, PIMC waived all advisory fees with respect to the Virginia Municipal Money
Market Portfolio. During the same periods, PIMC reimbursed expenses at the
annual rates of .04%, .02%, .05% and .24% of the average daily net assets of the
Pennsylvania Municipal Money Market, Ohio Municipal Money Market, North Carolina
Municipal Money Market and Virginia Municipal Money Market Portfolios,
respectively. See "Management--Expenses" for a discussion of PIMC's voluntary
fee waiver.
For its sub-advisory services, PNC Bank is entitled to receive from PIMC a
fee, computed daily and payable monthly, at an annual rate of .05% of the
average daily net assets of each Portfolio. Such sub-advisory fees have no
effect on the advisory fees payable by each Portfolio to PIMC. For the year
ended September 30, 1994, PNC Bank waived all sub-advisory fees for the Money
Market, Municipal Money Market, Government Money Market, Ohio
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<PAGE> 65
Municipal Money Market, Pennsylvania Municipal Money Market and North Carolina
Municipal Money Market Portfolios. For the period ended September 30, 1994, PNC
Bank waived all sub-advisory fees for the Virginia Municipal Money Market
Portfolio. See "Management--Expenses" for a discussion of the sub-adviser's fee
waivers.
------------------------------------
ADMINISTRATORS
PFPC Inc. ("PFPC"), whose principal business address is 400 Bellevue
Parkway, Wilmington, Delaware 19809, and Provident Distributors, Inc. ("PDI"),
whose principal business address is 259 Radnor-Chester Road, Suite 120, Radnor,
Pennsylvania 19087 (together, the "Administrators"), serve as administrators for
the Fund. PFPC is an indirect wholly-owned subsidiary of PNC Bank Corp. A
majority of the outstanding stock of PDI is owned by its officers and the
remaining outstanding stock is owned by Pennsylvania Merchant Group Ltd.
The Administrators generally assist the Fund in all aspects of its
administration and operation, including matters relating to the maintenance of
financial records and fund accounting. As compensation for their services, the
Administrators are entitled to receive a combined fee, computed daily and
payable monthly, at an annual rate of .15% of the first $500 million of each
Portfolio's average daily net assets, .13% of the next $500 million of each
Portfolio's average daily net assets, .11% of the next $1 billion of each
Portfolio's average daily net assets and .10% of each Portfolio's average daily
net assets in excess of $2 billion. The Fund paid the Administrators combined
administration fees at the annual rates of .08%, .03%, .05%, .01% and .01% of
the average daily net assets of the Money Market, Municipal Money Market,
Government Money Market, Ohio Municipal Money Market and Pennsylvania Municipal
Money Market Portfolios, respectively, for the year ended September 30, 1994,
and the Administrators waived combined administration fees at the annual rates
of .06%, .12%, .10%, .14% and .14% of the average daily net assets of such
respective Portfolios for that year. The Administrators waived all combined
administration fees with respect to the North Carolina Municipal Money Market
Portfolio for the year ended September 30, 1994. The Administrators waived all
combined administration fees with respect to the Virginia Municipal Money Market
Portfolio for the period ended September 30, 1994. During the same periods, the
Administrators reimbursed expenses at the annual rates of .01%, .01%, .02% and
.08% of the average daily net assets of the Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market and
Virginia Municipal Money Market Portfolios, respectively. See
"Management--Expenses" for a discussion of the Administrators' voluntary fee
waiver.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND CUSTODIAN
PNC Bank serves as the Fund's custodian and PFPC serves as the Fund's
transfer agent and dividend disbursing agent.
------------------------------------
EXPENSES
Expenses are deducted from the total income of each Portfolio before
dividends and distributions are paid. These expenses include, but are not
limited to, fees paid to PIMC and the Administrators, transfer agency fees, fees
and expenses of officers and trustees who are not affiliated with PIMC or the
Distributor or any of their affiliates, taxes, interest, legal fees, custodian
fees, auditing fees, 12b-1 fees, servicing fees, certain fees and expenses in
registering and qualifying the Portfolio and its Shares for distribution under
Federal and state securities laws, expenses of preparing
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<PAGE> 66
prospectuses and statements of additional information and of printing and
distributing prospectuses and statements of additional information to existing
shareholders, the expense of reports to shareholders, shareholders' meetings and
proxy solicitations, fidelity bond and trustees and officers liability insurance
premiums, the expense of using independent pricing services and other expenses
which are not expressly assumed by PIMC or the Administrators under their
respective agreements with the Fund. Any general expenses of the Fund that are
not readily identifiable as belonging to a particular investment portfolio will
be allocated among all investment portfolios by or under the direction of the
Board of Trustees in a manner the Board determines to be fair and equitable. Any
expenses relating only to a particular class of shares within a Portfolio (such
as Series A 12b-1 fees for Series A Investor Shares and Series B 12b-1 fees and
service fees for Series B Investor Shares) will be borne solely by such Shares.
PIMC and PNC Bank expect to waive voluntarily a portion of their respective
advisory and sub-advisory fees. In addition, if the total expenses borne by any
Portfolio in any fiscal year exceed the expense limitations imposed by
applicable state securities regulations, PIMC, PNC Bank and the Administrators
will bear the amount of such excess to the extent required by such regulations
in proportion to the advisory and administration fees otherwise payable to them
for such year. Such amount, if any, will be estimated and accrued daily and paid
on a monthly basis.
------------------------------------
BANKING LAWS
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered open-end investment company continuously
engaged in the issuance of its shares, and prohibit banks generally from
underwriting securities, but such banking laws and regulations do not prohibit
such a holding company or affiliate or banks generally from acting as investment
adviser, administrator, transfer agent or custodian to such an investment
company, or from purchasing shares of such a company as agent for and upon the
order of customers. PNC Bank, PIMC and PFPC are subject to such banking laws and
regulations. In addition, state securities laws on this issue may differ from
the interpretations of Federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of such companies in connection with the provision of
services on behalf of the Fund and the holders of Investor Shares, the Fund
might be required to alter materially or discontinue its arrangements with such
companies and change its method of operations with respect to the Investor
Shares. It is not anticipated, however, that any such change would affect a
Portfolio's net asset value per share or result in a financial loss to any
investor.
DISTRIBUTION OF SHARES
- --------------------------------------------------------------------------------
Shares of each Portfolio are offered on a continuous basis by the
Distributor. The Distributor is a registered broker/dealer with principal
offices at 259 Radnor-Chester Road, Suite 120, Radnor, Pennsylvania 19087.
The Fund's Board of Trustees has adopted a Distribution and Service Plan
("Series A Plan") for Series A Shares and a Series B Distribution Plan ("Series
B Plan" and, collectively with the Series A Plan, the "Plans") for Series B
Shares.
Under each Plan the Distributor is entitled to payments by each Portfolio
for: (i) direct out-of-pocket promotional expenses incurred in connection with
advertising and marketing Shares; and (ii) payments to broker/dealers that are
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<PAGE> 67
not affiliated with the Distributor ("Service Organizations") for distribution
assistance such as advertising and marketing of Fund Shares. In addition,
payments under the Series B Plan will be used to pay for or finance sales
commissions and other fees payable to Service Organizations and other
broker/dealers who sell Series B Shares. Service Organizations may also provide
support services such as establishing and maintaining accounts and records
relating to shareholders for whom the Service Organizations are the dealer of
record or holder of record for shareholders with whom the Service Organizations
have a servicing relationship. "Direct out-of-pocket promotional expenses"
include amounts spent by the Distributor in connection with advertising via
radio, television, newspapers, magazines and otherwise; preparing, printing and
mailing sales materials, brochures and prospectuses (except for prospectuses
used for regulatory purposes or for distribution to existing shareholders); and
other out-of-pocket expenses incurred in connection with the promotion of
Shares.
Upon proper authorization by the Fund's trustees, expenses covered by the
Plans may also include other expenses the Distributor (or any other person) may
incur in connection with the distribution of the Fund's Shares including,
without limitation, expenditures for telephone facilities and in-house
telemarketing, or, in the case of the Series A Plan, in connection with
shareholder servicing.
Payments under the Series A Plan will not exceed .55% (annualized) of the
average daily net asset value of each Portfolio's outstanding Series A Shares.
Service Organizations may charge their clients additional fees for account
services. Customers who are beneficial owners of Series A Shares should read
this Prospectus in light of the terms and fees governing their accounts with
Service Organizations.
Payments under the Series B Plan will not exceed .75% (annualized) of the
average daily net asset value of each Portfolio's outstanding Series B Shares.
Service Organizations may charge their clients additional fees for account
services. Customers who are beneficial owners of Series B Shares should read
this Prospectus in light of the terms and fees governing their accounts with
Service Organizations.
Payments under the Plans which are expenses of a Portfolio's Investor
Shares are for distribution and/or other services rendered for or on behalf of
the Investor Shares of such Portfolio. However, joint distribution financing
with respect to Shares of the Portfolios (which financing may also involve other
investment portfolios or companies that are affiliated persons of such a person,
or affiliated persons of the Distributor) will be permitted in accordance with
applicable regulations of the SEC if and when such regulations are adopted.
If in any month the Distributor expends more monies than are immediately
payable under the Plans because of the percentage limitations described above
(or, due to any expense limitation imposed on a Portfolio, monies otherwise
payable by a Portfolio to the Distributor under the Plans are rendered
uncollectible), the unpaid expenditure may be "carried forward" from month to
month until such time, if ever, as it may be paid. In addition, payments to
Service Organizations (which may include the adviser and sub-advisers and their
affiliates) are not tied directly to the Service Organizations' own
out-of-pocket expenses and therefore may be used as they elect (for example, to
defray their overhead expenses). See "Description of Shares".
SHAREHOLDER SERVICING
- --------------------------------------------------------------------------------
The Fund intends to enter into service agreements pursuant to which Service
Organizations and sometimes the Distributor will render certain support services
to their customers who are the beneficial owners of Series B Shares. Such
services will be provided to customers who are the beneficial owners of Series B
Shares and are intended to supplement the services provided by the Fund's
Administrators and transfer agent. In consideration for payment of up to .25%
(on an annualized basis) of the average daily net asset value of Series B Shares
owned beneficially by their
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<PAGE> 68
customers, Service Organizations and the Distributor may provide one or more of
the following services to such customers: establishing and maintaining accounts
and records relating to customers that invest in Series B Shares; processing
dividend and distribution payments from the Fund on behalf of customers;
arranging for bank wires; providing sub-accounting with respect to Series B
Shares beneficially owned by customers or the information necessary for
sub-accounting; forwarding shareholder communications from the Fund (such as
proxies, shareholder reports, annual and semi-annual financial statements and
dividend, distribution and tax notices) to customers; assisting in processing
purchase, exchange and redemption requests from customers and in placing such
orders with the Fund's service contractors; assisting customers in changing
dividend options, account designations and addresses; providing customers with a
service that invests the assets of their accounts in Series B Shares pursuant to
specific or pre-authorized instructions; providing information periodically to
customers showing their positions in Series B Shares and integrating such
statements with those of other transactions and balances in customers' other
accounts with the Service Organization; responding to customer inquiries
relating to the services performed by the Service Organization or the
Distributor; responding to customer inquiries concerning their investments in
Series B Shares; and providing other similar shareholder liaison services. Fees
relating to the Series B Service Plan are not paid to Service Organizations or
the Distributor with respect to other classes of shares of the Portfolios
("Service Shares," "Series A Investor Shares" and "Institutional Shares"). See
"Description of Shares." Customers who are beneficial owners of Series B Shares
should read this Prospectus in light of the terms and fees governing their
accounts with Service Organizations.
DIVIDENDS AND DISTRIBUTIONS
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Shareholders of each Portfolio are entitled to dividends and distributions
arising from the net income and capital gains, if any, earned on investments
held by the particular Portfolio involved. Each Portfolio's net income is
declared daily as a dividend (i) to shareholders of record immediately prior to
the determination of net asset value made as of the close of regular trading
hours on the NYSE on days on which net asset value is determined, or (ii) to
shareholders of record immediately prior to 4:00 p.m. (Eastern time) on days on
which there is no determination of net asset value. Consequently, shareholders
whose purchase orders are executed at 12:00 noon (Eastern time) receive
dividends for that day. On the other hand, shareholders whose redemption orders
have been received by 12:00 noon (Eastern time) do not receive dividends for
that day, while shareholders of each Portfolio whose redemption orders are
received after 12:00 noon (Eastern time) do receive dividends for that day.
Because purchase and redemption orders with respect to Shares of the Government
Money Market Portfolio are executed at 12:00 noon and at 4:00 p.m., shareholders
whose purchase orders have been received by 4:00 p.m. will receive a dividend
for that day. For dividend purposes, a Portfolio's investment income available
for distribution to holders of Investor Shares is reduced by accrued expenses
directly attributable to that Portfolio and the general expenses of the Fund
prorated to that Portfolio on the basis of its relative net assets. A
Portfolio's net investment income available for distribution to the holders of
Series A and Series B Shares will be reduced by the amount of other expenses
allocated to such respective series of that Portfolio's Investor Shares,
including: i) fees payable under the Fund's Distribution and Service Plan in the
case of the Series A Shares; and ii) fees payable under the Series B
Distribution Plan and the Series B Service Plan in the case of the Series B
Shares. See "Purchase and Redemption of Shares", "Shareholder Servicing" and
"Distribution of Shares."
Dividends are paid monthly by check, or by wire transfer if requested in
writing by the shareholder, within five business days after the end of the
month. Net short-term capital gains, if any, will be distributed at least
annually. The period for which dividends are payable and the time for payment of
such dividends are subject to change by the Fund's Board of Trustees. The
Portfolios do not expect to realize net long-term capital gains.
All dividends paid with respect to a Portfolio are reinvested in the form
of additional full and fractional Investor Shares of the same series of such
Portfolio, unless a shareholder elects to receive dividends in cash. Such
election, or
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any revocation thereof, must be made in writing to PFPC, and will become
effective with respect to dividends paid after its receipt by PFPC.
TAXES
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The following discussion is only a brief summary of some of the important
tax considerations generally affecting the Portfolios and their shareholders and
is not intended as a substitute for careful tax planning. Accordingly, investors
in the Portfolios should consult their tax advisers with specific reference to
their own tax situations.
Each Portfolio will elect to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). So long as a Portfolio qualifies for this tax treatment, it generally
will be relieved of Federal income tax on amounts distributed to shareholders,
but shareholders, unless otherwise exempt, will pay income or capital gains
taxes on amounts so distributed (except distributions that constitute "exempt
interest dividends" or that are treated as a return of capital), regardless of
whether such distributions are paid in cash or reinvested in additional shares.
None of the Portfolios intends to make distributions that will be eligible for
the corporate dividends received deduction.
Distributions paid out of the "net capital gain" (the excess of net
long-term capital gain over net short-term capital loss), if any, of any
Portfolio will be taxed to shareholders as long-term capital gain regardless of
the length of time a shareholder has held his Shares. All other distributions,
to the extent they are taxable, are taxed to shareholders as ordinary income.
Each Municipal Portfolio intends to pay substantially all of its dividends
as "exempt interest dividends." Investors in these Portfolios should note,
however, that taxpayers are required to report the receipt of tax-exempt
interest and "exempt interest dividends" on their Federal income tax returns for
informational purposes and that in two circumstances such amounts, while exempt
from regular Federal income tax, are taxable to persons subject to alternative
minimum and environmental taxes. First, tax-exempt interest and "exempt interest
dividends" derived from certain private activity bonds issued after August 7,
1986 generally will constitute an item of tax preference for corporate and
noncorporate taxpayers in determining alternative minimum tax liability and for
corporate taxpayers in determining environmental tax liability. Each of the
Ohio, Pennsylvania, North Carolina, Virginia and New Jersey Municipal Money
Market Portfolios may invest without limitation, and the Municipal Money Market
Portfolio up to 20% of its net assets, in such private activity bonds. Second,
tax-exempt interest and "exempt interest dividends" derived from all other
Municipal Obligations must be taken into account by corporate taxpayers in
determining certain adjustments for alternative minimum and environmental tax
purposes. In addition, investors should be aware of the possibility of state and
local alternative minimum or minimum income tax liability on interest from such
private activity bonds. Shareholders who are recipients of Social Security Act
or Railroad Retirement Act benefits should further note that tax-exempt interest
and "exempt interest dividends" derived from all types of Municipal Obligations
will be taken into account in determining the taxability of their benefit
payments.
Each Municipal Portfolio will determine annually the percentages of its net
investment income which are exempt from the regular Federal income tax, which
constitute an item of tax preference for purposes of the Federal alternative
minimum tax, and which are fully taxable. Such percentages will apply uniformly
to all distributions declared from net investment income during that year. These
percentages may differ significantly from the actual percentages for any
particular day.
The Fund will send written notices to shareholders annually regarding the
tax status of distributions made by each Portfolio. Dividends declared in
October, November or December of any year payable to shareholders of record as
of a
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specified date in those months will be deemed to have been received by the
shareholders on December 31, if the dividends are paid during the following
January.
Any loss upon the sale or exchange of shares of a Portfolio held for six
months or less will be disallowed for Federal income tax purposes to the extent
of any exempt interest dividends received by the shareholder. For the Ohio
Municipal Money Market and North Carolina Municipal Money Market Portfolios, the
loss will be disallowed for state tax purposes to the same extent, even though,
for state income tax purposes, some portion of such dividends actually may have
been subject to state income tax.
Future legislative or administrative changes or court decisions may
materially affect the tax consequences of investing in one or more Portfolios of
the Fund. Shareholders are also urged to consult their tax advisers concerning
the application of state and local income taxes to investments in the Portfolios
which may differ from the Federal income tax consequences described above. In
particular, dividends paid by each Portfolio may be taxable to investors under
state or local law as dividend income even though all or a portion of such
dividends may be derived from interest on obligations which, if realized
directly, would be exempt from such income taxes. Shareholders who are
nonresident alien individuals, foreign trusts or estates, foreign corporations
or foreign partnerships may be subject to different U.S. Federal income tax
treatment and should consult their tax advisers.
OHIO TAX CONSIDERATIONS. Individuals and estates that are subject to Ohio
personal income tax, or municipal or school district income taxes in Ohio will
not be subject to such taxes on distributions from the Ohio Municipal Money
Market Portfolio to the extent that such distributions consist of interest on
Ohio Municipal Obligations or obligations issued by the U.S. Government, its
agencies, instrumentalities or territories (if the interest on such obligations
is exempt from state income taxation under the laws of the United States) ("U.S.
Obligations"), provided that the Portfolio continues to qualify as a regulated
investment company for federal income tax purposes and that at all times at
least 50% of the value of the total assets of the Ohio Municipal Money Market
Portfolio consists of Ohio Municipal Obligations or similar obligations of other
states or their subdivisions. (It is assumed for purposes of this discussion of
Ohio tax considerations that these requirements are satisfied.) Corporations
that are subject to the Ohio corporation franchise tax will not have to include
distributions from the Ohio Municipal Money Market Portfolio in their net income
base for purposes of calculating their Ohio corporation franchise tax liability
to the extent that such distributions either constitute exempt-interest
dividends or consist of interest on Ohio Municipal Obligations or U.S.
Obligations. However, shares of the Ohio Municipal Money Market Portfolio will
be included in a corporation's net worth base for purposes of calculating the
Ohio corporation franchise tax. Distributions consisting of gain on the sale,
exchange or other disposition of Ohio Municipal Obligations will not be subject
to the Ohio personal income tax, or municipal or school district income taxes in
Ohio and will not be included in the net income base of the Ohio corporation
franchise tax. Distributions attributable to other sources will be subject to
the Ohio personal income tax and the Ohio corporation franchise tax. For
additional Ohio tax considerations, see "Taxes" above.
PENNSYLVANIA TAX CONSIDERATIONS. Income received by a shareholder
attributable to interest realized by the Pennsylvania Municipal Money Market
Portfolio from Pennsylvania Municipal Obligations or attributable to insurance
proceeds on account of such interest is not taxable to individuals, estates or
trusts under the Personal Income Tax imposed by Article III of the Tax Reform
Code of 1971 (in the case of insurance proceeds, to the extent they are exempt
for Federal Income Tax purposes); to corporations under the Corporate Net Income
tax imposed by Article IV of the Tax Reform Code of 1971 (in the case of
insurance proceeds, to the extent they are exempt for Federal Income Tax
purposes); nor to individuals under the Philadelphia School District New Income
Tax ("School District Tax") imposed on Philadelphia resident individuals under
authority of the Act of August 9, 1963, P.L. 640.
Income received by a shareholder attributable to gain on the sale or other
disposition by the Pennsylvania Municipal Money Market Portfolio of Pennsylvania
Municipal Obligations is taxable under the Personal Income Tax, the
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<PAGE> 71
Corporate Net Income Tax, and, unless these assets were held by the Pennsylvania
Municipal Money Market Portfolio for more than six months, the School District
Tax.
No opinion is expressed regarding the extent, if any, to which shares, or
interest and gain thereon, is subject to, or included in the measure of, the
special taxes imposed by the Commonwealth of Pennsylvania on banks and other
financial institutions or with respect to any privilege, excise, franchise or
other tax imposed on business entities not discussed herein (including the
Corporate Capital Stock/Foreign Franchise Tax.)
Shareholders of the Pennsylvania Municipal Money Market Portfolio are not
subject to any of the personal property taxes currently in effect in
Pennsylvania to the extent that the Portfolio is comprised of Pennsylvania
Municipal Obligations. The taxes referred to include the County Personal
Property Tax imposed on residents of Pennsylvania by the Act of June 17, 1913,
P.L. 507, as amended.
NORTH CAROLINA TAX CONSIDERATIONS. Interest received in the form of
dividends from the North Carolina Municipal Money Market Portfolio is exempt
from North Carolina state income tax to the extent the distributions represent
interest on direct obligations of the U.S. Government or North Carolina
Municipal Obligations. Distributions derived from interest earned on obligations
of political subdivisions of Puerto Rico, Guam and the U.S. Virgin Islands,
including the governments thereof and their agencies, instrumentalities and
authorities, are also exempt from North Carolina state income tax. Distributions
paid out of interest earned on obligations that are merely backed or guaranteed
by the U.S. Government (e.g., GNMAs, FNMAs), on repurchase agreements
collateralized by U.S. Government securities or on obligations of other states
(which the Portfolio may acquire and hold for temporary or defensive purposes)
are not exempt from North Carolina state income tax.
Any distributions of net realized gain earned by the North Carolina
Municipal Money Market Portfolio on the sale or exchange of certain obligations
of the State of North Carolina or its subdivisions will also be exempt from
North Carolina income tax to the Portfolio's shareholders. Distributions of
gains earned by the North Carolina Municipal Money Market Portfolio on the sale
or exchange of all other obligations will be subject to North Carolina income
tax.
Shares of the North Carolina Municipal Money Market Portfolio will not be
subject to the North Carolina intangibles personal property tax so long as
certain filings are made with the North Carolina Department of Revenue and on
December 31 of each year the Portfolio is composed entirely of North Carolina
Municipal Obligations and obligations of the United States (including the
District of Columbia and U.S. possessions), and at least 80% of the fair market
value of the Portfolio's assets consists of North Carolina Municipal
Obligations. For all years in which this portfolio-composition requirement is
met, the North Carolina Municipal Money Market Portfolio will file with the
North Carolina Department of Revenue a certification in order for shareholders
to qualify for this exemption. If the portfolio-composition requirement is not
met, shareholders may reduce for North Carolina intangibles personal property
tax purposes the value of their investment in the Portfolio in direct proportion
to the percentage of the Portfolio's assets invested in exempt U.S. Government
(including U.S. possessions) or North Carolina obligations as of December 31.
Shareholders also should note that the future of the North Carolina
intangibles personal property tax is uncertain. A challenge to the
constitutionality of such tax presently is on appeal to the United States
Supreme Court. In addition, several bills were introduced in recent State
legislative sessions that would have either repealed the North Carolina
intangibles personal property tax in total or significantly amended its
provisions. The Governor of North Carolina has also proposed that the
legislature repeal this tax. Although no such legislation has yet been enacted,
further attempts may be made to repeal or modify this tax in the future.
Accordingly, no assurance can be given that an investment in the North Carolina
Municipal Money Market Portfolio while it owns exempt U.S. government
obligations or North Carolina Municipal Obligations will in future years provide
shareholders with any reductions from the North Carolina intangibles personal
property tax that they otherwise might owe.
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<PAGE> 72
VIRGINIA TAX CONSIDERATIONS. Subject to the provisions discussed below,
dividends paid to shareholders by the Virginia Municipal Money Market Portfolio
and derived from interest on obligations of the Commonwealth of Virginia or of
any political subdivision or instrumentality of the Commonwealth or derived from
interest or dividends on obligations of the United States excludable from
Virginia taxable income under the laws of the United States, which obligations
are issued in the exercise of the borrowing power of the Commonwealth or the
United States and are backed by the full faith and credit of the Commonwealth or
the United States ("Virginia or U.S. Obligations"), will be exempt from the
Virginia income tax. Dividends paid to shareholders by the Portfolio and derived
from interest on debt obligations of certain territories and possessions of the
United States (those issued by Puerto Rico, the Virgin Islands and Guam) will be
exempt from the Virginia income tax. To the extent a portion of the dividends
are derived from interest on debt obligations other than those described above,
such portion will be subject to the Virginia income tax even though it may be
excludable from gross income for Federal income tax purposes.
Generally, dividends distributed to shareholders by the Portfolio and
derived from capital gains from the disposition of Virginia or U.S. Obligations
will be taxable to the shareholders. To the extent any portion of the dividends
are derived from taxable interest for Virginia purposes or from net short-term
capital gains, such portion will be taxable to the shareholders as ordinary
income. The character of long-term capital gains realized and distributed by the
Portfolio will flow through to its shareholders regardless of how long the
shareholders have held their shares. Capital gains distributed to shareholders
derived from Virginia obligations issued pursuant to special Virginia enabling
legislation which provides a specific exemption for such gains will be exempt
from Virginia income tax. Generally, interest on indebtedness incurred by
shareholders to purchase or carry shares of the Portfolio will not be deductible
for Virginia income tax purposes.
As a regulated investment company, the Portfolio may distribute dividends
that are exempt from the Virginia income tax to its shareholders if the
Portfolio satisfies all requirements for conduit treatment under Federal law
and, at the close of each quarter of its taxable year, at least 50% of the value
of its total assets consists of obligations the interest on which is exempt from
taxation under Federal law. The Portfolio intends to qualify under the above
requirements so that it can distribute Virginia exempt interest dividends. If
the Portfolio fails to qualify, no part of its dividends will be exempt from the
Virginia income tax.
When taxable income of a regulated investment company is commingled with
exempt income, all distributions of the income are presumed taxable to the
shareholders unless the portion of income that is exempt from Virginia income
tax can be determined with reasonable certainty and substantiated. Generally,
this determination must be made for each distribution to each shareholder. The
Virginia Department of Taxation has adopted a policy, however, of allowing
shareholders to exclude from their Virginia taxable income the exempt portion of
distributions from a regulated investment company even though the shareholders
receive distributions monthly but receive reports substantiating the exempt
portion of such distributions at less frequent intervals. Accordingly, if the
Portfolio receives taxable income, the Portfolio must determine the portion of
income that is exempt from Virginia income tax and provide such information to
the shareholders in accordance with the foregoing so that the shareholders may
exclude from Virginia taxable income the exempt portion of the distribution from
the Portfolio.
The foregoing is only a summary of some of the important Virginia income
tax considerations generally affecting the shareholders, and does not address
any Virginia taxes other than the income tax. This discussion is not intended as
a substitute for careful planning. Potential investors in the Portfolio should
consult their tax advisers with specific reference to their own tax situations.
NEW JERSEY TAX CONSIDERATIONS. It is anticipated that substantially all
dividends paid by the New Jersey Municipal Money Market Portfolio will not be
subject to New Jersey personal income tax. In accordance with the provisions of
New Jersey law as currently in effect, distributions paid by a "qualified
investment fund" will not be
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<PAGE> 73
subject to the New Jersey personal income tax to the extent that the
distributions are attributable to income received as interest or gain from New
Jersey Municipal Obligations, or as interest or gain from direct U.S. Government
obligations. Distributions by a qualified investment fund that are attributable
to most other sources will be subject to the New Jersey personal income tax. If
the New Jersey Municipal Money Market Portfolio qualifies as a qualified
investment fund under New Jersey law, any gain on the redemption or sale of the
Portfolio's shares will not be subject to the New Jersey personal income tax. To
be classified as a qualified investment fund, at least 80% of the Portfolio's
investments must consist of New Jersey Municipal Obligations or direct U.S.
Government obligations; it must have no investments other than interest-bearing
obligations, obligations issued at a discount, and cash and cash items
(including receivables); and it must satisfy certain reporting obligations and
provide certain information to its shareholders. Shares of the Portfolio are not
subject to property taxation by New Jersey or its political subdivisions. To the
extent that a shareholder is subject to state or local taxes outside New Jersey,
dividends earned by an investment in the New Jersey Municipal Money Market
Portfolio may represent taxable income.
The New Jersey personal income tax is not applicable to corporations. For
all corporations subject to the New Jersey Corporation Business Tax, dividends
and distributions from a "qualified investment fund" are included in the net
income tax base for purposes of computing the Corporation Business Tax.
Furthermore, any gain upon the redemption or sale of shares by a corporate
shareholder is also included in the net income tax base for purposes of
computing the Corporation Business Tax.
The foregoing is only a summary of certain New Jersey tax considerations
generally affecting the Portfolio and its shareholders, and is not intended as a
substitute for careful tax planning. Shareholders are urged to consult their tax
advisers with specific reference to their own tax situations.
DESCRIPTION OF SHARES
- --------------------------------------------------------------------------------
The Fund was organized as a Massachusetts business trust on December 22,
1988 and is registered under the 1940 Act as an open-end management investment
company. The Declaration of Trust authorizes the Board of Trustees to classify
and reclassify any unissued shares into one or more classes of shares. Pursuant
to such authority, the Board of Trustees has authorized the issuance of an
unlimited number of shares in each of 97 classes (19 classes of "Series B
Investor Shares" and 26 classes each of "Series A Investor Shares," "Service
Shares" and "Institutional Shares") representing interests in the Fund's
investment portfolios. This Prospectus describes eight Portfolios of the Fund
which, except for the Ohio Municipal Money Market, Pennsylvania Municipal Money
Market, North Carolina Municipal Money Market, Virginia Municipal Money Market
and New Jersey Municipal Money Market Portfolios, are classified as diversified
companies under the 1940 Act. The Money Market, Municipal Money Market and
Government Money Market Portfolios were each established with only one class of
shares. In each case, the original class of shares was available to all
investors until the subsequent establishment of multiple classes in the
Portfolio. In addition, the Board of Trustees has authorized the issuance of
additional classes of shares representing interests in other investment
portfolios of the Fund. For information regarding these other portfolios,
contact the Distributor by phone at (800) 998-7633 or at the address listed in
"Distribution of Shares."
Each share of an investment portfolio has a par value of $.001, represents
an equal proportionate interest in the particular portfolio and is entitled to
such dividends and distributions earned on such portfolio's assets as are
declared in the discretion of the Board of Trustees. The Fund's shareholders are
entitled to one vote for each full share held and proportionate fractional votes
for fractional shares held, and will vote in the aggregate and not by class,
except where otherwise required by law or when the Board of Trustees determines
that the matter to be voted upon affects only the interests of the shareholders
of a particular class or investment portfolio. Under the law of Massachusetts,
the Fund's state of organization, and the Fund's Declaration of Trust and Code
of Regulations, the Fund is not required and does
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<PAGE> 74
not currently intend to hold annual meetings of shareholders for the election of
trustees (except as required under the 1940 Act). For a further discussion of
the voting rights of shareholders, see "Additional Information Concerning
Shares" in the Statement of Additional Information.
Holders of Series A Investor Shares bear the fees described under
"Distribution of Shares" that are paid to the Distributor under the Fund's
Distribution and Service Plan. Holders of Series B Investor Shares bear the fees
described under "Distribution of Shares" that are paid to the Distributor under
the Series B Distribution Plan and the fees described under "Shareholder
Servicing" relating to the Series B Service Plan. Similarly, holders of a
Portfolio's Service Shares bear the expense of fees described in the prospectus
for such shares that are paid under the Fund's Service Plan. Payments under the
Service Plan will cover expenses relating to the support services provided to
beneficial owners of Service Shares by certain institutions. Such services are
intended to supplement the services provided by the Fund's Administrators and
transfer agent to the Fund's shareholders of record. In consideration for
payment of up to .15% (on an annualized basis) of the average daily net asset
value of Service Shares owned beneficially by their customers, institutions may
provide one or more of the following services to such customers: processing
purchase and redemption requests from customers and placing orders with the
Fund's transfer agent or the Distributor; processing dividend payments from the
Fund on behalf of customers; providing sub-accounting with respect to Service
Shares beneficially owned by customers or the information necessary for
sub-accounting; and other similar services. In consideration for payment of a
service fee of up to a separate .15% (on an annualized basis) of the average
daily net asset value of Service Shares owned beneficially by their customers,
institutions may provide one or more of these additional services to such
customers: responding to customer inquiries relating to the services performed
by the institution and to customer inquiries concerning their investments in
Service Shares; providing information periodically to customers showing their
positions in Service Shares; and other similar shareholder liaison services.
Institutional Shares bear no shareholder servicing or distribution fees. As a
result of these different fees, the net yields on the Fund's Institutional
Shares will generally be higher than those on the Fund's Service Shares, the net
yields on the Fund's Service Shares will generally be higher than those on the
Fund's Series A Investor Shares, and the net yields on the Fund's Series A
Investor Shares will generally be higher than those on the Fund's Series B
Investor Shares if payments by the Portfolios under the Service Plan, the
Distribution and Service Plan, the Series B Distribution Plan and the Series B
Service Plan are made at the maximum rates. Standardized yield quotations will
be computed separately for each class of Shares. Series A Investor Shares of the
Portfolios are exchangeable at the option of the holder for Series A Investor
Shares in another money market Portfolio and for Series A or Series B Investor
Shares in the Fund's non-money market investment portfolios. Series B Investor
Shares of the Money Market Portfolio may only be exchanged for Series B Investor
Shares of the Fund's non-money market portfolios. Series A Investor Shares of
the Fund's non-money market portfolios are offered to the public at the net
asset value per share plus a maximum sales charge of 4.50% of the offering price
on single purchases of less than $50,000; the sales charge is reduced on a
graduated scale on single purchases of $50,000 or more and certain exemptions
from the sales charge may apply. The sales charge does not apply to exchanges of
Series A Investor Shares among the Fund's non-money market portfolios or to
exchanges of Series A Investor Shares in the Fund's money market Portfolios
offered by this Prospectus for Series A Investor Shares in another money market
Portfolio. Series B Investor Shares of the Fund's non-money market portfolios
are subject to a maximum contingent deferred sales charge of 5.0%. The deferred
sales charge decreases over time. Series B Investor Shares may be exchanged for
Series B Investor Shares of another investment portfolio of the Fund without the
payment of any deferred sales charge at the time the exchange is made. Unless an
exception applies, a deferred sales charge will be deducted upon the redemption
of Series B Shares of the Money Market Portfolio received in an exchange
transaction for Series B Shares of a non-money market portfolio of the Fund.
Unless an exception applies, a sales charge will be charged when Series A
Investor Shares of the money market Portfolios are exchanged for Series A
Investor Shares or Series B Investor Shares of the Fund's non-money market
portfolios. See "Investor Programs--Exchange Privilege."
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On April 28, 1995, PNC Bank held of record approximately % of the Fund's
outstanding shares, and may be deemed a controlling person of the Fund under the
1940 Act. PNC Bank is a subsidiary of PNC Bank Corp., a multi-bank holding
company.
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN BY REFERENCE RELATE PRIMARILY TO THE FUND'S INVESTOR SHARES AND DESCRIBE
ONLY THE INVESTMENT OBJECTIVES, POLICIES, OPERATIONS, CONTRACTS AND OTHER
MATTERS PERTAINING TO THE INVESTOR SHARES.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time each Portfolio may advertise its "yield" and "effective
yield" for Series A and Series B Investor Shares. Both yield figures are based
on historical earnings and are not intended to indicate future performance.
"Yield" refers to the income generated by an investment in a Portfolio's
Investor Shares over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment.
"Effective yield" is calculated similarly but, when annualized, the income
earned by an investment in a Portfolio's Investor Shares is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. A Municipal
Portfolio's "tax-equivalent yield" may also be quoted from time to time for
Investor Shares of a Municipal Portfolio, which shows the level of taxable
yield needed to produce an after-tax equivalent to such Portfolio's tax-free
yield for Investor Shares. This is done by increasing such Portfolio's yield
for Investor Shares (calculated as above) by the amount necessary to reflect
the payment of Federal (and state and local for the Ohio, Pennsylvania, North
Carolina, Virginia and New Jersey Municipal Money Market Portfolios) income tax
at a stated tax rate.
Performance data of Investor Shares of a Portfolio may be compared to that
of other mutual funds with similar investment objectives and to other relevant
indexes or to ratings or rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual funds.
In addition, certain indexes may be used to illustrate historic performance of
select asset classes. For example, the yield of Investor Shares of a Portfolio
may be compared to data prepared by Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc. and Weisenberger Investment Company Service.
Performance information may also include evaluations of the Portfolios published
by nationally recognized ranking services and information as reported by
financial publications such as Business Week, Fortune, Institutional Investor,
Money Magazine, Forbes, Barron's, The Wall Street Journal and The New York
Times, or in publications of a local or regional nature, may also be used in
comparing the performance of Investor Shares of a Portfolio.
The yield of any investment is generally a function of portfolio quality
and maturities, type of investment and operating expenses. The yields on
Investor Shares will fluctuate and are not necessarily representative of future
results. Any fees charged by Service Organizations directly to their customers
in connection with investments in Investor Shares are not reflected in the
yields of Investor Shares, and such fees, if charged, will reduce the actual
return received by customers on their investments.
REPORTS AND INQUIRIES
Shareholders will receive unaudited semi-annual financial statements and
annual financial statements audited by independent accountants. Shareholder
inquiries should be addressed to the Fund c/o PFPC, P.O. Box 8907, Wilmington,
Delaware 19899-8907, toll-free (800) 422-6538.
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================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENT OF
ADDITIONAL INFORMATION FOR INVESTOR SHARES INCORPORATED HEREIN BY REFERENCE, IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE FUND OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING
BY THE FUND OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY
NOT LAWFULLY BE MADE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Expense Table............................................................. 2
Financial Highlights...................................................... 3
Investment Policies....................................................... 10
Investment Limitations.................................................... 19
How to Purchase Shares.................................................... 21
How to Redeem Shares...................................................... 22
Investor Programs......................................................... 24
Net Asset Value........................................................... 26
Management................................................................ 27
Distribution of Shares.................................................... 29
Shareholder Servicing..................................................... 30
Dividends and Distributions............................................... 31
Taxes..................................................................... 32
Description of Shares..................................................... 36
Performance Information................................................... 38
Reports and Inquiries..................................................... 38
</TABLE>
INVESTMENT ADVISER
PNC Institutional Management Corporation
Wilmington, Delaware
SUB-ADVISER AND CUSTODIAN
PNC Bank, National Association
Philadelphia, Pennsylvania
CO-ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
CO-ADMINISTRATOR
Provident Distributors, Inc.
Radnor, Pennsylvania
DISTRIBUTOR
Provident Distributors, Inc.
Radnor, Pennsylvania
COUNSEL
Drinker Biddle & Reath
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
Philadelphia, Pennsylvania
PNCR-P-001
================================================================================
================================================================================
[A R T]
THE PNC(R) FUND
THE MONEY
MARKET
PORTFOLIOS
INVESTOR CLASS
PROSPECTUS
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
- -----------------------------------------------------
GOVERNMENT MONEY MARKET PORTFOLIO
- -----------------------------------------------------
OHIO MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
PENNSYLVANIA MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
NORTH CAROLINA MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
VIRGINIA MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
NEW JERSEY MUNICIPAL MONEY
MARKET PORTFOLIO
- -----------------------------------------------------
, 1995
=====================================================
<PAGE> 77
THE PNC(R) FUND
(INSTITUTIONAL SHARES OF THE MONEY MARKET
PORTFOLIO, MUNICIPAL MONEY MARKET PORTFOLIO,
GOVERNMENT MONEY MARKET PORTFOLIO, OHIO MUNICIPAL
MONEY MARKET PORTFOLIO, PENNSYLVANIA MUNICIPAL MONEY MARKET
PORTFOLIO, NORTH CAROLINA MUNICIPAL MONEY MARKET, VIRGINIA
MUNICIPAL MONEY MARKET PORTFOLIO AND NEW JERSEY
MUNICIPAL MONEY MARKET PORTFOLIO)
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A ITEM LOCATION
- -------------- --------
<S> <C> <C>
PART A PROSPECTUS
1. Cover page . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expense Table
3. Condensed Financial Information . . . . . . . . . . . . . . . . . Financial Highlights
4. General Description of Registrant . . . . . . . . . . . . . . . . Cover Page; Investment
Policies;
Description of
Shares
5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . Management
6. Capital Stock and Other Securities . . . . . . . . . . . . . . . . Cover Page; Dividends
and Distributions;
Description of
Shares
7. Purchase of Securities Being Offered . . . . . . . . . . . . . . . Purchase and Redemption
of Shares;
Management
8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . . Purchase and Redemption
of Shares -
Redemption of
Shares
9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
</TABLE>
<PAGE> 78
THE MONEY MARKET PORTFOLIOS
INSTITUTIONAL CLASS
The PNC(R) Fund (the "Fund") consists of twenty-six investment portfolios.
This Prospectus relates to eight classes of shares ("Institutional Shares" or
"Shares") representing interests in seven of those portfolios (collectively, the
"Portfolios") with the following objectives:
MONEY MARKET PORTFOLIO--to provide as high a level of current interest
income as is consistent with maintaining liquidity and stability of
principal. It pursues this objective by investing primarily in short-term,
high quality, U.S. dollar-denominated money market instruments.
MUNICIPAL MONEY MARKET PORTFOLIO--to provide as high a level of current
interest income exempt from Federal income taxes as is consistent with
maintaining liquidity and stability of principal. It pursues this objective
by investing substantially all of its assets in a diversified portfolio of
short-term obligations issued by or on behalf of states, territories and
possessions of the United States, the District of Columbia, and their
political subdivisions, agencies, instrumentalities and authorities and
tax-exempt derivative securities relating thereto ("Municipal Obligations").
GOVERNMENT MONEY MARKET PORTFOLIO--to provide as high a level of current
interest income as is consistent with maintaining liquidity and stability of
principal. It pursues this objective by investing primarily in short-term
U.S. Treasury bills, notes and other obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities and repurchase
agreements relating to such obligations.
OHIO MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level of
current income exempt from Federal, and to the extent possible, from Ohio
income tax as is consistent with maintaining liquidity and stability of
principal. It pursues this objective by investing primarily in short-term
municipal obligations issued by the State of Ohio and its political
subdivisions, agencies, instrumentalities and authorities and tax-exempt
derivative securities relating thereto ("Ohio Municipal Obligations").
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level
of current income exempt from Federal, and to the extent possible, from
Pennsylvania income tax as is consistent with maintaining liquidity and
stability of principal. It pursues this objective by investing primarily in
short-term municipal obligations issued by the Commonwealth of Pennsylvania
and its political subdivisions, agencies, instrumentalities and authorities
and tax-exempt derivative securities relating thereto ("Pennsylvania
Municipal Obligations").
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level
of current interest income exempt from Federal and, to the extent possible,
from North Carolina income tax as is consistent with maintaining liquidity
and stability of principal. It pursues this objective by investing primarily
in short-term municipal obligations issued by the State of North Carolina
and its political subdivisions, agencies, instrumentalities and authorities
and tax-exempt derivative securities relating thereto ("North Carolina
Municipal Obligations").
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level of
current income exempt from Federal and, to the extent possible, from
Virginia income tax as is consistent with maintaining liquidity and
stability of principal. It pursues this objective by investing primarily in
short-term municipal obligations issued by the Commonwealth of Virginia and
its political sub-divisions, agencies, instrumentalities and authorities and
tax-exempt derivative securities relating thereto ("Virginia Municipal
Obligations").
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO--to seek as high a level of
current income exempt from Federal and, to the extent possible, from New
Jersey income tax as is consistent with maintaining liquidity and stability
of principal. It pursues this objective by investing primarily in short-term
municipal obligations issued by the State of New Jersey and its political
subdivisions, agencies, instrumentalities and authorities and tax-exempt
derivative securities relating thereto ("New Jersey Municipal Obligations").
Institutional Shares of the Portfolios ("Shares") are sold by the Fund's
distributor to institutional investors ("Institutions"). Institutional Shares
are sold and redeemed at net asset value without any purchase or redemption
charge imposed by the Fund.
Shares of the Ohio Municipal Money Market, Pennsylvania Municipal Money
Market, North Carolina Municipal Money Market, Virginia Municipal Money Market
and New Jersey Municipal Money Market Portfolios are intended for residents of
Ohio, Pennsylvania, North Carolina, Virginia and New Jersey, respectively.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, PNC BANK, NATIONAL ASSOCIATION OR ANY OTHER BANK AND SHARES ARE NOT
FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENTS IN SHARES OF THE
FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED. THERE CAN BE NO ASSURANCE THAT THE PORTFOLIOS WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus contains information that a prospective investor needs to
know before investing. Please keep it for future reference. A Statement of
Additional Information currently dated , 1995 has been filed with
the Securities and Exchange Commission (the "SEC"). The current Statement of
Additional Information may be obtained upon request free of charge from the Fund
by calling (800) 422-6538. The Statement of Additional Information, as it may be
supplemented from time to time, is incorporated by reference in this Prospectus.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS , 1995
<PAGE> 79
EXPENSE TABLE
ANNUAL FUND OPERATING EXPENSES FOR INSTITUTIONAL SHARES AFTER FEE WAIVERS
AS A PERCENTAGE OF DAILY NET ASSETS
<TABLE>
<CAPTION>
NORTH NEW
OHIO PENNSYLVANIA CAROLINA VIRGINIA JERSEY
MUNICIPAL GOVERNMENT MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
MONEY MONEY MONEY MONEY MONEY MONEY MONEY MONEY
MARKET MARKET MARKET MARKET MARKET MARKET MARKET MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------- --------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory fees(1)........ .06% .06% .06% .06% .06% .06% .05% .05%
Other operating
expenses.............. .22 .22 .22 .22 .22 .22 .23 .23
---- ---- ----- ---- ------ ---- ---- ----
Administration
fees(1)............ .13 .11 .12 .10 .12 .05 .02 .02
Other expenses(1)..... .09 .11 .10 .12 .10 .17 .21 .21
---- ---- ----- ---- ------ ---- ---- ----
Total fund operating
expenses.............. .28% .28% .28% .28% .28% .28% .28% .28%
==== ===== ===== ==== ====== ==== ==== ====
</TABLE>
- ------------------
(1) Advisory fees are net of fee waivers of .38%, .39%, .39%, .39%, .39%, .39%,
.40% and .40% and administration fees are net of waivers of .01%, .04%,
.03%, .05%, .03%, .10%, .13% and .13% for the Money Market, Municipal Money
Market, Government Money Market, Ohio Municipal Money Market, Pennsylvania
Municipal Money Market, North Carolina Municipal Money Market, Virginia
Municipal Money Market and New Jersey Municipal Money Market Portfolios,
respectively. PIMC and the Administrators are under no obligation to waive
or continue waiving such fees, but have informed the Fund that they expect
to waive or continue waiving such fees as necessary to maintain the
Portfolios' total operating expenses during the current fiscal year at the
levels set forth in the table. The expenses noted above under "Other
expenses" are estimated based on the level of such expenses for the Fund's
most recent fiscal year.
EXAMPLE
An investor in Institutional Shares would pay the following expenses on a
$1,000 investment, assuming (1) a 5% annual return and (2) redemption at the end
of each time period.
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Money Market Portfolio....................... $ 3 $ 9 $ 16 $36
Municipal Money Market Portfolio............. 3 9 16 36
Government Money Market Portfolio............ 3 9 16 36
Ohio Municipal Money Market Portfolio........ 3 9 16 36
Pennsylvania Municipal Money Market
Portfolio.................................. 3 9 16 36
North Carolina Municipal Money Market
Portfolio.................................. 3 9 16 36
Virginia Municipal Money Market Portfolio.... 3 9 16 36
New Jersey Municipal Money Market
Portfolio.................................. 3 9
</TABLE>
The foregoing Expense Table and Example are intended to assist investors in
understanding the expenses the Portfolios will pay. Investors bear these
expenses since they reduce the amount of income paid by the Portfolios to
investors as dividends. The information in the table for the Money Market,
Municipal Money Market, Government Money Market, Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market and
Virginia Municipal Money Market Portfolios is based on the advisory fees,
administration fees and other expenses payable after fee waivers by the
particular Portfolio for the fiscal year ended September 30, 1994, as restated
to reflect revised fee waivers. The table estimates fees, expenses, fee waivers
and assets for the New Jersey Municipal Money Market Portfolio for the current
fiscal year. Total operating expenses would have been .67%, .71%, .70%, .72%,
.70%, .77%, .81% and .81% for Institutional Shares of the Money Market,
Municipal Money Market, Government Money Market, Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market,
Virginia Municipal Money Market and New Jersey Municipal Money Market
Portfolios, respectively, without such fee waivers. See Footnote 1 to the
Expense Table, "Financial Highlights--Background," "Management" and "Description
of Shares" for a further description of operating expenses.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND OPERATING
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
2
<PAGE> 80
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
BACKGROUND
The Fund currently offers three classes of shares in each
Portfolio--Service, Series A Investor and Institutional Shares--and a fourth
class of shares in the Money Market Portfolio--Series B Investor Shares. The
shares of each class in a Portfolio represent equal pro rata interests in such
Portfolio, except that they bear different expenses which reflect the difference
in the range of services provided to them. Under the Fund's Service Plan,
Service Shares bear the expense of fees at an annual rate not to exceed .15% of
the average daily net asset value of each Portfolio's outstanding Service
Shares. Service Shares also bear the expense of a service fee at an annual rate
not to exceed .15% of the average daily net asset value of each Portfolio's
outstanding Service Shares for other shareholder support activities provided by
service organizations. See "Description of Shares" for a description of the
Service Plan and shareholder support activities. Series A Investor Shares bear
the expense of the Fund's Distribution and Service Plan at an annual rate not to
exceed .55% of the average daily net asset value of each Portfolio's outstanding
Series A Investor Shares. Series B Investor Shares bear the expense of the
Fund's Series B Distribution Plan and Series B Service Plan at annual rates not
to exceed .75% and .25%, respectively, of the average daily net asset value of
each Portfolio's outstanding Series B Investor Shares. See "Description of
Shares" for a description of the Distribution and Service Plan, the Series B
Distribution Plan and the Series B Service Plan. Institutional Shares bear no
shareholder servicing or distribution fees.
During periods in which fees relating to the Service Plan and shareholder
support activities and to the Distribution and Service Plan were not charged to
a Portfolio's Service Shares or Series A Investor Shares, respectively, the
financial data in the tables below pertaining to Service Shares or Series A
Investor Shares of such Portfolio are identical to the financial data relating
to Institutional Shares of the Portfolio for such periods or to what such
financial data would have been had Institutional Shares in the Portfolio been
outstanding for such periods (except, in each case, for the number of Service
and Series A Investor Shares outstanding).
The SEC requires that this Prospectus contain Financial Highlights for each
class of each Portfolio described herein. Because the public offering of Series
A Investor Shares of the Virginia Municipal Money Market Portfolio and of Series
B Investor Shares of the Money Market Portfolio had not commenced during the six
month period ended March 31, 1995, the tables below present only information
pertaining to Service Shares and Institutional Shares of the Virginia Municipal
Money Market Portfolio and to Service Shares, Series A Investor Shares and
Institutional Shares of the Money Market Portfolio. No shares of the New Jersey
Municipal Money Market Portfolio were issued prior to the date of this
prospectus.
Except for the financial data relating to the six month period ended March
31, 1995, the financial data included in the tables below has been derived from
financial statements incorporated by reference in the Statement of Additional
Information and has been audited by Coopers & Lybrand, L.L.P., the Fund's
independent accountants. This financial data should be read in conjunction with
such financial statements. Further information about the performance of the
Portfolios is available in the annual report to shareholders. Both the Statement
of Additional Information and the annual report to shareholders may be obtained
from the Fund free of charge by calling the number on the front cover of this
Prospectus.
3
<PAGE> 81
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------
INSTITUTIONAL
CLASS SERVICE CLASS
----------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
SERIES A
INVESTOR CLASS
-----------------------------------
<S> <C<C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 8/2/931 ENDED YEAR YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94 9/30/93
----------- -------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- -------- --------
Income from investment operations
Net investment income................... 0.0274 0.0359 0.0054 0.0259 0.0333 0.0274
Net realized gain (loss) on
investments............................ -- -- -- -- -- --
----------- -------- -------- ----------- -------- --------
Total from investment operations..... 0.0274 0.0359 0.0054 0.0259 0.0333 0.0274
----------- -------- -------- ----------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0274) (0.0359) (0.0054) (0.0259) (0.0333) (0.0274)
Distributions from net realized capital
gains.................................. -- -- -- -- -- --
----------- -------- -------- ----------- -------- --------
Total distributions.................. (0.0274) (0.0359) (0.0054) (0.0259) (0.0333) (0.0274)
----------- -------- -------- ----------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ========== ======== ========
Total return............................... 2.77% 3.64% 0.54% 2.61% 3.37% 2.77%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $ 593,948 $502,972 $435,586 $ 605,220 $575,948 $415,328
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.25%2 0.25% 0.27%2 0.55%2 0.51% 0.59%
Before advisory/administration fee
waivers.............................. 0.62%2 0.66% 0.38%2 0.92%2 0.92% 0.70%
Ratios of net investment income to
average
net assets
After advisory/administration fee
waivers.............................. 5.51%2 3.64% 3.01%2 5.19%2 3.35% 2.73%
Before advisory/administration fee
waivers.............................. 5.13%2 3.23% 2.90%2 4.82%2 2.95% 2.62%
<CAPTION>
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
YEAR YEAR 10/4/891 ENDED YEAR 1/13/931
ENDED ENDED THROUGH 3/31/95 ENDED THROUGH
9/30/92 9/30/91 9/30/90 (UNAUDITED) 9/30/94 9/30/93
-------- -------- -------- ----------- -------- --------
<S> <C<C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ----------- -------- --------
Income from investment operations
Net investment income................... 0.0391 0.0645 0.0778 0.0249 0.0308 0.0188
Net realized gain (loss) on
investments............................ -- -- -- -- -- --
-------- -------- -------- ----------- -------- --------
Total from investment operations..... 0.0391 0.0645 0.0778 0.0249 0.0308 0.0188
-------- -------- -------- ----------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0391) (0.0645) (0.0778) (0.0249) (0.0308) (0.0188)
Distributions from net realized capital
gains.................................. -- -- -- -- -- --
-------- -------- -------- ----------- -------- --------
Total distributions.................. (0.0391) (0.0645) (0.0778) (0.0249) (0.0308) (0.0188)
-------- -------- -------- ----------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========== ======== ========
Total return............................... 4.05% 6.64% 8.07% 2.51% 3.12% 1.89%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $838,012 $637,076 $628,075 $ 7,302 $ 4,342 $ 49
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.61% 0.62% 0.62%2 0.75%2 0.75% 0.67%2
Before advisory/administration fee
waivers.............................. 0.66% 0.67% 0.70%2 1.12%2 1.16% 0.78%2
Ratios of net investment income to
average
net assets
After advisory/administration fee
waivers.............................. 3.86% 6.45% 7.83%2 5.04%2 3.39% 2.62%2
Before advisory/administration fee
waivers.............................. 3.81% 6.40% 7.75%2 4.67%2 2.98% 2.51%2
</TABLE>
- -------------
1 Commencement of operations.
2 Annualized.
4
<PAGE> 82
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------
INSTITUTIONAL
CLASS SERVICE CLASS
----------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
SERIES A
INVESTOR CLASS
-----------------------------------
<S> <C<C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 8/2/931 ENDED YEAR YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94 9/30/93
----------- -------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- -------- --------
Income from investment operations
Net investment income................... 0.0176 0.0246 0.0040 0.0161 0.0219 0.0205
Net realized gain (loss) on
investments............................ -- -- -- -- -- --
----------- -------- -------- ----------- -------- --------
Total from investment operations..... 0.0176 0.0246 0.0040 0.0161 0.0219 0.0205
----------- -------- -------- ----------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0176) (0.0246) (0.0040) (0.0161) (0.0219) (0.0205)
Distributions from net realized capital
gains.................................. -- -- -- -- -- --
----------- -------- -------- ----------- -------- --------
Total distributions.................. (0.0176) (0.0246) (0.0040) (0.0161) (0.0219) (0.0205)
----------- -------- -------- ----------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ========== ======== ========
Total return............................... 1.78% 2.48% 0.40% 1.62% 2.20% 2.10%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $ 34,747 $ 30,608 $ 39,148 $ 190,789 $133,358 $ 93,937
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.25%2 0.25% 0.25%2 0.55%2 0.51% 0.61%
Before advisory/administration fee
waivers.............................. 0.69%2 0.73% 0.36%2 0.99%2 0.99% 0.72%
Ratios of net investment income to
average
net assets
After advisory/administration fee
waivers.............................. 3.51%2 2.48% 2.45%2 3.25%2 2.18% 2.02%
Before advisory/administration fee
waivers.............................. 3.07%2 2.01% 2.34%2 2.81%2 1.71% 1.91%
<CAPTION>
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
YEAR YEAR 11/1/891 ENDED YEAR 11/2/921
ENDED ENDED THROUGH 3/31/95 ENDED THROUGH
9/30/92 9/30/91 9/30/90 (UNAUDITED) 9/30/94 9/30/93
-------- -------- -------- ----------- -------- --------
<S> <C<C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ----------- -------- --------
Income from investment operations
Net investment income................... 0.0281 0.0438 0.0486 0.0151 0.0193 0.0181
Net realized gain (loss) on
investments............................ -- -- -- -- -- --
-------- -------- -------- ----------- -------- --------
Total from investment operations..... 0.0281 0.0438 0.0486 0.0151 0.0193 0.0181
-------- -------- -------- ----------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0281) (0.0438) (0.0486) (0.0151) (0.0193) (0.0181)
Distributions from net realized capital
gains.................................. -- -- -- -- -- --
-------- -------- -------- ----------- -------- --------
Total distributions.................. (0.0281) (0.0438) (0.0486) (0.0151) (0.0193) (0.0181)
-------- -------- -------- ----------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========== ======== ========
Total return............................... 2.85% 4.47% 4.97% 1.52% 1.95% 1.83%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $125,152 $ 89,312 $112,108 $ 29 $ 41 $ 15
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.63% 0.65% 0.65%2 0.75%2 0.75% 0.72%2
Before advisory/administration fee
waivers.............................. 0.68% 0.70% 0.70%2 1.19%2 1.23% 0.83%2
Ratios of net investment income to
average
net assets
After advisory/administration fee
waivers.............................. 2.78% 4.40% 5.31%2 3.00%2 2.05% 2.23%2
Before advisory/administration fee
waivers.............................. 2.73% 4.35% 5.26%2 2.56%2 1.58% 2.12%2
</TABLE>
- -------------
1 Commencement of operations.
2 Annualized.
5
<PAGE> 83
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET PORTFOLIO
-----------------------------------
INSTITUTIONAL CLASS
-----------------------------------
FOR THE FOR THE
SIX MONTHS PERIOD
ENDED YEAR 8/2/93(1)
3/31/95 ENDED THROUGH
(UNAUDITED) 9/30/94 9/30/93
----------- -------- --------
<S> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00
----------- -------- --------
Income from investment operations
Net investment income................... 0.0269 0.0357 0.0049
Net realized gain (loss) on
investments............................ -- -- --
----------- -------- --------
Total from investment operations..... 0.0269 0.0357 0.0049
----------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0269) (0.0357) (0.0049)
Distributions from net realized capital
gains.................................. -- -- --
----------- -------- --------
Total distributions.................. (0.0269) (0.0357) (0.0049)
----------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00
========== ======== ========
Total return............................... 2.72% 3.63% 0.49%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $ 113,707 $ 37,519 $ 13,513
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.25%(2) 0.25% 0.25%(2)
Before advisory/administration fee
waivers.............................. 0.66%(2) 0.70% 0.38%(2)
Ratios of net investment income to
average
net assets
After advisory/administration fee
waivers.............................. 5.53%(2) 3.69% 3.01%(2)
Before advisory/administration fee
waivers.............................. 5.12%(2) 3.24% 2.88%(2)
<CAPTION>
GOVERNMENT MONEY MARKET PORTFOLIO
------------------------------------------------------------------------
SERVICE CLASS
------------------------------------------------------------------------
FOR THE
SIX FOR THE
MONTHS PERIOD
ENDED YEAR YEAR YEAR YEAR 11/1/89(1)
3/31/95 ENDED ENDED ENDED ENDED THROUGH
(UNAUDITED) 9/30/94 9/30/93 9/30/9(2) 9/30/91 9/30/90
--------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- -------- -------- -------- -------- --------
Income from investment operations
Net investment income................... 0.0254 0.0331 0.0269 0.0394 0.0627 0.0697
Net realized gain (loss) on
investments............................ -- -- -- -- -- --
--------- -------- -------- -------- -------- --------
Total from investment operations..... 0.0254 0.0331 0.0269 0.0394 0.0627 0.0697
--------- -------- -------- -------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0254) (0.0331) (0.0269) (0.0394) (0.0627) (0.0697)
Distributions from net realized capital
gains.................................. -- -- -- -- -- --
--------- -------- -------- -------- -------- --------
Total distributions.................. (0.0254) (0.0331) (0.0269) (0.0394) (0.0627) (0.0697)
--------- -------- -------- -------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ======== ======== ========
Total return............................... 2.57% 3.36% 2.72% 4.01% 6.46% 7.29%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $505,356 $372,883 $185,400 $160,269 $180,776 $146,148
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.55%(2) 0.52% 0.60% 0.62% 0.65% 0.65%(2)
Before advisory/administration fee
waivers.............................. 0.96%(2) 0.97% 0.73% 0.67% 0.70% 0.70%(2)
Ratios of net investment income to
average
net assets
After advisory/administration fee
waivers.............................. 5.14%(2) 3.42% 2.68% 3.91% 6.27% 7.62%(2)
Before advisory/administration fee
waivers.............................. 4.72%(2) 2.97% 2.55% 3.86% 6.22% 7.57%(2)
<CAPTION>
GOVERNMENT MONEY MARKET PORTFOLIO
------------------------------------
SERIES A
INVESTOR CLASS
------------------------------------
FOR THE
SIX FOR THE
MONTHS PERIOD
ENDED YEAR 1/14/93(1)
3/31/95 ENDED THROUGH
(UNAUDITED) 9/30/94 9/30/93
--------- -------- --------
<S> <C> <C> <C>
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00
--------- -------- --------
Income from investment operations
Net investment income................... 0.0245 0.0309 0.0183
Net realized gain (loss) on
investments............................ -- -- --
--------- -------- --------
Total from investment operations..... 0.0245 0.0309 0.0183
--------- -------- --------
Less distributions
Distributions from net investment
income................................. (0.0245) (0.0309) (0.0183)
Distributions from net realized capital
gains.................................. -- -- --
--------- -------- --------
Total distributions.................. (0.0245) (0.0309) (0.0183)
--------- -------- --------
Net asset value at end of period........... $ 1.00 $ 1.00 $ 1.00
========= ======== ========
Total return............................... 2.47% 3.11% 1.85%
Ratios/Supplemental data
Net assets at end of period (in
thousands)............................. $ 2,400 $ 1,656 $ 50
Ratios of expenses to average net assets
After advisory/administration fee
waivers.............................. 0.75%(2) 0.75% 0.65%(2)
Before advisory/administration fee
waivers.............................. 1.16%(2) 1.20% 0.78%(2)
Ratios of net investment income to
average
net assets
After advisory/administration fee
waivers.............................. 4.93%(2) 3.60% 2.57%(2)
Before advisory/administration fee
waivers.............................. 4.51%(2) 3.14% 2.44%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
6
<PAGE> 84
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
-------------------------------------------------------------------
INSTITUTIONAL SERVICE
CLASS CLASS
------------------------------------- -----------------------
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 6/10/93(1) ENDED YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94
----------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- --------
Income from investment operations
Net investment income.................................. 0.0174 0.0252 0.0073 0.0159 0.0225
Net realized gain (loss) on investments................ -- -- -- -- --
----------- -------- -------- ----------- --------
Total from investment operations................... 0.0174 0.0252 0.0073 0.0159 0.0225
----------- -------- -------- ----------- --------
Less distributions
Distributions from net investment income............... (0.0174) (0.0252) (0.0073) (0.0159) (0.0225)
Distributions from net realized capital gains.......... -- -- -- -- --
----------- -------- -------- ----------- --------
Total distributions................................ (0.0174) (0.0252) (0.0073) (0.0159) (0.0225)
----------- -------- -------- ----------- --------
Net asset value at end of period.......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ========== =========
Total return.............................................. 1.76% 2.55% 0.73% 1.60% 2.27%
Ratios/Supplemental data
Net assets at end of period (in thousands)............. $ 12,191 $ 10,521 $ 12,026 $ 47,993 $ 44,066
Ratios of expenses to average net assets
After advisory/administration fee waivers............ 0.25%(2) 0.13% 0.10%(2) 0.55%(2) 0.40%
Before advisory/administration fee waivers........... 0.73%(2) 0.77% 0.83%(2) 1.03%(2) 1.04%
Ratios of net investment income to average net assets
After advisory/administration fee waivers............ 3.54%(2) 2.56% 2.45%(2) 3.21%(2) 2.29%
Before advisory/administration fee waivers........... 3.06%(2) 1.93% 1.72%(2) 2.74%(2) 1.65%
<CAPTION>
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
----------------------------------------------------
SERIES A
SERVICE CLASS INVESTOR CLASS
--------------- -----------------------
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
6/1/93(1) ENDED 10/5/93(1)
THROUGH 3/31/95 THROUGH
9/30/93 (UNAUDITED) 9/30/94
-------- ----------- ---------
<S> <C> <C> <C>
Net asset value at beginning of period.................... $ 1.00 $ 1.00 $ 1.00
-------- ----------- ---------
Income from investment operations
Net investment income.................................. 0.0074 0.0150 0.0199
Net realized gain (loss) on investments................ -- -- --
-------- ----------- ---------
Total from investment operations................... 0.0074 0.0150 0.0199
-------- ----------- ---------
Less distributions
Distributions from net investment income............... (0.0074) (0.0150) (0.0199)
Distributions from net realized capital gains.......... -- -- --
-------- ----------- ---------
Total distributions................................ (0.0074) (0.0150) (0.0199)
-------- ----------- ---------
Net asset value at end of period.......................... $ 1.00 $ 1.00 $ 1.00
======== =========== =========
Total return.............................................. 0.75% 1.50% 2.01%
Ratios/Supplemental data
Net assets at end of period (in thousands)............. $ 15,239 $ 5 $ 28
Ratios of expenses to average net assets
After advisory/administration fee waivers............ 0.23%(2) 0.75%(2) 0.62%(2)
Before advisory/administration fee waivers........... 0.96%(2) 1.22%(2) 1.26%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers............ 2.23%(2) 2.94%(2) 1.94%(2)
Before advisory/administration fee waivers........... 1.50%(2) 2.47%(2) 1.30%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
7
<PAGE> 85
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
--------------------------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
------------------------------------- ------------------------
FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS
ENDED YEAR 6/1/93(1) ENDED YEAR
3/31/95 ENDED THROUGH 3/31/95 ENDED
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94
----------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- ----------- --------
Income from investment operations
Net investment income............................... 0.0170 0.0247 0.0078 0.0156 0.0221
Net realized gain (loss) on investments............. -- -- -- -- --
----------- -------- -------- ----------- --------
Total from investment operations................ 0.0170 0.0247 0.0078 0.0156 0.0221
----------- -------- -------- ----------- --------
Less distributions
Distributions from net investment income............ (0.0170) (0.0247) (0.0078) (0.0156) (0.0221)
Distributions from net realized capital gains....... -- -- -- -- --
----------- -------- -------- ----------- --------
Total distributions............................. (0.0170) (0.0247) (0.0078) (0.0156) (0.0221)
----------- -------- -------- ----------- --------
Net asset value at end of period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ========== =========
Total return........................................... 1.72% 2.49% 0.78% 1.57% 2.24%
Ratios/Supplemental data
Net assets at end of period (in thousands).......... $ 187,858 $158,102 $ 2,242 $ 137,297 $ 60,560
Ratios of expenses to average net assets
After advisory/administration fee waivers......... 0.25%(2) 0.16% 0.09%(2) 0.55%(2) 0.42%
Before advisory/administration fee waivers........ 0.66%(2) 0.73% 0.97%(2) 0.96%(2) 0.99%
Ratios of net investment income to average net
assets
After advisory/administration fee waivers......... 3.41%(2) 2.64% 2.15%(2) 3.17%(2) 2.31%
Before advisory/administration fee waivers........ 3.00%(2) 2.07% 1.27%(2) 2.76%(2) 1.75%
<CAPTION>
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
--------------------------------------------------
SERIES A
SERVICE CLASS INVESTOR CLASS
------------------- ------------------------
FOR THE FOR THE FOR THE
PERIOD SIX MONTHS PERIOD
6/11/93(1) ENDED 12/28/93(1)
THROUGH 3/31/95 THROUGH
9/30/93 (UNAUDITED) 9/30/94
-------- ----------- ---------
<S> <C> <C> <C>
Net asset value at beginning of period................. $ 1.00 $ 1.00 $ 1.00
-------- --------- ---------
Income from investment operations
Net investment income............................... 0.0074 0.0146 0.0153
Net realized gain (loss) on investments............. -- -- --
-------- --------- ---------
Total from investment operations................ 0.0074 0.0146 0.0153
-------- --------- ---------
Less distributions
Distributions from net investment income............ (0.0074) (0.0146) (0.0153)
Distributions from net realized capital gains....... -- -- --
-------- --------- ---------
Total distributions............................. (0.0074) (0.0146) (0.0153)
-------- --------- ---------
Net asset value at end of period....................... $ 1.00 $ 1.00 $ 1.00
======== ========= =========
Total return........................................... 0.74% 1.47% 1.58%
Ratios/Supplemental data
Net assets at end of period (in thousands).......... $ 8,919 $ 105 $ 139
Ratios of expenses to average net assets
After advisory/administration fee waivers......... 0.32%(2) 0.75%(2) 0.65%(2)
Before advisory/administration fee waivers........ 1.20%(2) 1.16%(2) 1.22%(2)
Ratios of net investment income to average net
assets
After advisory/administration fee waivers......... 2.42%(2) 2.91%(2) 2.11%(2)
Before advisory/administration fee waivers........ 1.54%(2) 2.50%(2) 1.54%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
8
<PAGE> 86
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NORTH CAROLINA
MUNICIPAL MONEY MARKET PORTFOLIO
-----------------------------------------------------------------
INSTITUTIONAL SERVICE
CLASS CLASS
----------------------------------- -----------------------
FOR THE
FOR THE FOR THE PERIOD FOR THE
SIX MONTHS PERIOD 11/01/94 PERIOD
ENDED YEAR 5/4/93(1) THROUGH 4/29/94(1)
3/31/95 ENDED THROUGH 3/31/95 THROUGH
(UNAUDITED) 9/30/94 9/30/93 (UNAUDITED) 9/30/94
----------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- -------- -------- --------- --------
Income from investment operations
Net investment income........................... 0.0174 0.0249 0.0097 0.0135 0.0099
Net realized gain (loss) on investments......... -- -- -- -- --
--------- -------- -------- --------- --------
Total from investment operations............. 0.0174 0.0249 0.0097 0.0135 0.0099
--------- -------- -------- --------- --------
Less distributions
Distributions from net investment income........ (0.0174) (0.0249) (0.0097) (0.0135) (0.0099)
Distributions from net realized capital gains... -- -- -- -- --
--------- -------- -------- --------- --------
Total distributions.......................... (0.0174) (0.0249) (0.0097) (0.0135) (0.0099)
--------- -------- -------- --------- --------
Net asset value at end of period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ======== ======== ========= ========
Total return....................................... 1.75% 2.52% 0.97% 1.35% 0.99%
Ratios/Supplemental data
Net assets at end of period (in thousands)...... $ 118,224 $ 69,673 $ 34,135 $ 4064 $ --(3)
Ratios of expenses to average net assets
After advisory/administration fee waivers...... 0.16%(2) 0.10% 0.10%(2) 0.53%(2) 0.36%(2)
Before advisory/administration fee waivers..... 0.71%(2) 0.76% 0.81%(2) 1.19%(2) 1.02%(2)
Ratios of net investment income to average net
assets
After advisory/administration fee waivers...... 3.52%(2) 2.53% 2.35%(2) 3.30%(2) 2.54%(2)
Before advisory/administration fee waivers..... 2.97%(2) 1.87% 1.64%(2) 2.64%(2) 1.87%(2)
<CAPTION>
NORTH CAROLINA
MUNICIPAL MONEY MARKET PORTFOLIO
---------------------------------------------------------------------
INVESTOR A INSTITUTIONAL SERVICE
CLASS CLASS CLASS
---------- --------------------------- -----------
FOR THE FOR THE
PERIOD FOR THE FOR THE PERIOD
2/14/95(2) SIX MONTHS PERIOD 10/11/94(1)
THROUGH ENDED 7/25/94(1) THROUGH
3/31/95 3/31/95 THROUGH 3/31/95
(UNAUDITED) (UNAUDITED) 9/30/94 (UNAUDITED)
----------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Net asset value at beginning of period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ------ -----------
Income from investment operations
Net investment income........................... 0.0041 0.0171 0.0053 0.0149
Net realized gain (loss) on investments......... -- -- -- --
----------- ----------- ------ -----------
Total from investment operations............. 0.0041 0.0171 0.0053 0.0149
----------- ----------- ------ -----------
Less distributions
Distributions from net investment income........ (0.0041) (0.0171) (0.0053) (0.0149)
Distributions from net realized capital gains... -- -- -- --
----------- ----------- ------ -----------
Total distributions.......................... (0.0041) (0.0171) (0.0053) (0.0149)
----------- ----------- ------ -----------
Net asset value at end of period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== =============== ==========
Total return....................................... 0.41% 1.72% 0.53% 1.50%
Ratios/Supplemental data
Net assets at end of period (in thousands)...... $ 3 $ 18,634 $ 13,831 $ 400
Ratios of expenses to average net assets
After advisory/administration fee waivers...... 0.66%(2) 0.10%(2) 0.10%(2) 0.40%(2)
Before advisory/administration fee waivers..... 2.99%(2) 0.70%(2) 1.02%(2) 1.00%(2)
Ratios of net investment income to average net
assets
After advisory/administration fee waivers...... 3.32%(2) 3.44%(2) 2.89%(2) 3.23%(2)
Before advisory/administration fee waivers..... 1.00%(2) 2.84%(2) 1.97%(2) 2.63%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) There were no Service Shares outstanding as of September 30, 1994.
(4) Reissuance of shares.
9
<PAGE> 87
INVESTMENT POLICIES
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Portfolio obligations held by the Portfolio will have maturities of 13
months or less as determined in accordance with the rules of the SEC. The
Portfolio invests in a broad range of short-term, high quality, U.S.
dollar-denominated instruments, such as government, bank, commercial and other
obligations, that may be available in the money markets ("Money Market
Instruments"). The following descriptions illustrate types of Money Market
Instruments in which the Portfolio may invest.
BANK OBLIGATIONS. The Portfolio may purchase bank obligations, such as
certificates of deposit, bankers' acceptances and demand and time deposits,
including U.S. dollar-denominated instruments issued or supported by the credit
of U.S. or foreign banks or savings institutions having total assets at the time
of purchase in excess of $1 billion. The Portfolio may invest substantially in
obligations of foreign banks or foreign branches of U.S. banks where the adviser
deems the instrument to present minimal credit risks. Such investments may
include Eurodollar Certificates of Deposit ("ECDs") which are U.S.
dollar-denominated certificates of deposit issued by offices of foreign and
domestic banks located outside the United States; Eurodollar Time Deposits
("ETDs") which are U.S. dollar-denominated deposits in a foreign branch of a
U.S. bank or a foreign bank; Canadian Time Deposits ("CTDs") which are
essentially the same as ETDs except they are issued by Canadian offices of major
Canadian banks; and Yankee Certificates of Deposit ("Yankee Cds") which are U.S.
dollar-denominated certificates of deposit issued by a U.S. branch of a foreign
bank and held in the United States. The Portfolio may also make interest-bearing
savings deposits in commercial and savings banks in amounts not in excess of 5%
of its total assets.
Investments in obligations issued by foreign banks and foreign branches of
U.S. banks may involve risks that are different from investments in obligations
of domestic branches of U.S. banks. These risks may include future unfavorable
political and economic developments, possible withholding taxes on interest
income, seizure or nationalization of foreign deposits, currency controls,
interest limitations, or other governmental restrictions which might affect the
payment of principal or interest on the securities held by the Portfolio.
Additionally, these institutions may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting and recordkeeping
requirements than those applicable to domestic branches of U.S. banks.
COMMERCIAL PAPER. The Portfolio may purchase commercial paper rated (at the
time of purchase) in the two highest rating categories of a nationally
recognized statistical rating organization ("NRSRO"). The Portfolio may also
purchase unrated commercial paper determined to be of comparable quality at the
time of purchase by the adviser. Commercial paper issues in which the Portfolio
may invest include securities issued by corporations without registration under
the Securities Act of 1933 (the "1933 Act") in reliance on the exemption from
such registration afforded by Section 3(a)(3) thereof, and commercial paper
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)
paper"). Section 4(2) paper is restricted as to disposition under the Federal
securities laws in that any resale must similarly be made in an exempt
transaction. Section 4(2) paper is normally resold to other institutional
investors through or with the assistance of investment dealers which make a
market in Section 4(2) paper, thus providing liquidity.
The Portfolio may also invest in Canadian Commercial Paper ("CCP"), which
is U.S. dollar-denominated commercial paper issued by a Canadian corporation or
a Canadian counterpart of a U.S. corporation, and in Europaper, which is U.S.
dollar-denominated commercial paper of a foreign issuer, subject to the criteria
stated above for other commercial paper issuers.
10
<PAGE> 88
U.S. GOVERNMENT OBLIGATIONS. The Portfolio may purchase obligations issued
or guaranteed by the U.S. Government or its agencies and instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government are
backed by the full faith and credit of the United States. Others are backed by
the right of the issuer to borrow from the U.S. Treasury or are backed only by
the credit of the agency or instrumentality issuing the obligation. See
"Investment Policies--Government Money Market Portfolio" for examples of the
types of U.S. Government obligations that the Portfolio may purchase.
MUNICIPAL OBLIGATIONS. The Portfolio may, when deemed appropriate by the
adviser, invest without limitation in high quality Municipal Obligations (other
than tax-exempt derivative securities) issued by state and local governmental
issuers, the interest on which may be taxable or tax-exempt for Federal income
tax purposes, provided that such obligations carry yields that are competitive
with those of other types of Money Market Instruments of comparable quality. See
"Investment Policies--Municipal Money Market Portfolio" for a more complete
discussion of Municipal Obligations.
GUARANTEED INVESTMENT CONTRACTS. The Portfolio may invest up to 5% of its
total assets in guaranteed investment contracts ("GICs") issued by highly-rated
U.S. insurance companies. Pursuant to such contracts, the Portfolio makes cash
contributions to a deposit fund of the insurance company's general account. The
insurance company then credits to the Portfolio on a monthly basis guaranteed
interest which is based on an index (in most cases this index is expected to be
the Salomon Brothers CD Index). GICs provide that this guaranteed interest will
not be less than a certain minimum rate. A GIC is a general obligation of the
issuing insurance company and not a separate account. The purchase price paid
for a GIC becomes part of the general assets of the insurance company, and the
contract is paid from the general assets of the insurance company. The Portfolio
will only purchase GICs from insurance companies which, at the time of purchase,
are rated "A+" by A.M. Best Company, have assets of $1 billion or more and meet
quality and credit standards established by the adviser pursuant to guidelines
approved by the Board of Trustees. Generally, GICs are not assignable or
transferable without the permission of the issuing insurance companies, and an
active secondary market in GICs does not currently exist.
SECURITIES LENDING. To increase income on its investments, the Portfolio
may lend its portfolio securities with an aggregate value up to 30% of its total
assets to broker/dealers and other institutional investors pursuant to
agreements requiring that the loans be continuously secured by collateral equal
at all times in value to at least the market value of the securities loaned.
Collateral for such loans may include cash, securities of the U.S. Government or
its agencies or instrumentalities or an irrevocable letter of credit issued by a
bank which meets the Portfolio's investment standards. There may be risks of
delay in receiving additional collateral or in recovering the securities loaned
or even a loss of rights in the collateral should the borrower of the securities
fail financially. See "Investment Policies--Common Investment Policies" for a
description of other investment policies.
------------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio invests substantially all of its assets in a diversified
portfolio of Municipal Obligations, the interest on which, in the opinion of
bond counsel or counsel to the issuer or sponsor, is exempt from the regular
Federal income tax and which have remaining maturities of 13 months or less as
determined in accordance with the rules of the SEC. Purchasable Municipal
Obligations are determined by the sub-adviser to present minimal credit risks
pursuant to guidelines established by the Board of Trustees and at the time of
purchase are rated in one of the two highest rating categories by an NRSRO or
are unrated securities determined at the time of purchase to be of comparable
quality by the
11
<PAGE> 89
sub-adviser pursuant to guidelines approved by the Board of Trustees. The
applicable Municipal Obligations ratings are described in an Appendix to the
Statement of Additional Information.
The two principal classifications of Municipal Obligations are "general
obligation" securities and "revenue" securities. General obligation securities
are secured by the issuer's pledge of its full faith, credit and taxing power
for the payment of principal and interest. Revenue securities are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise tax or other specific
revenue source such as the user of the facility being financed. Revenue
securities include private activity bonds which are not payable from the
unrestricted revenues of the issuer. Consequently, the credit quality of private
activity bonds is usually directly related to the credit standing of the
corporate user of the facility involved. Municipal Obligations may also include
"moral obligation" bonds, which are normally issued by special purpose public
authorities. If the issuer of moral obligation bonds is unable to meet its debt
service obligations from current revenues, it may draw on a reserve fund, the
restoration of which is a moral commitment but not a legal obligation of the
state or municipality which created the issuer.
Also included within the general category of Municipal Obligations are
participation certificates in a lease, an installment purchase contract, or a
conditional sales contract ("lease obligations") entered into by a state or
political subdivision to finance the acquisition or construction of equipment,
land, or facilities. Although lease obligations do not constitute general
obligations of the issuer for which the lessee's unlimited taxing power is
pledged, certain lease obligations are backed by the lessee's covenant to
appropriate money to make the lease obligation payments. However, under certain
lease obligations, the lessee has no obligation to make these payments in future
years unless money is appropriated on a yearly basis. Although
"non-appropriation" lease obligations are secured by the leased property,
disposition of the property in the event of foreclosure might prove difficult.
These securities represent a relatively new type of financing that is not yet as
marketable as more conventional securities.
------------------------------------
GOVERNMENT MONEY MARKET PORTFOLIO
During normal market periods, not less than 65% of the Portfolio's assets
will be invested in U.S. Government obligations (or repurchase agreements
relating to such obligations). Instruments held by the Portfolio will have
maturities of 13 months or less as determined in accordance with the rules of
the SEC. Treasury obligations differ only in their interest rates, maturities,
and times of issuance. Obligations of certain agencies and instrumentalities of
the U.S. Government such as the Government National Mortgage Association
("GNMA") are supported by the United States' full faith and credit; others, such
as those of the Federal National Mortgage Association ("FNMA") and the Student
Loan Marketing Association, are supported by the right of the issuer to borrow
from the Treasury; others, such as those of the Federal Farm Credit Banks or the
Federal Home Loan Mortgage Corporation, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored agencies or
instrumentalities if it is not obligated to do so by law.
To increase income on its investments, the Portfolio may lend its portfolio
securities with an aggregate value up to 30% of its total assets to
broker/dealers and other institutional investors pursuant to agreements
requiring that the loans be continuously secured by collateral equal at all
times in value to at least the market value of the securities loaned. Collateral
for such loans may include cash, securities of the U.S. Government or its
agencies or instrumentalities or an irrevocable letter of credit issued by a
bank which meets the Portfolio's investment standards. There may be risks of
delay in receiving additional collateral or in recovering the securities loaned
or even a loss of rights in the
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collateral should the borrower of the securities fail financially. See
"Investment Policies--Common Investment Policies" for a description of other
investment policies.
------------------------------------
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in Ohio Municipal Obligations. The
Portfolio may also invest in Municipal Obligations (including related tax-exempt
derivative securities) in which the Municipal Money Market Portfolio may invest.
See "Investment Policies--Municipal Money Market Portfolio" for a description of
Municipal Obligations. Portfolio obligations held by the Portfolio will have
maturities of 13 months or less as determined in accordance with the rules of
the SEC.
The concentration of investments in Ohio Municipal Obligations raises
special investment considerations. While diversifying more into the service and
other non-manufacturing areas, the economy of Ohio continues to rely in part on
durable goods manufacturing largely concentrated in motor vehicles and
equipment, steel, rubber products and household appliances. As a result, general
economic activity in Ohio, as in many other industrially developed states, tends
to be more cyclical than in some other states and in the nation as a whole.
Agriculture is an important segment of the Ohio economy with over half the
State's area devoted to farming and approximately 15% of total employment in
agribusiness. In prior years, the State's overall unemployment rate was commonly
somewhat higher than the national figure. For example, the reported 1990 average
monthly State rate was 5.7%, compared to the national figure of 5.5%. However,
for 1991, 1992 and 1993 the State rates (6.4%, 7.2% and 6.5%) were below the
national rates (6.7%, 7.4% and 6.8%). The unemployment rate and its effects vary
among particular geographic areas of the State. There can be no assurance that
future national, regional or state-wide economic difficulties and the resulting
impact on State or local government finances will not adversely affect the
market value of Ohio Municipal Obligations held in the Portfolio or the ability
of the respective obligors to make timely payments of debt service on (or lease
payments relating to) those obligations. See the Statement of Additional
Information for further discussions of investment considerations associated with
Ohio Municipal Obligations and see "Investment Policies--Common Investment
Policies" for a description of other securities in which the Portfolio may
invest.
------------------------------------
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in Pennsylvania Municipal Obligations.
The Portfolio may also invest in Municipal Obligations (including related
tax-exempt derivative securities) in which the Municipal Money Market Portfolio
may invest. See "Investment Policies--Municipal Money Market Portfolio" for a
description of Municipal Obligations. Portfolio obligations held by the
Portfolio will have maturities of 13 months or less as determined in accordance
with the rules of the SEC.
The concentration of investments in Pennsylvania Municipal Obligations
raises special investment considerations. In particular, changes in the economic
condition and governmental policies of the Commonwealth of Pennsylvania and its
political subdivisions, agencies, instrumentalities and authorities could
adversely affect the value of the Portfolio and its portfolio securities.
Although the General Fund of the Commonwealth (the principal operating fund of
the Commonwealth) experienced deficits in fiscal 1990 and 1991, tax increases
and spending decreases helped return the General Fund balance to a surplus at
June 30, 1992 of $87.5 million and at June 30, 1993 of $698.9 million. The
deficit
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in the Commonwealth's unreserved/undesignated funds of prior years also was
reversed to a surplus of $64.4 million as of June 30, 1993. Rising unemployment,
a relatively high proportion of persons 65 and older in the Commonwealth and
court ordered increases in healthcare reimbursement rates place increased
pressures on the tax resources of the Commonwealth and its municipalities. See
the Statement of Additional Information for further discussion of investment
considerations associated with Pennsylvania Municipal Obligations and see
"Investment Policies--Common Investment Policies" for a description of other
investment policies.
------------------------------------
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in North Carolina Municipal
Obligations. The Portfolio may also invest in Municipal Obligations (including
related tax-exempt derivative securities) in which the Municipal Money Market
Portfolio may invest. See "Investment Policies--Municipal Money Market
Portfolio" for a description of Municipal Obligations. Portfolio obligations
held by the Portfolio will have maturities of 13 months or less as determined in
accordance with the rules of the SEC.
The concentration of investments in North Carolina Municipal Obligations
raises special investment considerations. In particular, changes in the economic
condition and governmental policies of North Carolina and its political
subdivisions, agencies, instrumentalities and authorities could adversely affect
the value of the Portfolio and its portfolio securities. Growth of North
Carolina tax revenues slowed considerably during fiscal 1990-92 requiring tax
increases and budget adjustments, including hiring freezes and restrictions,
spending constraints, changes in the timing of certain collections and payments,
and other short-term budget adjustments, that were needed to comply with North
Carolina's constitutional mandate for a balanced budget. Fiscal years 1993 and
1994, however, ended with a positive General Fund balance of approximately $500
million each year on a budgetary basis. By law, 25% of such positive fund
balance was required to be reserved in the General Fund of North Carolina as
part of a "Savings Reserve" (subject to a maximum reserve of 5% of the preceding
fiscal year's operating appropriation). An additional portion of such positive
fund balance was reserved in the General Fund as part of a "Reserve for Repair
and Renovation of State Facilities," leaving the remaining unrestricted fund
balance at the end of each such year available for future appropriations. See
the Statement of Additional Information for further discussion of investment
considerations associated with North Carolina Municipal Obligations and see
"Investment Policies--Common Investment Policies" for a description of other
investment policies of the Portfolio.
------------------------------------
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in Virginia Municipal Obligations. The
Portfolio may also invest in Municipal Obligations (including related tax-exempt
derivative securities) in which the Municipal Money Market Portfolio may invest.
See "Investment Policies--Municipal Money Market Portfolio" for a description of
Municipal Obligations. Instruments held by the Portfolio will have maturities of
13 months or less as determined in accordance with the rules of the SEC.
The Portfolio may also purchase obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities. Obligations of certain
agencies and instrumentalities of the U.S. Government are backed by the full
faith and credit of the United States. Others are backed by the right of the
issuer to borrow from the U.S. Treasury or
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are backed only by the credit of the agency or instrumentality issuing the
obligation. See "Investment Policies-- Government Money Market Portfolio" for
examples of the types of U.S. Government obligations that the Portfolio may
purchase.
The Virginia Municipal Money Market Portfolio will invest primarily in
Virginia Municipal Obligations. For this reason, the Portfolio is affected by
political, economic, regulatory or other developments that constrain the taxing,
revenue-collecting and spending authority of Virginia issuers or otherwise
affect the ability of Virginia issuers to pay interest, repay principal, or any
premium. Certain of these developments are described herein. The rate of
economic growth in the Commonwealth of Virginia slowed in 1990 and 1991, but has
increased steadily over the past decade. From 1984 to 1993, the Commonwealth's
4.8% rate of growth in per capita personal income was slightly ahead of the
national rate of growth of 4.7%. During 1990, 1991 and 1992, Virginia's per
capita personal income grew at a slightly lower rate than the U.S. average. Per
capita income in Virginia has been consistently above national levels over the
past decade and, in 1993, was $21,634 compared with the national level of
$20,817. The services sector in Virginia generates the largest number of jobs,
followed by wholesale and retail trade, government employment and manufacturing.
Because of Virginia's proximity to Washington, D.C. and the concentration of
military installations in the Commonwealth (the largest such concentration in
the United States), the Federal government has a greater economic impact on
Virginia relative to its size than on any of the other states except Alaska and
Hawaii. It is unclear what effect the current efforts by the Federal government
to restructure the defense budget will have on the long-term economic conditions
of the Commonwealth. According to statistics published by the U.S. Department of
Labor, the Commonwealth typically has one of the lowest unemployment rates in
the nation. This is generally attributed to the balance among the various
sectors represented in the economy. During 1993, an average of 5.9% of
Virginians were unemployed as compared with the national average of 6.8%. The
population of the Commonwealth has continued to grow over the last decade at a
rate that is substantially higher than the national average. The rate of
increase in such population growth has declined since reaching a high of 2.1%
annually in 1987 and, in 1993, was approximately 1.8%. Virginia is one of twenty
states with a right-to-work law and is generally regarded as having a favorable
business climate marked by few strikes or work stoppages. Virginia is also one
of the least unionized among the industrialized states. See "Special
Considerations Regarding Investment in Virginia Municipal Obligations" in the
Statement of Additional Information. See also "Investment Policies--Common
Investment Policies" for a description of other investment policies.
------------------------------------
NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIO
The Portfolio will invest primarily in New Jersey Municipal Obligations.
The Portfolio may also invest in Municipal Obligations (including related
tax-exempt derivative securities) in which the Municipal Money Market Portfolio
may invest. See "Investment Policies--Municipal Money Market Portfolio" for a
description of Municipal Obligations. Portfolio obligations held by the
Portfolio will have maturities of 13 months or less as determined in accordance
with the rules of the SEC.
The concentration of investments by the New Jersey Municipal Money Market
Portfolio in New Jersey Municipal Obligations raises special investment
considerations. The State of New Jersey generally has a diversified economic
base consisting of, among others, commerce and service industries, selective
commercial agriculture, insurance, tourism, petroleum refining and
manufacturing, although New Jersey's manufacturing industry has experienced a
downward trend in the last few years. New Jersey is a major recipient of Federal
assistance and, of all the states, is among the highest in the amount of Federal
aid received. Therefore, a decrease in Federal financial assistance may
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adversely affect the financial condition of New Jersey and its political
subdivisions and instrumentalities. While New Jersey's economic base has become
more diversified over time and thus its economy appears to be less vulnerable
during recessionary periods, a recurrence of high levels of unemployment could
adversely affect New Jersey's overall economy and the ability of New Jersey and
its political subdivisions and instrumentalities to meet their financial
obligations. In addition, New Jersey maintains a balanced budget which restricts
total appropriation increases to only 5% annually with respect to any
municipality or county, the balanced budget plan may actually adversely affect a
particular municipality's or county's ability to repay its obligations. See the
Statement of Additional Information for further discussion of investment
considerations associated with New Jersey Municipal Obligations and see
"Investment Policies--Common Investment Policies" for a description of other
securities in which the Portfolio may invest.
------------------------------------
COMMON INVESTMENT POLICIES
This section describes certain investment policies that are common to
Portfolios. Each Portfolio's investment objective and policies may be changed by
the Board of Trustees without shareholder approval.
MORTGAGE-RELATED SECURITIES. Each Portfolio other than the Municipal Money
Market, Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Virginia Municipal Money Market and New Jersey
Municipal Money Market Portfolios (collectively, the "Municipal Portfolios") may
invest in mortgage-related securities issued by the U.S. Government or its
agencies or instrumentalities or issued by private companies. Such
mortgage-related securities may include collateralized mortgage obligations
("CMOs") issued by the Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation or other U.S. Government agencies or instrumentalities
or issued by private companies. The average life of mortgage-related securities
is likely to be less than the original maturity of the mortgage pools underlying
the securities as a result of mortgage prepayments. For this and other reasons,
a mortgage-related security's stated maturity may be shortened and, therefore,
it may be difficult to predict precisely the security's total return to the
particular Portfolio. In addition, in periods of falling interest rates, the
rate of mortgage prepayments tends to increase. During such periods, the
reinvestment of prepayment proceeds by the particular Portfolio will generally
be at lower rates than the rates on the prepaid obligations.
REPURCHASE AGREEMENTS. Each Portfolio other than the Municipal Portfolios
may agree to purchase securities from financial institutions subject to the
seller's agreement to repurchase them at an agreed-upon time and price
("repurchase agreements"). The securities held subject to a repurchase agreement
may have stated maturities exceeding 13 months, provided the repurchase
agreement itself matures in less than 13 months. Default by or bankruptcy of the
seller would, however, expose the Portfolio to possible loss because of adverse
market action or delays in connection with the disposition of the underlying
obligations.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Each Portfolio may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions involve a commitment by a
Portfolio to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), and permit a
Portfolio to lock-in a price or yield on a security it owns or intends to
purchase, regardless of future changes in interest rates. When-issued and
forward commitment transactions involve the risk, however, that the price or
yield obtained in a transaction may be less favorable than the price or yield
available in the market when the delivery takes place. Each Portfolio's
when-issued purchases and forward commitments are not expected to exceed 25% of
the value of its total assets absent unusual market conditions. The Portfolios
do not intend to engage in when-issued purchases and forward commitments for
speculative purposes but only in furtherance of their investment objectives.
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REVERSE REPURCHASE AGREEMENTS. Each Portfolio other than the Municipal
Portfolios may enter into reverse repurchase agreements with respect to
portfolio securities for temporary purposes (such as to obtain cash to meet
redemption requests when the liquidation of portfolio securities is deemed
disadvantageous or inconvenient by the adviser or sub-adviser). A reverse
repurchase agreement involves a sale by a Portfolio of securities that it holds
concurrently with an agreement by the Portfolio to repurchase the same
securities of an agreed-upon price and date. Reverse repurchase agreements
involve the risk that the market value of the securities sold by the Portfolio
may decline below the price of the securities the Portfolio is obligated to
repurchase. Reverse repurchase agreements are considered to be borrowings by a
Portfolio under the Investment Company Act of 1940 (the "1940 Act").
INVESTMENT COMPANIES. In connection with the management of their daily cash
positions, each Portfolio may invest in securities issued by other investment
companies which invest in short-term, high quality debt securities and which
determine their net asset value per share based on the amortized cost or
penny-rounding method of valuation. Securities of other investment companies
will be acquired by a Portfolio within the limits prescribed by the 1940 Act.
Each Portfolio currently intends to limit its investments so that, as determined
immediately after a securities purchase is made: (i) not more than 5% of the
value of its total assets will be invested in the securities of any one
investment company; (ii) 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 (iii) not more than 3% of the outstanding voting stock of any one investment
company will be owned by the Portfolio or by the Fund as a whole. As a
shareholder of another investment company, a Portfolio would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory fees and other expenses the Portfolio bears directly in connection with
its own operations.
VARIABLE AND FLOATING RATE INSTRUMENTS. Each Portfolio may purchase rated
and unrated variable and floating rate instruments, which may have a stated
maturity in excess of 13 months but will, in any event, permit a Portfolio to
demand payment of the principal of the instrument at least once every 13 months
upon not more than thirty days' notice (unless the instrument is guaranteed by
the U.S. Government or an agency or instrumentality thereof). Such instruments
may include variable amount master demand notes that permit the indebtedness
thereunder to vary in addition to providing for periodic adjustments in the
interest rate. Issuers of unrated variable and floating rate instruments must
satisfy the same criteria as set forth above for the particular Portfolio, and
will be determined to present minimal credit risks by the adviser. The absence
of an active secondary market with respect to particular variable and floating
rate instruments, however, could make it difficult for a Portfolio to dispose of
a variable or floating rate instrument if the issuer defaulted on its payment
obligation or during periods when a Portfolio is not entitled to exercise its
demand rights, and a Portfolio could, for these or other reasons, suffer a loss
with respect to such instruments.
TAX-EXEMPT DERIVATIVES AND OTHER MUNICIPAL OBLIGATIONS. The Municipal
Portfolios may invest in tax-exempt derivative securities relating to Municipal
Obligations, including tender option bonds, participations, beneficial interests
in trusts and partnership interests.
Opinions relating to the validity of Municipal Obligations and to the
exemption of interest thereon from Federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance, and opinions relating
to the validity of and the tax-exempt status of payments received by the
Portfolios from tax-exempt derivative securities are rendered by counsel to the
respective sponsors of such securities. The Fund and its investment adviser will
rely on such opinions and will not review independently the underlying
proceedings relating to the issuance of Municipal Obligations, the creation of
any tax-exempt derivative securities, or the bases for such opinions.
UNINVESTED CASH RESERVES. Each Portfolio may hold uninvested cash reserves
pending investment during temporary defensive periods. Each Municipal Portfolio
may also hold uninvested cash reserves if, in the opinion of its
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sub-adviser, suitable obligations bearing tax-free interest are unavailable.
During normal market periods, no more than 20% of a Portfolio's assets will be
held uninvested. Uninvested cash reserves will not earn income.
ILLIQUID SECURITIES. No Portfolio will knowingly invest more than 10% of
the value of its net assets in securities that are illiquid. Variable and
floating rate instruments that cannot be disposed of within seven days, GICs,
and repurchase agreements and time deposits that do not provide for payment
within seven days after notice, without taking a reduced price, are subject to
this 10% limit. Each Portfolio may purchase securities which are not registered
under the 1933 Act but which can be sold to "qualified institutional buyers" in
accordance with Rule 144A under the 1933 Act. Any such security will not be
considered illiquid so long as it is determined by the adviser or sub-adviser,
acting under guidelines approved and monitored by the Board, that an adequate
trading market exists for that particular security. This investment practice
could have the effect of increasing the level of illiquidity in a Portfolio
during any period that qualified institutional buyers become uninterested in
purchasing these restricted securities.
MUNICIPAL MONEY MARKET, OHIO MUNICIPAL MONEY MARKET, PENNSYLVANIA MUNICIPAL
MONEY MARKET, NORTH CAROLINA MUNICIPAL MONEY MARKET, VIRGINIA MUNICIPAL MONEY
MARKET AND NEW JERSEY MUNICIPAL MONEY MARKET PORTFOLIOS. During normal market
conditions, up to 20% of each Municipal Portfolio's net assets may be invested
in securities which are not Municipal Obligations and at least 65% of the total
net assets of each of Ohio Municipal Money Market, Pennsylvania Municipal Money
Market, North Carolina Municipal Money Market, Virginia Municipal Money Market
and New Jersey Municipal Money Market Portfolios will be invested in Ohio,
Pennsylvania, North Carolina, Virginia and New Jersey Municipal Obligations,
respectively. During temporary defensive periods, each Municipal Portfolio may
invest without limitation in obligations which are not Municipal Obligations and
may hold without limitation uninvested cash reserves. Such securities may
include, without limitation, bonds, notes, variable rate demand notes and
commercial paper, provided such securities are rated within the relevant
categories applicable to Municipal Obligations set forth above, or if unrated,
are of comparable quality as determined by the adviser or sub-adviser, and may
also include, without limitation, other debt obligations, such as bank
obligations. Each Municipal Portfolio may acquire "stand-by commitments" with
respect to Municipal Obligations held by it. Under a stand-by commitment, a
dealer agrees to purchase at the Portfolio's option specified Municipal
Obligations at a specified price. The acquisition of a stand-by commitment may
increase the cost, and thereby reduce the yield, of the Municipal Obligation to
which such commitment relates. Each Municipal Portfolio will acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes.
The Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Virginia Municipal Money Market and New Jersey
Municipal Money Market Portfolios may invest without limitation in private
activity bonds the interest on which is an item of tax preference for purposes
of the Federal alternative minimum tax ("AMT Paper"). The Municipal Money Market
Portfolio may invest up to 20% of its total assets in AMT Paper when added
together with any taxable investments held by the Portfolio. Interest on AMT
Paper that is received by taxpayers subject to the Federal alternative minimum
tax is taxable. Investors should also be aware of the possibility of state and
local alternative minimum or minimum income tax liability on interest from AMT
Paper. To the extent a Portfolio's assets are invested in Municipal Obligations
payable from the revenues of similar projects or are invested in private
activity bonds, the Portfolio will be subject to the peculiar risks presented by
the laws and economic conditions relating to such projects and bonds to a
greater extent than it would be if its assets were not so invested. Each
Municipal Portfolio may invest 25% or more of its net assets in Municipal
Obligations the interest on which is paid solely from revenues of similar
projects. The amount of information regarding the financial condition of issuers
of Municipal Obligations may not be as extensive as that which is made available
by public corporations, and the secondary market for Municipal Obligations may
be less liquid than that for taxable obligations. Accordingly, the ability of a
Municipal Portfolio to buy and sell tax-exempt securities may, at any particular
time and with respect to any particular securities, be limited.
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The Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Virginia Municipal Money Market and New Jersey
Municipal Money Market Portfolios are classified as non-diversified under the
1940 Act. Investment returns on a non-diversified portfolio typically are
dependent upon the performance of a smaller number of securities relative to the
number held in a diversified portfolio. Consequently, the change in value of any
one security may affect the overall value of a non-diversified portfolio more
than it would a diversified portfolio. Additionally, a non-diversified portfolio
may be more susceptible to economic, political and regulatory developments than
a diversified portfolio with similar objectives.
ADDITIONAL QUALITY AND DIVERSIFICATION REQUIREMENTS. The Portfolios may
only invest in: (i) securities in the two highest rating categories of an NRSRO,
provided that if they are rated by more than one NRSRO, at least one other NRSRO
rates them in one of its two highest categories; and (ii) unrated securities
determined to be of comparable quality at the time of purchase (collectively,
"Eligible Securities"). Except for the Municipal Portfolios, a Portfolio may not
invest more than 5% of its assets in Eligible Securities that are not "First
Tier Securities" (as defined below). The rating symbols of the NRSROs which the
Portfolios may use are described in an Appendix to the Statement of Additional
Information. Each Portfolio other than the Municipal Portfolios will limit its
purchases of any one issuer's securities (other than U.S. Government obligations
and customary demand deposits) to 5% of the Portfolio's total assets, except
that it may invest more than 5% (but no more than 25%) of its total assets in
"First Tier Securities" of one issuer for a period of up to three business days.
First Tier Securities include: (i) securities in the highest rating category by
the only NRSRO rating them, (ii) securities in the highest rating category of at
least two NRSROs, if more than one NRSRO has rated them, (iii) securities that
have no short-term rating, but have been issued by an issuer that has other
outstanding short-term obligations that have been rated in accordance with (i)
or (ii) above and are comparable in priority and security to such securities,
and (iv) certain unrated securities that have been determined to be of
comparable quality to such securities. In addition, each Portfolio other than
the Municipal Portfolios will limit its purchases of "Second Tier Securities"
(Eligible Securities that are not First Tier Securities) of one issuer to the
greater of 1% of its total assets or $1 million.
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
Each Portfolio is subject to the fundamental investment limitations stated
in this section, which may not be changed as to a Portfolio except upon the
affirmative vote of the holders of a majority of the Portfolio's outstanding
shares.
1. Each of the Money Market, Municipal Money Market and Government
Money Market Portfolios may not purchase securities of any one issuer
(other than securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities or certificates of deposit for any such
securities) if more than 5% of the value of the Portfolio's total assets
(taken at current value) would be invested in the securities of such
issuer, or more than 10% of the issuer's outstanding voting securities
would be owned by the Portfolio or the Fund, except that up to 25% of the
value of the Portfolio's total assets (taken at current value) may be
invested without regard to these limitations. For purposes of this
limitation, a security is considered to be issued by the entity (or
entities) whose assets and revenues back the security. A guarantee of a
security is not deemed to be a security issued by the guarantor when the
value of all securities issued and guaranteed by the guarantor, and owned
by the Portfolio, does not exceed 10% of the value of the Portfolio's total
assets.
2. No Portfolio may borrow money or issue senior securities, except
that each Portfolio may borrow from banks and (other than a Municipal
Portfolio) enter into reverse repurchase agreements for temporary purposes
in amounts up to one-third of the value of its total assets at the time of
such borrowing; or mortgage, pledge or hypothecate any assets, except in
connection with any such borrowing and then in amounts not in excess of
one-
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third of the value of the Portfolio's total assets at the time of such
borrowing. No Portfolio will purchase securities while its aggregate
borrowings (including reverse repurchase agreements and borrowings from
banks) in excess of 5% of its total assets are outstanding. Securities held
in escrow or separate accounts in connection with a Portfolio's investment
practices are not deemed to be pledged for purposes of this limitation.
3. In addition, each of the Municipal Money Market, Government Money
Market, Ohio Municipal Money Market, Pennsylvania Municipal Money Market,
North Carolina Municipal Money Market, Virginia Municipal Money Market and
New Jersey Municipal Money Market Portfolios may not purchase securities
which would cause 25% or more of the value of its total assets at the time
of purchase to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry. The
Money Market Portfolio, on the other hand, may not purchase any securities
which would cause, at the time of purchase, less than 25% of the value of
its total assets to be invested in the obligations of issuers in the
banking industry, or in obligations, such as repurchase agreements, secured
by such obligations (unless the Portfolio is in a temporary defensive
position) or which would cause, at the time of purchase, more than 25% of
the value of its total assets to be invested in the obligations of issuers
in any other industry. In applying the investment limitations stated in
this paragraph, (i) there is no limitation with respect to the purchase of
(a) instruments issued (as defined in investment limitation number 1 above)
or guaranteed by the United States, any state, territory or possession of
the United States, the District of Columbia or any of their authorities,
agencies, instrumentalities or political subdivisions, (b) instruments
issued by domestic banks (which may include U.S. branches of foreign banks)
and (c) repurchase agreements secured by the instruments described in
clauses (a) and (b); (ii) 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 the parents; and (iii) utilities
will be divided according to their services, for example, gas, gas
transmission, electric and gas, electric and telephone will be each
considered a separate industry.
4. Each of the Ohio Municipal Money Market, Pennsylvania Municipal
Money Market, North Carolina Municipal Money Market, Virginia Municipal
Money Market and New Jersey Municipal Money Market Portfolios will invest
at least 80% of its net assets in AMT Paper and instruments the interest on
which is exempt from regular Federal income tax, except during defensive
periods or during periods of unusual market conditions.
5. Finally, the Municipal Money Market Portfolio will invest at least
80% of its net assets in instruments the interest on which is exempt from
regular Federal income tax and is not an item of tax preference for
purposes of Federal alternative minimum tax, except during defensive
periods or during periods of unusual market conditions.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
a Portfolio's investments will not constitute a violation of such limitation,
except that any borrowing by a Portfolio that exceeds the fundamental investment
restrictions stated above must be reduced to meet such restrictions within the
period required by the 1940 Act (currently three days).
In order to permit the sale of its shares in certain states, the Fund may
make commitments more restrictive than the investment policies and limitations
described in this Prospectus. Should the Fund determine that any such commitment
is no longer in the best interests of the Fund, it will revoke the commitment by
terminating sales of its shares in the state involved.
* * *
For information on additional investment limitations relating to the
Portfolios, see the Fund's Statement of Additional Information.
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PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
DISTRIBUTOR
Shares of each Portfolio are offered on a continuous basis for the Fund by
the distributor, Provident Distributors, Inc. (the "Distributor"). The
Distributor is a registered broker/dealer with principal offices at 259
Radnor-Chester Road, Suite 120, Radnor, Pennsylvania 19087.
PURCHASE OF SHARES
Institutional Shares are offered to Institutions at the net asset value per
share next determined after an order is received by PFPC Inc. ("PFPC"), the
Fund's transfer agent. Shares may be purchased on any Business Day. A "Business
Day" is any weekday that the New York Stock Exchange (the "NYSE") and the
Federal Reserve Bank of Philadelphia (the "FRB") are open for business.
Purchase orders for Shares of each Portfolio except the Government Money
Market Portfolio may be transmitted by telephoning PFPC at (800) 441-7379 not
later than 12:00 noon (Eastern Time) on any Business Day. Orders received before
noon will be executed at noon. If payment for such orders is not received by
4:00 p.m., the order will be cancelled and notice thereof will be given to the
Institution placing the order. Orders received after 12:00 noon will not be
accepted. The Fund may in its discretion reject any order for Shares.
Purchase orders for Shares of the Government Money Market Portfolio may be
transmitted by telephoning PFPC at (800) 441-7379 no later than 4:00 p.m.
(Eastern Time) on any Business Day. Orders received before noon will be executed
at noon; orders received after noon but before 4:00 p.m. will be executed at
4:00 p.m. If payment for such orders is not received by 4:00 p.m., the order
will be cancelled and notice thereof will be given to the Institution placing
the order. Orders will not be accepted after 4:00 p.m. Under certain
circumstances, the Fund may reject large individual purchase orders received
after 12:00 noon. The Fund may in its discretion reject any order for Shares.
Payment for Institutional Shares may be made only in Federal funds or other
funds immediately available to the Fund's custodian. The minimum initial
investment by an Institution is $5,000. There is no minimum subsequent
investment requirement.
REDEMPTION OF SHARES
Redemption orders may be transmitted to PFPC by telephone at (800)
441-7379. Shares are redeemed at the net asset value per share next determined
after PFPC's receipt of the redemption order. The Fund, the Administrators and
the Distributor will not be liable for any loss, liability, cost or expense for
acting upon telephone instructions that are reasonably believed to be genuine.
In attempting to confirm that telephone instructions are genuine, the Fund will
use such procedures as are considered reasonable, including recording those
instructions and requesting information as to account registration (such as the
name in which an account is registered, the account number, recent transactions
in the account, and the account holder's Social Security number, address and/or
bank). While the Fund intends to use its best efforts to maintain each
Portfolio's net asset value per share at $1.00, the proceeds paid upon
redemption may be more or less than the amount invested depending upon a Share's
net asset value at the time of redemption.
Payment for redeemed Shares for which a redemption order is received by
PFPC before 12:00 noon (Eastern Time) on a Business Day is normally made in
Federal funds wired to the redeeming Institution on the same Business Day,
provided that the Fund's custodian is also open for business. Payment for
redemption orders received between 12:00 noon (Eastern Time) and 4:00 p.m.
(Eastern Time) or on a day when the Fund's custodian is closed is normally
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<PAGE> 99
wired in Federal funds on the next Business Day following redemption on which
the Fund's custodian is open for business. The Fund reserves the right to wire
redemption proceeds within seven days after receiving a redemption order if, in
the judgment of the investment adviser, an earlier payment could adversely
affect a Portfolio. No charge for wiring redemption payments is imposed by the
Fund.
During periods of substantial economic or market change, telephone
redemptions may be difficult to complete. If an Institution is unable to contact
PFPC by telephone, the Institution may also deliver the redemption request to
PFPC by mail at 400 Bellevue Parkway, Wilmington, DE 19809.
An Institution may be required to redeem Shares in any Portfolio if the
balance in such shareholder's account in that Portfolio drops below $5,000 as
the result of a redemption request and the Institution does not increase the
balance to at least $5,000 upon thirty days' written notice.
The Fund may suspend the right of redemption or postpone the date of
payment upon redemption (as well as suspend the recordation of the transfer of
Shares) for such periods as are permitted under the 1940 Act. The Fund may also
redeem Shares involuntarily or make payment for redemption in securities or
other property if it appears appropriate to do so in light of the Fund's
responsibilities under the 1940 Act. See "Purchase and Redemption Information"
in the Statement of Additional Information for examples of when such redemption
might be appropriate.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The net asset value for each Institutional Share of each Portfolio for the
purpose of pricing purchase and redemption orders is determined twice each day,
once as of 12:00 noon (Eastern Time) and once as of 4:00 p.m. (Eastern Time) on
each Business Day. Each Portfolio's net asset value per share is calculated by
adding the value of all securities, cash and other assets of the Portfolio,
subtracting the liabilities and dividing the result by the number of Shares
outstanding. The net asset value per Share of each Portfolio is determined
independently of the other Portfolios.
The Fund seeks to maintain for each of the Portfolios a net asset value of
$1.00 per share for purposes of purchases and redemptions and values their
portfolio securities on the basis of the amortized cost method of valuation
described in the Statement of Additional Information under "Valuation of
Shares." There can be no assurance that net asset value per share will not vary.
A Portfolio may use a pricing service, bank or broker/dealer experienced in
such matters to value the Portfolio's securities. A more detailed discussion of
net asset value and security valuation is contained in the Statement of
Additional Information.
MANAGEMENT
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES
The business and affairs of the Fund and each Portfolio are managed under
the direction of the Fund's Board of Trustees. The Statement of Additional
Information contains the name of each trustee and background information
regarding the trustees.
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<PAGE> 100
INVESTMENT ADVISER AND SUB-ADVISER
PNC Institutional Management Corporation ("PIMC"), an indirect wholly-owned
subsidiary of PNC Bank, National Association ("PNC Bank"), serves as the
investment adviser for each of the Portfolios. PIMC was organized in 1977 by
PNC Bank to perform advisory services for investment companies, and has its
principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809. PNC Bank
serves as the sub-adviser for each of the Portfolios. PNC Bank, whose principal
business address is Broad and Chestnut Streets, Philadelphia, Pennsylvania
19107, is a subsidiary of PNC Bank Corp. PNC Bank Corp. is a multi-bank holding
company.
As adviser, PIMC is responsible for the overall investment management of
each Portfolio. In addition, PIMC is responsible for all purchases and sales of
portfolio securities for the Portfolios. PNC Bank, as sub-adviser for each of
the Portfolios, provides research and credit analysis and certain other
services. In entering into portfolio transactions for a Portfolio with a
broker/dealer, the investment adviser and sub-adviser may take into account the
sale by such broker/dealer of shares of the Fund, subject to the requirements of
best execution.
For the services provided and expenses assumed by it for the benefit of the
Portfolios, PIMC is entitled to receive from each Portfolio a fee, computed
daily and payable monthly, at an annual rate of .45% of the first $1 billion of
each Portfolio's average daily net assets, .40% of the next $1 billion of each
Portfolio's average daily net assets, .375% of the next $1 billion of each
Portfolio's average daily net assets and .35% of the average daily net assets of
each Portfolio in excess of $3 billion. The Fund paid PIMC advisory fees at
annual rates of .35%, .35%, .35%, .44% and .40% of the average daily net assets
of the Money Market, Municipal Money Market, Government Money Market, Ohio
Municipal Money Market and Pennsylvania Municipal Money Market Portfolios,
respectively, for the year ended September 30, 1994, and PIMC waived advisory
fees at the annual rates of .10%, .10% .10%, .01% and .05% of the average daily
net assets of such respective Portfolios for that year. For the year ended
September 30, 1994, PIMC waived all advisory fees with respect to the North
Carolina Municipal Money Market Portfolio. For the period ended September 30,
1994, PIMC waived all advisory fees with respect to the Virginia Municipal Money
Market Portfolio. During the same periods, PIMC reimbursed expenses at the
annual rates of .04%, .02%, .05% and .24% of the average daily net assets of the
Pennsylvania Municipal Money Market, Ohio Municipal Money Market, North Carolina
Municipal Money Market and Virginia Municipal Money Market Portfolios,
respectively. See "Management--Expenses" for a discussion of PIMC's voluntary
fee waiver.
For its sub-advisory services, PNC Bank is entitled to receive from PIMC a
fee, computed daily and payable monthly, at an annual rate of .05% of the
average daily net assets of each Portfolio. Such sub-advisory fees have no
effect on the advisory fees payable by each Portfolio to PIMC. For the year
ended September 30, 1994, PNC Bank waived all sub-advisory fees for the Money
Market, Municipal Money Market, Government Money Market, Ohio Municipal Money
Market, Pennsylvania Municipal Money Market and North Carolina Municipal Money
Market Portfolios. For the period ended September 30, 1994, PNC Bank waived all
sub-advisory fees for the Virginia Municipal Money Market Portfolio. See
"Management--Expenses" for a discussion of the sub-adviser's fee waivers.
------------------------------------
ADMINISTRATORS
PFPC Inc. ("PFPC"), whose principal business address is 400 Bellevue
Parkway, Wilmington, Delaware 19809, and Provident Distributors, Inc. ("PDI"),
whose principal business address is 259 Radnor-Chester Road, Suite 120, Radnor,
Pennsylvania 19087 (together, the "Administrators"), serve as administrators for
the Fund. PFPC is an
23
<PAGE> 101
indirect wholly-owned subsidiary of PNC Bank Corp. A majority of the outstanding
stock of PDI is owned by its officers and the remaining outstanding stock is
owned by Pennsylvania Merchant Group Ltd.
The Administrators generally assist the Fund in all aspects of its
administration and operation, including matters relating to the maintenance of
financial records and fund accounting. As compensation for their services, the
Administrators are entitled to receive a combined fee, computed daily and
payable monthly, at an annual rate of .15% of the first $500 million of each
Portfolio's average daily net assets, .13% of the next $500 million of each
Portfolio's average daily net assets, .11% of the next $1 billion of each
Portfolio's average daily net assets and .10% of each Portfolio's average daily
net assets in excess of $2 billion. The Fund paid the Administrators combined
administration fees at the annual rates of .08%, .03%, .05%, .01%, and .01% of
the average daily net assets of the Money Market, Municipal Money Market,
Government Money Market, Ohio Municipal Money Market and Pennsylvania Municipal
Money Market Portfolios, respectively, for the year ended September 30, 1994,
and the Administrators waived combined administration fees at the annual rates
of .06%, .12%, .10%, .14%, and .14% of the average daily net assets of such
respective Portfolios for that year. The Administrators waived all combined
administration fees with respect to the North Carolina Municipal Money Market
Portfolio for the year ended September 30, 1994. The Administrators waived all
combined administration fees with respect to the Virginia Municipal Money Market
Portfolio for the period ended September 30, 1994. During the same periods, the
Administrators reimbursed expenses at the annual rates of .01%, .01%, .02% and
.08% of the average daily net assets of the Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market and
Virginia Municipal Money Market Portfolios, respectively. See
"Management--Expenses" for a discussion of the Administrators' voluntary fee
waiver.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND CUSTODIAN
PNC Bank serves as the Fund's custodian and PFPC serves as the Fund's
transfer agent and dividend disbursing agent.
------------------------------------
EXPENSES
Expenses are deducted from the total income of each Portfolio before
dividends and distributions are paid. These expenses include, but are not
limited to, fees paid to PIMC and the Administrators, transfer agency fees, fees
and expenses of officers and trustees who are not affiliated with PIMC or the
Distributor or any of their affiliates, taxes, interest, legal fees, custodian
fees, auditing fees, 12b-1 fees, servicing fees, certain fees and expenses in
registering and qualifying the Portfolio and its Shares for distribution under
Federal and state securities laws, expenses of preparing prospectuses and
statements of additional information and of printing and distributing
prospectuses and statements of additional information to existing shareholders,
the expense of reports to shareholders, shareholders' meetings and proxy
solicitations, fidelity bond and trustees and officers liability insurance
premiums, the expense of using independent pricing services and other expenses
which are not expressly assumed by PIMC or the Administrators under their
respective agreements with the Fund. Any general expenses of the Fund that are
not readily identifiable as belonging to a particular investment portfolio will
be allocated among all investment portfolios by or under the direction of the
Board of Trustees in a manner the Board determines to be fair and equitable. Any
expenses relating only to a particular class of shares within a Portfolio will
be borne solely by such Shares.
PIMC and PNC Bank expect to waive voluntarily a portion of their respective
advisory and sub-advisory fees. In addition, if the total expenses borne by any
Portfolio in any fiscal year exceed the expense limitations imposed by
applicable state securities regulations, PIMC, PNC Bank and the Administrators
will bear the amount of such excess to
24
<PAGE> 102
the extent required by such regulations in proportion to the advisory and
administration fees otherwise payable to them for such year. Such amount, if
any, will be estimated and accrued daily and paid on a monthly basis.
------------------------------------
BANKING LAWS
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from underwriting securities, but such banking laws and regulations do not
prohibit such a holding company or affiliate or banks generally from acting as
investment adviser, administrator, transfer agent or custodian to such an
investment company, or from purchasing shares of such a company as agent for and
upon the order of customers. PNC Bank, PIMC and PFPC are subject to such banking
laws and regulations. In addition, state securities laws on this issue may
differ from the interpretations of Federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of such companies in connection with the provision of
services on behalf of the Fund and the holders of Institutional Shares, the Fund
might be required to alter materially or discontinue its arrangements with such
companies. It is not anticipated, however, that any such change would affect a
Portfolio's net asset value per share or result in a financial loss to any
shareholder.
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
Shareholders of each Portfolio are entitled to dividends and distributions
arising from the net income and capital gains, if any, earned on investments
held by the particular Portfolio involved. Each Portfolio's net income is
declared daily as a dividend (i) to shareholders of record immediately prior to
the determination of net asset value made as of the close of regular trading
hours on the NYSE on days on which net asset value is determined, or (ii) to
shareholders of record immediately prior to 4:00 p.m. (Eastern Time) on days on
which there is no determination of net asset value. Consequently, shareholders
whose purchase orders are executed at 12:00 noon (Eastern Time) receive
dividends for that day. On the other hand, shareholders whose redemption orders
have been received by 12:00 noon (Eastern Time) do not receive dividends for
that day, while shareholders of each Portfolio whose redemption orders are
received after 12:00 noon (Eastern Time) do receive dividends for that day.
Because purchase and redemption orders with respect to Shares of the Government
Money Market Portfolio are executed at 12:00 noon and at 4:00 p.m., shareholders
whose purchase orders have been received by 4:00 p.m. will receive a dividend
for that day. For dividend purposes, a Portfolio's investment income available
for distribution to holders of Institutional Shares is reduced by accrued
expenses directly attributable to that Portfolio and the general expenses of the
Fund prorated to that Portfolio on the basis of its relative net assets. See
"Purchase and Redemption of Shares."
Dividends are paid monthly by check, or by wire transfer if requested in
writing by the shareholder, within five business days after the end of the
month. Net short-term capital gains, if any, will be distributed at least
annually. The period for which dividends are payable and the time for payment of
such dividends are subject to change by the Fund's Board of Trustees. The
Portfolios do not expect to realize net long-term capital gains.
All dividends paid with respect to a Portfolio are reinvested in the form
of additional full and fractional Institutional Shares of such Portfolio, unless
an Institution elects to receive dividends in cash. Such election, or any
revocation thereof, must be made in writing to PFPC, and will become effective
with respect to dividends paid after its receipt by PFPC.
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<PAGE> 103
TAXES
- --------------------------------------------------------------------------------
The following discussion is only a brief summary of some of the important
tax considerations generally affecting the Portfolios and their shareholders and
is not intended as a substitute for careful tax planning. Accordingly, investors
in the Portfolios should consult their tax advisers with specific reference to
their own tax situation.
Each Portfolio will elect to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). So long as a Portfolio qualifies for this tax treatment, it generally
will be relieved of Federal income tax on amounts distributed to shareholders,
but shareholders, unless otherwise exempt, will pay income or capital gains
taxes on amounts so distributed (except distributions that constitute "exempt
interest dividends" or that are treated as a return of capital), regardless of
whether such distributions are paid in cash or reinvested in additional shares.
None of the Portfolios intends to make distributions that will be eligible for
the corporate dividends received deduction.
Distributions paid out of the "net capital gain" (the excess of net
long-term capital gain over net short-term capital loss), if any, of any
Portfolio will be taxed to shareholders as long-term capital gain regardless of
the length of time a shareholder has held his Shares. All other distributions,
to the extent they are taxable, are taxed to shareholders as ordinary income.
Each Municipal Portfolio intends to pay substantially all of its dividends
as "exempt interest dividends." Investors in these Portfolios should note,
however, that taxpayers are required to report the receipt of tax-exempt
interest and "exempt interest dividends" on their Federal income tax returns for
informational purposes and that in two circumstances such amounts, while exempt
from regular Federal income tax, are taxable to persons subject to alternative
minimum and environmental taxes. First, tax-exempt interest and "exempt interest
dividends" derived from certain private activity bonds issued after August 7,
1986 generally will constitute an item of tax preference for corporate and
noncorporate taxpayers in determining alternative minimum tax liability and for
corporate taxpayers in determining environmental tax liability. Each of the
Ohio, Pennsylvania, North Carolina, Virginia and New Jersey Municipal Money
Market Portfolios may invest without limitation, and the Municipal Money Market
Portfolio up to 20% of its net assets, in such private activity bonds. Second,
tax-exempt interest and "exempt interest dividends" derived from all other
Municipal Obligations must be taken into account by corporate taxpayers in
determining certain adjustments for alternative minimum and environmental tax
purposes. In addition, investors should be aware of the possibility of state and
local alternative minimum or minimum income tax liability on interest from such
private activity bonds. Shareholders who are recipients of Social Security Act
or Railroad Retirement Act benefits should further note that tax-exempt interest
and "exempt interest dividends" derived from all types of Municipal Obligations
will be taken into account in determining the taxability of their benefit
payments.
Each Municipal Portfolio will determine annually the percentages of its net
investment income which are exempt from the regular Federal income tax, which
constitute an item of tax preference for purposes of the Federal alternative
minimum tax, and which are fully taxable. Such percentages will apply uniformly
to all distributions declared from net investment income during that year. These
percentages may differ significantly from the actual percentages for any
particular day.
The Fund will send written notices to shareholders annually regarding the
tax status of distributions made by each Portfolio. Dividends declared in
October, November or December of any year payable to shareholders of record as
of a specified date in those months will be deemed to have been received by the
shareholders on December 31, if the dividends are paid during the following
January.
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<PAGE> 104
Any loss upon the sale or exchange of shares of a Portfolio held for six
months or less will be disallowed for Federal income tax purposes to the extent
of any exempt interest dividends received by the shareholder. For the Ohio
Municipal Money Market and North Carolina Municipal Money Market Portfolios, the
loss will be disallowed for state tax purposes to the same extent, even though,
for state income tax purposes, some portion of such dividends actually may have
been subject to state income tax.
Future legislative or administrative changes or court decisions may
materially affect the tax consequences of investing in one or more Portfolios of
the Fund. Shareholders are also urged to consult their tax advisers concerning
the application of state and local income taxes to investments in the Portfolios
which may differ from the Federal income tax consequences described above. In
particular, dividends paid by each Portfolio may be taxable to investors under
state or local law as dividend income even though all or a portion of such
dividends may be derived from interest on obligations which, if realized
directly, would be exempt from such income taxes. Shareholders who are
nonresident alien individuals, foreign trusts or estates, foreign corporations
or foreign partnerships may be subject to different U.S. Federal income tax
treatment and should consult their tax advisers.
OHIO TAX CONSIDERATIONS. Individuals and estates that are subject to Ohio
personal income tax or municipal or school district income taxes in Ohio will
not be subject to such taxes on distributions from the Ohio Municipal Money
Market Portfolio to the extent that such distributions consist of interest on
Ohio Municipal Obligations or obligations issued by the U.S. Government, its
agencies, instrumentalities or territories (if the interest on such obligations
is exempt from state income taxation under the laws of the United States) ("U.S.
Obligations"), provided that the Portfolio continues to qualify as a regulated
investment company for federal income tax purposes and that at all times at
least 50% of the value of the total assets of the Ohio Municipal Money Market
Portfolio consists of Ohio Municipal Obligations or similar obligations of other
states or their subdivisions. (It is assumed for purposes of this discussion of
Ohio tax considerations that these requirements are satisfied). Corporations
that are subject to the Ohio corporation franchise tax will not have to include
distributions from the Ohio Municipal Money Market Portfolio in their net income
base for purposes of calculating their Ohio corporation franchise tax liability
to the extent that such distributions either constitute exempt-interest
dividends or consist of interest on Ohio Municipal Obligations or U.S.
Obligations. However, shares of the Ohio Municipal Money Market Portfolio will
be included in a corporation's net worth base for purposes of calculating the
Ohio corporation franchise tax. Distributions consisting of gain on the sale,
exchange or other disposition of Ohio Municipal Obligations will not be subject
to the Ohio personal income tax, or municipal or school district income taxes in
Ohio and will not be included in the net income base of the Ohio corporation
franchise tax. Distributions attributable to other sources will be subject to
the Ohio personal income tax and the Ohio corporation franchise tax. For
additional Ohio tax considerations, see "Taxes" above.
PENNSYLVANIA TAX CONSIDERATIONS. Income received by a shareholder
attributable to interest realized by the Pennsylvania Municipal Money Market
Portfolio from Pennsylvania Municipal Obligations or attributable to insurance
proceeds on account of such interest is not taxable to individuals, estates or
trusts under the Personal Income Tax imposed by Article III of the Tax Reform
Code of 1971 (in the case of insurance proceeds, to the extent they are exempt
for Federal Income Tax purposes); to corporations under the Corporate Net Income
tax imposed by Article IV of the Tax Reform Code of 1971 (in the case of
insurance proceeds, to the extent they are exempt for Federal Income Tax
purposes); nor to individuals under the Philadelphia School District New Income
Tax ("School District Tax") imposed on Philadelphia resident individuals under
authority of the Act of August 9, 1963, P.L. 640.
Income received by a shareholder attributable to gain on the sale or other
disposition by the Pennsylvania Municipal Money Market Portfolio of Pennsylvania
Municipal Obligations is taxable under the Personal Income Tax, the Corporate
Net Income Tax, and, unless these assets were held by the Pennsylvania Municipal
Money Market Portfolio for more than six months, the School District Tax.
27
<PAGE> 105
No opinion is expressed regarding the extent, if any, to which shares, or
interest and gain thereon, is subject to, or included in the measure of, the
special taxes imposed by the Commonwealth of Pennsylvania on banks and other
financial institutions or with respect to any privilege, excise, franchise or
other tax imposed on business entities not discussed herein (including the
Corporate Capital Stock/Foreign Franchise Tax.)
Shareholders of the Pennsylvania Municipal Money Market Portfolio are not
subject to any of the personal property taxes currently in effect in
Pennsylvania to the extent that the Portfolio is comprised of Pennsylvania
Municipal Obligations. The taxes referred to include the County Personal
Property Tax imposed on residents of Pennsylvania by the Act of June 17, 1913,
P.L. 507, as amended.
NORTH CAROLINA TAX CONSIDERATIONS. Interest received in the form of
dividends from the North Carolina Municipal Money Market Portfolio is exempt
from North Carolina state income tax to the extent the distributions represent
interest on direct obligations of the U.S. Government or North Carolina
Municipal Obligations. Distributions derived from interest earned on obligations
of political subdivisions of Puerto Rico, Guam and the U.S. Virgin Islands,
including the governments thereof and their agencies, instrumentalities and
authorities, are also exempt from North Carolina state income tax. Distributions
paid out of interest earned on obligations that are merely backed or guaranteed
by the U.S. Government (e.g., GNMAs, FNMAs), on repurchase agreements
collateralized by U.S. Government securities or on obligations of other states
(which the Portfolio may acquire and hold for temporary or defensive purposes)
are not exempt from North Carolina state income tax.
Any distributions of net realized gain earned by the North Carolina
Municipal Money Market Portfolio on the sale or exchange of certain obligations
of the State of North Carolina or its subdivisions will also be exempt from
North Carolina income tax to the Portfolio's shareholders. Distributions of
gains earned by the North Carolina Municipal Money Market Portfolio on the sale
or exchange of all other obligations will be subject to North Carolina income
tax.
Shares of the North Carolina Municipal Money Market Portfolio will not be
subject to the North Carolina intangibles personal property tax so long as
certain filings are made with the North Carolina Department of Revenue and on
December 31 of each year the Portfolio is composed entirely of North Carolina
Municipal Obligations and obligations of the United States (including the
District of Columbia and U.S. possessions), and at least 80% of the fair market
value of the Portfolio's assets consists of North Carolina Municipal
Obligations. For all years in which this portfolio-composition requirement is
met, the North Carolina Municipal Money Market Portfolio will file with the
North Carolina Department of Revenue a certification in order for shareholders
to qualify for this exemption. If the portfolio-composition requirement is not
met, shareholders may reduce for North Carolina intangibles personal property
tax purposes the value of their investment in the Portfolio in direct proportion
to the percentage of the Portfolio's assets invested in exempt U.S. Government
(including U.S. possessions) or North Carolina obligations as of December 31.
Shareholders also should note that the future of the North Carolina
intangibles personal property tax is uncertain. A challenge to the
constitutionality of such tax presently is on appeal to the United States
Supreme Court. In addition, several bills were introduced in recent State
legislative sessions that would have either repealed the North Carolina
intangibles personal property tax in total or significantly amended its
provisions. The Governor of North Carolina has also proposed that the
legislature repeal this tax. Although no such legislation has yet been enacted,
further attempts may be made to repeal or modify this tax in the future.
Accordingly, no assurance can be given that an investment in the North Carolina
Municipal Money Market Portfolio while it owns exempt U.S. government
obligations or North Carolina Municipal Obligations will in future years provide
shareholders with any reductions from the North Carolina intangibles personal
property tax that they otherwise might owe.
VIRGINIA TAX CONSIDERATIONS. Subject to the provisions discussed below,
dividends paid to shareholders by the Virginia Municipal Money Market Portfolio
and derived from interest on obligations of the Commonwealth of Virginia or of
any political subdivision or instrumentality of the Commonwealth or derived from
interest or dividends on obligations
28
<PAGE> 106
of the United States excludable from Virginia taxable income under the laws of
the United States, which obligations are issued in the exercise of the borrowing
power of the Commonwealth or the United States and are backed by the full faith
and credit of the Commonwealth or the United States ("Virginia or U.S.
Obligations"), will be exempt from the Virginia income tax. Dividends paid to
shareholders by the Portfolio and derived from interest on debt obligations of
certain territories and possessions of the United States (those issued by Puerto
Rico, the Virgin Islands and Guam) will be exempt from the Virginia income tax.
To the extent a portion of the dividends are derived from interest on debt
obligations other than those described above, such portion will be subject to
the Virginia income tax even though it may be excludable from gross income for
Federal income tax purposes.
Generally, dividends distributed to shareholders by the Portfolio and
derived from capital gains from the disposition of Virginia or U.S. Obligations
will be taxable to the shareholders. To the extent any portion of the dividends
are derived from taxable interest for Virginia purposes or from net short-term
capital gains, such portion will be taxable to the shareholders as ordinary
income. The character of long-term capital gains realized and distributed by the
Portfolio will flow through to its shareholders regardless of how long the
shareholders have held their shares. Capital gains distributed to shareholders
derived from Virginia obligations issued pursuant to special Virginia enabling
legislation which provides a specific exemption for such gains will be exempt
from Virginia income tax. Generally, interest on indebtedness incurred by
shareholders to purchase or carry shares of the Portfolio will not be deductible
for Virginia income tax purposes.
As a regulated investment company, the Portfolio may distribute dividends
that are exempt from the Virginia income tax to its shareholders if the
Portfolio satisfies all requirements for conduit treatment under Federal law
and, at the close of each quarter of its taxable year, at least 50% of the value
of its total assets consists of obligations the interest on which is exempt from
taxation under Federal law. The Portfolio intends to qualify under the above
requirements so that it can distribute Virginia exempt interest dividends. If
the Portfolio fails to qualify, no part of its dividends will be exempt from the
Virginia income tax.
When taxable income of a regulated investment company is commingled with
exempt income, all distributions of the income are presumed taxable to the
shareholders unless the portion of income that is exempt from Virginia income
tax can be determined with reasonable certainty and substantiated. Generally,
this determination must be made for each distribution to each shareholder. The
Virginia Department of Taxation has adopted a policy, however, of allowing
shareholders to exclude from their Virginia taxable income the exempt portion of
distributions from a regulated investment company even though the shareholders
receive distributions monthly but receive reports substantiating the exempt
portion of such distributions at less frequent intervals. Accordingly, if the
Portfolio receives taxable income, the Portfolio must determine the portion of
income that is exempt from Virginia income tax and provide such information to
the shareholders in accordance with the foregoing so that the shareholders may
exclude from Virginia taxable income the exempt portion of the distribution from
the Portfolio.
The foregoing is only a summary of some of the important Virginia income
tax considerations generally affecting the shareholders, and does not address
any Virginia taxes other than the income tax. This discussion is not intended as
a substitute for careful planning. Potential investors in the Portfolio should
consult their tax advisers with specific reference to their own tax situations.
NEW JERSEY TAX CONSIDERATIONS. It is anticipated that substantially all
dividends paid by the New Jersey Municipal Money Market Portfolio will not be
subject to New Jersey personal income tax. In accordance with the provisions of
New Jersey law as currently in effect, distributions paid by a "qualified
investment fund" will not be subject to the New Jersey personal income tax to
the extent that the distributions are attributable to income received as
interest or gain from New Jersey Municipal Obligations, or as interest or gain
from direct U.S. Government obligations. Distributions by a qualified investment
fund that are attributable to most other sources will be subject to the New
Jersey personal
29
<PAGE> 107
income tax. If the New Jersey Municipal Money Market Portfolio qualifies as a
qualified investment fund under New Jersey law, any gain on the redemption or
sale of the Portfolio's shares will not be subject to the New Jersey personal
income tax. To be classified as a qualified investment fund, at least 80% of the
Portfolio's investments must consist of New Jersey Municipal Obligations or
direct U.S. Government obligations; it must have no investments other than
interest-bearing obligations, obligations issued at a discount, and cash and
cash items (including receivables); and it must satisfy certain reporting
obligations and provide certain information to its shareholders. Shares of the
Portfolio are not subject to property taxation by New Jersey or its political
subdivisions. To the extent that a shareholder is subject to state or local
taxes outside New Jersey, dividends earned by an investment in the New Jersey
Municipal Money Market Portfolio may represent taxable income.
The New Jersey personal income tax is not applicable to corporations. For
all corporations subject to the New Jersey Corporation Business Tax, dividends
and distributions from a "qualified investment fund" are included in the net
income tax base for purposes of computing the Corporation Business Tax.
Furthermore, any gain upon the redemption or sale of shares by a corporate
shareholder is also included in the net income tax base for purposes of
computing the Corporation Business Tax.
The foregoing is only a summary of certain New Jersey tax considerations
generally affecting the Portfolio and its shareholders, and is not intended as a
substitute for careful tax planning. Shareholders are urged to consult their tax
advisers with specific reference to their own tax situations.
DESCRIPTION OF SHARES
- --------------------------------------------------------------------------------
The Fund was organized as a Massachusetts business trust on December 22,
1988 and is registered under the 1940 Act as an open-end management investment
company. The Declaration of Trust authorizes the Board of Trustees to classify
and reclassify any unissued shares into one or more classes of shares. Pursuant
to such authority, the Board of Trustees has authorized the issuance of an
unlimited number of shares in each of 97 classes (19 classes of "Series B
Investor Shares" and 26 classes each of "Institutional Shares", "Service Shares"
and "Series A Investor Shares") representing interests in the Fund's investment
portfolios. This Prospectus describes eight Portfolios of the Fund which, except
for the Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Virginia Municipal Money Market and New Jersey
Municipal Money Market Portfolios, are classified as diversified companies under
the 1940 Act. The Money Market, Municipal Money Market and Government Money
Market Portfolios were each established with only one class of shares. In each
case, the original class of shares was available to all investors until the
subsequent establishment of multiple classes in the Portfolio. In addition, the
Board of Trustees has authorized the issuance of additional classes of shares
representing interests in other investment portfolios of the Fund. For
information regarding these other portfolios, contact the Distributor by phone
at (800) 998-7633 or at the address listed in "Purchase and Redemption of
Shares--Distributor."
Each share of an investment portfolio has a par value of $.001, represents
an equal proportionate interest in the particular portfolio and is entitled to
such dividends and distributions earned on such portfolio's assets as are
declared in the discretion of the Board of Trustees. The Fund's shareholders are
entitled to one vote for each full share held and proportionate fractional votes
for fractional shares held, and will vote in the aggregate and not by class,
except where otherwise required by law or when the Board of Trustees determines
that the matter to be voted upon affects only the interests of the shareholders
of a particular class or investment portfolio. Under the law of Massachusetts,
the Fund's state of organization, and the Fund's Declaration of Trust and Code
of Regulations, the Fund is not required and does not currently intend to hold
annual meetings of shareholders for the election of trustees (except as required
under the
30
<PAGE> 108
1940 Act). For a further discussion of the voting rights of shareholders, see
"Additional Information Concerning Shares" in the Statement of Additional
Information.
Institutional Shares bear no servicing or distribution fees. Holders of a
Portfolio's Service Shares bear the expense of fees described in the prospectus
for such shares that will be paid under the Fund's Service Plan. Payments under
the Service Plan will cover expenses relating to the support services provided
to beneficial owners of Service Shares by certain institutions. Such services
are intended to supplement the services provided by the Fund's Administrators
and transfer agent to the Fund's shareholders of record. In consideration for
payment of up to .15% (on an annualized basis) of the average daily net asset
value of Service Shares owned beneficially by their customers, institutions may
provide one or more of the following services to such customers: processing
purchase and redemption requests from customers and placing orders with the
Fund's transfer agent or the Distributor; processing dividend payments from the
Fund on behalf of customers; providing sub-accounting with respect to Service
Shares beneficially owned by customers or the information necessary for
sub-accounting; and other similar services. In consideration for payment of a
service fee of up to a separate .15% (on an annualized basis) of the average
daily net asset value of Service Shares owned beneficially by their customers,
institutions may provide one or more of these additional services to such
customers: responding to customer inquiries relating to the services performed
by the institution and to customer inquiries concerning their investments in
Service Shares; providing information periodically to customers showing their
positions in Service Shares; and other similar shareholder liaison services.
Similarly, holders of a Portfolio's Series A Investor Shares and Series B
Investor Shares (collectively, "Investor Shares") bear the payments described in
the prospectus for such shares that are paid under the Fund's Distribution and
Service Plan and Series B Distribution Plan, respectively (the "Distribution
Plans"). Under the Distribution Plans, the Distributor is entitled to payments
by each Portfolio for: (i) direct out-of-pocket promotional expenses incurred in
connection with advertising and marketing Investor Shares; and (ii) payments to
broker/dealers that are not affiliated with the Distributor ("Service
Organizations") for distribution assistance such as advertising and marketing of
Investor Shares. In addition, payments under the Series B Distribution Plan will
be used to pay for or finance sales commissions and other fees payable to
Service Organizations and other broker/dealers who sell Series B Investor
Shares. Service Organizations may also provide support services such as
establishing and maintaining accounts and records relating to shareholders of
Investor Shares for whom the Service Organizations are the dealer of record or
holder of record for shareholders with whom the Service Organizations have a
servicing relationship. The Distribution and Service Plan provides for payments
to the Distributor at an annual rate not to exceed .55% of the average daily net
asset value of each Portfolio's outstanding Series A Investor Shares. The Series
B Distribution Plan provides for payments to the Distributor at an annual rate
not to exceed .75% of the average daily net asset value of each Portfolio's
outstanding Series B Investor Shares. In addition, holders of Series B Investor
Shares bear the expense of fees described in the prospectus for such shares that
are paid under the Fund's Series B Service Plan. Payments under the Series B
Service Plan will cover expenses relating to the support services provided to
the beneficial owners of Series B Investor Shares by certain Service
Organizations and sometimes by the Distributor. Such services are intended to
supplement the services provided by the Fund's Administrators and transfer
agent. In consideration for payments aggregating up to .25% (on an annualized
basis) of the average daily net asset value of Series B Investor Shares owned
beneficially by their customers, Service Organizations and the Distributor may
provide one or more of the following services to such customers: establishing
and maintaining accounts and records relating to customers that invest in Series
B Shares; processing dividend and distribution payments from the Fund on behalf
of customers; arranging for bank wires; providing sub-accounting with respect to
Series B Shares beneficially owned by customers or the information necessary for
sub-accounting; forwarding shareholder communications from the Fund (such as
proxies, shareholder reports, annual and semi-annual financial statements and
dividend, distribution and tax notices) to customers; assisting in processing
purchase, exchange and redemption requests from customers and in placing such
orders with the Fund's service contractors; assisting customers in changing
dividend options, account designations and addresses; providing customers with a
service that invests the assets of their accounts in Series B
31
<PAGE> 109
Shares pursuant to specific or pre-authorized instructions; providing
information periodically to customers showing their positions in Series B Shares
and integrating such statements with those of other transactions and balances in
customers' other accounts with the Service Organization; responding to customer
inquiries relating to the services performed by the Service Organization or the
Distributor; responding to customer inquiries concerning their investments in
Series B Shares; and providing other similar shareholder liaison services. As a
result of these different fees, the net yields on the Fund's Institutional
Shares will generally be higher than those on the Fund's Service Shares, the net
yields on the Fund's Service Shares will generally be higher than those on the
Fund's Series A Investor Shares, and the net yields on the Fund's Series A
Investor Shares will generally be higher than those on the Fund's Series B
Investor Shares if payments by the Portfolios under the Service Plan, the
Distribution and Service Plan, the Series B Distribution Plan and the Series B
Service Plan are made at the maximum rates. Standardized yield quotations will
be computed separately for each class of Shares. Series A Investor Shares of the
Portfolios are exchangeable at the option of the holder for Series A Investor
Shares in another money market Portfolio and for Series A or Series B Investor
Shares in the Fund's non-money market investment portfolios. Series B Investor
Shares of the Money Market Portfolio may only be exchanged for Series B Investor
Shares of the Fund's non-money market portfolios.
On April 28, 1995, PNC Bank held of record approximately % of the Fund's
outstanding shares, and may be deemed a controlling person of the Fund under the
1940 Act. PNC Bank is a subsidiary of PNC Bank Corp., a multi-bank holding
company.
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN BY REFERENCE RELATE PRIMARILY TO THE FUND'S INSTITUTIONAL SHARES AND
DESCRIBE ONLY THE INVESTMENT OBJECTIVES, POLICIES, OPERATIONS, CONTRACTS AND
OTHER MATTERS PERTAINING TO THE INSTITUTIONAL SHARES.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time each Portfolio may advertise its "yield" and "effective
yield" for Institutional Shares. Both yield figures are based on historical
earnings and are not intended to indicate future performance. "Yield" refers to
the income generated by an investment in a Portfolio's Institutional Shares over
a seven-day period (which period will be stated in the advertisement). This
income is then "annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. "Effective yield" is
calculated similarly but, when annualized, the income earned by an investment in
a Portfolio's Institutional Shares is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment. A Municipal Portfolio's "tax equivalent
yield" may also be quoted from time to time for Institutional Shares of a
Municipal Portfolio, which shows the level of taxable yield needed to produce an
after-tax equivalent to such Portfolio's tax-free yield for Institutional
Shares. This is done by increasing such Portfolio's yield for Institutional
Shares (calculated as above) by the amount necessary to reflect the payment of
Federal (and state and local for the Ohio, Pennsylvania, North Carolina,
Virginia and New Jersey Municipal Money Market Portfolios) income tax at a
stated tax rate.
Performance data of Institutional Shares of a Portfolio may be compared to
those of mutual funds with similar investment objectives and to other relevant
indexes or to ratings or rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual funds.
In addition, certain indexes may be used to illustrate historic performance of
select asset classes. For example, the yield of Institutional Shares of a
Portfolio may be compared to data prepared by Lipper Analytical Services, Inc.,
CDA Investment Technologies, Inc. and Weisenberger Investment Company Service.
Performance information may also include evaluations of the Portfolios published
by nationally recognized ranking services and information as reported by
financial publications such as
32
<PAGE> 110
Business Week, Fortune, Institutional Investor, Money Magazine, Forbes,
Barron's, The Wall Street Journal and The New York Times, or in publications of
a local or regional nature, may also be used in comparing the performance of
Institutional Shares of a Portfolio.
The yield of any investment is generally a function of portfolio quality
and maturities, type of investment and operating expenses. The yields on
Institutional Shares will fluctuate and are not necessarily representative of
future results.
REPORTS AND INQUIRIES
Shareholders will receive unaudited semi-annual financial statements and
annual financial statements audited by independent accountants. Shareholder
inquiries should be addressed to the Fund c/o PFPC, P.O. Box 8950, Wilmington,
Delaware 19885-9628, toll-free (800) 441-7764 (in Delaware call collect (302)
791-1104).
* * *
33
<PAGE> 111
- -----------------------------------------------------
- -----------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Expense Table.................................... 2
Financial Highlights............................. 3
Investment Policies.............................. 10
Investment Limitations........................... 19
Purchase and Redemption of Shares................ 21
Net Asset Value.................................. 22
Management....................................... 22
Dividends and Distributions...................... 25
Taxes............................................ 26
Description of Shares............................ 30
Performance Information.......................... 32
Reports and Inquiries............................ 33
</TABLE>
INVESTMENT ADVISER
PNC Institutional Management Corporation
Wilmington, Delaware
SUB-ADVISER AND CUSTODIAN
PNC Bank, National Association
Philadelphia, Pennsylvania
CO-ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
CO-ADMINISTRATOR
Provident Distributors, Inc.
Radnor, Pennsylvania
DISTRIBUTOR
Provident Distributors, Inc.
Radnor, Pennsylvania
COUNSEL
Drinker Biddle & Reath
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
Philadelphia, Pennsylvania
PNCI-P-001
- -----------------------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
THE MONEY MARKET
PORTFOLIOS
INSTITUTIONAL
CLASS
PROSPECTUS
MONEY
MARKET PORTFOLIO
- -----------------------------------------------------
MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
GOVERNMENT
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
OHIO MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
PENNSYLVANIA MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
NORTH CAROLINA MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
VIRGINIA MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
NEW JERSEY MUNICIPAL
MONEY MARKET PORTFOLIO
- -----------------------------------------------------
, 1995
- -----------------------------------------------------
- -----------------------------------------------------
<PAGE> 112
This filing includes the prospectuses for Service Shares, Investor
Shares and Institutional Shares of the Managed Income, Tax-Free Income,
Intermediate Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income,
Short-Term Bond, Intermediate-Term Bond, International Fixed Income, Government
Income, Value Equity, Growth Equity, Small Cap Growth Equity, Core Equity,
Index Equity, Small Cap Value Equity, International Equity, International
Emerging Markets and Balanced Portfolios of The PNC(R) Fund (the "Fund"). The
above-referenced prospectuses are incorporated herein by reference to
Post-Effective Amendment No. 14 to the Fund's Registration Statement on Form
N-1A filed with the Securities and Exchange Commission on January 18, 1995.
<PAGE> 113
THE PNC(R) FUND
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information provides supplementary
information pertaining to shares ("Shares") representing interests in the Money
Market, Municipal Money Market, Government Money Market, Ohio Municipal Money
Market, Pennsylvania Municipal Money Market, North Carolina Municipal Money
Market, Virginia Municipal Money Market, New Jersey Municipal Money Market,
Value Equity, Growth Equity, Index Equity, Small Cap Value Equity, International
Equity, International Emerging Markets, Balanced, Small Cap Growth Equity, Core
Equity, Managed Income, Tax-Free Income, Intermediate Government, Ohio Tax-Free
Income, Pennsylvania Tax-Free Income, Short-Term Bond, Intermediate-Term Bond,
Government Income and International Fixed Income Portfolios of The PNC Fund (the
"Fund"). The Money Market, Municipal Money Market, Government Money Market,
Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North Carolina
Municipal Money Market, Virginia Municipal Money Market and New Jersey Municipal
Money Market Portfolios are hereinafter collectively called "Money Market
Portfolios," and the other Portfolios are hereinafter collectively called
"Non-Money Market Portfolios." This Statement of Additional Information is not
a prospectus, and should be read only in conjunction with the Prospectuses of
the Fund relating to those Portfolios, dated _______ __, 1995, as amended from
time to time (the "Prospectuses"). Prospectuses may be obtained from the Fund's
distributor by calling toll-free (800) 441-7379. This Statement of Additional
Information is dated _______ __, 1995. Capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the
Prospectuses.
CONTENTS
<TABLE>
<S> <C>
Page
----
Investment Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Advisory, Administration,
Distribution and Servicing Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase and Redemption Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Information Concerning Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
</TABLE>
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<PAGE> 114
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS STATEMENT OF ADDITIONAL INFORMATION OR
THE PROSPECTUSES IN CONNECTION WITH THE OFFERING MADE BY THE PROSPECTUSES AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND OR ITS DISTRIBUTOR. THE PROSPECTUSES DO
NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE FUND'S DISTRIBUTOR IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
-2-
<PAGE> 115
INVESTMENT POLICIES
The following supplements information contained in the Prospectus
concerning the Portfolios' investment policies. A description of applicable
credit ratings is set forth in Appendix A hereto. Except as indicated, the
information below relates only to those Portfolios that are authorized to
invest in the instruments or securities described below.
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS.
REVERSE REPURCHASE AGREEMENTS. Each Portfolio other than the Municipal
Money Market, Ohio Municipal Money Market, Pennsylvania Municipal Money Market,
North Carolina Municipal Money Market, Virginia Municipal Money Market and New
Jersey Municipal Money Market Portfolios (the "Municipal Portfolios") may
invest in reverse repurchase agreements. Reverse repurchase agreements
involve the sale of securities held by a Portfolio pursuant to a Portfolio's
agreement to repurchase the securities at an agreed upon price, date and
interest rate. Such agreements are considered to be borrowings under the
Investment Company Act of 1940 (the "1940 Act"), and may be entered into only
for temporary or emergency purposes. While reverse repurchase transactions are
outstanding, a Portfolio will maintain in a segregated account cash, U.S.
Government securities or other liquid, high-grade debt securities in an amount
at least equal to the market value of the securities, plus accrued interest,
subject to the agreement.
VARIABLE AND FLOATING RATE INSTRUMENTS. With respect to purchasable
variable and floating rate instruments, the adviser or sub-adviser will
consider the earning power, cash flows and liquidity ratios of the issuers and
guarantors of such instruments and, if the instruments are subject to a demand
feature, will monitor their financial status to meet payment on demand. Such
instruments may include variable amount master demand notes that permit the
indebtedness thereunder to vary in addition to providing for periodic
adjustments in the interest rate. The absence of an active secondary market
with respect to particular variable and floating rate instruments could make it
difficult for a Portfolio to dispose of a variable or floating rate note if the
issuer defaulted on its payment obligation or during periods that the Portfolio
is not entitled to exercise its demand rights, and the Portfolio could, for
these or other reasons, suffer a loss with respect to such instruments. In
determining average-weighted portfolio maturity, an instrument will usually be
deemed to have a maturity equal to the longer of the period remaining until the
next interest rate adjustment or the time the Portfolio involved can recover
payment of principal
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<PAGE> 116
as specified in the instrument. Variable rate U.S. Government obligations held
by the Portfolios, however, will be deemed to have maturities equal to the
period remaining until the next interest rate adjustment.
MONEY MARKET OBLIGATIONS OF DOMESTIC BANKS, FOREIGN BANKS AND FOREIGN
BRANCHES OF U.S. BANKS. Each Non-Money Market Portfolio may purchase bank
obligations, such as certificates of deposit, bankers' acceptances and time
deposits, including instruments issued or supported by the credit of U.S. or
foreign banks or savings institutions having total assets at the time of
purchase in excess of $1 billion. The assets of a bank or savings institution
will be deemed to include the assets of its domestic and foreign branches for
purposes of each Portfolio's investment policies. Investments in short-term
bank obligations may include obligations of foreign banks and domestic branches
of foreign banks, and also foreign branches of domestic banks.
MORTGAGE-RELATED SECURITIES. There are a number of important
differences among the agencies and instrumentalities of the U.S. Government
that issue mortgage-related securities and among the securities that they
issue. Mortgage-related securities guaranteed by the Government National
Mortgage Association ("GNMA") include GNMA Mortgage Pass-Through Certificates
(also known as "Ginnie Maes") which are guaranteed as to the timely payment of
principal and interest by GNMA and such guarantee is backed by the full faith
and credit of the United States. GNMA is a wholly-owned U.S. Government
corporation within the Department of Housing and Urban Development. GNMA
certificates also are supported by the authority of GNMA to borrow funds from
the U.S. Treasury to make payments under its guarantee. Mortgage-related
securities issued by the Federal National Mortgage Association ("FNMA") include
FNMA guaranteed Mortgage Pass-Through Certificates (also known as "Fannie
Maes") which are solely the obligations of the FNMA, are not backed by or
entitled to the full faith and credit of the United States and are supported by
the right of the issuer to borrow from the Treasury. FNMA is a
government-sponsored organization owned entirely by private stockholders.
Fannie Maes are guaranteed as to timely payment of principal and interest by
FNMA. Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates (also
known as "Freddie Macs" or "Pcs"). FHLMC is a corporate instrumentality of the
United States, created pursuant to an Act of Congress, which is owned entirely
by Federal Home Loan Banks. Freddie Macs are not guaranteed by the United
States or by any Federal Home Loan Banks and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank. Freddie Macs
entitle the holder to timely payment of interest, which is guaranteed by the
FHLMC. FHLMC guarantees either ultimate collection or timely
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<PAGE> 117
payment of all principal payments on the underlying mortgage loans. When FHLMC
does not guarantee timely payment of principal, FHLMC may remit the amount due
on account of its guarantee of ultimate payment of principal at any time after
default on an underlying mortgage, but in no event later than one year after it
becomes payable.
The Managed Income, Intermediate Government, Short-Term Bond,
Intermediate-Term Bond, Government Income and International Fixed Income
Portfolios may invest in multiple class pass-through securities, including
collateralized mortgage obligations ("CMOs") and real estate mortgage
investment conduit ("REMIC") pass-through or participation certificates ("REMIC
Certificates"). These multiple class securities may be issued by U.S.
Government agencies or instrumentalities, including FNMA and FHLMC, or by
trusts formed by private originators of, or investors in, mortgage loans. In
general, CMOs and REMICs are debt obligations of a legal entity that are
collateralized by, and multiple class pass-through securities represent direct
ownership interests in, a pool of residential mortgage loans or mortgage
pass-through securities (the "Mortgage Assets"), the payments on which are used
to make payments on the CMOs or multiple pass-through securities. Investors
may purchase beneficial interests in REMICs, which are known as "regular"
interests or "residual" interests. The Portfolios do not intend to purchase
residual interests.
Each class of CMOs or REMIC Certificates, often referred to as a
"tranche," is issued at a specific adjustable or fixed interest rate and must
be fully retired no later than its final distribution date. Principal
prepayments on the Mortgage Assets underlying the CMOs or REMIC Certificates
may cause some or all of the classes of CMOs or REMIC Certificates to be
retired substantially earlier than their final distribution dates. Generally,
interest is paid or accrues on all classes of CMOs or REMIC Certificates on a
monthly basis.
The principal of and interest on the Mortgage Assets may be allocated
among the several classes of CMOs or REMIC Certificates in various ways. In
certain structures (known as "sequential pay" CMOs or REMIC Certificates),
payments of principal, including any principal prepayments, on the Mortgage
Assets generally are applied to the classes of CMOs or REMIC Certificates in
the order of their respective final distribution dates. Thus no payment of
principal will be made on any class of sequential pay CMOs or REMIC
Certificates until all other classes having an earlier final distribution date
have been paid in full.
Additional structures of CMOs or REMIC Certificates include, among
others, "parallel pay" CMOs and REMIC Certificates. Parallel pay CMOs or REMIC
Certificates are those which are
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structured to apply principal payments and prepayments of the Mortgage Assets
to two or more classes concurrently on a proportionate or disproportionate
basis. These simultaneous payments are taken into account in calculating the
final distribution date of each class.
A wide variety of REMIC Certificates may be issued in the parallel pay
or sequential pay structures. These securities include accrual certificates
(also known as "Z-Bonds"), which only accrue interest at a specified rate until
all other certificates having an earlier final distribution date have been
retired and are converted thereafter to an interest-paying security, and
planned amortization class ("PAC") certificates, which are parallel pay REMIC
Certificates which generally require that specified amounts of principal be
applied on each payment date to one or more classes of REMIC Certificates (the
"PAC Certificates"), even though all other principal payments and prepayments
of the Mortgage Assets are then required to be applied to one or more other
classes of the Certificates. The scheduled principal payments for the PAC
Certificates generally have the highest priority on each payment date after
interest due has been paid to all classes entitled to receive interest
currently. Shortfalls, if any, are added to the amount payable on the next
payment date. The PAC Certificate payment schedule is taken into account in
calculating the final distribution date of each class of PAC. In order to
create PAC tranches, one or more tranches generally must be created that absorb
most of the volatility in the underlying Mortgage Assets. These tranches tend
to have market prices and yields that are much more volatile than the PAC
classes.
FNMA REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by FNMA. In addition, FNMA will be
obligated to distribute on a timely basis to holders of FNMA REMIC Certificates
required installments of principal and interest and to distribute the principal
balance of each class of REMIC Certificates in full, whether or not sufficient
funds are otherwise available.
For FHLMC REMIC Certificates, FHLMC guarantees the timely payment of
interest, and also guarantees the ultimate payment of principal as payments are
required to be made on the underlying mortgage participation certificates
("Pcs"). Pcs represent undivided interests in specified level payment,
residential mortgages or participations therein purchased by FHLMC and placed
in a PC pool. With respect to principal payments on Pcs, FHLMC generally
guarantees ultimate collection of all principal of the related mortgage loans
without offset or deduction. FHLMC also guarantees timely payment of principal
on certain Pcs, referred to as "Gold Pcs."
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ASSET-BACKED SECURITIES. Asset-backed securities are generally issued
as pass-through certificates, which represent undivided fractional ownership
interests in an underlying pool of assets, or as debt instruments, which are
also known as collateralized obligations, and are generally issued as the debt
of a special purpose entity organized solely for the purpose of owning such
assets and issuing such debt. Asset-backed securities are often backed by a
pool of assets representing the obligations of a number of different parties.
The yield characteristics of asset-backed securities differ from
traditional debt securities. A major difference is that the principal amount
of the obligations may be prepaid at any time because the underlying assets
(i.e., loans) generally may be prepaid at any time. As a result, if an
asset-backed security is purchased at a premium, a prepayment rate that is
faster than expected may reduce yield to maturity, while a prepayment rate that
is slower than expected may have the opposite effect of increasing yield to
maturity. Conversely, if an asset-backed security is purchased at a discount,
faster than expected prepayments may increase, while slower than expected
prepayments may decrease, yield to maturity.
In general, the collateral supporting asset-backed securities is of
shorter maturity than mortgage-related securities. Like other fixed-income
securities, when interest rates rise the value of an asset-backed security
generally will decline; however, when interest rates decline, the value of an
asset-backed security with prepayment features may not increase as much as that
of other fixed-income securities.
U.S. GOVERNMENT OBLIGATIONS. Examples of the types of U.S. Government
obligations which the Portfolios may hold include U.S. Treasury bills, Treasury
instruments and Treasury bonds and the obligations of Federal Home Loan Banks,
Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Federal National Mortgage Association,
Government National Mortgage Association, General Services Administration,
Student Loan Marketing Association, Central Bank for Cooperatives, Federal Home
Loan Mortgage Corporation, Federal Intermediate Credit Banks, Maritime
Administration, International Bank for Reconstruction and Development (the
"World Bank"), the Asian-American Development Bank and the Inter-American
Development Bank.
LEASE OBLIGATIONS. The Municipal Money Market, Pennsylvania
Municipal Money Market, Ohio Municipal Money Market, North Carolina Municipal
Money Market, Virginia Municipal Money Market, New Jersey Municipal Money
Market, Managed Income, Tax-Free Income, Pennsylvania Tax-Free Income, Ohio
Tax-Free Income, Short-Term Bond, Intermediate-Term Bond and
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International Fixed Income Portfolios may hold participation certificates in a
lease, an installment purchase contract, or a conditional sales contract
("lease obligations").
The Adviser will monitor the credit standing of each municipal
borrower and each entity providing credit support and/or a put option. In
determining whether a lease obligation is liquid, the Adviser will consider,
among other factors, the following: (i) whether the lease can be cancelled;
(ii) the degree of assurance that assets represented by the lease could be
sold; (iii) the strength of the lessee's general credit (e.g., its debt,
administrative, economic, and financial characteristics); (iv) the likelihood
that the municipality would discontinue appropriating funding for the leased
property because the property is no longer deemed essential to the operations
of the municipality (e.g., the potential for an "event of nonappropriation");
(v) legal recourse in the event of failure to appropriate; (vi) whether the
security is backed by a credit enhancement such as insurance; and (vii) any
limitations which are imposed on the lease obligor's ability to utilize
substitute property or services other than those covered by the lease
obligation.
The Municipal Money Market, Pennsylvania Municipal Money Market, Ohio
Municipal Money Market, North Carolina Municipal Money Market, Virginia
Municipal Money Market and New Jersey Municipal Money Market Portfolios will
only invest in lease obligations with puts that (i) may be exercised at par on
not more than seven days notice, and (ii) are issued by institutions deemed by
the Adviser to present minimal credit risks. Such obligations will be
considered liquid. However, a number of puts are not exercisable at the time
the put would otherwise be exercised if the municipal borrower is not
contractually obligated to make payments (e.g., an event of nonappropriation
with a "nonappropriation" lease obligation). Under such circumstances, the
lease obligation while previously considered liquid would become illiquid, and
a Portfolio might lose its entire investment in such obligation.
Municipal leases, like other municipal debt obligations, are subject
to the risk of non-payment. The ability of issuers of municipal leases to make
timely lease payments may be adversely impacted in general economic downturns
and as relative governmental cost burdens are allocated and reallocated among
federal, state and local governmental units. Such non-payment would result in
a reduction of income to the Fund, and could result in a reduction in the value
of the municipal lease experiencing non-payment and a potential decrease in the
net asset value of the Fund. Issuers of municipal securities might seek
protection under the bankruptcy laws. In the event of bankruptcy of such an
issuer, the Fund could experience delays and limitations with respect to the
collection of principal and
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interest on such municipal leases and the Fund may not, in all circumstances,
be able to collect all principal and interest to which it is entitled. To
enforce its rights in the event of a default in lease payments, the Fund may
take possession of and manage the assets securing the issuer's obligations on
such securities, which may increase the Fund's operating expenses and adversely
affect the net asset value of the Fund. When the lease contains a
non-appropriation clause, however, the failure to pay would not be a default
and the Fund would not have the right to take possession of the assets. Any
income derived from the Fund's ownership or operation of such assets may not be
tax-exempt. In addition, the Fund's intention to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended, may
limit the extent to which the Fund may exercise its rights by taking possession
of such assets, because as a regulated investment company the Fund is subject
to certain limitations on its investments and on the nature of its income.
COMMERCIAL PAPER. The Money Market Portfolios may purchase commercial
paper rated in one of the two highest rating categories of a nationally
recognized statistical rating organization ("NRSRO"). The Non-Money Market
Portfolios may purchase commercial paper rated (at the time of purchase) "A-1"
by S&P or "Prime-1" by Moody's or, when deemed advisable by the Portfolio's
adviser or sub-adviser, "high quality" issues rated "A-2" or "Prime-2" by S&P
or Moody's, respectively. These ratings symbols are described in Appendix A.
Commercial paper purchasable by each Portfolio includes "Section 4(2) paper," a
term that includes debt obligations issued in reliance on the "private
placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933. Section 4(2) paper is restricted as to disposition
under the Federal securities laws, and is frequently sold (and resold) to
institutional investors such as the Fund through or with the assistance of
investment dealers who make a market in the Section 4(2) paper, thereby
providing liquidity. Certain transactions in Section 4(2) paper may qualify
for the registration exemption provided in Rule 144A under the Securities Act
of 1933.
REPURCHASE AGREEMENTS. Each Portfolio other than the Municipal
Portfolios may invest in repurchase agreements. The repurchase price under the
repurchase agreements described in the Prospectuses generally equals the price
paid by a Portfolio involved plus interest negotiated on the basis of current
short-term rates (which may be more or less than the rate on securities
underlying the repurchase agreement). The financial institutions with whom a
Portfolio may enter into repurchase agreements will be banks and non-bank
dealers of U.S. Government securities that are listed on the Federal Reserve
Bank of New York's list of reporting dealers, if such banks and non-bank
dealers are deemed creditworthy by the Portfolio's adviser or sub-adviser. A
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Portfolio's adviser or sub-adviser will continue to monitor creditworthiness of
the seller under a repurchase agreement, and will require the seller to
maintain during the term of the agreement the value of the securities subject
to the agreement at not less than the repurchase price (including accrued
interest). In addition, the Portfolio's adviser or sub-adviser will
mark-to-market daily the value of the securities, and will, if necessary,
require the seller to maintain additional securities to ensure that the value
is not less than the repurchase price. Securities subject to repurchase
agreements will be held by the Fund's custodian (or sub-custodian) in the
Federal Reserve/Treasury book-entry system or by another authorized securities
depository. Repurchase agreements are considered to be loans by the Portfolios
under the 1940 Act.
INVESTMENT GRADE DEBT OBLIGATIONS. Each of the Money Market
Portfolios may invest in securities in the two highest rating categories of
NRSROs. The Non-Money Market Portfolios invest in "investment grade
securities", which are securities rated in the four highest rating categories
of an NRSRO. It should be noted that debt obligations rated in the lowest of
the top four ratings (i.e., "Baa" by Moody's or "BBB" by S&P) are considered to
have some speculative characteristics and are more sensitive to economic change
than higher rated securities.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. When a Portfolio
agrees to purchase securities on a when-issued or forward commitment basis, the
custodian will set aside cash or liquid portfolio securities equal to the
amount of the commitment in a separate account. Normally, the custodian will
set aside portfolio securities to satisfy a purchase commitment, and in such a
case the Portfolio may be required subsequently to place additional assets in
the separate account in order to ensure that the value of the account remains
equal to the amount of the Portfolio commitments. It may be expected that the
market value of the Portfolios' 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. Because a Portfolio's liquidity and ability to manage
its portfolio might be affected when it sets aside cash or portfolio securities
to cover such purchase commitments, each Portfolio expects that its commitments
to purchase when-issued securities and forward commitments will not exceed 25%
of the value of its total assets absent unusual market conditions.
A Portfolio will purchase securities on a when-issued or forward
commitment basis only with the intention of completing the transaction and
actually purchasing the securities. If deemed advisable as a matter of
investment strategy, however, a Portfolio may dispose of or renegotiate a
commitment after it has been entered into, and may sell securities it has
committed to
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purchase before those securities are delivered to the Portfolio on the
settlement date. In these cases the Portfolio may realize a taxable capital
gain or loss.
When a Portfolio engages in when-issued and forward commitment
transactions, it relies on the other party to consummate the trade. Failure of
such party to do so may result in the Portfolio's incurring a loss or missing
an opportunity to obtain a price considered to be advantageous.
The market value of the securities underlying a when-issued purchase
or a forward commitment to purchase securities, and any subsequent fluctuations
in their market value, is taken into account when determining the market value
of a Portfolio starting on the day the Portfolio agrees to purchase the
securities. The Portfolio does not earn interest on the securities it has
committed to purchase until they are paid for and delivered on the settlement
date.
RIGHTS OFFERINGS AND WARRANTS TO PURCHASE. As stated in their
Prospectus, the Value Equity, Growth Equity, Small Cap Growth Equity, Core
Equity, Index Equity, Small Cap Value Equity, International Equity,
International Emerging Markets and Balanced Portfolios may participate in
rights offerings and may purchase warrants, which are privileges issued by
corporations enabling the owners to subscribe to and purchase a specified
number of shares of the corporation at a specified price during a specified
period of time. Subscription rights normally have a short life span to
expiration. The purchase of rights or warrants involves the risk that the
Portfolios could lose the purchase value of a right or warrant if the right to
subscribe to additional shares is not exercised prior to the rights' and
warrants' expiration. Also, the purchase of rights and/or warrants involves
the risk that the effective price paid for the right and/or warrant added to
the subscription price of the related security may exceed the value of the
subscribed security's market price such as when there is no movement in the
level of the underlying security. A Portfolio will not invest more than 5% of
its net assets, taken at market value, in warrants, or more than 2% of its net
assets, taken at market value, in warrants not listed on the New York or
American Stock Exchanges. Warrants acquired by a Portfolio in units or
attached to other securities are not subject to this restriction.
FOREIGN CURRENCY TRANSACTIONS. Forward foreign currency exchange
contracts involve an obligation to purchase or sell a specified currency at a
future date at a price set at the time of the contract. Forward currency
contracts do not eliminate fluctuations in the values of portfolio securities
but rather allow a Portfolio to establish a rate of exchange for a future point
in time. A Portfolio may enter into forward foreign
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currency exchange contracts when deemed advisable by its adviser or sub-adviser
under two circumstances. First, when entering into a contract for the purchase
or sale of a security, the Portfolio may enter into a forward foreign currency
exchange contract for the amount of the purchase or sale price to protect
against variations, between the date the security is purchased or sold and the
date on which payment is made or received, in the value of the foreign currency
relative to the U.S. dollar or other foreign currency.
Second, when the Portfolio's adviser or sub-adviser anticipates that a
particular foreign currency may decline substantially relative to the U.S.
dollar or other leading currencies, in order to reduce risk, the Portfolio may
enter into a forward contract to sell, for a fixed amount, the amount of
foreign currency approximating the value of some or all of the Portfolio's
securities denominated in such foreign currency. No Portfolio intends to enter
into forward contracts under this second circumstance on a regular or
continuing basis and will not do so if, as a result, it will have more than 15%
of the value of its total assets committed to such contracts. With respect to
any forward foreign currency contract, it will not generally be possible to
match precisely the amount covered by that contract and the value of the
securities involved due to the changes in the values of such securities
resulting from market movements between the date the forward contract is
entered into and the date it matures. In addition, while forward contracts may
offer protection from losses resulting from declines in the value of a
particular foreign currency, they also limit potential gains which might result
from increases in the value of such currency. A Portfolio will also incur
costs in connection with forward foreign currency exchange contracts and
conversions of foreign currencies and U.S. dollars.
A separate account of a Portfolio consisting of cash or liquid
securities equal to the amount of the Portfolio's assets that could be required
to consummate forward contracts entered into under the second circumstance, as
set forth above, will be established with the Fund's custodian. For the
purpose of determining the adequacy of the securities in the account, the
deposited securities will be valued at market or fair value. If the market or
fair value of such securities declines, additional cash or securities will be
placed in the account daily so that the value of the account will equal the
amount of such commitments by the Portfolio.
OPTIONS. Options trading is a highly specialized activity which
entails greater than ordinary investment risks. Options on particular
securities may be more volatile than the underlying securities, and therefore,
on a percentage basis, an investment in the underlying securities themselves.
A Portfolio will write
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call options only if they are "covered." In the case of a call option on a
security, the option is "covered" if a Portfolio owns the security underlying
the call or has an absolute and immediate right to acquire that security
without additional cash consideration (or, if additional cash consideration is
required, cash or cash equivalents in such amount as are held in a segregated
account by its custodian) upon conversion or exchange of other securities held
by it. For a call option on an index, the option is covered if a Portfolio
maintains with its custodian cash or cash equivalents equal to the contract
value. A call option is also covered if a Portfolio holds a call on the same
security or index as the call written where the exercise price of the call held
is (i) equal to or less than the exercise price of the call written, or (ii)
greater than the exercise price of the call written provided the difference is
maintained by the Portfolio in cash or cash equivalents in a segregated account
with its custodian.
When a Portfolio purchases a put option, the premium paid by it is
recorded as an asset of the Portfolio. When a Portfolio writes an option, an
amount equal to the net premium (the premium less the commission) received by
the Portfolio is included in the liability section of the Portfolio's statement
of assets and liabilities as a deferred credit. The amount of this asset or
deferred credit will be subsequently marked-to-market to reflect the current
value of the option purchased or written. The current value of the traded
option is the last sale price or, in the absence of a sale, the mean between
the last bid and asked prices. If an option purchased by a Portfolio expires
unexercised the Portfolio realizes a loss equal to the premium paid. If the
Portfolio enters into a closing sale transaction on an option purchased by it,
the Portfolio will realize a gain if the premium received by the Portfolio on
the closing transaction is more than the premium paid to purchase the option,
or a loss if it is less. If an option written by a Portfolio expires on the
stipulated expiration date or if the Portfolio enters into a closing purchase
transaction, it will realize a gain (or loss if the cost of a closing purchase
transaction exceeds the net premium received when the option is sold) and the
deferred credit related to such option will be eliminated. If an option
written by a Portfolio is exercised, the proceeds of the sale will be increased
by the net premium originally received and the Portfolio will realize a gain or
loss.
There are several risks associated with transactions in options on
securities and indexes. For example, there are significant differences between
the securities and options markets that could result in an imperfect
correlation between these markets, causing a given transaction not to achieve
its objectives. In addition, a liquid secondary market for particular options,
whether traded over-the-counter or on a
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national securities exchange ("Exchange") may be absent for reasons which
include the following: there may be insufficient trading interest in certain
options; restrictions may be imposed by an Exchange on opening transactions or
closing transactions or both; trading halts, suspensions or other restrictions
may be imposed with respect to particular classes or series of options or
underlying securities; unusual or unforeseen circumstances may interrupt normal
operations on an Exchange; the facilities of an Exchange or the Options
Clearing Corporation may not at all times be adequate to handle current trading
volume; or one or more Exchanges could, for economic or other reasons, decide
or be compelled at some future date to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on
that Exchange (or in that class or series of options) would cease to exist,
although outstanding options that had been issued by the Options Clearing
Corporation as a result of trades on that Exchange would continue to be
exercisable in accordance with their terms.
FUTURES CONTRACTS AND RELATED OPTIONS. Each Non-Money Market
Portfolio may invest in futures contracts and options thereon (interest rate
futures contracts or index futures contracts, as applicable). Positions in
futures contracts may be closed out only on an exchange which provides a
secondary market for such futures. However, there can be no assurance that a
liquid secondary market will exist for any particular futures contract at any
specific time. Thus, it may not be possible to close a futures position. In
the event of adverse price movements, a Portfolio would continue to be required
to make daily cash payments to maintain its required margin. In such
situations, if a Portfolio has insufficient cash, it may have to sell portfolio
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, a Portfolio may be required to make
delivery of the instruments underlying futures contracts it holds. The
inability to close options and futures positions also could have an adverse
impact on a Portfolio's ability to effectively hedge.
Successful use of futures by a Portfolio is also subject to the
adviser's ability to correctly predict movements in the direction of the
market. For example, if a Portfolio has hedged against the possibility of a
decline in the market adversely affecting securities held by it and securities
prices increase instead, the Portfolio will lose part or all of the benefit to
the increased value of its securities which it has hedged because it will have
approximately equal offsetting losses in its futures positions. In addition,
in some situations, if a Portfolio has insufficient cash, it may have to sell
securities to meet daily variation margin requirements. Such sales of
securities may be, but will not necessarily be, at increased prices which
reflect
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the rising market. A Portfolio may have to sell securities at a time when it
may be disadvantageous to do so.
The risk of loss in trading futures contracts in some strategies can
be substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. As a result, a relatively
small price movement in a futures contract may result in immediate and
substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit, before any
deduction for the transaction costs, if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in losses in excess of the
amount invested in the contract.
Utilization of futures transactions by a Portfolio involves the risk
of loss by a Portfolio of margin deposits in the event of bankruptcy of a
broker with whom the Portfolio has an open position in a futures contract or
related option.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of a
trading session. Once the daily limit has been reached in a particular type of
contract, no trades may be made on that day at a price beyond that limit. The
daily limit governs only price movement during a particular trading day and
therefore does not limit potential losses, because the limit may prevent the
liquidation of unfavorable positions. Futures contract prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures
positions and subjecting some futures traders to substantial losses.
The trading of futures contracts is also subject to the risk of
trading halts, suspensions, exchange or clearing house equipment failures,
government intervention, insolvency of a brokerage firm or clearing house or
other disruptions of normal trading activity, which could at times make it
difficult or impossible to liquidate existing positions or to recover excess
variation margin payments.
STAND-BY COMMITMENTS. Under a stand-by commitment for a Municipal
Obligation, a dealer agrees to purchase at the
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Portfolio's option a specified Municipal Obligation at a specified price.
Stand-by commitments for Municipal Obligations may be exercisable by a
Portfolio at any time before the maturity of the underlying Municipal
Obligations and may be sold, transferred or assigned only with the instruments
involved. It is expected that such stand-by commitments will generally be
available without the payment of any direct or indirect consideration.
However, if necessary or advisable, a Portfolio may pay for such a stand-by
commitment either separately in cash or by paying a higher price for Municipal
Obligations which are acquired subject to the commitment for Municipal
Obligations (thus reducing the yield to maturity otherwise available for the
same securities). The total amount paid in either manner for outstanding
stand-by commitments for Municipal Obligations held by a Portfolio will not
exceed 1/2 of 1% of the value of such Portfolio's total assets calculated
immediately after each stand-by commitment is acquired.
Stand-by commitments will only be entered into with dealers, banks and
broker-dealers which, in the adviser's or sub- adviser's opinion, present
minimal credit risks. A Portfolio will acquire stand-by commitments solely to
facilitate portfolio liquidity and not to exercise its rights thereunder for
trading purposes. Stand-by commitments will be valued at zero in determining
net asset value. Accordingly, where a Portfolio pays directly or indirectly
for a stand-by commitment, its cost will be reflected as an unrealized loss for
the period during which the commitment is held by such Portfolio and will be
reflected in realized gain or loss when the commitment is exercised or expires.
TAX-EXEMPT DERIVATIVES. The Municipal Portfolios and the Tax-Free
Income, Ohio Tax-Free Income and Pennsylvania Tax-Free Income Portfolios
(collectively, the "Money and Non-Money Market Municipal Portfolios") may hold
tax-exempt derivatives which may be in the form of tender option bonds,
participations, beneficial interests in a trust, partnership interests or other
forms. A number of different structures have been used. For example,
interests in long-term fixed-rate municipal obligations, held by a bank as
trustee or custodian, are coupled with tender option, demand and other features
when the tax-exempt derivatives are created. Together, these features entitle
the holder of the interest to tender (or put), the underlying municipal
obligation to a third party at periodic intervals and to receive the principal
amount thereof. In some cases, municipal obligations are represented by
custodial receipts evidencing rights to receive specific future interest
payments, principal payments, or both, on the underlying municipal securities
held by the custodian. Under such arrangements, the holder of the custodial
receipt has the option to tender the underlying municipal securities at its
face value to the sponsor (usually a bank or broker dealer or other financial
institution), which is paid
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periodic fees equal to the difference between the bond's fixed coupon rate and
the rate that would cause the bond, coupled with the tender option, to trade at
par on the date of a rate adjustment. The Money and Non-Money Market Municipal
Portfolios may hold tax- exempt derivatives, such as participation interests
and custodial receipts, for municipal obligations which give the holder the
right to receive payment of principal subject to the conditions described
above. The Internal Revenue Service has not ruled on whether the interest
received on tax-exempt derivatives in the form of participation interests or
custodial receipts is tax-exempt, and accordingly, purchases of any such
interests or receipts are based on the opinion of counsel to the sponsors of
such derivative securities. Neither the Fund nor its investment adviser will
review the proceedings related to the creation of any tax-exempt derivatives or
the basis for such opinions.
SECURITIES LENDING. A Portfolio would continue to accrue interest on
loaned securities and would also earn income on investment collateral for such
loans. Any cash collateral received by a Portfolio in connection with such
loans would be invested in short-term U.S. Government obligations.
YIELDS AND RATINGS. The yields on certain obligations are dependent
on a variety of factors, including general market conditions, conditions in the
particular market for the obligation, the financial condition of the issuer,
the size of the offering, the maturity of the obligation and the ratings of the
issue. The ratings of Moody's and S&P represent their respective opinions as
to the quality of the obligations they undertake to rate. Ratings, however,
are general and are not absolute standards of quality. Consequently,
obligations with the same rating, maturity and interest rate may have different
market prices. Subsequent to its purchase by a Portfolio, a rated security may
cease to be rated. The adviser or sub-adviser will consider such an event in
determining whether the Portfolio should continue to hold the security.
SECURITIES OF SMALL CAP ISSUERS. Securities of small cap issues
purchased by the Small Cap Value Equity and Small Cap Growth Equity Portfolios
may be exchange-listed or purchased "over-the-counter".
SPECIAL CONSIDERATIONS REGARDING INVESTMENT IN OHIO MUNICIPAL
OBLIGATIONS. As described above, the Ohio Tax-Free Money Market and Ohio
Tax-Free Income Portfolios (the "Ohio Portfolios") will each invest most of its
net assets in securities issued by or on behalf of (or in certificates of
participation in lease-purchase obligations of) the State of Ohio, political
subdivisions of the State, or agencies or instrumentalities of the State or its
political subdivisions (Ohio Obligations). The Ohio Portfolios are therefore
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susceptible to general or particular political, economic or regulatory factors
that may affect issuers of Ohio Obligations. The following information
constitutes only a brief summary of some of the many complex factors that may
have an effect. The information does not apply to "conduit" obligations on
which the public issuer itself has no financial responsibility. This
information is derived from official statements of certain Ohio issuers
published in connection with their issuance of securities and from other
publicly available information, and is believed to be accurate. No independent
verification has been made of any of the following information.
Generally, the creditworthiness of Ohio Obligations of local issuers
is unrelated to that of obligations of the State itself, and the State has no
responsibility to make payments on those local obligations. There may be
specific factors that at particular times apply in connection with investment
in particular Ohio Obligations or in those obligations of particular Ohio
issuers. It is possible that the investment may be in particular Ohio
Obligations, or in those of particular issuers, as to which those factors
apply. However, the information below is intended only as a general summary,
and is not intended as a discussion of any specific factors that may affect any
particular obligation or issuer.
Ohio is the seventh most populous state; the 1990 Census count of
10,847,000 indicated a 0.5% population increase from 1980. The Census estimate
for 1993 is 11,091,000.
While diversifying more into the service and other non-manufacturing
areas, the Ohio economy continues to rely in part on durable goods
manufacturing largely concentrated in motor vehicles and equipment, steel,
rubber products and household appliances. As a result, general economic
activity, as in many other industrially-developed states, tends to be more
cyclical than in some other states and in the nation as a whole. Agriculture
is an important segment of the economy, with over half the State's area devoted
to farming and approximately 15% of total employment in agribusiness.
In prior years, the State's overall unemployment rate was commonly
somewhat higher than the national figure. For example, the reported 1990
average monthly State rate was 5.7%, compared to the 5.5% national figure.
However, for the last four years the State rates were below the national rates
(6.5% versus 6.8% in 1993). The unemployment rate and its effects vary among
geographic areas of the State.
There can be no assurance that future national, regional or state-wide
economic difficulties, and the resulting impact on State or local government
finances generally, will not adversely
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affect the market value of Ohio Obligations held in the Ohio Portfolios or the
ability of particular obligors to make timely payments of debt service on (or
lease payments relating to) those Obligations.
The State operates on the basis of a fiscal biennium for its
appropriations and expenditures, and is precluded by law from ending its July 1
to June 30 fiscal year (FY) or fiscal biennium in a deficit position. Most
State operations are financed through the General Revenue Fund (GRF), for which
the personal income and sales-use taxes are the major sources. Growth and
depletion of GRF ending fund balances show a consistent pattern related to
national economic conditions, with the ending FY balance reduced during less
favorable and increased during more favorable economic periods. The State has
well-established procedures for, and has timely taken, necessary actions to
ensure resource/expenditure balances during less favorable economic periods.
Those procedures included general and selected reductions in appropriations
spending.
Key biennium-ending fund balances at June 30, 1989 were $475.1 million
in the GRF and $353 million in the Budget Stabilization Fund (BSF, a cash and
budgetary management fund). In the next two fiscal years necessary corrective
steps were taken to respond to lower receipts and higher expenditures in
certain categories than earlier estimated. Those steps included selected
reductions in appropriations spending and the transfer of $64 million from the
BSF to the GRF. Reported June 30, 1991 ending fund balances were $135.3
million (GRF) and $300 million (BSF).
To allow time to resolve certain budget differences for the latest
complete biennium, an interim appropriations act was enacted effective July 1,
1991; it included GRF debt service and lease rental appropriations for the
entire 1992-93 biennium, while continuing most other appropriations for a
month. Pursuant to the general appropriations act for the entire biennium,
passed on July 11, 1991, $200 million was transferred from the BSF to the GRF
in FY 1992.
Based on updated results and forecasts in the course of FY 1992, both
in light of a continuing uncertain nationwide economic situation, there was
projected, and then timely addressed, an FY 1992 imbalance in GRF resources and
expenditures. GRF receipts significantly below original forecasts resulted
primarily from lower collections of certain taxes, particularly sales - use and
personal income taxes. Higher expenditure levels came in certain areas,
particularly human services including Medicaid. The Governor ordered most
State agencies to reduce GRF spending in the last six months of FY 1992 by a
total of approximately $184 million. As authorized by the General Assembly,
the $100.4
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million BSF balance and additional amounts from certain other funds were
transferred late in the FY to the GRF, and adjustments made in the timing of
certain tax payments. Other administrative revenue and spending actions
resolved the remaining imbalance.
A significant GRF shortfall (approximately $520 million) was then
projected for FY 1993. It was addressed by appropriate legislative and
administrative actions. The Governor ordered, effective July 1, 1992, $300
million in selected GRF spending reductions. Subsequent executive and
legislative action in December 1992 -- a combination of tax revisions and
additional spending reductions -- resulted in a balance of GRF resources and
expenditures for the 1992-93 biennium. The June 30, 1993 ending GRF fund
balance was approximately $111 million, of which, as a first step to BSF
replenishment, $21 million was deposited in the BSF. (Based on June 30, 1994
balances, an additional $260 million has been deposited in the BSF, which has a
current balance of $281 million.)
No spending reductions were applied to appropriations needed for debt
service on or lease rentals relating to any State obligations.
The GRF appropriations act for the current 1994-95 biennium was passed
and signed by the Governor on July 1, 1993. It included all necessary GRF
appropriations for State debt service and lease rental payments then projected
for the biennium.
The State's incurrence or assumption of debt without a vote of the
people is, with limited exceptions, prohibited by current State constitutional
provisions. The State may incur debt, limited in amount to $750,000, to cover
casual deficits or failures in revenues or to meet expenses not otherwise
provided for. The Constitution expressly precludes the State from assuming the
debts of any local government or corporation. (An exception is made in both
cases for any debt incurred to repel invasion, suppress insurrection or defend
the State in war.)
By 13 constitutional amendments, the last adopted in 1993, Ohio voters
have authorized the incurrence of State debt and the pledge of taxes or excises
to its payment. At January 25, 1995, $794.4 million (excluding certain highway
bonds payable primarily from highway use charges) of this debt was outstanding
or awaiting delivery. The only such State debt then still authorized to be
incurred are portions of the highway bonds, and the following: (a) up to $100
million of obligations for coal research and development may be outstanding at
any one time ($38.9 million outstanding); (b) $360 million of obligations
authorized for local infrastructure improvements, no more than $120 million of
which may be issued in any calendar year ($728.2 million outstanding or
awaiting delivery); and (c) up to $200
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million in general obligation bonds for parks, recreation and natural resources
purposes which may be outstanding at any one time (no more than $50 million to
be issued in any one year).
The Constitution also authorizes the issuance of State obligations for
certain purposes, the owners of which do not have the right to have excises or
taxes levied to pay debt service. Those special obligations include
obligations issued by the Ohio Public Facilities Commission and the Ohio
Building Authority, and certain obligations issued by the State Treasurer, over
$4.5 billion of which were outstanding or awaiting delivery at January 25,
1995.
A 1990 constitutional amendment authorizes greater State and political
subdivision participation (including financing) in the provision of housing.
The General Assembly may for that purpose authorize the issuance of State
obligations secured by a pledge of all or such portion as it authorizes of
State revenues or receipts (but not by a pledge of the State's full faith and
credit).
A 1994 constitutional amendment pledges the full faith and credit and
taxing power of the State to meeting certain guarantees under the State's
tuition credit program which provides for purchase of tuition credits, for the
benefit of State residents, guaranteed to cover a specified amount when applied
to the cost of higher education tuition. (A 1965 constitutional provision that
authorized student loan guarantees payable from available State moneys has
never been implemented, a part from a "guarantee fund" approach funded
essentially from program revenues.)
State and local agencies issue obligations that are payable from
revenues from or relating to certain facilities (but not from taxes). By
judicial interpretation, these obligations are not "debt" within constitutional
provisions. In general, payment obligations under lease-purchase agreements of
Ohio public agencies (in which certificates of participation may be issued) are
limited in duration to the agency's fiscal period, and are renewable only upon
appropriations being made available for the subsequent fiscal period.
Local school districts in Ohio receive a major portion (state-wide
aggregate in the range of 46% in recent years) of their operating moneys from
State subsidies, but are dependent on local property taxes, and in 107
districts from voter-authorized income taxes, for significant portions of their
budgets. Litigation, similar to that in other states, is pending questioning
the constitutionality of Ohio's system of school funding. The trial court
recently concluded that aspects of the system (including basic operating
assistance) are
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unconstitutional, and ordered the State to provide for and fund a system
complying with the Ohio Constitution. The State has appealed. A small number
of the State's 612 local school districts have in any year required special
assistance to avoid year-end deficits. A current program provides for school
district cash need borrowing directly from commercial lenders, with diversion
of State subsidy distributions to repayment if needed. Borrowings under this
program totalled $68.6 million for 44 districts (including $46.6 million for
one district) in FY 1992, $94.5 million for 27 districts (including $75 million
for one)in FY 1993, and $15.6 million for 28 districts in FY 1994.
Ohio's 943 incorporated cities and villages rely primarily on property
and municipal income taxes for their operations. With other subdivisions, they
also receive local government support and property tax relief moneys
distributed by the State. For those few municipalities that on occasion have
faced significant financial problems, there are statutory procedures for a
joint State/local commission to monitor the municipality's fiscal affairs and
for development of a financial plan to eliminate deficits and cure any
defaults. Since inception in 1979, these procedures have been applied to 23
cities and villages; for 18 of them the fiscal situation was resolved and the
procedures terminated.
At present the State itself does not levy ad valorem taxes on real or
tangible personal property. Those taxes are levied by political subdivisions
and other local taxing districts. The Constitution has since 1934 limited to
1% of true value in money the amount of the aggregate levy (including a levy
for unvoted general obligations) of property taxes by all overlapping
subdivisions, without a vote of the electors or a municipal charter provision,
and statutes limit the amount of that aggregate levy to 10 mills per $1 of
assessed valuation (commonly referred to as the "ten-mill limitation"). Voted
general obligations of subdivisions are payable from property taxes that are
unlimited as to amount or rate.
SPECIAL CONSIDERATIONS REGARDING INVESTMENT IN PENNSYLVANIA MUNICIPAL
OBLIGATIONS. The concentration of investments in Pennsylvania Municipal
Obligations by the Pennsylvania Municipal Money Market and Pennsylvania
Tax-Free Income Portfolios raises special investment considerations. In
particular, changes in the economic condition and governmental policies of the
Commonwealth of Pennsylvania and its municipalities could adversely affect the
value of those Portfolios and their portfolio securities. This section briefly
describes current economic trends in Pennsylvania.
Pennsylvania has historically been dependent on heavy industry
although recent declines in the coal, steel and railroad
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industries have led to diversification of the Commonwealth's economy. Recent
sources of economic growth in Pennsylvania are in the service sector, including
trade, medical and health services, education and financial institutions.
Agriculture continues to be an important component of the Commonwealth's
economic structure, with nearly one-third of the Commonwealth's total land area
devoted to cropland, pasture and farm woodlands.
The population of Pennsylvania experienced a slight increase in the
period 1980 through 1990 and has a high proportion of persons 65 or older. The
Commonwealth is highly urbanized, with almost 85% of the 1980 census population
residing in metropolitan statistical areas. The two largest metropolitan
statistical areas, those containing the Cities of Philadelphia and Pittsburgh,
together comprise approximately 50% of the Commonwealth's total population.
The Commonwealth utilizes the fund method of accounting and over 120
funds have been established for purposes of recording receipts and
disbursements of the Commonwealth, of which the General Fund is the largest.
Most of the Commonwealth's operating and administrative expenses are payable
from the General Fund. The major tax sources for the General Fund are the
sales tax, the personal income tax and the corporate net income tax. Major
expenditures of the Commonwealth include funding for education, public health
and welfare, transportation, and economic development.
The constitution of the Commonwealth provides that operating budget
appropriations of the Commonwealth may not exceed the estimated revenues and
available surplus in the fiscal year for which funds are appropriated. Annual
budgets are enacted for the General Fund (the principal operating fund of the
Commonwealth) and for certain special revenue funds which together represent
the majority of expenditures of the Commonwealth. Although a negative balance
was experienced applying generally accepted accounting principles ("GAAP") in
the General Fund for fiscal 1990 and 1991, tax increases and spending decreases
helped return the General Fund balance to a surplus at June 30, 1992 of $87.5
million and at June 30, 1993 of $698.9 million. The deficit in the
Commonwealth's unreserved/undesignated funds of prior years also was reversed
to a surplus of $64.4 million as of June 30, 1993.
Current constitutional provisions permit the Commonwealth to issue the
following types of debt: (i) electorate approved debt, (ii) debt for capital
projects subject to an aggregate debt limit of 1.75 times the annual average
tax revenues of the preceding five fiscal years, (iii) tax anticipation notes
payable in the fiscal year of issuance and (iv) debt to suppress insurrection
or rehabilitate areas affected by disaster. Certain state-created
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agencies issue debt supported by assets of, or revenues derived from, the
various projects financed and the debt of such agencies is not an obligation of
the Commonwealth, although some of the agencies are indirectly dependent on
Commonwealth appropriations.
Certain litigation is pending against the Commonwealth that could
adversely affect the ability of the Commonwealth to pay debt service on its
obligations including suits relating to the following matters: (a) the ACLU
has filed suit in Federal court demanding additional funding for child welfare
services; the Commonwealth settled a similar suit in the Commonwealth Court of
Pennsylvania and is seeking the dismissal of the federal suit, inter alia,
because of that settlement. The district court has denied class certification
to the ACLU, and the parties have stipulated to a judgment against the
plaintiffs to allow plaintiffs to appeal the denial of class certification (no
available estimates of potential liability); (b) in 1987, the Supreme Court of
Pennsylvania held the statutory scheme for county funding of the judicial
system to be in conflict with the constitution of the Commonwealth, but stayed
judgment pending enactment by the legislature of funding consistent with the
opinion, and the legislature has yet to consider legislation implementing the
judgment. In 1992, a new action in mandamus was filed seeking to compel the
Commonwealth to comply with the original decision; (c) several banks have filed
suit against the Commonwealth contesting the constitutionality of a law enacted
in 1989 imposing a bank shares tax; in July 1994, the Commonwealth Court en
banc upheld the constitutionality of the 1989 bank shares tax law, but struck
down a companion law to provide credits against the bank shares tax for new
banks; cross-appeals from that decision to the Pennsylvania Supreme Court have
been filed; (d) litigation has been filed in both state and Federal court by an
association of rural and small schools and several individual school districts
and parents challenging the constitutionality of the Commonwealth's system for
funding local school districts -- the Federal case has been stayed pending
resolution of the state case and the state case is in the pre-trial stage (no
available estimate of potential liability); (e) the ACLU has brought a class
action on behalf of inmates challenging the conditions of confinement in
thirteen of the Commonwealth correctional institutions; a proposed settlement
agreement has been submitted to the court and members of the class for their
review (no available estimate of potential cost of complying with the
injunction sought, but capital and personnel costs might cost millions of
dollars); (f) a consortium of public interest law firms has filed a class
action suit alleging that the Commonwealth has not complied with a Federal
mandate to provide screening, diagnostic and treatment services for all
Medicaid- eligible children under 21; the district court denied class
certification and the parties have submitted a tentative settlement agreement
to the court for approval; and (g)
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litigation has been filed in federal court by the Pennsylvania Medical Society
seeking payment of the full co-pay and deductible in excess of the maximum fees
set under the Commonwealth's medical assistance program for outpatient services
provided to medical assistance patients who also were eligible for Medicare;
the Commonwealth received a favorable decision in the federal district court,
but the Pennsylvania Medical Society won a reversal in the federal circuit
court (potential liability estimated at $50 million per year).
Local government units in the Commonwealth of Pennsylvania (which
include, among other things, counties, cities, boroughs, towns, townships,
school districts and other municipally created units such as industrial
development authorities and municipality authorities, including water and sewer
authorities) are permitted to issue debt for capital projects: (i) in any
amount so long as the debt has been approved by the voters of the local
government unit; or (ii) without electoral approval if the aggregate
outstanding principal amount of debt of the local government unit is not in
excess of 100% of its borrowing base (in the case of a school district of the
first class), 300% of its borrowing base (in the case of a county) or 250% of
its borrowing base (in the case of all other local government units); or (iii)
without electoral approval and without regard to the limit described in (ii) in
any amount in the case of certain subsidized debt and qualifying
self-liquidating debt. Lease rental debt may also be issued, in which case the
total debt limits described in section (ii) (taking into account all existing
lease rental debt in addition to all other debt) are increased. The borrowing
base for a local government unit is the average of total revenues for the three
fiscal years preceding the borrowing. The risk of investing in debt issued by
any particular local government unit depends, in the case of general obligation
bonds secured by tax revenues, on the credit-worthiness of that issuer or, in
the case of revenue bonds, on the revenue producing ability of the project
being financed, and not directly on the credit-worthiness of the Commonwealth
of Pennsylvania as a whole.
The City of Philadelphia (the "City") has been experiencing severe
financial difficulties which has impaired its access to public credit markets
and a long-term solution to the City's financial crisis is still being sought.
The City experienced a series of General Fund deficits for fiscal years 1988
through 1992. The City has no legal authority to issue deficit reduction bonds
on its own behalf, but state legislation has been enacted to create an
Intergovernmental Cooperation Authority (the "Authority") to provide fiscal
oversight for Pennsylvania cities (primarily Philadelphia) suffering recurring
financial difficulties. The Authority is broadly empowered to assist cities in
avoiding defaults and eliminating deficits by encouraging the adoption of sound
budgetary practices and issuing
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bonds. In order for the Authority to issue bonds on behalf of the City, the
City and the Authority entered into an intergovernmental cooperative agreement
providing the Authority with certain oversight powers with respect to the
fiscal affairs of the City, and the Authority originally approved a five-year
financial plan prepared by the City on April 6, 1992. The Authority approved
the latest update of the five year financial plan on May 2, 1994. The City has
reported a surplus of approximately $15 million for the fiscal year ending June
30, 1994. In June 1992, the Authority issued $474,555,000 in bonds to
liquidate the City's deficit balance in its general fund. The Authority issued
$643,430,000 of bonds in July 1993 and $178,675,000 of bonds in August 1993 to
refund certain general obligation bonds of the City and to fund additional
capital projects.
SPECIAL CONSIDERATIONS REGARDING INVESTMENT IN NORTH CAROLINA
MUNICIPAL OBLIGATIONS. The concentration of investments in North Carolina
Municipal Obligations by the North Carolina Municipal Money Market Portfolio
raises special investment considerations. In particular, changes in the
economic condition and governmental policies of North Carolina and its
political subdivisions, agencies, instrumentalities, and authorities could
adversely affect the value of the Portfolio and its portfolio securities. This
section briefly describes current economic trends in North Carolina.
The State of North Carolina has two major operating funds: the
General Fund and the Highway Fund. In addition, the 1989 General Assembly
created the Highway Trust Fund to provide funding for a major highway
construction program. North Carolina derives most of its revenue from taxes,
including individual income tax, corporation income tax, sales and use taxes,
corporation franchise tax, alcoholic beverage tax, insurance tax, inheritance
tax, tobacco products tax, soft drink tax and intangible personal property tax.
North Carolina receives other non-tax revenues which are also deposited in the
General Fund. The most important are Federal funds collected by North Carolina
agencies, university fees and tuition, interest earned by the North Carolina
Treasurer on investments of General Fund moneys and revenues from the judicial
branch. The proceeds from the motor fuel tax, highway use tax and motor
vehicle license tax are deposited in the Highway Fund and the Highway Trust
Fund.
During the 1989-92 budget years, growth of North Carolina tax revenues
slowed considerably, requiring tax increases and budget adjustments, including
hiring freezes and restrictions, spending constraints, changes in timing and
certain collections and payments, and other short-term budget adjustments
necessary to comply with North Carolina's constitutional mandate for a balanced
budget. Many areas of North Carolina government were
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affected. Reductions in capital spending, local government aid, and the use of
the budget stabilization reserve, combined with other budget adjustments,
brought the budget into balance. Tax increases in the fiscal 1992 budget
included a $.01 increase in the North Carolina sales tax and increases in the
personal and corporate income tax rates, as well as increases in the tax on
cigarettes and alcohol, among other items.
Fiscal year 1992 ended with a positive fund balance of approximately
$164.8 million. By law, $41.2 million of such positive fund balance was
required to be reserved in the General Fund of North Carolina as part of a
"Savings Reserve," leaving an unrestricted General Fund balance at June 30,
1992 of $123.6 million. Fiscal year 1993 ended with a positive General Fund
balance of approximately $537.3 million. Of this amount, $134.3 million was
reserved in the Savings Reserve and $57 million was reserved in a Reserve for
Repair and Renovation of State Facilities, leaving an unrestricted General Fund
balance at June 30, 1993 of $346 million. Fiscal year 1994 ended with a
positive General Fund balance of approximately $444.7 million. An additional
$178 million was available from a reserved fund balance. Of this aggregate
amount, $155.7 million was reserved in the Savings Reserve (bringing the total
reserve to $210.6 million after prior withdrawals) and $60 million was reserved
in the Reserve for Repair and Renovation of State Facilities (bringing the
total reserve to $60 million after prior withdrawals), leaving an unrestricted
General Fund balance at June 30, 1994 of $407 million.
The foregoing results are presented on a budgetary basis. Accounting
principles applied to develop data on a budgetary basis differ significantly
from those principles used to present financial statements in conformity with
generally accepted accounting principles (GAAP). Based on a modified accrual
basis (GAAP), the General Fund balance at June 30, 1993 and 1994 was $681.5
million and $1,240.9 million, respectively.
The 1993 sessions of the General Assembly reduced departmental
operating requirements by $357.6 million for fiscal year 1995 and authorized
continuation funding of $8,603.4 million. The savings reductions were based on
recommendations from the Governor, a Governmental Performance Audit Committee,
and selective savings identified by the General Assembly. After review of the
continuation budget, the General Assembly authorized funding for planned
expansion to existing programs and funded new initiatives for children,
economic development, education, human services, and environmental programs.
Expansion funds of $1,650.4 million for fiscal year 1995 were approved during
the 1993 and 1994 sessions of the General Assembly. In addition to the
transfers to the Savings Reserve from the fiscal year-end credit balance, the
General Assembly in 1993
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appropriated $66.7 million for the Savings Reserve. The General Assembly
authorized $189.4 million for capital improvements spending and $60 million for
the Reserve for Repair and Renovation of State Facilities for fiscal year 1995.
The North Carolina budget is based upon a number of existing and
assumed State and non-State factors, including State and national economic
conditions, international activity, Federal government policies and legislation
and the activities of the State's General Assembly. Such factors are subject
to change which may be material and affect the budget.
During recent years North Carolina has moved from an agricultural to a
service and goods producing economy. According to the North Carolina
Employment Security Commission (the "Commission"), in May 1994, North Carolina
ranked tenth among the states in non-agricultural employment and eighth in
manufacturing employment. The Commission estimated North Carolina's seasonally
adjusted unemployment rate in December 1994 to be 3.3% of the labor force, as
compared with an unemployment rate of 5.4% nationwide. As part of its 1993-95
budget, the General Assembly provided major funding for economic initiatives in
an effort to create additional jobs.
The following are certain cases pending in which the State of North
Carolina faces the risk of either a loss of revenue or an unanticipated
expenditure which, in the opinion of the North Carolina Department of State
Treasurer, would not materially adversely affect the State's ability to meet
its financial obligations:
1. Swanson Case -- State Tax Refunds - Federal Retirees. In
Davis v. Michigan (1989), the United States Supreme Court ruled that a Michigan
income tax statute which taxed federal retirement benefits while exempting
those paid by state and local governments violated the constitutional doctrine
of intergovernmental tax immunity. At the time of the Davis decision, North
Carolina law contained similar exemptions in favor of state and local retirees.
Those exemptions were repealed prospectively, beginning with the 1989 tax year.
All public pension and retirement benefits are now entitled to a $4,000 annual
exclusion.
Following Davis, federal retirees filed a class action suit in federal
court in 1989 seeking damages equal to the North Carolina income tax paid on
federal retirement income by the class members. A companion suit was filed in
state court in 1990. The complaints alleged that the amount in controversy
exceeded $140 million. The North Carolina Department of Revenue estimate of
refunds and interest liability is $280.89 million as of June 30, 1994. In
1991, the North Carolina Supreme Court
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ruled in favor of the State in the state court action, concluding that Davis
could only be applied prospectively and that the taxes collected from the
federal retirees were thus not improperly collected. In 1993, the United
States Supreme Court vacated that decision and remanded the case back to the
North Carolina Supreme Court. The North Carolina Supreme Court then ruled in
favor of the State on the grounds that the federal retirees had failed to
comply with state procedures for challenging unconstitutional taxes.
Plaintiffs petitioned the United States Supreme Court for review of that
decision. On December 12, 1994, the United States Supreme Court announced that
it would not hear the case. The United States District Court has ruled in
favor of the defendants in the companion federal case, and a petition for
reconsideration was denied. Plaintiffs have appealed to the United States
Court of Appeals. No date for oral argument has been set. The North Carolina
Attorney General's Office believes that sound legal arguments support the
State's position.
2. Bailey case -- State Tax Refunds - State Retirees. State and
local governmental retirees filed a class action suit in 1990 as a result of
the repeal of the income tax exemptions for state and local government
retirement benefits. The original suit was dismissed after the North Carolina
Supreme Court ruled in 1991 that the plaintiffs had failed to comply with state
law requirements for challenging unconstitutional taxes and the United States
Supreme Court denied review. In 1992, many of the same plaintiffs filed a new
lawsuit alleging essentially the same claims, including breach of contract,
unconstitutional impairment of contract rights by the State in taxing benefits
that were allegedly promised to be tax-exempt and violation of several state
constitutional provisions. The North Carolina Attorney General's Office
estimates that the amount in controversy is approximately $40-$45 million
annually for the tax years 1989 through 1992. The case is now pending in
Superior Court. Defendants' motion to dismiss as a matter of law has been
denied. The North Carolina Attorney General's Office believes that sound legal
arguments support the State's position.
3. Fulton Case. The State's intangible personal property tax
levied on certain shares of stock has been challenged by the plaintiff on
grounds that it violates the United States Constitution Commerce Clause by
discriminating against stock issued by corporations that do all or part of
their business outside the State. The plaintiff in the action is a North
Carolina corporation that does all or part of its business outside the State.
The plaintiff seeks to invalidate the tax in its entirety and to recover tax
paid on the value of its shares in other corporations. The North Carolina
Court of Appeals invalidated the taxable percentage deduction and excised it
from the statute beginning with the 1994 tax year. The effect of this ruling
is to increase collections by rendering all stock taxable
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on 100% of its value. The State and the plaintiff sought further appellate
review. On December 9, 1994, the North Carolina Supreme Court ruled in favor
of the State, reversing the decision of the Court of Appeals and upholding the
tax on intangible personal property. The plaintiff has announced it intends to
petition the United States Supreme Court for review of that decision. Net
collections from the tax for the fiscal year ended June 30, 1994 amounted to
$127.6 million. The North Carolina Attorney General's Office believes that
sound legal arguments support the State's position.
In October 1993, the State issued a total of $194.7 million general
obligation bonds (consisting of $87.5 million Prison and Youth Services
Facilities Bonds, $61 million Public Improvement Refunding Bonds, $30.2 million
Highway Refunding Bonds, and $16 million Clean Water Refunding Bonds). An
additional $67.5 million general obligation bonds (Prison and Youth Services
Facilities Bonds) were issued in November, 1993. On November 2, 1993, a total
of $740 million general obligation bonds (consisting of $310 million University
Improvement Bonds, $250 million Community College Bonds, $145 million Clean
Water Bonds, and $35 million State Parks Bonds) were approved by the voters of
the State. Pursuant to this authorization, the State issued $400 million
general obligation bonds (Capital Improvement Bonds) in January, 1994. The
proceeds of these Capital Improvement Bonds may be used for any purpose for
which the proceeds of the University Improvement Bonds, Community College
Bonds, and State Parks Bonds may be used (none of such proceeds may be used for
Clean Water purposes). An additional $60 million general obligation bonds
(Clean Water Bonds) were issued in September and October, 1994. The offering
of the remaining $280 million of these authorized bonds is anticipated to occur
over the next two years.
Currently, Moody's Investors Service, Inc., Standard & Poor's
Corporation, and Fitch Investors Service, Inc. rate North Carolina general
obligation bonds Aaa, AAA, and AAA, respectively. See Appendix A.
SPECIAL CONSIDERATIONS REGARDING INVESTMENT IN VIRGINIA MUNICIPAL
OBLIGATIONS. The Virginia Municipal Money Market Portfolio will invest
primarily in Virginia Municipal Obligations. For this reason, the Portfolio is
affected by political, economic, regulatory or other developments that
constrain the taxing, revenue-collecting and spending authority of Virginia
issuers or otherwise affect the ability of Virginia issuers to pay interest,
principal, or any premium. The following information constitutes only a brief
summary of certain of these developments and does not purport to be a complete
description of them.
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The rate of economic growth in the Commonwealth of Virginia has
increased steadily over the past decade. From 1984 to 1993, the Commonwealth's
4.8 percent rate of growth in per capita personal income was slightly ahead of
the national rate of growth of 4.7 percent. During 1990 and 1992, Virginia's
per capita personal income grew at a slightly lower rate than the U.S. average.
Per capita income in Virginia has been consistently above national levels over
the past decade and, in 1993, was $21,634 compared with the national level of
$20,817. The services sector in Virginia generates the largest of number of
jobs, followed by wholesale and retail trade, government employment and
manufacturing. Because of Virginia's proximity in Washington, D.C. and the
concentration of military installations in the Commonwealth (the largest such
concentration in the United States), the Federal government has a grater
economic impact on Virginia relative to its size than on any of the other
states except Alaska and Hawaii. It is unclear what effect the current efforts
by the Federal government to restructure the defense budget will have on the
long-term economic conditions of the Commonwealth.
According to statistics published by the U.S. Department of Labor, the
Commonwealth typically has one of the lowest unemployment rates in the nation.
This is generally attributed to the balance among the various sectors
represented in the economy. During 1993, an average of 5 percent of Virginians
were unemployed as compared with the national average of 6.8 percent. At the
same time, the population of the state has continued to grow over the last
decade at a rate that is substantially higher than the national average. The
rate of increase in such population growth has declined since reaching a high
of 2.1 percent annually in 1987 and, in 1993, was approximately 1.8 percent.
Virginia is one of twenty states with a right-to-work law and is
generally regarded as having a favorable business climate marked by few strikes
or work stoppages. Virginia is also one of the least unionized among the
industrialized states.
Budget and Deficit Matters. Virginia's state government operates on a
two-year budget. The Constitution vests the ultimate responsibility and
authority for levying taxes and appropriating revenue in the General Assembly,
but the Governor has broad authority to manage the budgetary process; the
budgetary process begins in May of even-numbered years, approximately 14 months
before the start of a biennium when the Governor gives initial guidance to
state agencies regarding base budgets, maximum employment levels and policy
initiatives. By the following December, final revenue estimates are submitted
by the Department of Taxation for review by the Governor, the Advisory Board of
Economists and the Advisory Council on Revenue
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Estimates. Final adjustments to revenues and services are then made, and a
bill detailing the Governor's budget is prepared. The Governor is required by
statute to present the budget bill and a narrative summary of the bill to the
General Assembly by December 20 in the year immediately prior to each even-year
session. In the odd-year sessions of the General Assembly, amendments are
considered to the Appropriation Act of the previous year.
Once an appropriation act becomes law, revenue collections and
expenditures are constantly monitored by the Governor, assisted by the
Secretary of Finance and Department of Planning and Budget, to ensure that a
balanced budget is maintained. If projected revenue collections fall below
amounts appropriated at any time, the Governor must reduce expenditures and
withhold allotments of appropriations (other than for debt service and other
specified purposes) to restore balance. Up to 15 percent of a general fund
appropriation to an agency may be withheld, if required.
The Constitution further requires the Governor to ensure that expenses
do not exceed total revenues anticipated plus fund balances during the
two-and-a-half-year period following the end of the General Assembly session in
which appropriations are made. An amendment to the Constitution, effective
January 1, 1993, established a Revenue Stabilization Fund. This fund is used
to offset, in part, anticipated shortfalls in revenues in years when
appropriations based on initial forecasts exceed expected revenues in any
subsequent forecast. The Revenue Stabilization Fund consists of an amount not
to exceed 10% of the Commonwealth's average annual tax revenues derived from
taxes on income and retail sales as certified by the Auditor of Public Accounts
for the three immediately preceding fiscal years. If in any year total
revenues are forecasted to decline by more than 2% of the certified tax
revenues collected in the most recently ended fiscal year, the General Assembly
may appropriate an amount for transfer from the Revenue Stabilization Fund to
the General Fund in an amount not to exceed one-half of the forecasted
shortfall. Earnings in excess of the 10% cap are transferred to the General
Fund as received.
In fiscal year 1994, revenues increased six percent from the previous
year, while total expenditures increased by 4.5 percent. Revenues exceeded
expenditures by $731.2 million, an increase of 20 percent over fiscal year
1993.
Tax Matters. General fund revenues are principally composed of direct
taxes. In fiscal year 1994, approximately 94.9% of total tax revenues was
derived from five major taxes imposed by the Commonwealth on individual and
fiduciary income, sales and
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use, corporate income, public services corporations and premiums of insurance
companies.
Nongeneral revenues consist of all revenues not formally accounted for
in the general fund. Included in this category are special taxes and user
charges earmarked for specific purposes, the majority of institutional revenues
and revenues from the sale of property and commodities, plus receipts from the
Federal government.
Approximately 50% of the nongeneral revenues consist of grants and
donations from the Federal government, motor vehicle taxes and institutional
revenues. Institutional revenues consist primarily of fees and charges
collected by institutions of higher education, medical and mental hospitals and
correctional institutions. Motor vehicle-related taxes include the motor
vehicle fuel tax, a motor vehicle sales and use tax, oil excise tax, fees
generated from driver licenses, title registration, and motor vehicle
registrations and other miscellaneous revenues.
Debt Management. In September 1991, the Debt Capacity Advisory
Committee was created by the Governor through an executive order. The
committee is charged with annually estimating the amount of tax-supported debt
that may prudently be authorized consistent with the financial goals, capital
needs and policies of the Commonwealth. The committee reviews the outstanding
debt of all agencies, institutions, boards and authorities of the Commonwealth
for which the Commonwealth has either a direct or indirect pledge of tax
revenues or moral obligation. The committee released its first report in
January 1992 and its second in January 1994.
The Department of Planning and Budget has prepared a Six-Year Capital
Outlay Plan for the Commonwealth. The Plan lists proposed capital projects,
and it recommends how the proposed projects should be financed. More
specifically, the Plan distinguishes between immediate demands and longer-term
needs, assesses the state's ability to meet its highest priority needs and
outlines approaches for addressing priorities in terms of costs, benefits and
financing mechanisms.
The Constitution of Virginia prohibits the creation of debt by or on
behalf of the Commonwealth that is backed by the Commonwealth's full faith and
credit, except as provided in Section 9 of Article X. Section 9 of Article X
contains several different provisions for the issuance of general obligation
and other debt:
Section 9(a)(2) provides that the General Assembly may contract
general obligation debt to meet certain types of emergencies, subject to
limitations on amount and duration; to
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meet casual deficits in the revenue or in anticipation of the collection of
revenues of the Commonwealth; and to redeem a previous debt obligation of the
Commonwealth. Total indebtedness issued pursuant to this Section may not
exceed 30 percent of an amount equal to 1.15 times the annual tax revenues
derived from taxes on income and retail sales, as certified by the Auditor of
Public Accounts for the preceding fiscal year.
Section 9(b) provides that the General Assembly may authorize the
creation of general obligation debt for capital projects. Such debt is
required to be authorized by an affirmative vote of a majority of each house of
the General Assembly and approved in a statewide election. The outstanding
amount of such debt is limited to an amount equal to 1.15 times the average
annual tax revenues derived from taxes on income and retail sales, as certified
by the Auditor of Public Accounts for the three preceding fiscal years less the
total amount of bonds outstanding. The amount of 9(b) debt that may be
authorized in any single fiscal year is limited to 25% of the limit on all 9(b)
debt less the amount of 9(b) debt authorized in the current and prior three
fiscal years.
Section 9(c) provides that the General Assembly may authorize the
creation of general obligation debt for revenue-producing capital projects
(so-called "double-barrel" debt). Such debt is required to be authorized by an
affirmative vote of two-thirds of each house of the General Assembly and
approved by the Governor. The Governor must certify before the enactment of
the authorizing legislation and again before the issuance of the debt that the
net revenues pledged are expected to be sufficient to pay principal of and
interest on the debt. The outstanding amount of 9(c) debt is limited to an
amount equal to 1.15 times the average annual tax revenues derived from taxes
on income and retail sales, as certified by the Auditor of Public Accounts for
the three preceding fiscal years. While the debt limits under Sections 9(b)
and 9(c) are each calculated as the same percentage of the same average tax
revenues, these debt limits are separately computed and apply separately to
each type of debt.
Based on individual, fiduciary and corporate income taxes and the
state sales and use tax, as certified as of July 1, 1994, the debt limits and
remaining debt margins under Article X,
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Section 9 are set forth below (in $ thousands).
<TABLE>
<S> <C>
Section 9(a)(2) General Obligation Debt Limit(5):
- -------------------------------------------------
Debt Limit (30% of 1.15 times annual tax revenues for fiscal year 1994) $1,954,008
Less Bonds Outstanding: (none) -
---------------
Debt Margin $1,954,008
===============
Section 9(b) General Obligation Debt Limit:
- -------------------------------------------
Debt Limit (1.15 times average tax revenues for three fiscal years as calculated above) $6,136,996
Less Bonds Outstanding:
Public Facilities Bonds 213,570
Transportation Facilities Refunding Bonds 71,825
---------------
Debt Margin $5,851,601
Additional Section 9(b) Debt Borrowing Restriction:
Four-year authorization restriction (25% of 9(b) Debt Limit) $1,534,249
Less 9(b) Debt authorized in past three years 612,944
---------------
Total Additional Borrowing $921,305
===============
(maximum amount that could be authorized
by the General Assembly)
Section 9(c) General Obligation Debt Limit and Debt Margin
- ----------------------------------------------------------
Debt Limit (1.15 times average tax revenues for three fiscal years as calculated above) $6,136,996
Less Bonds Outstanding:
Parking Facilities 10.645
Transportation Facilities 80,115
Higher Education Institutions 406,427
---------------
Debt Margin $5,639,809
===============
</TABLE>
Article X further provides in Section 9(d) that the restrictions of
Section 9 are not applicable to any obligation incurred by the Commonwealth or
any of its institutions, agencies or authorities if the full faith and credit
of the Commonwealth is not pledged or committed to the payment of such
obligation. There are currently outstanding various types of such 9(d) revenue
bonds. Certain of these bonds, however, are paid in part or in whole from
revenues received as appropriations by the General Assembly from general tax
revenues, while others are paid solely from revenues of the applicable project.
The debt repayments of the Virginia Public Building Authority, the
Virginia Port Authority, the Virginia College Building Authority Equipment
Leasing Program and The Innovative Technology Authority are supported in large
part by General Fund appropriations. Together, payments to these authorities
totaled $87.3 million in fiscal year 1994.
The Commonwealth Transportation Board ("CTB") in 1993 issued its
$111,680,000 Transportation Contract Revenue Refunding Bonds to refund in full
an earlier series of the same bonds issued to finance costs related to its
Route 28 Project. In 1989, CTB issued its $200,000,000 Transportation Revenue
Bonds, Series 1989
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(U.S. Route 58 Corridor Development Program). These bonds were refunded in
part in 1993 by the issuance of CTB's $91,455,000 Transportation Revenue
Refunding Bonds, Series 1993A (U.S. Route 58 Corridor Development Program).
Additional costs of that program were financed through the issuance of CTB's
$98,715,000 Transportation Revenue Bonds, Series 1993 B (U.S. Route 58 Corridor
Development Program). In August, 1993, CTB also issued its $134,060,000
Transportation Revenue Bonds, Series 1993C (Northern Virginia Transportation
District Program). These bonds are secured by and payable from funds
appropriated by the General Assembly from the Transportation Trust Fund for
such purpose. The Transportation Trust Fund was established by the General
Assembly in 1986 as a special non-reverting fund administered and allocated by
the Transportation Board to provide increased funding for construction, capital
and other needs of state highways, airports, mass transportation and ports.
The Virginia Port Authority has also issued bonds in the approximately amount
of $106 million which are secured by a portion of the Transportation Trust
Fund. The fund balance of the Transportation Trust Fund administered by the
Transportation Board at June 30, 1994, was $278.9 million.
The Commonwealth is also involved in numerous leases that are subject
to appropriation of funding by the General Assembly. For all capital leases,
the principal balance was $21.1 million as of June 30, 1993.
The Commonwealth finances the acquisition of certain personal property
and equipment through installment purchase agreements. The length of the
agreements and the interest rates charged vary. In most cases, the agreements
are collateralized by the personal property and equipment acquired.
Installment purchase agreements contain nonappropriation clauses indicating
that continuation of the installment purchase is subject to funding by the
General Assembly. The balance of installment purchase obligations was $48.3
million as of June 30, 1993.
Bonds issued by the Virginia Housing Development Authority, the
Virginia Resources Authority and the Virginia Public School Authority are
designed to be self-supporting from their individual loan programs. A portion
of the Virginia Housing Development Authority and Virginia Public School
Authority bonds and all of the Virginia Resources Authority bonds are secured
in part by a moral obligation pledge of the Commonwealth. Should the need
arise, the Commonwealth may consider funding deficiencies in the respective
debt service for such moral obligation debt. To date, none of these
authorities has advised the Commonwealth that any such deficiencies exist.
Local Government. Local government in the Commonwealth is comprised
of 95 counties, 41 incorporated cities, and 190
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incorporated towns. The Commonwealth is unique among the several states in
that cities and counties are independent, and their land areas do not overlap.
Cities and counties are the units of general government that have traditionally
provided all services not provided by the Commonwealth; they levy and collect
their own taxes. On the other hand, towns constitute a part of the counties in
which they are located; they levy and collect taxes for town purposes, but
their residents are also subject to county taxes. The largest expenditure by
local governments in the Commonwealth are for education, but local governments
also provide other services such as water and sewer, police and fire protection
and recreational facilities.
According to figures prepared by the Auditor of Public Accounts of
Virginia, the total outstanding general obligation and revenue debt of counties
in the Commonwealth was approximately $4.1 billion as of June 30, 1993, most of
which was borrowed for school construction. The amount of debt of Virginia's
cities outstanding as of June 30, 1993, was approximately $3.6 billion, while
towns had approximately $233 million outstanding as of June 30, 1993.
Pending Litigation. On March 28, 1989, in Davis v. Michigan the
United States Supreme Court declared unconstitutional a Michigan statute
exempting from state income tax the retirement benefits paid to former workers
by the state and local governments but not comparable benefits paid by the
Federal government. At that time, Virginia exempted state and local but not
Federal government benefits.
Harper v. Department of Transportation is a suit by Federal retirees
seeking refund of four years of state income taxes paid during 1985-1988. On
May 27, 1994, the Virginia Supreme Court agreed to hear Harper on appeal from
the Alexandria Circuit Court. In a July 1994 special session, the Virginia
General Assembly passed emergency legislation to provide payments to Federal
retirees in settlement of the principal amount, excluding interest, of the
retirees' claims for overpaid taxes. On July 26, 1994, in order to permit the
settlement process to go forward, the Virginia Supreme Court granted a stay in
the proceedings in Harper for six months or until further order of the Court,
whichever occurs first.
The settlement payments are to be made over a five-year period,
commencing on March 31, 1995. The total amount of the proposed settlement is
$340 million plus earnings on the investment of such amount that may be
appropriated. These amounts will be paid to participating retirees in
installments of $60 million on March 31, 1995, and $70 million on each
succeeding March 31 through 1999, subject to appropriation by the General
Assembly.
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Retirees who choose to accept and remain eligible to recover such
taxes must have responded to the Department of Taxation by November 1, 1994.
By February 1, 1995 , retirees must have signed and returned to the Tax
Commissioner a settlement agreement releasing the Commonwealth from any further
liability for claims arising out of such taxes and dismissing any related
litigation to which the taxpayer is a party. The legislation also provides
that in the event the total principal amount of the claims of the taxpayers
opting out of the settlement exceeds $20 million, the entire settlement shall
be null and void unless reauthorized by the General Assembly on or before March
1, 1995. The estimated amount of such claims, including interest calculated as
of December 31, 1993, is approximately $707.5 million.
After the decision in Davis v. Michigan, the General Assembly amended
applicable Virginia law to make all pensions taxable. On July 8, 1993, in
Stepka v. Commonwealth several former state employees and one current state
employee filed suit against the Commonwealth and the Department of Taxation in
the Circuit Court of the City of Richmond claiming that legislature's response
to Davis breached an implied contract not to tax state employees' pensions and
seeking refunds for all such taxes paid. The Commonwealth and the Department
have filed responsive pleadings. The case involves multiple plaintiffs with
claims aggregating approximately $19.2 million as of June 1994. The outcome of
the foregoing actions cannot be predicted.
Current Rating. Most recently, Moody's has rated the long-term
general obligation bonds of the Commonwealth Aaa, and Standard & Poor's has
rated such bonds AAA. There can be no assurance that the economic conditions
on which these ratings are based will continue or that particular bond issues
may not be adversely affected by changes in economic or political conditions.
SPECIAL CONSIDERATIONS REGARDING INVESTMENT IN NEW JERSEY MUNICIPAL
OBLIGATIONS. The State of New Jersey and its political subdivisions, agencies
and public authorities are authorized to issue two general classes of
indebtedness: general obligation bonds and revenue bonds. Both classes of
bonds may be included in the New Jersey Municipal Money Market Portfolio. The
repayment of principal and interest on general obligation bonds is secured by
the full faith and credit of the issuer, backed by the issuer's taxing
authority, without recourse to any special project or source of revenue.
Special obligation or revenue bonds may be repaid only from revenues received
in connection with the project for which the bonds are issued, special excise
taxes, or other special revenue sources and generally are issued by entities
without taxing power. Neither the State of New Jersey nor any of its
subdivisions is liable for the repayment of principal or interest on revenue
bonds except to the extent stated in the preceding sentences.
General obligation bonds of the State are repaid from revenues
obtained through the State's general taxing authority. An inability to
increase taxes may adversely affect the State's ability to authorize or repay
debt.
Public authorities, private non-profit corporations, agencies and
similar entities of New Jersey ("Authorities") are established for a variety of
beneficial purposes, including economic development, housing and mortgage
financing, health care facilities and public transportation. The Authorities
are not operating entities of the State of New Jersey, but are separate legal
entities that are managed independently. The State oversees the Authorities by
appointing the governing boards, designating management, and by significantly
influencing operations. The Authorities are not subject to New Jersey
constitutional restrictions on the incurrence of debt, applicable to the State
of New Jersey itself, and may issue special obligation or private activity
bonds in legislatively authorized amounts.
An absence or reduction of revenue will affect a bond-issuing
Authority's ability to repay debt on special obligation bonds and no assurance
can be given that sufficient revenues will be obtained to make such payments,
although in some instances repayment may be guaranteed or otherwise secured.
Various Authorities have issued bonds for the construction of health
care facilities, transportation facilities, office buildings and related
facilities, housing facilities, pollution control facilities, water and sewage
facilities and power and electric facilities. Each of these facilities may
incur different difficulties in meeting its debt repayment obligations.
Hospital facilities, for example, are subject to changes in Medicare and
Medicaid reimbursement regulations, attempts by Federal and state legislatures
to limit the costs of health care and management's ability to complete
construction projects on a timely basis as well as to maintain projected rates
of occupancy and utilization. At any given time, there are several proposals
pending on a Federal and state level concerning health care which may further
affect a hospital's debt service obligation.
Housing facilities may be subject to increases in operating costs,
management's ability to maintain occupancy levels, rent restrictions and
availability of Federal or state subsidies, while power and electric facilities
may be subject to increased costs resulting from environmental restrictions,
fluctuations in fuel costs, delays in licensing procedures and the general
regulatory framework in which these facilities operate. All of these entities
are constructed and operated under rigid regulatory guidelines.
Some entities which financed facilities with proceeds of private
activity bonds issued by the New Jersey Economic Development Authority, a major
issuer of special obligation bonds, have defaulted on their debt service
obligations. Because these special obligation bonds were repayable only from
revenue received from the specific projects which they funded, the New Jersey
Economic Development Authority was unable to repay the debt service to
bondholders for such facilities. Each issue of special obligation bonds,
however, depends on its own revenue for repayment, and thus these defaults
should not affect the ability of the New Jersey Economic Development Authority
to repay obligations on other bonds that it issues in the future.
The State has, in the past, experienced a period of substantial
economic growth with unemployment levels below the national average. Recently,
however, the state has experienced an economic slowdown, and its unemployment
rate has risen to the extent the State has lost its relative advantage over the
nation. To the extent that any adverse conditions exist in the future which
affect the obligor's ability to repay debt, the value of the Portfolio may be
immediately and substantially affected.
The following are cases presently pending or threatened in which the
State has a potential for either a significant loss of revenue or a significant
unanticipated expenditure: (i) several labor unions have challenged 1992
legislation mandating a revaluation of several public employee pension funds
which resulted in a refund of $773 million in public employer contributions to
the State and annual savings to the State of approximately $226 million for
fiscal 1993 and thereafter; (ii) in June 1990, the State Supreme Court held the
State's public school funding mechanism unconstitutional; legislation which was
enacted to establish a new funding system has also been challenged; (iii)
several cases filed in the State courts challenged the basis on which
recoveries of certain costs for residents in State psychiatric hospitals and
other facilities are shared between the State Department of Human Services and
the State's county governments, and certain counties are seeking the recovery
from the Department of costs they have incurred for the maintenance of such
residents; (iv) a lawsuit filed in the United States District Court in 1990
alleges that the State Department of Human Services has established
unreasonably low Medicaid payment rates for long-term care facilities; (v) a
number of taxpayers are seeking refunds of taxes paid to the Spill Compensation
Fund, on the grounds, inter alia, that the State law is preempted by the
Federal Superfund legislation; (vi) the 1990 Fair Automobile Insurance Reform
Act has been challenged in several State court suits, including provisions in
the Act dealing with the premium tax surtax which was intended to raise $300
million in 1993; (vii) a suit was filed in 1991 seeking to impose directly on
the State the responsibility for funding the State's judicial system, which has
been primarily funded by the counties; (viii) several union welfare benefit
plans are challenging the State's hospital rate-setting system in a suit filed
in United States District Court; the Court held in 1992 that certain provisions
of the State system are preempted by Federal law; and (ix) the method by which
various State agencies reduced their personnel has been challenged and the case
is pending before the State Supreme Court.
Although the Portfolio generally intends to invest its assets
primarily in New Jersey Municipal Obligations rated within the two highest
rating categories of an NRSRO, there can be no assurance that such ratings will
remain in effect until such obligations mature or are redeemed or will not be
revised downward or withdrawn. Such revisions or withdrawals may have an
adverse affect on the market price of such securities.
ADDITIONAL INVESTMENT LIMITATIONS.
In addition to the investment limitations disclosed in the
Prospectuses, each Portfolio is subject to the investment limitations
enumerated in this subsection which may be changed with respect to a particular
Portfolio only by a vote of the holders of a majority of such Portfolio's
outstanding shares (as defined below under "Miscellaneous").
No Portfolio may:
1. Purchase or sell real estate, except that each
Portfolio may purchase securities of issuers which deal in real
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estate and may purchase securities which are secured by interests in real
estate.
2. Acquire any other investment company or investment
company security except in connection with a merger, consolidation,
reorganization or acquisition of assets or where otherwise permitted by the
1940 Act.
3. Act as an underwriter of securities within the
meaning of the Securities Act of 1933 except to the extent that the purchase of
obligations directly from the issuer thereof, or the disposition of securities,
in accordance with the Portfolio's investment objective, policies and
limitations may be deemed to be underwriting.
4. Write or sell put options, call options, straddles,
spreads, or any combination thereof, except for transactions in options on
securities, securities indices, futures contracts and options on futures
contracts.
5. Purchase securities of companies for the purpose of
exercising control.
6. Purchase securities on margin, make short sales of
securities or maintain a short position, except that (a) this investment
limitation shall not apply to a Portfolio's transactions in futures contracts
and related options or a Portfolio's sale of securities short against the box,
and (b) a Portfolio may obtain short-term credit as may be necessary for the
clearance or purchases and sales of portfolio securities.
7. Purchase or sell commodity contracts, or invest in
oil, gas or mineral exploration or development programs, except that each
Portfolio may, to the extent appropriate to its investment policies, purchase
securities (publicly traded securities in the case of each Money Market
Portfolio) of companies engaging in whole or in part in such activities and may
enter into futures contracts and related options.
8. Make loans, except that each Portfolio may purchase
and hold debt instruments and enter into repurchase agreements in accordance
with its investment objective and policies and may lend portfolio securities.
Although the foregoing investment limitations would permit the Money
Market Portfolios to invest in options, futures contracts and options on
futures contracts, and to sell securities short against the box, those
Portfolios do not currently intend to trade in such instruments or engage in
such transactions during the next twelve months. Prior to making any such
investments, a Money Market Portfolio would notify its
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shareholders and add appropriate descriptions concerning the instruments and
transactions to its Prospectus.
TRUSTEES AND OFFICERS
The trustees and executive officers of the Fund, and their business
addresses and principal occupations during the past five years, are:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS AGE POSITION WITH FUND DURING PAST FIVE YEARS
- ---------------- --- ------------------ ----------------------
<S> <C> <C> <C>
Philip E. Coldwell 72 Trustee Economic Consultant;
Coldwell Financial Consultants Chairman, Coldwell
3330 Southwestern Blvd. Financial Consultants;
Dallas, TX 75225 Director, Maxus Energy
Corporation (energy
products) from 1989 to 1993;
Director or Trustee of
Temporary Investment Fund, Inc.,
Trust for Federal Securities,
Municipal Fund for Temporary
Investment and Portfolios for
Diversified Investment.
Robert R. Fortune 78 Trustee Financial consultant;
2920 Ritter Lane Chairman, President and
Allentown, PA 18104 Chief Executive Officer,
Associated Electric & Gas
Insurance Services Limited
from 1984 to 1993; Member of
the Financial Executives
Institute and American
Institute of Certified
Public Accountants; Director,
Trustee or Managing General
Partner of a number of
investment companies advised
by PIMC; Director, Prudential
Utility Fund, Inc., Prudential
Structured Maturity Fund, Inc.
and Prudential IncomeVertible
Fund, Inc.
Rodney D. Johnson 53 Trustee President, Fairmount
</TABLE>
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<TABLE>
<CAPTION>
NAME AND ADDRESS AGE POSITION WITH FUND DURING PAST FIVE YEARS
- ---------------- --- ------------------ ----------------------
<S> <C> <C> <C>
Fairmont Capital Advisers, Capital Advisors, Inc.
Inc. (financial advisers)
1435 Walnut St. since 1987; Treasurer,
Philadelphia, PA 19102 North Philadelphia Health
System (formerly Girard
Medical Center) from 1988
to 1992; Member, Board of
Education, School District
of Philadelphia, 1983 to
1988; Treasurer, Cascade
Aphasia Center, 1984 to
1988; Director or Trustee of
Temporary Investment Fund,
Inc., Trust for Federal
Securities, Municipal Fund
for Temporary Investment,
Portfolios for Diversified
Investment, Municipal Fund
for California Investors,
Inc. and Municipal Fund for
New York Investors, Inc.
G. Willing Pepper(1) 86 Chairman of Retired; Chairman of the
128 Springton the Board Board, Specialty
Lake Road and President Composites Corporation
Media, PA 19063 until May 1984;
Chairman of the Board, The
Institute for Cancer
Research until 1979;
Director, Philadelphia
National Bank until 1978;
President, Scott Paper
Company from 1971 to
1973; Director, Marmon
Group, Inc. until April
1986; Director, Trustee
or Managing General
Partner of a number
of investment companies
advised by PIMC.
</TABLE>
- --------------------
(1) This trustee may be deemed an "interested person" of the Fund as
defined in the 1940 Act.
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<PAGE> 154
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE POSITION WITH FUND DURING PAST FIVE YEARS
- ---------------- --- ------------------ ----------------------
<S> <C> <C> <C>
Anthony M. Santomero 48 Trustee Deputy Dean from
310 Keithwood Road 1990 to 1994, Richard
Wynnewood, PA 19096 K. Mellon Professor
of Finance since April 1984,
and Dean's Advisory
Council Member since
July 1984, The Wharton
School, University of
Pennsylvania; Associate
Editor, Journal of Banking
and Finance since June 1978;
Associate Editor, Journal of
Economics and Business since
October 1979; Associate Editor,
Journal of Money, Credit and
Banking since January 1980;
Research Associate, New York
University Center for Japan-U.S.
Business and Economic Studies
since July 1989; Editorial
Advisory Board, Open Economics
Review since November 1990;
Director, The Zweig Fund and
The Zweig Total Return Fund;
Director or Trustee of Temporary
Investment Fund, Inc., Trust
for Federal Securities, Municipal
Fund for Temporary Investment,
Portfolios for Diversified
Investment and Municipal Fund
for California Investors, Inc.
David R. Wilmerding, Jr. 60 Vice-Chairman President, Gates,
One Aldwyn Center of the Board Wilmerding, Carper &
Villanova, PA 19085 Rawlings, Inc.
(investment advisers)
since February 1989;
Director, Beaver Management
Corporation; Until September
1988, President, Treasurer
and Trustee, The Mutual
</TABLE>
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<PAGE> 155
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE POSITION WITH FUND DURING PAST FIVE YEARS
- ---------------- --- ------------------ ----------------------
<S> <C> <C> <C>
Assurance Company; Until
September 1988, Chairman,
President Treasurer and
Director, The Green Tree
Insurance Company (a
wholly-owned subsidiary
of The Mutual Assurance
Company); Until September
1988, Director, Keystone
State Life Insurance Company;
Director, Trustee or Managing
General Partner of a number
of investment companies advised
by PIMC.
Edward J. Roach 70 Treasurer Certified Public
400 Bellevue Parkway and Vice- Accountant; Partner of
Suite 100 President the accounting firm of
Wilmington, DE 19809 Main Hurdman until 1981; Vice
Chairman of the Board, Fox
Chase Cancer Center; Trustee
Emeritus, Pennsylvania School
for the Deaf; Trustee Emeritus,
Immaculata College; President,
Vice President and/or Treasurer
of a number of investment
companies advised by PIMC.
Morgan R. Jones 55 Secretary Partner in the law
Philadelphia National firm of Drinker Biddle &
Bank Building Reath, Philadelphia,
1345 Chestnut Street Pennsylvania.
Philadelphia, PA 19107-3496
</TABLE>
The Fund pays trustees who are not affiliated with PNC Institutional
Management Corporation ("PIMC") or Provident Distributors, Inc. ("PDI" or
"Distributor") $5,500 annually and $500 per meeting of the Board or any
committee thereof that is not held in conjunction with a Board meeting (subject
to a cap of $6,000 per year for such meeting fees), and pays the Chairman an
additional $5,000 annually. Trustees who are not affiliated with PIMC or the
Distributor are reimbursed for any expenses incurred in attending meetings of
the Board of Trustees or any committee thereof. No officer, director or
employee of PIMC, Provident Capital Management, Inc. ("PCM"), PNC Bank,
National Association
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<PAGE> 156
("PNC Bank"), Black Rock Financial Management, Inc. ("Black Rock"), PNC
Equity Advisors Company ("PEAC"), PFPC Inc. ("PFPC"), Provident Distributors,
Inc. (formerly, MFD Group, Inc.) ("PDI" and, collectively with PFPC, the
"Administrators") or the Distributor currently receives any compensation from
the Fund. Drinker Biddle & Reath, of which Mr. Jones is a partner, receives
legal fees as counsel to the Fund. As of the date of this Statement of
Additional Information, the trustees and officers of the Fund, as a group,
owned less than 1% of the outstanding shares of each Portfolio.
The table below sets forth the compensation actually received from the
Fund Complex, of which the Fund is a part, by the trustees for the fiscal year
ended September 30, 1994:
<TABLE>
<CAPTION>
===========================================================================================================================
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL FROM REGISTRANT AND
NAME OF PERSON, COMPENSATION FROM ACCRUED AS PART OF BENEFITS UPON FUND COMPLEX (1)
POSITION REGISTRANT FUND EXPENSES RETIREMENT PAID TO TRUSTEES
--------------- ----------------- ------------------- ---------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Philip E. Coldwell, Trustee $7,625 n/a n/a (4)(2) $44,025.00
- ---------------------------------------------------------------------------------------------------------------------------
Robert R. Fortune, Trustee $7,625 n/a n/a (6)(2) $56,725.00
- ---------------------------------------------------------------------------------------------------------------------------
Rodney D. Johnson, Trustee $7,625 n/a n/a (6)(2) $54,775.00
- ---------------------------------------------------------------------------------------------------------------------------
G. Willing Pepper, Chairman $11,625 n/a n/a (7)(2) $98,275.00
of the Board and President
- ---------------------------------------------------------------------------------------------------------------------------
Anthony M. Santomero, Trustee $7,625 n/a n/a (5)(2) $44,025.00
- ---------------------------------------------------------------------------------------------------------------------------
Henry M. Watts, Jr.,(1) Trustee $2,675 n/a n/a (8)(2) $61,875.00
- ---------------------------------------------------------------------------------------------------------------------------
David R. Wilmerding, Jr., $7,625 n/a n/a (6)(2) $61,025.00
Trustee
===========================================================================================================================
</TABLE>
- -------------------------------
(1) A Fund Complex means two or more investment companies that hold
themselves out to investors as related companies for purposes of
investment and investor services, or have a common investment adviser
or have an investment adviser that is an affiliated person of the
investment adviser of any of the other investment companies.
(2) Total number of investment companies trustee serves on within the
Fund Complex.
(3) Mr. Watts resigned as trustee on May 5, 1994.
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<PAGE> 157
SHAREHOLDER AND TRUSTEE LIABILITY. Under Massachusetts law,
shareholders of a business trust may, under certain circumstances, be held
personally liable as partners for the obligations of the trust. However, the
Fund's Declaration of Trust provides that shareholders shall not be subject to
any personal liability in connection with the assets of the Fund for the acts
or obligations of the Fund, and that every note, bond, contract, order or other
undertaking made by the Fund shall contain a provision to the effect that the
shareholders are not personally liable thereunder. The Declaration of Trust
provides for indemnification out of the trust property of any shareholder held
personally liable solely by reason of his being or having been a shareholder
and not because of his acts or omissions or some other reason. The Declaration
of Trust also provides that the Fund shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of the Fund,
and shall satisfy any judgment thereon.
The Declaration of Trust further provides that all persons having any
claim against the trustees or Fund shall look solely to the trust property for
payment; that no trustee of the Fund shall be personally liable for or on
account of any contract, debt, tort, claim, damage, judgment or decree arising
out of or connected with the administration or preservation of the trust
property or the conduct of any business of the Fund; and that no trustee shall
be personally liable to any person for any action or failure to act except by
reason of his own bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties as a trustee. With the exception stated, the
Declaration of Trust provides that a trustee is entitled to be indemnified
against all liabilities and expenses reasonably incurred by him in connection
with the defense or disposition of any proceeding in which he may be involved
or with which he may be threatened by reason of his being or having been a
trustee, and that the Fund will indemnify officers, representatives and
employees of the Fund to the same extent that trustees are entitled to
indemnification.
INVESTMENT ADVISORY, ADMINISTRATION,
DISTRIBUTION AND SERVICING ARRANGEMENTS
ADVISORY AND SUB-ADVISORY AGREEMENTS. The advisory and sub-advisory
services provided by PIMC, BlackRock, PCM, PEAC and PNC Bank and the fees
received by each of them for such services are described in the Prospectuses.
As stated in the Prospectuses, PIMC may from time to time voluntarily waive its
advisory fees with respect to a Portfolio and may voluntarily reimburse
Portfolios for expenses. In addition, if the total expenses borne by any
Portfolio in any fiscal year exceed the expense limitations imposed by
applicable state securities regulations,
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<PAGE> 158
PIMC and the Administrators will bear the amount of such excess to the extent
required by such regulations in proportion to the fees otherwise payable to
them for such year. Such amount, if any, will be estimated and accrued daily
and paid on a monthly basis. As of the date of this Statement of Additional
Information, to the knowledge of the Fund, there were no state expense
limitations more restrictive than the following: 2 1/2% of the first $30
million of average annual net assets, 2% of the next $70 million of average
annual net assets, and 1 1/2% of average annual net assets in excess of $100
million.
PIMC renders advisory services to each of the Portfolios pursuant to an
Investment Advisory Agreement. PCM renders sub-advisory services to the Value
Equity, Small Cap Value Equity, International Equity, International Fixed
Income and International Emerging Markets Portfolios pursuant to Sub-Advisory
Agreements. PNC Bank renders sub-advisory services to the Money Market,
Government Money Market, Municipal Money Market, Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market,
Virginia Municipal Money Market, New Jersey Municipal Money Market, Balanced
and Tax-Free Income Portfolios pursuant to Sub-Advisory Agreements. BlackRock
renders sub-advisory services to the Managed Income, Intermediate Government,
Ohio Tax-Free Income, Pennsylvania Tax-Free Income, Short-Term Bond,
Intermediate-Term Bond and Government Income Portfolios pursuant to
Sub-Advisory Agreements. PEAC renders sub-advisory services to the Growth
Equity, Small Cap Growth Equity, Core Equity and Index Equity Portfolios
pursuant to Sub-Advisory Agreements. These Advisory and Sub-Advisory
Agreements are collectively referred to as the "Advisory Contracts." From
December 1, 1992 (commencement of operations) to March 29, 1995, PNC Bank,
Ohio, National Association ("PNC Bank Ohio") served as sub-adviser to the Ohio
Tax-Free Income Portfolio. From November 1, 1989 (commencement of operations)
to May 8, 1992, PNC Bank Ohio served as sub-adviser to the Municipal Money
Market Portfolio. From November 1, 1989 (commencement of operations) to
September 10, 1993, PNC Bank Ohio served as sub-adviser to the Managed Income
and Growth Equity Portfolios. From April 20, 1992 (commencement of
operations) to July 22, 1992, Advanced Investment Management, Inc. served as
sub-adviser to the Index Equity Portfolio. From April 20, 1992 to September
10, 1993, PCM served as sub-adviser to the Intermediate Government Portfolio.
From July 23, 1992 to March 29, 1995, PNC Bank served as sub-adviser to the
Index Equity Portfolio. From September 11, 1993 to March 29, 1995, PNC Bank
served as sub-adviser to the Managed Income, Intermediate Government and Growth
Equity Portfolios. From December 1, 1992 (commencement of operations) to March
29, 1995, PNC Bank served as sub-adviser to the Ohio Tax-Free Income and
Pennsylvania Tax-Free Income Portfolios. From September 1, 1993 (commencement
of operations) to March 29, 1995, PNC Bank served as sub-adviser to the
Short-Term Bond Portfolio. From September 13, 1993 (commencement of
operations) to March 29, 1995, PNC Bank served as sub-adviser to the Core
Equity Portfolio. From September 14, 1993 (commencement of operations) to
March 29, 1995, PNC Bank served as sub-adviser to the Small Cap Growth Equity
Portfolio. From September 17, 1993 (commencement of operations) to March 29,
1995, PNC Bank served as sub-adviser to the Intermediate-Term Bond Portfolio.
Under the Advisory Contracts, PIMC, PCM, PEAC, PNC Bank and BlackRock
are not liable for any error of judgment or mistake of law or for any loss
suffered by the Fund or a Portfolio in connection with the performance of the
Advisory Contracts, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of PIMC, PCM, PEAC, PNC Bank or BlackRock in
the performance of their respective duties or from reckless disregard of their
respective duties and obligations thereunder. Each of the Advisory Contracts
is terminable as to a Portfolio by vote of the Board of Trustees or by the
holders of a majority of the outstanding voting securities of the relevant
Portfolio, at any time without penalty, on 60 days' written notice to PIMC,
PCM, PEAC, PNC Bank or BlackRock, as the case may be. PIMC, PCM, PEAC, PNC
Bank or BlackRock may also terminate their advisory
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<PAGE> 159
relationship with respect to a Portfolio, on 60 days' written notice to the
Fund. Each of the Advisory Contracts terminates automatically in the event of
its assignment.
For the year ended September 30, 1994, the Fund paid advisory fees to
PIMC, after waivers, of $951,230, $171,405, $281,771, $6,724, $42,612, $0,
$1,398,343, $0, $368,546, $0, $49,646, $36,893, $131,294, $2,306,672, $467,637,
$55,825, $303,169, $28,392, $890,883, $1,408,053 and $470,579 with respect to
the Money Market, Municipal Money Market, Government Money Market, Ohio
Municipal Money Market, Pennsylvania Municipal Money Market, North Carolina
Municipal Money Market, Managed Income, Tax-Free Income, Intermediate
Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income, Short-Term
Bond, Intermediate-Term Bond, Value Equity, Growth Equity, Small Cap Growth
Equity, Core Equity, Index Equity, Small Cap Value Equity, International Equity
and Balanced Portfolios. For that year, PIMC waived advisory fees of
$3,359,847, $599,920, $986,201, $217,938, $336,382, $249,914, $599,290,
$47,655, $552,819, $35,709, $227,003, $137,696, $206,071, $865,002, $175,364,
$160,320, $113,689, $376,934, $197,974, $477,733 and $202,166 for such
respective Portfolios, and reimbursed the Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market,
Tax-Free Income, Ohio Tax-Free Income and Pennsylvania Tax-Free Income
Portfolios for certain operational expenses totalling $20,660, $19,022,
$26,804, $35,898, $35,496, and $9,645, respectively. For the period from
commencement of operations (July 25, 1994 for the Virginia Municipal Money
Market Portfolio and June 17, 1994 for the International Emerging Market
Portfolio) through September 30, 1994, the Fund paid advisory fees to PIMC,
after waivers, of $0 and $7,672 with respect to the Virginia Municipal Money
Market and International Emerging Markets Portfolios, respectively. For the
same periods, PIMC waived advisory fees of $8,925 and $16,051 for such
respective Portfolios, and reimbursed the Virginia Municipal Money Market
Portfolio for certain operational expenses totalling $4,816.
For the year ended September 30, 1993, the Fund paid advisory fees to
PIMC, after waivers, of $2,899,093, $509,475, $601,820, $1,522,695, $0,
$594,202, $1,996,726, $400,652, $212,413, $564,065, $598,040 and $124,556 for
the Money Market, Municipal Money Market, Government Money Market, Managed
Income, Tax-Free Income, Intermediate Government, Value Equity, Growth Equity,
Index Equity, Small Cap Value Equity, International Equity and Balanced
Portfolios, respectively. For that year, PIMC waived advisory fees of
$815,911, $131,249, $195,459, $87,513, $43,457, $77,301, $108,242, $31,912,
$161,606, $34,794, $47,134 and $45,203 for such respective Portfolios, and
reimbursed the Tax-Free Income Portfolio for certain operational expenses
totalling $7,314. For the period from commencement of operations (December 1,
1992 for each of the Ohio Tax-Free Income
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<PAGE> 160
and Pennsylvania Tax-Free Income Portfolios; May 3, 1993 for the North Carolina
Municipal Money Market Portfolio; June 1, 1993 for each of the Ohio Municipal
Money Market and Pennsylvania Municipal Money Market Portfolios; September 1,
1993 for the Short-Term Bond Portfolio; September 13, 1993 for the Core Equity
Portfolio; September 14, 1993 for the Small Cap Growth Equity Portfolio; and
September 17, 1993 for the Intermediate-Term Bond Portfolio) to September 30,
1993, the Fund paid advisory fees to PIMC, after waivers, of $0, $0, $0, $0,
$0, $0, $5,432, $0 and $14,325 for the Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market,
Ohio Tax-Free Income, Pennsylvania Tax-Free Income, Short-Term Bond,
Intermediate-Term Bond, Small Cap Growth Equity and Core Equity Portfolios,
respectively. For the same periods, PIMC waived advisory fees of $28,953,
$18,117, $47,085, $8,781, $87,528, $2,078, $5,432, $2,773 and $5,372 for such
respective Portfolios, and reimbursed the Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market,
Ohio Tax-Free Income, Pennsylvania Tax-Free Income and Short-Term Bond
Portfolios for certain operational expenses totalling $8,630, $11,411, $11,729,
$20,906, $19,064 and $1,349, respectively.
For the year ended September 30, 1992, the Fund paid advisory fees to
PIMC, after waivers, of $2,526,929, $495,175, $706,211, $303,330, $8,166,
$815,088 and $0 for the Money Market, Municipal Money Market, Government Money
Market, Growth Equity, Balanced, Managed Income and Tax-Free Income Portfolios,
respectively. For that year, PIMC waived advisory fees of $315,866, $61,909,
$88,276, $6,541, $26,089 and $22,281 for the Money Market, Municipal Money
Market, Government Money Market, Growth Equity, Balanced and Tax-Free Income
Portfolios, respectively, and reimbursed the Tax-Free Income Portfolio for
certain operational expenses totalling $19,415. For the period from
commencement of operations (April 13, 1992 for the Small Cap Value Equity
Portfolio, April 20, 1992 for the Value Equity, Index Equity and Intermediate
Government Portfolios and April 27, 1992 for the International Equity
Portfolio) to September 30, 1992, the Fund paid advisory fees to PIMC, after
waivers, of $786,513, $88,130, $177,897, $187,950 and $208,451, for the Value
Equity, Index Equity, Small Cap Value Equity, International Equity and
Intermediate Government Portfolios, respectively. For the same periods, PIMC
waived advisory fees of $67,979, $4,597, $3,247 and $178 for the Index Equity,
Small Cap Value Equity, International Equity and Intermediate Government
Portfolios, respectively.
For the year ended September 30, 1994, PIMC paid sub-advisory fees to
the specified Portfolios' sub-adviser, after waivers, of $0, $0, $0, $0, $0,
$0, $1,198,580, $0, $276,410, $0, $33,198, $36,893, $97,470, $2,018,338,
$409,182, $55,825,
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<PAGE> 161
$265,273, $28,392, $791,896, $1,257,191, and $409,420 with respect to the Money
Market, Municipal Money Market, Government Money Market, Ohio Municipal Money
Market, Pennsylvania Municipal Money Market, North Carolina Municipal Money
Market, Managed Income, Tax-Free Income, Intermediate Government, Ohio Tax-Free
Income, Pennsylvania Tax-Free Income, Short-Term Bond, Intermediate-Term Bond,
Value Equity, Growth Equity, Small Cap Growth Equity, Core Equity, Index
Equity, Small Cap Value Equity, International Equity and Balanced Portfolios.
For that year, such sub-advisers waived sub-advisory fees of $479,008, $85,703,
$140,886, $24,962, $42,110, $27,768, $199,763, $33,359, $368,546, $24,996,
$160,456, $85,319, $138,685, $288,334, $58,455, $101,371, $37,896, $275,602,
$0, $251,438, and $79,849 for such respective Portfolios. For the period from
commencement of operations (July 25, 1994 for the Virginia Municipal Money
Market Portfolio and June 17, 1994 for the International Emerging Markets
Portfolio) through September 30, 1994, PIMC paid sub-advisory fees to the
specified Portfolios' sub-adviser, after waivers, of $0 and $6,723 with respect
to the Virginia Municipal Money Market and International Emerging Markets
Portfolios, respectively. For the same periods, such sub- advisers waived
sub-advisory fees of $992 and $14,153 for such respective Portfolios.
For the year ended September 30, 1993, PIMC paid sub-advisory fees to
the specified Portfolios' sub-adviser, after waivers, of $0, $0, $0,
$1,065,887, $0, $415,941, $1,452,164, $291,383, $159,310, $410,229, $478,432
and $90,586 for the Money Market, Municipal Money Market, Government Money
Market, Managed Income, Tax-Free Income, Intermediate Government, Value Equity,
Growth Equity, Index Equity, Small Cap Value Equity, International Equity and
Balanced Portfolios, respectively. For that year, such sub- advisers waived
sub-advisory fees of $412,778, $71,192, $88,587, $61,259, $30,420, $54,111,
$78,721, $25,967, $121,205, $25,305, $37,707 and $32,875 for such respective
Portfolios. For the period from commencement of operations to September 30,
1993, the Fund paid sub-advisory fees to the specified Portfolios' sub-adviser,
after waivers, of $0, $0, $0, $0, $0, $0, $3,802, $0 and $10,418 for the Ohio
Municipal Money Market, Pennsylvania Municipal Money Market, North Carolina
Municipal Money Market, Ohio Tax-Free Income, Pennsylvania Tax-Free Income,
Short-Term Bond, Intermediate-Term Bond, Small Cap Growth Equity and Core
Equity Portfolios, respectively. For the same periods, such sub-advisers
waived sub-advisory fees of $3,217, $2,013, $5,232, $6,147, $61,270, $1,456,
$3,802, $2,017 and $3,906 for such respective Portfolios. For the period from
October 1, 1992 to September 10, 1993, PIMC paid sub- advisory fees of
$1,017,364 and $274,275 to PNC Bank Ohio for the Managed Income and Growth
Equity Portfolios, respectively. For the period from October 1, 1992 to
September 10, 1993, PIMC paid sub-
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<PAGE> 162
advisory fees of $397,885 to PCM with respect to the Intermediate Government
Portfolio.
For the year ended September 30, 1992, PIMC paid sub-advisory fees to
the specified Portfolios' sub-adviser, after waivers, of $0, $0, $220,604,
$5,939, $0 and $570,562, for the Money Market, Government Money Market, Growth
Equity, Balanced, Tax-Free Income and Managed Income Portfolios, respectively.
For that year, such sub-advisers waived sub-advisory fees of $315,866, $88,276,
$4,757, $18,974 and $15,597 for the Money Market, Government Money Market,
Growth Equity, Balanced and Tax-Free Income Portfolios, respectively. For the
period from commencement of operations to September 30, 1992, PIMC paid
sub-advisory fees to the specified Portfolios' sub-adviser, after waivers, of
$572,004, $129,380, $150,360 and $145,916 for the Value Equity, Small Cap Value
Equity, International Equity and Intermediate Government Portfolios,
respectively. For the same periods, the specified Portfolios' sub-adviser
waived sub-advisory fees of $3,343, $2,598 and $125, for the Small Cap Value
Equity, International Equity and Intermediate Government Portfolios,
respectively. For the period from October 1, 1991 to May 8, 1992 for the
Tax-Free Money Market Portfolio and the period April 20, 1992 to July 22, 1992
for the Index Equity Portfolio, PIMC paid sub-advisory fees to the particular
Portfolio's sub-adviser, after waivers, of $192,992 and $35,282, respectively,
and such sub-advisers waived sub-advisory fees of $0 and $30,027, respectively.
Such sub-advisory fees have no effect on the advisory fees payable by each
Portfolio to PIMC.
ADMINISTRATION AGREEMENTS. The Administrators serve as the Fund's
co-administrators pursuant to an Administration Agreement (the "Administration
Agreement"). The Administrators have agreed to maintain office facilities for
the Fund, furnish the Fund with statistical and research data, clerical,
accounting, and bookkeeping services, and certain other services required by
the Fund.
The Administration Agreement provides that the Administrators will not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Fund or a Portfolio in connection with the performance of the
Administration Agreement, except a loss resulting from willful misfeasance, bad
faith or gross negligence in the performance of their respective duties or from
reckless disregard of their respective duties and obligations thereunder.
For the year ended September 30, 1994, the Fund paid the
Administrators combined administration fees, after waivers, of $803,349,
$42,931, $132,901, $2,241, $11,758, $0, $521,204, $0, $186,742, $0, $19,858,
$14,758, $52,518, $1,075,209, $128,262, $20,166, $52,164, $27,115, $354,486,
$502,876 and $125,112 with
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<PAGE> 163
respect to the Money Market, Municipal Money Market, Government Money Market,
Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Managed Income, Tax-Free Income, Intermediate
Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income, Short-Term
Bond, Intermediate-Term Bond, Value Equity, Growth Equity, Small Cap Growth
Equity, Core Equity, Index Equity, Small Cap Value Equity, International Equity
and Balanced Portfolios. For that year, the Administrators waived combined
administration fees of $541,066, $214,178, $289,756, $72,646, $114,573,
$83,304, $277,849, $19,062, $181,804, $14,284, $90,020, $55,078, $82,428,
$61,908, $105,557, $58,432, $99,421, $378,211, $41,462, and $119,522 with
respect to the Money Market, Municipal Money Market, Government Money Market,
Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Managed Income, Tax-Free Income, Intermediate
Government, Ohio Tax-Free Income, Pennsylvania Tax- Free Income, Short-Term
Bond, Intermediate-Term Bond, Value Equity, Growth Equity, Small Cap Growth
Equity, Core Equity, Index Equity, Small Cap Value Equity and Balanced
Portfolios, respectively, and reimbursed the Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market,
Tax-Free Income, Ohio Tax-Free Income, and Pennsylvania Tax-Free Income
Portfolios for certain operational expenses totalling $6,887, $6,340, $8,934,
$14,359, $14,199 and $3,858, respectively. For the period from commencement of
operations (July 25, 1994 for the Virginia Municipal Money Market Portfolio and
June 17, 1994 for the International Emerging Markets Portfolio) through
September 30, 1994, the Fund paid Administrators combined administration fees,
after waivers, of $0 and $1,259 with respect to the Virginia Municipal Money
Market and International Emerging Market Portfolios, respectively. For the
same periods, the Administrators waived combined administration fees of $2,975
and $2,537 for such respective Portfolios, and reimbursed the Virginia
Municipal Money Market Portfolio for certain operational expenses totalling
$1,605.
For the period from February 1, 1993 to September 30, 1993, the Fund
paid the Administrators combined administration fees, after waivers, of
$674,120, $117,768, $157,519, $397,750, $0, $167,611, $0, $0, $528,584,
$101,208, $195,736, $156,048, $123,924 and $44,667 for the Money Market,
Municipal Money Market, Government Money Market, Managed Income, Tax-Free
Income, Intermediate Government, Pennsylvania Tax-Free Income, Ohio Tax-Free
Income, Value Equity, Growth Equity, Index Equity, Small Cap Value Equity,
International Equity and Balanced Portfolios, respectively. For that period,
the Administrators waived combined administration fees of $101,509, $21,036,
$30,288, $87,513, $11,914, $24,673, $85,754, $8,757, $9,382, $12,879, $59,581,
$5,441, $6,477 and $8,046 for such respective Portfolios, and reimbursed the
Pennsylvania Tax-Free Income and
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<PAGE> 164
Ohio Tax-Free Income Portfolios for certain operational expenses totalling
$5,766 and $6,515, respectively. For the period from commencement of
operations to September 30, 1993, the Fund paid the Administrators combined
administration fees, after waivers, of $0, $0, $0, $0, $1,262, $173 and $4,722
for the Ohio Municipal Money Market, Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Short-Term Bond, Intermediate-Term Bond, Small
Cap Growth Equity and Core Equity Portfolios, respectively. For the same
period, the Administrators waived combined administration fees of $9,651,
$6,039, $15,695, $831, $3,084, $835 and $2,441 for such respective Portfolios.
For the period from October 1, 1992 to January 31, 1993, the Fund paid
PFPC and the former co-administrator combined administration fees, before
waivers, of $397,594, $74,771, $77,953, $212,227, $0, $76,317, $227,477,
$43,210, $118,702, $56,278, $41,645 and $4,938 Money Market, Municipal Money
Market, Government Money Market, Managed Income, Tax-Free Income, Intermediate
Government, Value Equity, Growth Equity, Index Equity, Small Cap Value Equity,
International Equity and Balanced Portfolios, respectively. For that period,
PFPC and the former co-administrator waived combined administration fees of $0,
$0, $0, $0, $5,469, $0, $0, $0, $0, $0, $0 and $4,080 for such respective
Portfolios, and reimbursed the Tax-Free Income Portfolio for certain
operational expenses totalling $0. For the period from commencement of
operations to January 31, 1993, the Fund paid PFPC and the former
co-administrator combined administration fees, before waivers, of $0 and $0 for
the Ohio Tax-Free Income and Pennsylvania Tax-Free Income Portfolios,
respectively. For the same period, PFPC and the former co-administrator waived
combined administration fees of $124 and $1,774 for such respective Portfolios,
and reimbursed such Portfolios for certain operational expenses totalling
$1,848 and $1,859, respectively.
For the year ended September 30, 1992, the Fund paid PFPC and the
former co-administrator combined administration fees, after waivers, of
$923,307, $185,695, $264,829, $112,680, $3,511, $326,035 and $0 for the Money
Market, Municipal Money Market, Government Money Market, Growth Equity,
Balanced, Managed Income and Tax-Free Income Portfolios, respectively. For
that year, PFPC and the former co-administrator waived combined administration
fees of $8,946 and $8,912 for the Balanced and Tax-Free Income Portfolios,
respectively. For the services provided and expenses assumed by PFPC and the
former co-administrator, the Fund paid them combined administration fees of
$286,005, $156,109, $66,361, $50,986 and $83,451 for the Value Equity, Index
Equity, Small Cap Value Equity, International Equity and Intermediate
Government Portfolios, respectively, for the periods from the dates the
respective Portfolios commenced operations to September 30, 1992. See
"Investment Advisory,
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<PAGE> 165
Administration, Distribution and Servicing Agreements - Advisory and
Sub-Advisory Agreements" regarding the Administrators' agreement to reimburse
the Fund in the event the expenses of a Portfolio exceed applicable state
expense limitations.
CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. PNC Bank is custodian of
the Fund's assets pursuant to a custodian agreement (the "Custodian
Agreement"). Under the Custodian Agreement, PNC Bank or a sub-custodian (i)
maintains a separate account or accounts in the name of each Portfolio, (ii)
holds and transfers portfolio securities on account of each Portfolio, (iii)
accepts receipts and makes disbursements of money on behalf of each Portfolio,
(iv) collects and receives all income and other payments and distributions on
account of each Portfolio's securities and (v) makes periodic reports to the
Board of Trustees concerning each Portfolio's operations. PNC Bank is
authorized to select one or more banks or trust companies to serve as
sub-custodian on behalf of the Fund, provided that, with respect to
sub-custodians other than sub-custodians for foreign securities, PNC Bank
remains responsible for the performance of all its duties under the Custodian
Agreement and holds the Fund harmless from the acts and omissions of any
sub-custodian. The Chase Manhattan Bank, N.A., State Street Bank and Trust
Company and Barclays Bank PLC serve as the Fund's sub-custodians.
For its services to the Fund under the Custodian Agreement, PNC Bank
receives a fee which is calculated based upon each investment portfolio's
average gross assets, with a minimum monthly fee of $1,000 per investment
portfolio. PNC Bank is also entitled to out-of-pocket expenses and certain
transaction charges.
PFPC, an affiliate of PNC Bank, serves as the transfer and dividend
disbursing agent for the Fund pursuant to a Transfer Agency Agreement (the
"Transfer Agency Agreement"), under which PFPC (i) issues and redeems Service,
Investor, and Institutional classes of shares in each Portfolio, (ii) addresses
and mails all communications by each Portfolio to record owners of its shares,
including reports to shareholders, dividend and distribution notices and proxy
materials for its meetings of shareholders, (iii) maintains shareholder
accounts and, if requested, sub-accounts and (iv) makes periodic reports to the
Board of Trustees concerning the operations of each Portfolio. PFPC may, on 30
days' notice to the Fund, assign its duties as transfer and dividend disbursing
agent to any other affiliate of PNC Bank Corp. For its services with respect
to the Fund's Institutional and Service Shares under the Transfer Agency
Agreement, PFPC receives fees at the annual rate of .03% of the average net
asset value of outstanding Institutional and Service Shares in each Portfolio,
plus per account fees and disbursements. For its services under the Transfer
Agency Agreement with respect to Investor Shares, PFPC receives per account
fees, with minimum annual fees of $24,000 for each Portfolio, plus
disbursements.
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<PAGE> 166
DISTRIBUTOR AND DISTRIBUTION PLANS. The Fund has entered into a
distribution agreement with the Distributor under which the Distributor, as
agent, offers shares of each Portfolio on a continuous basis. The Distributor
has agreed to use appropriate efforts to effect sales of the shares, but it is
not obligated to sell any particular amount of shares. A message from the
Distributor has been attached to this Statement of Additional Information as
Appendix B.
The Distributor is entitled to payments by each class of Series A
Investor Shares and Series B Investor Shares for certain distribution and other
expenses in addition to the sales charges described in the Prospectuses (if
applicable). The Fund's Distribution and Service Plan for Series A Investor
Shares and the Fund's Series B Distribution Plan (collectively, "the Plans")
provide, among other things, that: (i) the Distributor shall submit quarterly
reports to the Board of Trustees regarding the amounts expended under each Plan
and the purposes for which such expenditures were made; (ii) each Plan will
continue in effect for so long as its continuance is approved at least annually
by the Board of Trustees; (iii) any material amendment thereto must be approved
by the Board of Trustees, including the trustees who are not "interested
persons" of the Fund (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plans or any agreement
entered into in connection with the Plans ("12b-1 Trustees"), acting in person
at a meeting called for said purpose; (iv) any amendment to increase materially
the costs which any class of shares may bear for distribution pursuant to the
Plans shall be effective only upon approval by a vote of a majority of the
outstanding shares of such class; and (v) while the Plans remain in effect, the
selection and nomination of the Fund's trustees who are not "interested
persons" of the Fund shall be committed to the discretion of such
non-interested trustees.
The Distribution and Service and Series B Distribution Plans are
terminable as to any class of Series A and Series B Investor Shares,
respectively, without penalty at any time by a vote of a majority of the 12b-1
Trustees, or by vote of the holders of a majority of the shares of such
respective classes. Similarly, any agreement entered into pursuant to either
Plan with a Service Organization is terminable as to a class without penalty,
at any time, by the Fund or by the Service Organization upon written notice to
the other. Each such agreement will terminate automatically in the event of
its assignment.
The front-end sales charge and amounts payable to the Distributor
under the Distribution and Service Plan are used by the Distributor to pay
commissions and other fees payable to Service Organizations and other
broker/dealers who sell Series A Shares.
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<PAGE> 167
Service Organizations and other broker/dealers receive commissions
from the Distributor for selling Series B Shares, which are paid at the time of
the sale. These commissions approximate the commissions payable with respect
to sales of Series A Shares. The fees payable under the Series B Distribution
Plan (at an annual rate of .75% of the average daily net asset value of each
Portfolio's outstanding Series B Shares) are intended to cover the expense to
the Distributor of paying such up-front commissions, and the contingent
deferred sales charge is calculated to charge the investor with any shortfall
that would occur if Series B Shares are redeemed prior to the expiration of the
six year period, after which Series B Shares automatically convert to Series A
Shares. To provide funds for the payment of up-front sales commissions, the
Distributor has entered into an agreement with PNC Investment Corp. ("PNCIC"),
an affiliate of the Fund's adviser, which provides funds for the payment of
commissions and other fees payable to Service Organizations and broker/dealers
who sell Series B Shares. Under the terms of that agreement, the Distributor
has sold and assigned to PNCIC the fees which may be payable from time to time
to the Distributor under the Series B Distribution Plan and the contingent
deferred sales charges payable to the Distributor with respect to Series B
Shares.
For the fiscal year ended September 30, 1994, the Series A Investor
Shares of the Money Market, Municipal Money Market, Government Money Market,
Ohio Municipal Money Market, Pennsylvania Municipal Money Market, Managed
Income, Tax-Free Income, Intermediate Government, Pennsylvania Tax-Free Income,
Short-Term Bond, Intermediate-Term Bond, Value Equity, Growth Equity, Small Cap
Growth Equity, Core Equity, Index Equity, Small Cap Value Equity, International
Equity and Balanced Portfolios bore expenses relating to the Distribution and
Service Plan in the amount of $10,092, $165, $427, $252, $193, $43,985,
$33,891, $20,618, $53,423, $316, $34, $31,135, $16,155, $3,297, $921, $8,190,
$54,045, $39,012 and $222,954, respectively. For the period from commencement
of operations to September 30, 1994, the Series A Investor Shares of the
International Emerging Markets Portfolio bore expenses relating to the
Distribution and Service Plan in the amount of $2,703. All such amounts paid
under the Distribution and Service Plan were paid as compensation to dealers
for distribution assistance. For the period from commencement of operations to
September 30, 1994, Series A Investor Shares of the Ohio Tax-Free Income
Portfolio bore no expenses relating to the Distribution and Service Plan. As
of September 30, 1994, the public offering of Series A Investor Shares of the
North Carolina Municipal Money Market and Virginia Municipal Money Market
Portfolios had not commenced. No Series B Investor Shares of any Portfolio
were issued during the fiscal year ended September 30, 1994.
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<PAGE> 168
No compensation is payable by the Fund to the Distributor for its
distribution services for Service or Institutional Shares.
Service Organizations may charge their clients additional fees for
account services.
SERVICE PLAN. As stated in the Prospectus for the Fund's Service
Shares, the Fund intends to enter into service agreements with institutions
pursuant to which institutions will render certain support services to their
customers who are the beneficial owners of Service Shares ("Customers"). Such
services will be provided to Customers who are the beneficial owners of Service
Shares and are intended to supplement the services provided by the Fund's
Administrators and transfer agent to the Fund's shareholders of record. In
consideration for payment of up to .15% (on an annualized basis) of the average
daily net asset value of Service Shares owned beneficially by their Customers,
institutions may provide one or more of the following services to such
Customers: processing purchase and redemption requests from Customers and
placing orders with the Fund's transfer agent or the Distributor; processing
dividend payments from the Fund on behalf of Customers; providing
sub-accounting with respect to Service Shares beneficially owned by Customers
or the information necessary for sub-accounting; and other similar services.
In consideration for payment of a service fee of up to a separate .15% (on an
annualized basis) of the average daily net asset value of Service Shares owned
beneficially by their Customers, institutions may provide one or more of these
additional services to such Customers: responding to Customer inquiries
relating to the services performed by the institution and to Customer inquiries
concerning their investments in Service Shares; providing information
periodically to Customers showing their positions in Service Shares; and other
similar shareholder liaison services. Customers who are beneficial owners of
Service Shares should read the Prospectus in light of the terms and fees
governing their accounts with institutions. These servicing fees are not paid
to institutions with respect to other classes of shares of the Portfolios
("Series A Investor Shares," "Series B Investor Shares" and "Institutional
Shares").
For the fiscal year ended September 30, 1994, the Service Shares of
the Money Market, Municipal Money Market, Government Money Market, Ohio
Municipal Money Market, Pennsylvania Municipal Money Market, North Carolina
Municipal Money Market, Managed Income, Tax-Free Income, Intermediate
Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income, Short-Term
Bond, Intermediate- Term Bond, Value Equity, Growth Equity, Small Cap Growth
Equity, Core Equity, Index Equity, Small Cap Value Equity, International Equity
and Balanced Portfolios bore expenses relating to the Fund's Service Plan and
other service fees
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<PAGE> 169
aggregating $1,382,350, $368,547, $677,020, $97,034, $56,294, $87, $106,193,
$3,523, $99,744, $5,089, $24,652, $13,458, $69,088, $177,459, $58,828, $28,347,
$66,516, $52,752, $84,160, $110,459 and $123,661, respectively. For the period
from commencement of operations to September 30, 1994, the Service Shares of
the International Emerging Markets Portfolio bore expenses relating to the
Fund's Service Plan and other servicing fees aggregating $1,620. As of
September 30, 1994, the public offering of Service Shares of the Virginia
Municipal Money Market Portfolio had not commenced.
SERIES B SERVICE PLAN. As stated in the Prospectus for the Fund's
Series B Investor Shares, the Fund intends to enter into service agreements
with Service Organizations pursuant to which Service Organizations and
sometimes the Distributor will render certain support services to their
customers who are the beneficial owners of Series B Investor Shares. Such
services will be provided to customers who are the beneficial owners of Series
B Investor Shares and are intended to supplement the services provided by the
Fund's Administrators and transfer agent. In consideration for payment
aggregating up to .25% (on an annualized basis) of the average daily net asset
value of Series B Investor Shares owned beneficially by their customers,
Service Organizations and the Distributor may provide one or more of the
following services to such customers: establishing and maintaining accounts
and records relating to customers that invest in Series B Shares; processing
dividend and distribution payments from the Fund on behalf of customers;
arranging for bank wires; providing sub-accounting with respect to Series B
Shares beneficially owned by customers or the information necessary for
sub-accounting; forwarding shareholder communications from the Fund (such as
proxies, shareholder reports, annual and semi-annual financial statements and
dividend, distribution and tax notices) to customers; assisting in processing
purchase, exchange and redemption requests from customers and in placing such
orders with the Fund's service contractors; assisting customers in changing
dividend options, account designations and addresses; providing customers with
a service that invests the assets of their accounts in Series B Shares pursuant
to specific or pre-authorized instructions; providing information periodically
to customers showing their positions in Series B Shares and integrating such
statements with those of other transactions and balances in customers' other
accounts with the Service Organization; responding to customer inquiries
relating to the services performed by the Service Organization or the
Distributor; responding to customer inquiries concerning their investments in
Series B Shares; and providing other similar shareholder liaison services.
Fees relating to the Series B Service Plan are not paid to Service
Organizations or the Distributor with respect to other classes of shares of the
Portfolios ("Service Shares," "Series A Investor Shares" and
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<PAGE> 170
"Institutional Shares"). Customers who are beneficial owners of Series B
Investor Shares should read the Prospectus in light of the terms and fees
governing their accounts with Service Organizations. No Series B Investor
Shares of any Portfolio were issued during the fiscal year ended September 30,
1994.
PORTFOLIO TRANSACTIONS
In executing portfolio transactions, the adviser and sub-advisers seek
to obtain the best price and execution for a Portfolio, taking into account
such factors as the price (including the applicable brokerage commission or
dealer spread), size of the order, difficulty of execution and operational
facilities of the firm involved. While the adviser and sub-advisers generally
seek reasonably competitive commission rates, payment of the lowest commission
or spread is not necessarily consistent with obtaining the best price and
execution in particular transactions. Payments of commissions to brokers who
are affiliated persons of the Fund (or affiliated persons of such persons) will
be made in accordance with Rule 17e-1 under the 1940 Act.
No Portfolio has any obligation to deal with any broker or group of
brokers in the execution of portfolio transactions. The adviser and
sub-advisers may, consistent with the interests of a Portfolio, select brokers
on the basis of the research, statistical and pricing services they provide to
a Portfolio and the adviser's or sub-adviser's other clients. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by the adviser and sub-advisers under
their respective contracts. A commission paid to such brokers may be higher
than that which another qualified broker would have charged for effecting the
same transaction, provided that adviser or sub-adviser determines in good faith
that such commission is reasonable in terms either of the transaction or the
overall responsibility of adviser or sub-adviser to a Portfolio and its other
clients and that the total commissions paid by a Portfolio will be reasonable
in relation to the benefits to a Portfolio over the long-term. Commission
rates for brokerage transactions on foreign stock exchanges are generally
fixed. In addition, the adviser or sub-adviser may take into account the sale
of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers (including brokers that are affiliated with them or
Distributor).
For the year or period ended September 30, 1994, the Value Equity,
Growth Equity, Small Cap Growth Equity, Core Equity, Index Equity, Small Cap
Value Equity, International Equity, International Emerging Markets and Balanced
Portfolios paid
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<PAGE> 171
brokerage commissions of $431,232, $530,428, $62,339, $156,700, $47,190,
$185,560, $1,031,631, $32,367, and $164,460, respectively.
For the year or period ended September 30, 1993, the Value Equity,
Growth Equity, Small Cap Growth Equity, Core Equity, Index Equity, Small Cap
Value Equity, International Equity and Balanced Portfolios paid brokerage
commissions of $136,565, $366,421, $1,186, $4,770, $18,386, $105,423, $308,297
and $68,556, respectively, of which $4,390, $264 and $636 for the Growth
Equity, Small Cap Growth Equity and Small Cap Value Equity Portfolios,
respectively, was paid to Shearson Lehman Hutton Inc. ("Shearson"), an
affiliate of the Fund's former distributor. Approximately 1%, 22% and 1% of
the aggregate brokerage commissions of the Growth Equity, Small Cap Growth
Equity and Small Cap Value Equity Portfolios, respectively, were paid to
Shearson, representing approximately 1%, 22% and 1% of the aggregate dollar
amounts of transactions by those respective Portfolios involving the payment of
commissions.
For the year ended September 30, 1992, the Growth Equity and Balanced
Portfolios paid brokerage commissions of $300,421 and $11,821, respectively, of
which $19,840 for the Growth Equity Portfolio was paid to Shearson Lehman
Hutton Inc. ("Shearson"), an affiliate of the Fund's former distributor.
Approximately 7% of the Growth Equity Portfolio's aggregate brokerage
commissions for the year ended September 30, 1992 were paid to Shearson,
representing approximately 7% of the aggregate dollar amount of transactions by
that Portfolio involving the payment of commission. For the period from
commencement of operations to September 30, 1992, the Value Equity, Index
Equity, Small Cap Value Equity and International Equity Portfolios paid
brokerage commissions of $68,214, $43,725, $23,728 and $84,226, respectively.
Over-the-counter issues, including corporate debt and U.S. Government
securities, are normally traded on a "net" basis without a stated commission,
through dealers acting for their own account and not as brokers. The
Portfolios will primarily engage in transactions with these dealers or deal
directly with the issuer unless a better price or execution could be obtained
by using a broker. Prices paid to a dealer with respect to both foreign and
domestic securities will generally include a "spread," which is the difference
between the prices at which the dealer is willing to purchase and sell the
specific security at the time, and includes the dealer's normal profit.
Purchases of money market instruments by a Portfolio are made from
dealers, underwriters and issuers. The Portfolios do not currently expect to
incur any brokerage commission expense on such transactions because money
market instruments are generally
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<PAGE> 172
traded on a "net" basis with dealers acting as principal for their own accounts
without a stated commission. The price of the security, however, usually
includes a profit to the dealer. Each Money Market Portfolio intends to
purchase only securities with remaining maturities of 13 months or less as
determined in accordance with the rules of the SEC. As a result, the portfolio
turnover rates of a Money Market Portfolio will be relatively high. However,
because brokerage commissions will not normally be paid with respect to
investments made by a Money Market Portfolio, the turnover rates should not
adversely affect the Portfolio's net asset values or net income.
Securities purchased in underwritten offerings include a fixed amount
of compensation to the underwriter, generally referred to as the underwriter's
concession or discount. When securities are purchased or sold directly from or
to an issuer, no commissions or discounts are paid. It is the policy of the
Portfolios to give primary consideration to obtaining the most favorable price
and efficient execution of transactions involving money market instruments. In
seeking to implement this policy of the Portfolios, adviser and sub-advisers
will effect transactions involving money market instruments with those dealers
they believe provide the most favorable prices and are capable of providing
efficient executions.
The adviser or sub-advisers may seek to obtain an undertaking from
issuers of commercial paper or dealers selling commercial paper to consider the
repurchase of such securities from a Portfolio prior to maturity at their
original cost plus interest (sometimes adjusted to reflect the actual maturity
of the securities), if it believes that a Portfolio's anticipated need for
liquidity makes such action desirable. Any such repurchase prior to maturity
reduces the possibility that a Portfolio would incur a capital loss in
liquidating commercial paper, especially if interest rates have risen since
acquisition of the particular commercial paper.
Investment decisions for each Portfolio and for other investment
accounts managed by the adviser or sub-advisers are made independently of each
other in the light of differing conditions. However, the same investment
decision may be made for two or more of such accounts. In such cases,
simultaneous transactions are inevitable. Purchases or sales are then averaged
as to price and allocated as to amount in a manner deemed equitable to each
such account. While in some cases this practice could have a detrimental
effect upon the price or value of the security as far as a Portfolio is
concerned, in other cases it is believed to be beneficial to a Portfolio. A
Portfolio will not purchase securities during the existence of any underwriting
or selling group relating to such securities of which PIMC, BlackRock, PNC
Bank, PCM, PEAC, the Administrators,
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Distributor or any affiliated person (as defined in the 1940 Act) thereof is a
member except pursuant to procedures adopted by the Board of Trustees in
accordance with Rule 10f-3 under the 1940 Act. In no instance will portfolio
securities be purchased from or sold to PIMC, BlackRock, PNC Bank, PCM, PEAC,
the Administrators, Distributor or any affiliated person of the foregoing
entities except as permitted by SEC exemptive order or by applicable law.
The portfolio turnover rate of a Portfolio is calculated by dividing
the lesser of a Portfolio's annual sales or purchases of portfolio securities
(exclusive of purchases or sales of securities whose maturities at the time of
acquisition were one year or less) by the monthly average value of the
securities held by the Portfolio during the year.
The Fund is required to identify any securities of its regular brokers
or dealers (as defined in Rule 10b-1 under the 1940 Act) or their parents held
by the Fund as of the end of its most recent fiscal year. As of September 30,
1994, the following Portfolios held the following securities: (a) Money Market
Portfolio: variable rate obligations of Goldman Sachs Group L.P., Lehman
Brothers Holdings, Inc. and Morgan Stanley Group in the principal amounts of
$47,000,000, $50,000,000 and $29,998,328, respectively; medium-term note of
Morgan Stanley Group in the principal amount of $15,000,000; and repurchase
agreements with Kidder, Peabody & Co., Morgan Stanley & Co. and PaineWebber
Group in the principal amounts of $100,000,000, $65,000,000 and $10,000,000,
respectively; (b) Government Money Market Portfolio: repurchase agreements with
Kidder, Peabody & Co. and Morgan Stanley & Co. in the principal amounts of
$9,058,000 and $70,000,000, respectively; (c) Managed Income Portfolio:
corporate bonds and variable rate obligations of Morgan Stanley Group in the
principal amounts of $4,925,000 and $10,000,000, respectively; medium-term note
of Salomon Brothers, Inc. in the principal amount of $3,730,680; (d) Short-Term
Bond Portfolio: corporate bonds of Lehman Brothers, Inc. and Merrill Lynch Co.,
Inc. in the principal amounts of $992,500 and $956,250, respectively;
medium-term note of Salomon Brothers, Inc. in the principal amount of $932,670;
Intermediate-Term Bond Portfolio: corporate bonds of Lehman Brothers Holdings,
Inc. in the principal amount of $975,000; and Index Equity Portfolio: common
stock of Merrill Lynch & Co., Inc. and Salomon, Inc. in the principal amounts
of $380,875 and $280,450, respectively.
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PURCHASE AND REDEMPTION INFORMATION
COMPUTATION OF PUBLIC OFFERING PRICES FOR SERIES A INVESTOR SHARES OF
THE NON-MONEY MARKET PORTFOLIOS. An illustration of the computation of the
public offering price per Series A Investor Share of each Non-Money Market
Portfolio, based on the value of the Managed Income, Tax-Free Income,
Intermediate Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income,
Short-Term Bond, Intermediate-Term Bond, Value Equity, Growth Equity, Small Cap
Growth Equity, Core Equity, Index Equity, Small Cap Value Equity, International
Equity, International Emerging Markets and Balanced Portfolios' net assets as
of September 30, 1994 and the value of the Government Income and International
Fixed Income Portfolios' initial capitalization prior to the commencement of
operations, follows:
TABLE
<TABLE>
<CAPTION>
Value Growth Small Cap Index
Equity Equity Growth Equity Core Equity Equity
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net Assets . . . . . . . . . . . . . $10,412,074 $5,049,054 $1,620,407 $601,053 $2,631,836
Outstanding
Shares . . . . . . . . . . . . . . . 895,820 496,922 160,040 60,595 240,770
============ =========== =========== ========== ==========
Net Asset Value
Per Share . . . . . . . . . . . . . $11.62 $10.16 $10.12 $9.92 $10.93
Maximum Sales Charge,
4.50% of offering price
(4.71% of net asset
value per share) . . . . . . . . . . $ .55 $ .48 $ .48 $ .47 $ .52
------ ------ --------- --------- ------
Offering to Public . . . . . . . . . $12.17 $10.64 $10.60 $10.39 $11.45
======== ======= ========= ======= ======
</TABLE>
<TABLE>
<CAPTION>
Small
Cap Value International Managed Tax-Free
Equity Equity Balanced Income Income
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Assets . . . . . . . . . . . . . $16,884,283 $14,432,684 $62,306,981 $10,921,371 $6,972,180
Outstanding
Shares . . . . . . . . . . . . . . . 1,243,462 1,077,374 5,200,179 1,115,757 694,590
============ =========== ============ ============ ===========
Net Asset Value
Per Share . . . . . . . . . . . . . $13.58 $13.40 $11.98 $9.79 $10.04
Maximum Sales Charge,
4.50% of offering price
(4.71% of net asset
value per share) . . . . . . . . . . $ .64 $ .63 $ .56 $ .46 $ .47
-------- -------- -------- -------- -------
Offering to Public . . . . . . . . . $14.22 $14.03 $12.54 $10.25 $10.51
======== ======== ======== ======== =======
</TABLE>
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<PAGE> 175
<TABLE>
<CAPTION>
Pennsylvania
Intermediate Ohio Tax- Tax-Free Short-Term Intermediate-
Government Free Income Income Bond Term Bond
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net Assets . . . . . . . . . . . . . $8,508,396 $3,824,845 $46,562,641 $277,387 $87,119
Outstanding
Shares . . . . . . . . . . . . . . . 882,983 398,330 4,742,341 28,876 9,630
============ ============ ============= ========== ========
Net Asset Value
Per Share . . . . . . . . . . . . . $9.64 $9.60 $9.82 $9.58 $9.05
Maximum Sales Charge,
4.50% of offering price
(4.71% of net asset
value per share) . . . . . . . . . . $ .45 $ .45 $ .46 $ .45 $ .43
-------- -------- -------- -------- --------
Offering to Public . . . . . . . . . $10.09 $10.05 $10.28 $10.03 $9.48
========== ========= ======== ========= ========
</TABLE>
<TABLE>
<CAPTION>
International
Government International Emerging
Income Fixed Income Markets
Portfolio Portfolio Portfolio
--------- --------- ---------
<S> <C> <C> <C>
Net Assets . . . . . . . . . . . . . $100 $100 $2,857,212
Outstanding
Shares . . . . . . . . . . . . . . . 10 10 271,033
======= ======== ==========
Net Asset Value
Per Share . . . . . . . . . . . . . $10.00 $10.00 $10.54
Maximum Sales Charge,
4.50% of offering price
(4.71% of net asset
value per share) . . . . . . . . . . $ .47 $ .47 $ .50
--------- -------- --------
Offering to Public . . . . . . . . . $10.47 $10.47 $11.04
========= ======== ========
</TABLE>
Total front-end sales charges paid by shareholders of Series A
Investor Shares of the Managed Income, Tax-Free Income, Intermediate
Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income, Short-Term
Bond, Intermediate-Term Bond, Value Equity, Growth Equity, Small Cap Growth
Equity, Core Equity, Index Equity, Small Cap Value Equity, International
Equity, International Emerging Markets and Balanced Portfolios for the year or
period ended September 30, 1994 were $150,150, $37,504, $50,694, $64,596,
$678,464, $10,268, $2,124, $195,675, $81,496, $44,054, $17,550, $38,454,
$230,590, $303,547, $130,755 and $1,213,056, respectively. The public offering
of Series A Investor Shares of the Government Income and International Fixed
Income Portfolios had not commenced as of September 30, 1994.
Total front-end sales charges paid by shareholders of Series A
Investor Shares of the Value Equity, Growth Equity, Small Cap
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Value Equity, International Equity, Balanced, Managed Income, Tax-Free Income,
Intermediate Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income and
Index Equity Portfolios for the year or period ended September 30, 1993 were
$155,096, $60,863, $250,615, $86,294, $1,304,538, $202,926, $128,003, $127,347,
$68,959, $1,083,103 and $37,281, respectively. The public offering of Series A
Investor Shares of the Short-Term Bond, Intermediate-Term Bond, Core Equity,
Government Income, International Fixed Income and International Emerging
Markets Portfolios had not commenced as of September 30, 1993.
Total front-end sales charges paid by shareholders of Series A
Investor Shares of the Value Equity, Growth Equity, Small Cap Value Equity,
International Equity, Balanced, Managed Income, Tax-Free Income and
Intermediate Government Portfolios for the year or period ended September 30,
1992 were $36, $5,072, $802, $452, $162,649, $48,926, $145,624 and $21,284,
respectively. The Ohio Tax-Free Income and Pennsylvania Tax-Free Income
Portfolios had not commenced operations as of September 30, 1992.
Series B Investor Shares of the Non-Money Market Portfolios are sold
at the net asset value per share next determined after a purchase order is
received. Series B Investor Shares of the Non-Money Market Portfolios are
subject to a contingent deferred sales charge which is payable on redemption of
such Series B Investor Shares.
Service and Institutional Shares of each Portfolio are sold at the net
asset value per share next determined after a purchase order is received.
EXCHANGE PRIVILEGE. By use of the exchange privilege, the investor
authorizes the Fund's transfer agent to act on telephonic or written exchange
instructions from any person representing himself to be the investor and
believed by the Fund's transfer agent to be genuine. The records of the Fund's
transfer agent pertaining to such instructions are binding. The exchange
privilege may be modified or terminated at any time upon 60 days' notice to
affected shareholders. The exchange privilege is only available in states
where the exchange may legally be made.
A front-end sales charge or a contingent deferred sales charge will be
imposed (unless an exemption from either sales charge applies) when Investor
Shares of a Money Market Portfolio are redeemed and the proceeds are used to
purchase Series A Investor Shares and Series B Investor Shares, respectively,
of a Non-Money Market Portfolio.
INVESTMENTS OF REDEMPTION PROCEEDS FROM OTHER INVESTMENT COMPANIES.
Investors may purchase Series A Shares of the Non- Money Market Portfolios at
net asset value, without a sales
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charge, with the proceeds from the redemption of shares of any other investment
company which were sold with a sales charge or commission in accordance with
the terms set forth in the Prospectuses. This does not include shares of an
affiliated mutual fund which were or would be subject to a contingent deferred
sales charge upon redemption. For purposes of this restriction, the term
"affiliated mutual fund" means:
i) any Portfolio of the Fund; and
ii) any other investment company, if such company and the Fund
hold themselves out to investors as related companies for
purposes of investment and investor services, and if:
a) that company and the Fund have a common investment
adviser or distributor; or
b) the investment adviser or distributor of such company
or the Fund is an "affiliated person" (as defined in
Section 2(a)(3) of the 1940 Act) of the investment
adviser or distributor of the Fund or the company,
respectively.
MISCELLANEOUS. The Fund reserves the right, if conditions exist which
make cash payments undesirable, to honor any request for redemption or
repurchase of a Portfolio's shares by making payment in whole or in part in
securities chosen by the Fund and valued in the same way as they would be
valued for purposes of computing a Portfolio's net asset value. If payment is
made in securities, a shareholder may incur transaction costs in converting
these securities into cash. The Fund has elected, however, to be governed by
Rule 18f-1 under the 1940 Act so that a Portfolio is obligated to redeem its
shares solely in cash up to the lesser of $250,000 or 1% of its net asset value
during any 90-day period for any one shareholder of a Portfolio.
Under the 1940 Act, a Portfolio may suspend the right to redemption or
postpone the date of payment upon redemption for any period during which the
New York Stock Exchange (the "NYSE") is closed (other than customary weekend
and holiday closings), or during which trading on the NYSE is restricted, or
during which (as determined by the SEC by rule or regulation) an emergency
exists as a result of which disposal or valuation of portfolio securities is
not reasonably practicable, or for such other periods as the SEC may permit.
(A Portfolio may also suspend or postpone the recordation of the transfer of
its shares upon the occurrence of any of the foregoing conditions.)
In addition to the situations described in the Prospectuses, the Fund
may redeem shares involuntarily to reimburse a Portfolio
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for any loss sustained by reason of the failure of a shareholder to make full
payment for shares purchased by the shareholder or to collect any charge
relating to a transaction effected for the benefit of a shareholder as provided
in the Prospectus from time to time.
VALUATION OF PORTFOLIO SECURITIES
In determining the approximate market value of portfolio investments,
the Fund may employ outside organizations, which may use, without limitation, a
matrix or formula method that takes into consideration market indexes,
matrices, yield curves and other specific adjustments. This may result in the
securities being valued at a price different from the price that would have
been determined had the matrix or formula method not been used. All cash,
receivables and current payables are carried on the Fund's books at their face
value. Other assets, if any, are valued at fair value as determined in good
faith under the supervision of the Board of Trustees.
MONEY MARKET PORTFOLIOS. The value of the portfolio securities of
each Money Market Portfolio is calculated using the amortized cost method of
valuation. Under this method the market value of an instrument is approximated
by amortizing the difference between the acquisition cost and value at maturity
of the instrument on a straight-line basis over the remaining life of the
instrument. The effect of changes in the market value of a security as a
result of fluctuating interest rates is not taken into account. The market
value of debt securities usually reflects yields generally available on
securities of similar quality. When such yields decline, market values can be
expected to increase, and when yields increase, market values can be expected
to decline.
As indicated, the amortized cost method of valuation may result in the
value of a security being higher or lower than its market price, the price a
Money Market Portfolio would receive if the security were sold prior to
maturity. The Fund's Board of Trustees has established procedures for the
purpose of maintaining a constant net asset value of $1.00 per share for each
Money Market Portfolio, which include a review of the extent of any deviation
of net asset value per share, based on available market quotations, from the
$1.00 amortized cost per share. Should that deviation exceed 1/2 of 1% for a
Money Market Portfolio, the Fund's Board of Trustees will promptly consider
whether any action should be initiated to eliminate or reduce material dilution
or other unfair results to shareholders. Such action may include redeeming
shares in kind, selling portfolio securities prior to maturity, reducing or
withholding dividends, shortening the average portfolio maturity, reducing the
number of outstanding shares without monetary consideration, and utilizing
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<PAGE> 179
a net asset value per share as determined by using available market quotations.
Each Money Market Portfolio will maintain a dollar-weighted average
portfolio maturity of 90 days or less, will not purchase any instrument with a
deemed maturity under Rule 2a-7 of the 1940 Act greater than 13 months, and
will limit portfolio investments, including repurchase agreements, to those
instruments that the adviser or sub-adviser (depending on the Money Market
Portfolio) determines present minimal credit risks pursuant to guidelines
adopted by the Fund's Board of Trustees. There can be no assurance that a
constant net asset value will be maintained for each Money Market Portfolio.
NON-MONEY MARKET PORTFOLIOS. The valuation of securities held by the
Non-Money Market Portfolios is discussed in their respective Prospectuses.
PERFORMANCE INFORMATION
MONEY MARKET PORTFOLIO YIELD. Each Money Market Portfolio's current
and effective yields for Service, Series A Investor and Institutional Shares
and the Money Market Portfolio's current and effective yields for Series B
Investor Shares are computed separately using standardized methods required by
the SEC. The annualized yield for a class of Service, Series A Investor,
Series B Investor or Institutional Shares is computed by: (a) determining the
net change in the value of a hypothetical account having a balance of one share
at the beginning of a seven-calendar day period; (b) dividing the net change by
the value of the account at the beginning of the period to obtain the base
period return; and (c) annualizing the results (i.e., multiplying the base
period return by 365/7). The net change in the value of the account reflects
the value of additional shares purchased with dividends declared and all
dividends declared on both the original share and such additional shares, but
does not include realized gains and losses or unrealized appreciation and
depreciation. Compound effective yields are computed by adding 1 to the base
period return (calculated as described above) raising the sum to a power equal
to 365/7 and subtracting 1. For the seven-day period ended March 31, 1995,
the annualized yield for Service Shares of each of the Money Market Portfolios
was as follows: [INSERT DATA]. For the seven-day period ended March 31, 1995,
the annualized yield for Series
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<PAGE> 180
A Investor Shares of each of the Money Market Portfolios was as follows:
[INSERT DATA]. For the seven-day period ended March 31, 1995, the annualized
yield for Institutional Shares of each of the Money Market Portfolios was as
follows: [INSERT DATA]. For the seven-day period ended March 31, 1995, the
annualized effective yield for Service Shares of each of the Money Market
Portfolios was as follows: [INSERT DATA]. For the seven-day period ended
March 31, 1995, the annualized effective yield for Series A Investor
Shares of each of the Money Market Portfolios was as follows: [INSERT
DATA]. For the seven-day period ended March 31, 1995, the annualized effective
yield for Institutional Shares of each of the Money Market Portfolios was as
follows: [INSERT DATA]. In addition, a standardized "tax-equivalent yield"
may be quoted for Service, Series A Investor and Institutional Shares in the
Municipal Money Market, Ohio Municipal Money Market, Pennsylvania Municipal
Money Market, North Carolina Municipal Money Market and Virginia Municipal
Money Market Portfolios, which is computed separately for each class by: (a)
dividing the portion of the Portfolio's yield for shares (as calculated above)
that is exempt from Federal or state income tax by one minus a stated Federal
or state income tax rate; and (b) adding the figure resulting from (a) above to
that portion, if any, of the yield that is not exempt from Federal and state
income tax. For the seven-day period ended March 31, 1995, the annualized
tax-equivalent yield for Service Shares of each of the Money Market Portfolios
was as follows: [INSERT DATA]
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<PAGE> 181
For the seven-day period ended March 31, 1995, the annualized tax-equivalent
yield for Series A Investor Shares of each of the Money Market Portfolios
was as follows: [INSERT DATA]. For the seven-day period ended March 31,
1995, the annualized tax-equivalent yield for Institutional Shares of
each of the Money Market Portfolios was as follows: The fees which
may be imposed by institutions on their Customers are not
reflected in the calculations of yields for the Money Market Portfolios. No
Series A Investor Shares of the Virginia Municipal Money Market Portfolio,
no Series B Investor Shares of the Money Market Portfolio, and no shares of any
class of the New Jersey Municipal Money Market Portfolio had been issued
prior to March 31, 1995. Yields on Institutional Shares will generally be
higher than yields on Service Shares; yields on Service Shares will generally
be higher than yields on Series A Investor Shares; and yields on Service A
Investor Shares will generally be higher than yields on Series B Investor
Shares.
From time to time, in advertisements or in reports to shareholders,
the yields of a Portfolio's Service, Series A Investor, Series B Investor or
Institutional Shares may be quoted and compared to those of other mutual funds
with similar investment objectives and to stock or other relevant indexes. For
example, the yield of a Portfolio's Service, Series A Investor, Series B
Investor or Institutional Shares may be compared to the Donoghue's Money Fund
Average, which is an average compiled by IBC/Donoghue's MONEY FUND REPORT of
Holliston, MA 01746, a widely-recognized independent publication that monitors
the performance of money market funds, or to the data prepared by Lipper
Analytical Services, Inc., a widely-recognized independent service that
monitors the performance of mutual funds.
TOTAL RETURN. For purposes of quoting and comparing the performance
of shares of the Non-Money Market Portfolios to the performance of other mutual
funds and to stock or other relevant indexes in advertisements or in
communications to shareholders, performance may be stated in terms of total
return. The total return for each class of a Non-Money Market Portfolio will
be calculated independently of the other classes within that
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<PAGE> 182
Portfolio. Under the rules of the SEC, funds advertising performance must
include total return quotes calculated according to the following formula:
ERV 1/n
T = [(-----) - 1]
P
Where: T = average annual total return.
ERV = ending redeemable value at the end
of the period covered by the
computation of a hypothetical $1,000
payment made at the beginning of the
period.
P = hypothetical initial payment of
$1,000.
n = period covered by the computation,
expressed in terms of years.
In calculating the ending redeemable value for Series A Investor
Shares of the Fund's Non-Money Market Portfolios, the maximum front-end sales
charge is deducted from the initial $1,000 payment and all dividends and
distributions by the particular Portfolio are assumed to have been reinvested
at net asset value as described in the particular Prospectus on the
reinvestment dates during the period. In calculating the ending redeemable
value for Series B Investor Shares of the Non-Money Market Portfolios, the
maximum contingent deferred sales charge is deducted at the end of the period
and all dividends and distributions by the particular Portfolio are assumed to
have been reinvested at net asset value as described in the particular
Prospectus on the reinvestment dates during the period. Total return, or "T"
in the formula above, is computed by finding the average annual compounded
rates of return over the specified periods that would equate the initial amount
invested to the ending redeemable value. Based on the foregoing calculation:
(i) the average annual total return for Service Shares of the Non-Money Market
Portfolios for the year ended March 31, 1995 was as follows: [INSERT DATA].
(ii) the average annual total return for Series A Investor Shares of the
Non-Money Market Portfolios for the year ended
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<PAGE> 183
March 31, 1995 was as follows: [INSERT DATA].
(iii) the average annual total return for Institutional Shares of the Non-Money
Market Portfolios for the year ended March 31, 1995 was as follows: [INSERT
DATA].
(iv) the average annual total return for Service Shares of the Non-Money Market
Portfolios for the period from commencement of operations (July 28, 1993 for
the Growth Equity Portfolio; July 29, 1993 for each of the Managed Income,
Tax-Free Income, Intermediate Government, Ohio Tax-Free Income, Pennsylvania
Tax-Free Income, Value Equity, Index Equity, Small Cap Value Equity,
International Equity and Balanced Portfolios; September 1, 1993 for the
Short-Term Bond Portfolio; September 15, 1993 for each of the Small Cap Growth
Equity and Core Equity Portfolios; September 23, 1993 for the Intermediate-Term
Bond Portfolio; and June 17, 1994 for the International Emerging Markets
Portfolio) to March 31, 1995 was as follows: [INSERT DATA].
(v) the average annual total return for Series A Investor Shares of the
Non-Money Market Portfolios for the period from commencement of operations (May
14, 1990 for each of the Tax-Free Income and Balanced Portfolios; February 5,
1992 for the Managed Income Portfolio; March 14, 1992 for the Growth Equity
Portfolio; May 2, 1992 for the Value Equity Portfolio; May 11, 1992 for the
Intermediate Government Portfolio; June 2, 1992 for each of the
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<PAGE> 184
Index Equity, Small Cap Value Equity and International Equity Portfolios;
December 1, 1992 for each of the Ohio Tax-Free Income and Pennsylvania Tax-Free
Income Portfolios; September 15, 1993 for the Small Cap Growth Equity
Portfolio; October 13, 1993 for the Core Equity Portfolio; November 17, 1993
for the Short-Term Bond Portfolio; May 20, 1994 for the Intermediate-Term Bond
Portfolio; and June 17, 1994 for the International Emerging Markets Portfolio)
to March 31, 1995 was as follows: [INSERT DATA].
(vi) the average annual total return for Institutional Shares of the Non-Money
Market Portfolios for the period from commencement of operations (November 1,
1989 for each of the Managed Income and Growth Equity Portfolios; April 13,
1992 for the Small Cap Value Equity Portfolio; April 20, 1992 for each of the
Intermediate Government, Value Equity and Index Equity Portfolios; April 27,
1992 for the International Equity Portfolio; May 1, 1992 for the Balanced
Portfolio; December 1, 1992 for each of the Ohio Tax-Free Income and
Pennsylvania Tax-Free Income Portfolios; September 1, 1993 for the Short-Term
Bond Portfolio; September 13, 1993 for the Core Equity Portfolio; September 14,
1993 for the Small Cap Growth Equity Portfolio; September 17, 1993 for the
Intermediate-Term Bond Portfolio; and June 17, 1994 for the International
Emerging Markets Portfolio) to March 31, 1995 was as follows: [INSERT DATA].
No shares of any class of the Government Income and International
Fixed Income Portfolio had been issued prior to March 31, 1995.
Each class of the Non-Money Market Portfolios may also from time to
time include in advertisements and communications to shareholders a total
return figure that is not calculated
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<PAGE> 185
according to the formula set forth above in order to compare more accurately
the performance of each class of a Non-Money Market Portfolio's shares with
other performance measures. For example, in comparing the total return of a
Non-Money Market Portfolio's shares with data published by Lipper Analytical
Services, Inc., CDA Investment Technologies, Inc. or Weisenberger Investment
Company Service, or with the performance of the Standard & Poor's 500 Stock
Index, EAFE, the Dow Jones Industrial Average or the Shearson Lehman Hutton
Government Corporate Bond Index, as appropriate, a Non-Money Market Portfolio
may calculate the aggregate total return for its shares of a certain class for
the period of time specified in the advertisement or communication by assuming
the investment of $10,000 in such Non-Money Market Portfolio's shares and
assuming the reinvestment of each dividend or other distribution at net asset
value on the reinvestment date. Percentage increases are determined by
subtracting the initial value of the investment from the ending value and by
dividing the remainder by the beginning value. A Non-Money Market Portfolio
does not, for these purposes, deduct from the initial value invested or the
ending value any amount representing front-end or deferred sales charges,
respectively, charged to purchasers of Series A and Series B Investor Shares,
respectively. The Series A and Series B Investor classes of the Portfolio
will, however, disclose the maximum applicable sales charge and will also
disclose that the performance data does not reflect sales charges and that
inclusion of sales charges would reduce the performance quoted.
NON-MONEY MARKET PORTFOLIO YIELD. The Balanced, Managed Income,
Tax-Free Income, Intermediate Government, Ohio Tax-Free Income, Pennsylvania
Tax-Free Income, Short-Term Bond, Intermediate-Term Bond, Government Income and
International Fixed Income Portfolios may advertise their yields on their
Service, Series A Investor, Series B Investor and Institutional Shares. Under
the rules of the SEC, each such Portfolio advertising the respective yields for
its Service, Series A Investor, Series B Investor and Institutional Shares must
calculate yield using the following formula:
a-b 6
YIELD = 2[(----- +1) - 1]
cd
Where: a = dividends and interest earned during the
period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends.
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<PAGE> 186
d = the maximum offering price per share on the
last day of the period.
For the purpose of determining net investment income earned during the
period (variable "a" in the formula), dividend income on equity securities held
by a Portfolio is recognized by accruing 1/360th of the stated dividend rate of
the security each day that the security is in the Portfolio. Except as noted
below, interest earned on any debt obligations held by the Portfolio is
calculated by computing the yield to maturity of each obligation held by the
Portfolio based on the market value of the obligation (including actual accrued
interest) at the close of business on the last business day of each month, or,
with respect to obligations purchased during the month, the purchase price
(plus actual accrued interest) and dividing the result by 360 and multiplying
the quotient by the market value of the obligation (including actual accrued
interest) in order to determine the interest income on the obligation for each
day of the subsequent month that the obligation is held by the Portfolio. For
purposes of this calculation, it is assumed that each month contains 30 days.
The maturity of an obligation with a call provision is the next call date on
which the obligation reasonably may be expected to be called or, if none, the
maturity date.
With respect to debt obligations purchased at a discount or premium,
the formula generally calls for amortization of the discount or premium.
However, interest earned on tax-exempt obligations that are issued without
original issue discount and have a current market discount is calculated by
using the coupon rate of interest instead of the yield to maturity. In the
case of tax- exempt obligations that are issued with original issue discount
but which have discounts based on current market value that exceed the
then-remaining portion of the original issue discount (market discount), the
yield to maturity is the imputed rate based on the original issue discount
calculation. On the other hand, in the case of tax-exempt obligations that are
issued with original issue discount but which have discounts based on current
market value that are less than the then-remaining portion of the original
issue discount (market premium), the yield to maturity is based on the market
value.
With respect to mortgage or other receivables-backed obligations which
are expected to be subject to monthly payments of principal and interest ("pay
downs"), (a) gain or loss attributable to actual monthly pay downs are
accounted for as an increase or decrease to interest income during the period;
and (b) a Portfolio may elect either (i) to amortize the discount and premium
on the remaining security, based on the cost of the security, to the
weighted-average maturity date, if such information is available, or to the
remaining term of the security, if any, if the weighted-average maturity date
is not
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<PAGE> 187
available, or (ii) not to amortize discount or premium on the remaining
security. The amortization schedule will be adjusted monthly to reflect
changes in the market values of debt obligations.
Undeclared earned income will be subtracted from the maximum offering
price per share (variable "d" in the formula). Undeclared earned income is the
net investment income which, at the end of the base period, has not been
declared as a dividend, but is reasonably expected to be and is declared and
paid as a dividend shortly thereafter. In the case of Series A Investor Shares
of a Non-Money Market Portfolio, a Portfolio's maximum offering price per share
for purposes of the formula includes the maximum front- end sales charge
imposed by the Portfolio -- currently 4.50% of the per share offering price.
For the 30-day period ended March 31, 1995, the annualized yield on
Service Shares of the Portfolios referenced below was as follows: [INSERT
DATA]. For the 30-day period ended on March 31, 1995, the annualized yield on
Series A Investor Shares of the Portfolios referenced below was as follows:
[INSERT DATA]. For the 30-day period ended on March 31, 1995, the annualized
yield on Institutional Shares of the Portfolios referenced below was as
follows: [INSERT DATA].
Each of the Tax-Free Income, Ohio Tax-Free Income and Pennsylvania
Tax-Free Income Portfolios may advertise the tax equivalent yield for its
shares of a specified class. Under the rules of the SEC, such a Portfolio
advertising its tax equivalent yield must calculate such tax equivalent yield
by dividing that portion of the yield of the Portfolio which is tax-exempt by
one minus a stated income tax rate and adding the product to that portion, if
any, of the yield of the Portfolio which is not tax-exempt. For the 30-day
period ended on March 31, 1995, the annualized tax-equivalent yield on
Service Shares of the Portfolios referenced below was as follows (assuming a
Federal income tax rate of 28%): [INSERT DATA].
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<PAGE> 188
For the 30-day period ended on March 31, 1995, the annualized
tax-equivalent yield on Series A Investor Shares of the Portfolios referenced
below was as follows (assuming a Federal income tax rate of 28%): For the
30-day period ended on March 31, 1995, the annualized tax-equivalent yield on
Institutional Shares of the Portfolios referenced below was as follows
(assuming a Federal income tax rate of 28%): [INSERT DATA].
OTHER INFORMATION REGARDING INVESTMENT RETURNS. In addition to
providing performance information that demonstrates the total return or yield
of shares of a particular class of a Portfolio over a specified period of time,
the Fund may provide certain other information demonstrating hypothetical
investment returns. Such information may include, but is not limited to,
illustrating the compounding effects of a dividend in a dividend reinvestment
plan or the impact of tax-free investing. As illustrated below, the Fund may
demonstrate, using certain specified hypothetical data, the compounding effect
of dividend reinvestment on investments in a Non-Money Market Portfolio.
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<PAGE> 189
The Money and Non-Money Market Municipal Portfolios may illustrate in
advertising or sales literature the benefits of tax- free investing. For
example, Table 1 shows taxpayers how to translate Federal tax savings from
investments the income on which is not subject to Federal income tax into an
equivalent yield from a taxable investment. Similarly, Tables 2, 3, 4, 5 and 6
show Pennsylvania, Ohio, North Carolina, Virginia and New Jersey shareholders
the approximate yield that a taxable investment must earn at various income
brackets to produce after-tax yields equivalent to those of the Pennsylvania
Municipal Money Market and Pennsylvania Tax-Free Income Portfolios, the Ohio
Municipal Money Market and Ohio Tax-Free Income Portfolios, the North Carolina
Municipal Money Market Portfolio, the Virginia Municipal Money Market
Portfolio, and the New Jersey Municipal Money Market Portfolio respectively.
The yields below are for illustration purposes only and are not intended to
represent current or future yields for the Money and Non-Money Market
Municipal Portfolios, which may be higher or lower than the yields shown.
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<PAGE> 190
TABLE 1
<TABLE>
<CAPTION>
Federal TAX-EXEMPT YIELD
1995 Taxable Marginal
Income Bracket Tax Rate* 3.0 3.5 4.0 4.5 5.0 5.5 6.0
- ------------------------------------------------------------------------------------------------------------------------------
Single Return Joint Return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - $23,350 $ 0 - $39,000 15.0% 3.529% 4.118% 4.706% 5.294% 5.882% 6.471% 7.059%
$23,351 - $56,550 $39,001 - $94,250 28.0% 4.167% 4.861% 5.556% 6.250% 6.944% 7.639% 8.333%
$56,551 -$117,950 $94,251 -$143,600 31.0% 4.348% 5.072% 5.797% 6.522% 7.246% 7.971% 8.696%
$117,951-$256,500 $143,601-$256,500 36.0% 4.688% 5.469% 6.250% 7.031% 7.812% 8.594% 9.375%
Over $256,500 Over $256,500 39.6% 4.967% 5.795% 6.623% 7.450% 8.278% 9.106% 9.934%
</TABLE>
*Rates do not include the phase out of personal exemptions or itemized
deductions. It is assumed that the investor is not subject to the alternative
minimum tax. Where applicable, investors should consider that the benefit of
certain itemized deductions and the benefit of personal exemptions are limited
in the case of higher income individuals. For 1995, taxpayers with adjusted
gross income in excess of a threshold amount of approximately $114,700 are
subject to an overall limitation on certain itemized deductions, requiring a
reduction in such deductions equal to the lesser of (i) 3% of adjusted gross
income in excess of the threshold of approximately $114,700 or (ii) 80% of the
amount of such itemized deductions otherwise allowable. The benefit of each
personal exemption is phased out at the rate of two percentage points for each
$2,500 (or fraction thereof) of adjusted gross income in the phase-out zone.
For single taxpayers the range of adjusted gross income comprising the
phase-out zone for 1995 is estimated to be from $114,700 to $237,201 and for
married taxpayers filing a joint return from $172,050 to $294,551. The Federal
tax brackets, the threshold amounts at which itemized deductions are subject to
reduction, and the range over which personal exemptions are phased out will be
further adjusted for inflation for each year after 1995.
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<PAGE> 191
TABLE 2
<TABLE>
<CAPTION>
Approx.
Combined
Federal
and PA TAX-EXEMPT YIELD
1995 Federal Marginal
Taxable Income Bracket Tax Rate* 3.0 3.5 4.0 4.5 5.0 5.5 6.0
- ----------------------------------------------------------------------------------------------------------------------------
Single Return Joint Return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - $ 23,350 $ 0 - $39,000 17.380% 3.631% 4.236% 4.841% 5.447% 6.052% 6.657% 7.262%
$23,351 - $ 56,550 $ 39,001 - $94,250 30.016% 4.287% 5.001% 5.716% 6.430% 7.144% 7.859% 8.573%
$56,551 - $117,950 $ 94,251 -$143,600 32.932% 4.473% 5.219% 5.964% 6.710% 7.455% 8.201% 8.946%
$117,951- $256,500 $143,601 -$256,500 37.792% 4.823% 5.626% 6.430% 7.234% 8.038% 8.841% 9.645%
Over $256,500 Over $256,500 41.291% 5.110% 5.962% 6.813% 7.665% 8.517% 9.368% 10.220%
</TABLE>
*The income amount shown is income subject to Federal income tax reduced by
adjustments to income, exemptions, and itemized deductions (including the
deduction for state income taxes). If the standard deduction is taken for
Federal income tax purposes, the taxable equivalent yield required to equal a
specified tax-exempt yield is at least as great as that shown in the table. It
is assumed that the investor is not subject to the alternative minimum tax.
Where applicable, investors should consider that the benefit of certain
itemized deductions and the benefit of personal exemptions are limited in the
case of higher income individuals. For 1995, taxpayers with adjusted gross
income in excess of a threshold amount of approximately $114,700 are subject to
an overall limitation on certain itemized deductions, requiring a reduction in
such deductions equal to the lesser of (i) 3% of adjusted gross income in
excess of the threshold of approximately $114,700 or (ii) 80% of the amount of
such itemized deductions otherwise allowable. The benefit of each personal
exemption is phased out at the rate of two percentage points for each $2,500
(or fraction thereof) of adjusted gross income in the phase-out zone. For
single taxpayers the range of adjusted gross income comprising the phase-out
zone for 1995 is estimated to be from $114,700 to $237,201 and for married
taxpayers filing a joint return from $172,050 to $294,551. The Federal tax
brackets, the threshold amounts at which itemized deductions are subject to
reduction, and the range over which personal exemptions are phased out will be
further adjusted for inflation for each year after 1995.
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<PAGE> 192
TABLE 3
<TABLE>
<CAPTION>
Weighted Approximate
Federal Ave.Ohio Combined Federal Tax-Exempt Yield
1995 Marginal Marginal and Ohio
Income Bracket* Tax Rate Tax Rate* Marginal Tax Rate* 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%
- -------------- -------- -------- ----------------- ---- ----- ----- ------ ------ ----- ------
Single Return Taxable Yield - Single Return
-------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 - 23,350 15.0% 2.549% 17.166% 3.622% 4.225% 4.829% 5.433% 6.036% 6.640% 7.243%
23,351 - 56,550 28.0% 4.828% 31.476% 4.378% 5.108% 5.837% 6.567% 7.297% 8.026% 8.756%
56,551 - 100,000 31.0% 5.543% 34.824% 4.603% 5.370% 6.137% 6.904% 7.672% 8.439% 9.206%
100,001 - 117,950 31.0% 6.900% 35.761% 4.670% 5.448% 6.227% 7.005% 7.783% 8.562% 9.340%
117,951 - 200,000 36.0% 6.900% 40.416% 5.035% 5.874% 6.713% 7.552% 8.392% 9.231% 10.070%
200,001 - 256,500 36.0% 7.500% 40.800% 5.068% 5.912% 6.757% 7.601% 8.446% 9.291% 10.135%
Over 256,500 39.6% 7.500% 44.130% 5.370% 6.265% 7.159% 8.054% 8.949% 9.844% 10.739%
</TABLE>
<TABLE>
<CAPTION>
Joint Return Taxable Yield - Joint Return
------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 - 39,000 15.0% 2.711% 17.304% 3.628% 4.232% 4.837% 5.442% 6.046% 6.651% 7.255%
39,001 - 94,250 28.0% 4.881% 31.514% 4.380% 5.111% 5.841% 6.571% 7.301% 8.031% 8.761%
94,251 - 100,000 31.0% 5.646% 34.896% 4.608% 5.376% 6.144% 6.912% 7.680% 8.448% 9.216%
100,001 - 143,600 31.0% 6.555% 35.523% 4.653% 5.428% 6.204% 6.979% 7.755% 8.530% 9.306%
143,601 - 200,000 36.0% 6.555% 40.195% 5.016% 5.852% 6.688% 7.524% 8.361% 9.197% 10.033%
200,001 - 219,900 36.0% 7.125% 40.560% 5.047% 5.888% 6.729% 7.571% 8.412% 9.253% 10.094%
219,901 - 256,500 36.0% 7.500% 40.800% 5.068% 5.912% 6.757% 7.601% 8.446% 9.291% 10.135%
Over 256,500 39.6% 7.500% 44.130% 5.370% 6.265% 7.159% 8.054% 8.949% 9.844% 10.739%
</TABLE>
*The income brackets applicable to the state of Ohio do not correspond to the
Federal taxable income brackets. In addition, Ohio taxable income will likely
be different than Federal taxable income because it is computed by reference to
Federal adjusted gross income with specifically-defined Ohio modifications and
exemptions, and does not consider many of the deductions allowed from Federal
adjusted gross income in computing Federal taxable income. In arriving at the
combined marginal tax rate, a weighted average of Ohio's marginal tax rate was
used within each Federal taxable income bracket up to $100,000, at which point
Ohio's actual 6.9% marginal rate was applied up to taxable income of $200,000,
at which point Ohio's top actual marginal rate of 7.5% was applied. The Ohio
joint filing credit has been taken into account in determining the marginal tax
rate for the taxable yield on joint returns up to the maximum credit amount
allowed. However, no other state tax credits, exemptions, or local taxes have
been
-80-
<PAGE> 193
taken into account in arriving at the combined marginal tax rate. The income
amount shown is income subject to Federal income tax reduced by adjustments to
income, exemptions, and itemized deductions (including the deduction for state
and local income taxes). If the standard deduction is taken for Federal income
tax purposes, the taxable equivalent yield required to equal a specified tax-
exempt yield is at least as great as that shown in the table. It is assumed
that the investor is not subject to the alternative minimum tax. Where
applicable, investors should consider that the benefit of certain itemized
deductions and the benefit of personal exemptions are limited in the case of
higher income individuals. For 1994, taxpayers with adjusted gross income in
excess of a $111,800 threshold amount are subject to an overall limitation on
certain itemized deductions, requiring a reduction in such deductions equal to
the lesser of (i) 3% of adjusted gross income in excess of the $111,800
threshold or (ii) 80% of the amount of such itemized deductions otherwise
allowable. The benefit of each personal exemption is phased out at the rate of
two percentage points for each $2,500 (or fraction thereof) of adjusted gross
income in the phase-out zone. For single taxpayers the range of adjusted gross
income comprising the phase-out zone for 1994 is from $111,800 to $234,301 and
for married taxpayers filing a joint return the range is from $167,700 to
$290,201. The Federal tax brackets, the threshold amounts at which itemized
deductions are subject to reduction, and the range over which personal
exemptions are phased out will be further adjusted for inflation for each year
after 1994.
-81-
<PAGE> 194
TABLE 4
<TABLE>
<CAPTION>
1995 Taxable North
Income Bracket Federal Carolina Combined Federal Tax-Exempt Yield
Marginal Marginal and North Carolina
Single Return Joint Return Tax Rate Tax Rate Marginal Tax Rate* 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%
- ------------- ------------ -------- -------- ------------------ ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 - 12,750 0 - 21,250 15.0% 6.00% 20.100% 3.755% 4.380% 5.006% 5.632% 6.258% 6.884% 7.509%
12,751 - 23,350 21,251 - 39,000 15.0% 7.00% 20.950% 3.795% 4.428% 5.060% 5.693% 6.325% 6.958% 7.590%
23,351 - 56,550 39,001 - 94,250 28.0% 7.00% 33.040% 4.480% 5.227% 5.974% 6.720% 7.467% 8.214% 8.961%
56,551 - 60,000 94,251 -100,000 31.0% 7.00% 35.830% 4.675% 5.454% 6.233% 7.013% 7.792% 8.571% 9.350%
60,001 - 117,950 100,001 -143,600 31.0% 7.75% 36.348% 4.713% 5.499% 6.284% 7.070% 7.855% 8.641% 9.426%
117,951 - 256,500 143,601- 256,500 36.0% 7.75% 40.960% 5.081% 5.928% 6.775% 7.622% 8.469% 9.316% 10.163%
Over 256,500 Over 256,500 39.6% 7.75% 44.281% 5.384% 6.282% 7.179% 8.076% 8.974% 9.871% 10.768%
</TABLE>
*The taxable income brackets applicable to North Carolina do not correspond to
the Federal taxable income brackets. The taxable income brackets presented in
this table represent the breakpoints for both the Federal and North Carolina
marginal tax rate changes. When applying these brackets, Federal taxable
income may be different than North Carolina taxable income. No state tax
credits, exemptions, or local taxes have been taken into account in arriving at
the combined marginal tax rate. The income amount shown is income subject to
Federal income tax reduced by adjustments to income, exemptions, and itemized
deductions (including the deduction for state and local income taxes). If the
standard deduction is taken for Federal income tax purposes, the taxable
equivalent yield required to equal a specified tax-exempt yield is at least as
great as that shown in the table. It is assumed that the investor is not
subject to the alternative minimum tax. Where applicable, investors should
consider that the benefit of certain itemized deductions and the benefit of
personal exemptions are limited in the case of higher-income individuals. For
1995, taxpayers with adjusted gross income in excess of $114,700 are subject to
an overall limitation on certain itemized deductions, requiring a reduction in
such deductions equal to the lesser of (i) 3% of adjusted gross income in
excess of $114,700 or (ii) 80% of the amount of such itemized deductions
otherwise allowable. The benefit of each personal exemption is phased out at
the rate of two percentage points for each $2,500 (or fraction thereof) of
adjusted gross income in the phase-out zone. For single taxpayers the range of
adjusted gross income comprising the phase-out zone for 1995 is from $114,700
to $237,201, and for married taxpayers filing a joint return the range is from
$172,050 to $294,551. The Federal tax brackets, the threshold amounts at which
itemized deductions are subject to reduction, and the range over which personal
exemptions are phased out will be further adjusted for inflation for each year
after 1995.
-82-
<PAGE> 195
TABLE 5
<TABLE>
<CAPTION>
1995 Taxable
Income Bracket Federal Virginia Combined Federal Tax-Exempt Yield
Marginal Marginal and Virginia
Single Return Joint Return Tax Rate Tax Rate Marginal Tax Rate* 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%
- ------------- ------------ -------- -------- ------------------ ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 - 22,750 0 - 38,000 15.0% 5.75% 19.888% 3.745% 4.369% 4.993% 5.617% 6.241% 6.865% 7.489%
22,751 - 55,100 38,001 - 91,850 28.0% 5.75% 32.140% 4.421% 5.158% 5.894% 6.631% 7.368% 8.105% 8.842%
55,101 - 115,000 91,851 - 140,000 31.0% 5.75% 34.968% 4.613% 5.382% 6.151% 6.920% 7.688% 8.457% 9.226%
115,001 - 250,000 140,001 - 250,000 36.0% 5.75% 39.680% 4.973% 5.802% 6.631% 7.460% 8.289% 9.118% 9.947%
OVER 250,000 OVER 250,000 39.6% 5.75% 43.073% 5.270% 6.148% 7.027% 7.905% 8.783% 9.661% 10.540%
</TABLE>
*The taxable income brackets applicable to Virginia do not correspond to the
Federal taxable income brackets. Because Virginia imposes a maximum tax rate
of 5.75% on taxable income over $17,000, the taxable income brackets presented
in this table represent the breakpoints only for the Federal marginal tax rate
changes. When applying these brackets, Federal taxable income may be different
than Virginia taxable income. No state tax credits, exemptions, or local taxes
have been taken into account in arriving at the combined marginal tax rate.
The income amount shown is income subject to Federal income tax reduced by
adjustments to income, exemptions, and itemized deductions (including the
deduction for state and local income taxes). If the standard deduction is
taken for Federal income tax purposes, the taxable equivalent yield required to
equal a specified tax-exempt yield is at least as great as that shown in the
table. It is assumed that the investor is not subject to the alternative
minimum tax. Where applicable, investors should consider that the benefit of
certain itemized deductions and the benefit of personal exemptions are limited
in the case of higher income individuals. For 1995, taxpayers with adjusted
gross income in excess of $111,800 are subject to an overall limitation on
certain itemized deductions, requiring a reduction in such deductions equal to
the lesser of (i) 3% of adjusted gross income excess of $118,800 or (ii) 80% of
the amount of such itemized deductions otherwise allowable. The benefit of
each personal exemption is phased out at the rate of two percentage points for
each $2,500 (or fraction thereof) of adjusted gross income in the phase-out
zone. For single taxpayers the range of adjusted gross income comprising the
phase-out zone for 1995 is from $111,800 to $234,301 and for married taxpayers
filing a joint return from $167,700 to $290,201. The Federal tax brackets, the
threshold amounts at which itemized deductions are subject to reduction, and
the range over which personal exemptions are phased out will be further
adjusted for inflation for each year after 1995.
-83-
<PAGE> 196
TABLE 6
[TO BE INSERTED]
<PAGE> 197
MISCELLANEOUS. Yields on shares of a Portfolio may fluctuate daily
and do not provide a basis for determining future yields. Because such yields
will fluctuate, they cannot be compared with yields on savings account or other
investment alternatives that provide an agreed to or guaranteed fixed yield for
a stated period of time. In comparing the yield of one fund to another,
consideration should be given to each fund's investment policies, including the
types of investments made, lengths of maturities of the portfolio securities,
and whether there are any special account charges which may reduce the
effective yield. The fees which may be imposed by Authorized Dealers, Service
Organizations and other institutions on their customers are not reflected in
the calculations of total returns or yields for the Portfolios.
The Fund may also from time to time include discussions or
illustrations of the effects of compounding in advertisements. "Compounding"
refers to the fact that, if dividends or other distributions on a Portfolio
investment are reinvested by being paid in additional Portfolio shares, any
future income or capital appreciation of a Portfolio would increase the value,
not only of the original investment in the Portfolio, but also of the
additional Portfolio shares received through reinvestment. The Fund may also
include discussions or illustrations of the potential investment goals of a
prospective investor, investment management techniques, policies or investment
suitability of a Portfolio, economic conditions, the effects of inflation and
historical performance of various asset classes, including but not limited to,
stocks, bonds and Treasury bills. From time to time advertisements or
communications to shareholders may summarize the substance of information
contained in shareholder reports (including the investment composition of a
Portfolio), as well as the views of the Portfolio's adviser and/or sub-adviser
as to current market, economy, trade and interest rate trends, legislative,
regulatory and monetary developments, investment strategies and related matters
believed to be of relevance to a Portfolio. The Fund may also include in
advertisements charts, graphs or drawings which illustrate the potential risks
and rewards of investment in various investment vehicles, including but not
limited to, stocks, bonds, treasury bills and shares of a Portfolio. In
addition, advertisement or shareholder communications may include a discussion
of certain attributes or benefits to be derived by an investment in a
Portfolio. Such advertisements or communicators may include symbols, headlines
or other material which highlight or summarize the information discussed in
more detail therein.
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<PAGE> 198
TAXES
The following is only a summary of certain additional tax
considerations generally affecting the Portfolios and their shareholders that
are not described in the Prospectuses. No attempt is made to present a
detailed explanation of the tax treatment of the Portfolios or their
shareholders, and the discussion here and in the Prospectuses is not intended
as a substitute for careful tax planning. Investors are urged to consult their
tax advisers with specific reference to their own tax situation.
Each Portfolio will elect to be taxed as a regulated investment
company under Part I of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, each Portfolio
generally is exempt from Federal income tax on its net investment income and
realized capital gains that it distributes to shareholders, provided that it
distributes an amount equal to at least the sum of (a) 90% of its investment
company taxable income (net investment income and the excess of net short-term
capital gain over net long-term capital loss, if any, for the year) and (b) 90%
of its net tax-exempt interest income, if any, for the year (the "Distribution
Requirement") and satisfies certain other requirements of the Code that are
described below. Distributions of investment company taxable income and net
tax-exempt interest income made during the taxable year or, under specified
circumstances, within twelve months after the close of the taxable year will
satisfy the Distribution Requirement.
In addition to satisfaction of the Distribution Requirement, each
Portfolio must derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans and gains from the
sale or other disposition of stock or securities or foreign currencies
(including, but not limited to, gains from forward foreign currency exchange
contacts), or from other income derived with respect to its business of
investment in such stock, securities, or currencies (the "Income Requirement")
and derive less than 30% of its gross income from the sale or other disposition
of stock, securities and certain other investments (including securities and
forward foreign currency exchange contracts, but only to the extent that such
contracts are not directly related to the Portfolio's principal business of
investing in stock or securities) held for less than three months (the
"Short-Short Gain Test"). Future Treasury regulations may provide that foreign
currency gains that are not "directly related" to a Portfolio's principal
business of investing in stock or securities will not satisfy the Income
Requirement. Interest (including original issue discount and "accrued market
discount") received by a Portfolio at maturity or upon disposition of a
security held for less than three months will not be treated as gross income
derived from the sale or
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<PAGE> 199
other disposition of such security held for less than three months for purposes
of the Short-Short Gain Test. However, any other income that is attributable
to realized market appreciation will be treated as gross income from the sale
or other disposition of securities for this purpose.
In addition to the foregoing requirements, at the close of each
quarter of its taxable year, at least 50% of the value of each Portfolio's
assets must consist of cash and cash items, U.S. government securities,
securities of other regulated investment companies, and securities of other
issuers (as to which a Portfolio has not invested more than 5% of the value of
its total assets in securities of such issuer and as to which a Portfolio does
not hold more than 10% of the outstanding voting securities of such issuer),
and no more than 25% of the value of each Portfolio's total assets may be
invested in the securities of any one issuer (other than U.S. Government
securities and securities of other regulated investment companies), or in two
or more issuers which such Portfolio controls and which are engaged in the same
or similar trades or businesses.
Each of the Money and Non-Money Market Municipal Portfolios is
designed to provide investors with tax-exempt interest income. Shares of the
Money and Non-Money Market Municipal Portfolios would not be suitable for
tax-exempt institutions and may not be suitable for retirement plans qualified
under Section 401 of the Code, H.R. 10 plans and individual retirement accounts
because such plans and accounts are generally tax-exempt and, therefore, not
only would not gain any additional benefit from the Portfolio's dividends being
tax-exempt but also such dividends would be taxable when distributed to the
beneficiary. In addition, the Money and Non-Money Market Municipal Portfolios
may not be an appropriate investment for entities which are "substantial users"
of facilities financed by private activity bonds or "related person" thereof.
"Substantial user" is defined under U.S. Treasury Regulations to include a
non-exempt person who regularly uses a part of such facilities in his trade or
business and (a) whose gross revenues derived with respect to the facilities
financed by the issuance of bonds are more than 5% of the total revenues
derived by all users of such facilities, (b) who occupies more than 5% of the
entire usable area of such facilities, or (c) for whom such facilities or a
part thereof were specifically constructed, reconstructed or acquired.
"Related persons" include certain related natural persons, affiliated
corporations, a partnership and its partners and an S corporation and its
shareholders.
In order for the Money and Non-Money Market Municipal Portfolios to
pay exempt interest dividends for any taxable year, at the close of each
quarter of the taxable year at least 50% of the value of each such Portfolio
must consist of exempt interest obligations. Exempt interest dividends
distributed to
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<PAGE> 200
shareholders are not included in the shareholder's gross income for regular
Federal income tax purposes. However, all shareholders required to file a
Federal income tax return are required to report the receipt of exempt interest
dividends and other exempt interest on their returns. Moreover, while such
dividends and interest are exempt from regular Federal income tax, they may be
subject to alternative minimum tax (currently imposed at the rates of 26% and
28% in the case of non-corporate taxpayers and at the rate of 20% in the case
of corporate taxpayers) in two circumstances. First, exempt interest dividends
derived from certain "private activity" bonds issued after August 7, 1986,
generally will constitute an item of tax preference for both corporate and
non-corporate taxpayers. Second, exempt interest dividends derived from all
bonds, regardless of the date of issue, must be taken into account by corporate
taxpayers in determining certain adjustments for alternative minimum tax
purposes. In addition, exempt interest dividends paid to corporate taxpayers
may in these two circumstances be subject to tax under the environmental tax
under Section 59A of the Code, which is imposed at the rate of 0.12% on the
excess of the modified alternative minimum taxable income of a corporate
taxpayer over $2 million for taxable years beginning before January 1996.
Receipt of exempt interest dividends may result in collateral Federal income
tax consequences to certain other taxpayers, including financial institutions,
property and casualty insurance companies, individual recipients of Social
Security or Railroad Retirement benefits, and foreign corporations engaged in
trade or business in the United States. Prospective investors should consult
their own tax advisors as to such consequences.
If a Money or Non-Money Market Municipal Portfolio distributes exempt
interest dividends during the shareholder's taxable year, no deduction
generally will be allowed for any interest expense on indebtedness incurred to
purchase or carry shares of such Portfolio.
The Ohio Municipal Money Market and Tax-Free Income Portfolios are not
subject to the Ohio personal income tax, school district income taxes in Ohio,
the Ohio corporation franchise tax, or the Ohio dealers intangibles tax,
provided that, with respect to the Ohio corporation franchise tax and the Ohio
dealers intangibles tax, the Fund timely files the annual report required by
Section 5733.09 of the Ohio Revised Code. Distributions with respect to the
Ohio Municipal Money Market and Tax-Free Income Portfolios properly
attributable to proceeds of insurance paid to those Portfolios that represent
maturing or matured interest on defaulted Obligations held by those Portfolios
and that are excluded from gross income for federal income tax purposes will
not be subject to Ohio personal income tax or municipal or school district
income taxes in Ohio if, and to the same extent as, such interest would not
have been subject
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<PAGE> 201
to such taxes if paid in the normal course by the issuer of such defaulted
Obligations.
An investment in a Portfolio (including the North Carolina Municipal
Money Market Portfolio) by a corporation subject to the North Carolina
franchise tax will be included in the capital stock, surplus and undivided
profits base in computing the North Carolina franchise tax. Investors in a
Portfolio including, in particular, corporate investors which may be subject to
the North Carolina franchise tax, should consult their tax advisors with
respect to the effects on such tax of an investment in a Portfolio and with
respect to their North Carolina tax situation in general.
Distributions of investment company taxable income will be taxable
(other than interest on tax-exempt Municipal Obligations held by the Money
Market and Non-Money Market Municipal Portfolios and the possible allowance of
the dividends received deduction described below) to shareholders as ordinary
income, regardless of whether such distributions are paid in cash or are
reinvested in shares. Shareholders receiving any distribution from a Portfolio
in the form of additional shares will be treated as receiving a taxable
distribution in an amount equal to the fair market value of the shares
received, determined as of the reinvestment date. The Money Market and
Non-Money Market Municipal Portfolios may each purchase securities that do not
bear Tax-Exempt Interest. Any income on such securities recognized by such a
Portfolio will be distributed and will be taxable to its shareholders.
Each Portfolio intends to distribute to shareholders any of its excess
of net long-term capital gain over net short-term capital loss ("net capital
gain") for each taxable year. Such gain is distributed as a capital gain
dividend and is taxable to shareholders as long-term capital gain, regardless
of the length of time the shareholder has held his shares, whether such gain
was recognized by the Portfolio prior to the date on which a shareholder
acquired shares of the Portfolio and whether the distribution was paid in cash
or reinvested in shares.
In the case of corporate shareholders, distributions (other than
capital gain dividends) of a Non-Money Market Portfolio for any taxable year
generally qualify for the dividends received deduction to the extent of the
gross amount of "qualifying dividends" received by such Portfolio for the year.
Generally, a dividend will be treated as a "qualifying dividend" if it has been
received from a domestic corporation. Distributions of net investment income
from debt securities and of net realized short-term capital gains will be
taxable to shareholders as ordinary income and will not be treated as
"qualifying dividends" for purposes of the dividends received deduction.
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Ordinary income of individuals will be taxable at a maximum nominal
rate of 39.6%, but because of limitations on itemized deductions otherwise
allowable and the phase-out of personal exemptions, the maximum effective
marginal rate of tax for some taxpayers may be higher. An individual's
long-term capital gains will be taxable at a maximum rate of 28%. Capital
gains and ordinary income of corporate taxpayers are both taxed at a maximum
nominal rate of 35%, but at marginal rates of 39% for taxable income between
$100,000 and $335,000 and 38% for taxable income between $15,000,000 and
18,333,333. Investors should be aware that any loss realized upon the sale,
exchange or redemption of shares held for six months or less will be treated as
a long-term capital loss to the extent any capital gain dividends have been
paid with respect to such shares.
Generally, futures contracts held by a Portfolio at the close of the
Portfolio's taxable year will be treated for Federal income tax purposes as
sold for their fair market value on the last business day of such year, a
process known as "mark-to-market." Forty percent of any gain or loss resulting
from such constructive sale will be treated as short-term capital gain or loss
and 60% of such gain or loss will be treated as long-term capital gain or loss
without regard to the length of time a Portfolio holds the futures contract
("the 40-60 rule"). The amount of any capital gain or loss actually realized
by a Portfolio in a subsequent sale or other disposition of those futures
contracts will be adjusted to reflect any capital gain or loss taken into
account by the Portfolio in a prior year as a result of the constructive sale
of the contracts. With respect to futures contracts to sell, which will be
regarded as parts of a "mixed straddle" because their values fluctuate
inversely to the values of specific securities held by the Portfolio, losses as
to such contracts to sell will be subject to certain loss deferral rules which
limit the amount of loss currently deductible on either part of the straddle to
the amount thereof which exceeds the unrecognized gain (if any) with respect to
the other part of the straddle, and to certain wash sales regulations. Under
short sales rules, which also will be applicable, the holding period of the
securities forming part of the straddle will (if they have not been held for
the long-term holding period) be deemed not to begin prior to termination of
the straddle. With respect to certain futures contracts, deductions for
interest and carrying charges will not be allowed. Notwithstanding the rules
described above, with respect to futures contracts to sell which are properly
identified as such, a Portfolio may make an election which will exempt (in
whole or in part) those identified futures contracts from being treated for
Federal income tax purposes as sold on the last business day of the Fund's
taxable year, but gains and losses will be subject to such short sales, wash
sales, loss deferral rules and the requirement to capitalize interest and
carrying charges. Under temporary regulations, a Portfolio would be allowed
(in lieu of
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the foregoing) to elect either (1) to offset gains or losses from portions
which are part of a mixed straddle by separately identifying each mixed
straddle to which such treatment applies, or (2) to establish a mixed straddle
account for which gains and losses would be recognized and offset on a periodic
basis during the taxable year. Under either election, the 40-60 rule will
apply to the net gain or loss attributable to the futures contracts, but in the
case of a mixed straddle account election, not more than 50% of any net gain
may be treated as long-term and no more than 40% of any net loss may be treated
as short-term. Options on futures contracts generally receive Federal tax
treatment similar to that described above.
Under the Federal income tax provisions applicable to regulated
investment companies, less than 30% of a company's gross income for a taxable
year must be derived from gains realized on the sale or other disposition of
securities held for less than three months. The Internal Revenue Service has
issued a private letter ruling with respect to certain other investment
companies to the following effect: gains realized from a futures contract to
purchase or to sell will be treated as being derived from a security held for
three months or more regardless of the actual period for which the contract is
held if the gain arises as a result of a constructive sale of the contract at
the end of the taxable year as described above, and will be treated as being
derived from a security held for less than three months only if the contract is
terminated (or transferred) during the taxable year (other than by reason of
mark-to-market) and less than three months elapses between the date the
contract is acquired and the termination date. Although private letter rulings
are not binding on the Internal Revenue Service with respect to the Portfolios,
the Fund believes that the Internal Revenue Service would take a comparable
position with respect to the Portfolios. In determining whether the 30% test
is met for a taxable year, increases and decreases in the value of a
Portfolio's futures contracts and securities that qualify as part of a
"designated hedge," as defined in the Code, may be netted.
Special rules govern the Federal income tax treatment of the portfolio
transactions of the International Equity, International Emerging Markets and
International Fixed Income Portfolios and certain transactions of the other
Portfolios that are denominated in terms of a currency other than the U.S.
dollar or determined by reference to the value of one or more currencies other
than the U.S. dollar. The types of transactions covered by the special rules
include the following: (i) the acquisition of, or becoming the obligor under,
a bond or other debt instrument (including, to the extent provided in Treasury
regulations, certain preferred stock); (ii) the accruing of certain trade
receivables and payables; (iii) the entering into or acquisition of any forward
contract or similar financial instruments; and (iv) the entering into or
acquisition of any futures contract,
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option or similar financial instrument, if such instrument is not
marked-to-market. The disposition of a currency other than the U.S. dollar by
a U.S. taxpayer also is treated as a transaction subject to the special
currency rules. With respect to such transactions, foreign currency gain or
loss is calculated separately from any gain or loss on the underlying
transaction and is normally taxable as ordinary gain or loss. A taxpayer may
elect to treat as capital gain or loss foreign currency gain or loss arising
from certain identified forward contracts that are capital assets in the hands
of the taxpayer and which are not part of a straddle ("Capital Asset
Election"). In accordance with Treasury regulations, certain transactions with
respect to which the taxpayer has not made the Capital Asset Election and that
are part of a "Section 988 hedging transaction" (as defined in the Code and the
Treasury regulations) are integrated and treated as a single transaction or
otherwise treated consistently for purposes of the Code. "Section 988 hedging
transactions" (as identified by such Treasury regulations) are not subject to
the mark-to-market or loss deferral rules under the Code. Some of the non-U.S.
dollar-denominated investments that the Portfolios may make (such as non- U.S.
dollar-denominated debt securities and obligations and preferred stock) and
some of the foreign currency contracts the International Equity, International
Emerging Markets and International Fixed Income Portfolios may enter into will
be subject to the special currency rules described above. Gain or loss
attributable to the foreign currency component of transactions engaged in by a
Portfolio which is not subject to the special currency rules (such as foreign
equity investments other than certain preferred stocks) will be treated as
capital gain or loss and will not be segregated from the gain or loss on the
underlying transaction.
In addition, certain forward foreign currency contracts held by a
Portfolio at the close of the Fund's taxable year will be subject to
"mark-to-market" treatment. If the Fund makes the Capital Asset Election with
respect to such contracts, the contract will be subject to the 40-60 rule
described above. Otherwise, such gain or loss will be ordinary in nature. To
receive such Federal income tax treatment, a foreign currency contract must
meet the following conditions: (1) the contract must require delivery of a
foreign currency of a type in which regulated futures contracts are traded or
upon which the settlement value of the contract depends; (2) the contract must
be entered into at arm's length at a price determined by reference to the price
in the interbank market; and (3) the contract must be traded in the interbank
market. The Treasury Department has broad authority to issue regulations under
these provisions respecting foreign currency contracts. As of the date of this
Statement of Additional Information the Treasury has not issued any such
regulations. Forward foreign currency contracts entered into by the
International Equity, International Emerging Markets and International Fixed
Income Portfolios also may result
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in the creation of one or more straddles for Federal income tax purposes, in
which case certain loss deferral, short sales, and wash sales rules and
requirements to capitalize interest and carrying charges may apply.
If for any taxable year any Portfolio does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and
all distributions (including amounts derived from interest on Municipal
Obligations) will be taxable as ordinary dividends to the extent of such
Portfolio's current and accumulated earnings and profits. Such distributions
will be eligible for the dividends received deduction in the case of corporate
shareholders.
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). Each Portfolio intends to make sufficient distributions
or deemed distributions of its ordinary taxable income and any capital gain net
income prior to the end of the each calendar year to avoid liability for this
excise tax.
The Fund will be required in certain cases to withhold and remit to
the United States Treasury 31% of dividends and gross sale proceeds paid to any
shareholder (i) who has provided either an incorrect tax identification number
or no number at all, (ii) who is subject to backup withholding by the Internal
Revenue Service for failure to report the receipt of interest or dividend
income properly, or (iii) who has failed to certify to the Fund that he is not
subject to backup withholding or that he is an "exempt recipient."
Shareholders will be advised annually as to the Federal income tax
consequences of distributions made by the Portfolios each year.
The foregoing general discussion of Federal income tax consequences is
based on the Code and the regulations issued thereunder as in effect on the
date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
Although each Portfolio 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
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located or in which it is otherwise deemed to be conducting business, each
Portfolio may be subject to the tax laws of such states or localities.
Shareholders should consult their tax advisors about state and local tax
consequences, which may differ from the Federal income tax consequences
described above.
ADDITIONAL INFORMATION CONCERNING SHARES
Shares of the Fund have noncumulative voting rights and, accordingly,
the holders of more than 50% of the Fund's outstanding shares (irrespective of
class) may elect all of the trustees. Shares have no preemptive rights and
only such conversion and exchange rights as the Board may grant in its
discretion. When issued for payment as described in the Prospectus, shares
will be fully paid and non-assessable by the Fund.
There will normally be no meetings of shareholders for the purpose of
electing trustees unless and until such time as required by law. At that time,
the trustees then in office will call a shareholders' meeting to elect
trustees. Except as set forth above, the trustees shall continue to hold
office and may appoint successor trustees. The Fund's Declaration of Trust
provides that meetings of the shareholders of the Fund shall be called by the
trustees upon the written request of shareholders owning at least 10% of the
outstanding shares entitled to vote.
The Funds' Declaration of Trust authorizes the Board of Trustees,
without shareholder approval (unless otherwise required by applicable law), to:
(i) sell and convey the assets belonging to a class of shares to another
management investment company for consideration which may include securities
issued by the purchaser and, in connection therewith, to cause all outstanding
shares of such class to be redeemed at a price which is equal to their net
asset value and which may be paid in cash or by distribution of the securities
or other consideration received from the sale and conveyance; (ii) sell and
convert the assets belonging to one or more classes of shares into money and,
in connection therewith, to cause all outstanding shares of such class to be
redeemed at their net asset value; or (iii) combine the assets belonging to a
class of shares with the assets belonging to one or more other classes of
shares if the Board of Trustees reasonably determines that such combination
will not have a material adverse effect on the shareholders of any class
participating in such combination and, in connection therewith, to cause all
outstanding shares of any such class to be redeemed or converted into shares of
another class of shares at their net asset value. However, the exercise of
such authority may be subject to certain restrictions under the 1940 Act. The
Board of Trustees may authorize the termination of any class of shares
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after the assets belonging to such class have been distributed to its
shareholders.
MISCELLANEOUS
COUNSEL. The law firm of Drinker Biddle & Reath, PNB Building, 1345
Chestnut Street, Philadelphia, Pennsylvania 19107- 3496, serves as the Fund's
counsel.
INDEPENDENT ACCOUNTANTS. Coopers & Lybrand, L.L.P.,2400 Eleven Penn
Center, Philadelphia, Pennsylvania 19103, serves as the Fund's independent
accountants.
FIVE PERCENT OWNERS. The name, address and percentage ownership of
each person that owned of record or beneficially on April 28, 1995 5% or more
of the outstanding shares of a Portfolio which had commenced operations as of
that date was as follows: [INSERT DATA]
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On April 28, 1995, PNC Bank held of record approximately __% of the
Fund's outstanding shares, and may be deemed a controlling person of the Fund
under the 1940 Act. PNC Bank is a national bank organized under the laws of
the United States. All of the capital stock of PNC Bank is owned by PNC
Bancorp, Inc. All of the capital stock of PNC Bancorp, Inc. is owned by PNC
Bank Corp., a publicly-held bank holding company.
BANKING LAWS. Banking laws and regulations currently prohibit a bank
holding company registered under the Federal Bank Holding Company Act of 1956
or any bank or non-bank affiliate thereof from sponsoring, organizing,
controlling or distributing the shares of a registered, open-end investment
company continuously engaged in the issuance of its shares, and prohibit banks
generally from underwriting securities, but such banking laws and regulations
do not prohibit such a holding company or affiliate or banks generally from
acting as investment adviser, administrator, transfer agent or custodian to
such an investment company, or from purchasing shares of such a company as
agent for and upon the order of customers. PIMC, BlackRock, PCM, PEAC and
PNC Bank are subject to such banking laws and regulations.
PIMC, BlackRock, PCM, PEAC and PNC Bank believe they may perform the
services for the Fund contemplated by their respective agreements with the Fund
without violation of applicable banking laws or regulations. It should be
noted, however, that there have been no cases deciding whether bank and
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non-bank subsidiaries of a registered bank holding company may perform services
comparable to those that are to be performed by these companies, and future
changes in either Federal or state statutes and regulations relating to
permissible activities of banks and their subsidiaries or affiliates, as well
as further judicial or administrative decisions or interpretations of present
and future statutes and regulations, could prevent these companies from
continuing to perform such services for the Fund. If such were to occur, it is
expected that the Board of Trustees would recommend that the Fund enter into
new agreements or would consider the possible termination of the Fund. Any new
advisory or sub-advisory agreement would be subject to shareholder approval.
SHAREHOLDER APPROVALS. As used in this Statement of Additional
Information and in the Prospectus, a "majority of the outstanding shares" of a
class, series or Portfolio means the lesser of (1) 67% of the shares of the
particular class, series or Portfolio represented at a meeting at which the
holders of more than 50% of the outstanding shares of such class, series or
Portfolio are present in person or by proxy, or (2) more than 50% of the
outstanding shares of such class, series or Portfolio.
THE FUND'S NAME. PNC Bank Corp. is the owner of the registered
service mark "PNC." The Fund has entered into a licensing agreement with
respect to its non-exclusive use of "PNC," under which it has agreed not to
claim any interest to the name "PNC" except under the agreement. The license
will terminate if it is breached by the Fund or if neither PIMC nor any of PNC
Bank Corp.'s affiliates continues as the investment adviser or manager of the
Fund.
FINANCIAL STATEMENTS
The Fund's Annual Report to Shareholders for the fiscal year ended
September 30, 1994 (the "1994 Annual Report") and its Semi-Annual Report to
Shareholders dated March 31, 1995 (the "1995 Semi-Annual Report") are
incorporated by reference in this Statement of Additional Information. The
financial statements and notes thereto in the 1994 Annual Report and the 1995
Semi-Annual Report are incorporated in this Statement of Additional Information
by reference. The financial statements included in the 1994 Annual Report have
been audited by the Fund's independent accountants, Coopers & Lybrand, L.L.P.,
whose reports are incorporated herein by reference. Such financial statements
have been incorporated herein in reliance upon such report given upon their
authority as experts in accounting and auditing. Additional copies of the 1994
Annual Report and the 1995 Semi-Annual Report may be obtained at no charge by
telephoning the Distributor at the telephone number appearing on the front page
of this Statement of Additional Information.
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APPENDIX A
COMMERCIAL PAPER RATINGS
A Standard & Poor's commercial paper rating is a current
assessment of the likelihood of timely payment of debt considered short-term in
the relevant market. The following summarizes the rating categories used by
Standard and Poor's for commercial paper:
"A-1" - Issue's degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted "A-1+."
"A-2" - Issue's capacity for timely payment is satisfactory.
However, the relative degree of safety is not as high as for issues designated
"A-1."
"A-3" - Issue has an adequate capacity for timely payment. It
is, however, somewhat more vulnerable to the adverse effects of changes and
circumstances than an obligation carrying a higher designation.
"B" - Issue has only a speculative capacity for timely payment.
"C" - Issue has a doubtful capacity for payment.
"D" - Issue is in payment default.
Moody's commercial paper ratings are opinions of the ability
of issuers to repay punctually promissory obligations not having an original
maturity in excess of 9 months. The following summarizes the rating categories
used by Moody's for commercial paper:
"Prime-1" - Issuer or related supporting institutions are
considered to have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earning 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.
"Prime-2" - Issuer or related supporting institutions are
considered to have a strong capacity for repayment of short-
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term promissory obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected
by external conditions. Ample alternative liquidity is maintained.
"Prime-3" - Issuer or related supporting institutions have an
acceptable capacity for repayment of short-term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuer does not fall within any of the Prime
rating categories.
The three rating categories of Duff & Phelps for investment
grade commercial paper and short-term debt are "Duff 1," "Duff 2" and "Duff 3."
Duff & Phelps employs three designations, "Duff 1+," "Duff 1" and "Duff 1-,"
within the highest rating category. The following summarizes the rating
categories used by Duff & Phelps for commercial paper:
"Duff 1+" - Debt possesses highest certainty of timely
payment. Short-term liquidity, including internal operating factors and/or
access to alternative sources of funds, is outstanding, and safety is just
below risk-free U.S. Treasury short-term obligations.
"Duff 1" - Debt possesses very high certainty of timely
payment. Liquidity factors are excellent and supported by good fundamental
protection factors. Risk factors are minor.
"Duff 1-" - Debt possesses high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.
"Duff 2" - Debt possesses 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.
"Duff 3" - Debt possesses satisfactory liquidity, and other
protection factors qualify issue as investment grade. Risk factors are larger
and subject to more variation. Nevertheless, timely payment is expected.
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"Duff 4" - Debt possesses speculative investment
characteristics. Liquidity is not sufficient to ensure against disruption in
debt service. Operating factors and market access may be subject to a high
degree of variation.
"Duff 5" - Issuer has failed to meet scheduled principal
and/or interest payments.
Fitch short-term ratings apply to debt obligations that are
payable on demand or have original maturities of up to three years. The
following summarizes the rating categories used by Fitch for short-term
obligations:
"F-1+" - Securities possess exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment.
"F-1" - Securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."
"F-2" - Securities possess good credit quality. Issues
assigned this rating have a satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as the "F-1+" and "F-1"
categories.
"F-3" - Securities possess fair credit quality. Issues
assigned this rating have characteristics suggesting that the degree of
assurance for timely payment is adequate; however, near-term adverse changes
could cause these securities to be rated below investment grade.
"F-S" - Securities possess weak credit quality. Issues
assigned this rating have characteristics suggesting a minimal degree of
assurance for timely payment and are vulnerable to near-term adverse changes in
financial and economic conditions.
"D" - Securities are in actual or imminent payment default.
Fitch may also use the symbol "LOC" with its short-term
ratings to indicate that the rating is based upon a letter of credit issued by
a commercial bank.
Thomson BankWatch short-term ratings assess the likelihood of
an untimely or incomplete payment of principal or interest of unsubordinated
instruments having a maturity of one year or less which is issued by United
States commercial banks, thrifts and non-bank banks; non-United States banks;
and broker-
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dealers. The following summarizes the ratings used by Thomson BankWatch:
"TBW-1" - This designation represents Thomson BankWatch's
highest rating category and indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis.
"TBW-2" - This designation indicates that while the degree of
safety regarding timely payment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents the lowest investment
grade category and indicates that while the debt is more susceptible to adverse
developments (both internal and external) than obligations with higher ratings,
capacity to service principal and interest in a timely fashion is considered
adequate.
"TBW-4" - This designation indicates that the debt is regarded
as non-investment grade and therefore speculative.
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for short-term debt ratings:
"A1" - Obligations are supported by the highest capacity for
timely repayment. Where issues possess a particularly strong credit feature, a
rating of A1+ is assigned.
"A2" - Obligations are supported by a good capacity for timely
repayment.
"A3" - Obligations are supported by a satisfactory capacity
for timely repayment.
"B" - Obligations for which there is an uncertainty as to the
capacity to ensure timely repayment.
"C" - Obligations for which there is a high risk of default or
which are currently in default.
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CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
The following summarizes the ratings used by Standard & Poor's
for corporate and municipal debt:
"AAA" - This designation represents the highest rating
assigned by Standard & Poor's to a debt obligation and indicates an extremely
strong capacity to pay interest and repay principal.
"AA" - Debt is considered to have a very strong capacity to
pay interest and repay principal and differs from AAA issues only in small
degree.
"A" - Debt is considered to have a strong capacity to pay
interest and repay principal although such issues are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions than
debt in higher-rated categories.
"BBB" - Debt is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher-rated categories.
"BB," "B," "CCC," "CC" and "C" - Debt is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "C" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
"BB" - Debt has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The
"BB" rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.
"B" - Debt has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions will likely impair capacity
or willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
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"CCC" - Debt has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The "CCC"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "B" or "B-" rating.
"CC" - This rating is typically applied to debt subordinated
to senior debt that is assigned an actual or implied "CCC" rating.
"C" - This rating is typically applied to debt subordinated to
senior debt which is assigned an actual or implied "CCC-" debt rating. The "C"
rating may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.
"CI" - This rating is reserved for income bonds on which no
interest is being paid.
"D" - Debt is in payment default. This rating is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S & P believes such
payments will be made during such grace period. "D" rating is also used upon
the filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC"
may be modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
"r" - This rating is attached to highlight derivative, hybrid,
and certain other obligations that S & P believes may experience high
volatility or high variability in expected returns due to non-credit risks.
Examples of such obligations are: securities whose principal or interest return
is indexed to equities, commodities, or currencies; certain swaps and options;
and interest only and principal only mortgage securities.
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
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"Aa" - Bonds are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in "Aaa" securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than in
"Aaa" securities.
"A" - Bonds possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds considered medium-grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of
these ratings provide questionable protection of interest and principal ("Ba"
indicates some speculative elements; "B" indicates a general lack of
characteristics of desirable investment; "Caa" represents a poor standing; "Ca"
represents obligations which are speculative in a high degree; and "C"
represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be
in default.
Con. (---) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes probable
credit stature upon completion of construction or elimination of basis of
condition.
Moody's applies numerical modifiers 1, 2 and 3 in each generic
classification from "Aa" to "B" in its bond rating system. The modifier 1
indicates that the issuer ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issuer ranks at the lower end of its generic rating
category.
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The following summarizes the long-term debt ratings used by
Duff & Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit
quality. The risk factors are negligible, being only slightly more than for
risk-free U.S. Treasury debt.
"AA" - Debt is considered of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.
"BBB" - Debt possesses below average protection factors but
such protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of
these ratings is considered to be below investment grade. Although below
investment grade, debt rated "BB" is deemed likely to meet obligations when
due. Debt rated "B" possesses the risk that obligations will not be met when
due. Debt rated "CCC" is well below investment grade and has considerable
uncertainty as to timely payment of principal, interest or preferred dividends.
Debt rated "DD" is a defaulted debt obligation, and the rating "DP" represents
preferred stock with dividend arrearages.
To provide more detailed indications of credit quality, the
"AA," "A," "BBB," "BB" and "B" ratings may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within these major
categories.
The following summarizes the highest four ratings used by
Fitch for corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
"AA" - Bonds considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated "AAA." Because
bonds rated in the "AAA" and "AA" categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated "F-1+."
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"A" - Bonds considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.
"BB," "B," "CCC," "CC," "C," "DDD," "DD," and "D" - Bonds that
possess one of these ratings are considered by Fitch to be speculative
investments. The ratings "BB" to "C" represent Fitch's assessment of the
likelihood of timely payment of principal and interest in accordance with the
terms of obligation for bond issues not in default. For defaulted bonds, the
rating "DDD" to "D" is an assessment of the ultimate recovery value through
reorganization or liquidation.
To provide more detailed indications of credit quality, the
Fitch ratings from and including "AA" to "C" may be modified by the addition of
a plus (+) or minus (-) sign to show relative standing within these major
rating categories.
IBCA assesses the investment quality of unsecured debt with an
original maturity of more than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for long-term debt ratings:
"AAA" - Obligations for which there is the lowest expectation
of investment risk. Capacity for timely repayment of principal and interest is
substantial such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.
"AA" - Obligations for which there is a very low expectation
of investment risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions may
increase investment risk albeit not very significantly.
"A" - Obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
strong, although adverse changes in business,
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economic or financial conditions may lead to increased investment risk.
"BBB" - Obligations for which there is currently a low
expectation of investment risk. Capacity for timely repayment of principal and
interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment risk than
for obligations in higher categories.
"BB," "B," "CCC," "CC," and "C" - Obligations are assigned one
of these ratings where it is considered that speculative characteristics are
present. "BB" represents the lowest degree of speculation and indicates a
possibility of investment risk developing. "C" represents the highest degree
of speculation and indicates that the obligations are currently in default.
IBCA may append a rating of plus (+) or minus (-) to a rating
to denote relative status within major rating categories.
Thomson BankWatch assesses the likelihood of an untimely
repayment of principal or interest over the term to maturity of long term debt
and preferred stock which are issued by United States commercial banks, thrifts
and non-bank banks; non- United States banks; and broker-dealers. The
following summarizes the rating categories used by Thomson BankWatch for
long-term debt ratings:
"AAA" - This designation represents the highest category
assigned by Thomson BankWatch to long-term debt and indicates that the ability
to repay principal and interest on a timely basis is very high.
"AA" - This designation indicates a superior ability to repay
principal and interest on a timely basis with limited incremental risk versus
issues rated in the highest category.
"A" - This designation indicates that the ability to repay
principal and interest is strong. Issues rated "A" could be more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BBB" - This designation represents Thomson BankWatch's lowest
investment grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BB," "B," "CCC," and "CC," - These designations are assigned
by Thomson BankWatch to non-investment grade long- term
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debt. Such issues are regarded as having speculative characteristics regarding
the likelihood of timely payment of principal and interest. "BB" indicates the
lowest degree of speculation and "CC" the highest degree of speculation.
"D" - This designation indicates that the long-term debt is in
default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC"
may include a plus or minus sign designation which indicates where within the
respective category the issue is placed.
MUNICIPAL NOTE RATINGS
A Standard and Poor's rating reflects the liquidity concerns
and market access risks unique to notes due in three years or less. The
following summarizes the ratings used by Standard & Poor's Ratings Group for
municipal notes:
"SP-1" - The issuers of these municipal notes exhibit very
strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given a plus (+)
designation.
"SP-2" - The issuers of these municipal notes exhibit
satisfactory capacity to pay principal and interest.
"SP-3" - The issuers of these municipal notes exhibit
speculative capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade ("MIG") and variable
rate demand obligations are designated Variable Moody's Investment Grade
("VMIG"). Such ratings recognize the differences between short-term credit
risk and long-term risk. The following summarizes the ratings by Moody's
Investors Service, Inc. for short-term notes:
"MIG-1"/"VMIG-1" - Loans bearing this designation are of the
best quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
"MIG-2"/"VMIG-2" - Loans bearing this designation are of high
quality, with margins of protection ample although not so large as in the
preceding group.
"MIG-3"/"VMIG-3" - Loans bearing this designation are of
favorable quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades.
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Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
"MIG-4"/"VMIG-4" - Loans bearing this designation are of
adequate quality, carrying specific risk but having protection commonly
regarded as required of an investment security and not distinctly or
predominantly speculative.
"SG" - Loans bearing this designation are of speculative
quality and lack margins of protection.
Fitch and Duff & Phelps use the short-term ratings described
under Commercial Paper Ratings for municipal notes.
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APPENDIX B
THE FOLLOWING INFORMATION HAS BEEN PROVIDED TO THE FUND BY THE
DISTRIBUTOR.
Why the PNC Family of Funds?
The PNC Funds are guided by money managers whose philosophy and
discipline come with the 148-year tradition in money management of PNC
Bank Corp. and its affiliates. PNC Bank Corp. is one of the largest
banking institutions in the country, has a strong capital position,
and oversees assets of more than $170 billion as America's sixth
largest bank money manager.
Because of this size, depth and breadth of experience, the PNC Family
of Funds can offer portfolios guided by a variety of investment
philosophies -- from indexing to value to growth -- to help investors
with their goals.
For years, money managers in the PNC Bank Corp. Family have been the
investment advisor/manager for dozens of the world's major
institutions.
- - In 1993, more than 1,200 corporate investors turned to members
of the PNC Bank Corp. Family for the expertise they needed to
earn investment income in international markets.
- - During 1993, some of the world's largest investors turned to
members of the PNC Bank Corp. Family to help them earn
tax-exempt income on over $4 billion of assets.
- - In 1993, some of America's leading companies turned to members
of the PNC Bank Corp. Family to help them manage over $4
billion in employee retirement plans.
NOW THIS EXPERTISE IS AVAILABLE TO INDIVIDUAL INVESTORS.
Each PNC Fund portfolio focuses on specific client needs -- income,
growth, risk tolerance, tax bracket. Every portfolio is managed with
a sophisticated blend of discipline, experience and expertise.
In managing PNC Fund portfolios, the money managers utilize a
philosophy of "optimizing rather than maximizing." PNC Fund money
managers understand the risks of securities investments and believe
their philosophy helps to avoid taking unnecessary risks with
customers' money. Instead, PNC Fund money managers aim for
consistency and above-average results year in and year out.
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THE PNC(R) FUND
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Included in Part A are audited Financial
Highlights for the Registrant's Money Market,
Municipal Money Market, Government Money
Market, Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North
Carolina Municipal Money Market, Virginia
Municipal Money Market, Value Equity, Growth
Equity, Index Equity, Small Cap Value Equity,
Small Cap Growth Equity, Core Equity,
International Equity, International Emerging
Markets, Balanced, Managed Income, Tax-Free
Income, Intermediate Government, Ohio
Tax-Free Income, Pennsylvania Tax-Free
Income, Short-Term Bond and Intermediate-Term
Bond Portfolios for the fiscal years ended
September 30, 1994, September 30, 1993,
September 30, 1992, September 30, 1991 and
September 30, 1990.
(2) Included in Part A are unaudited semi-annual
Financial Highlights for the Registrant's
Money Market, Municipal Money Market,
Government Money Market, Ohio Municipal Money
Market, Pennsylvania Municipal Money Market,
North Carolina Municipal Money Market and
Virginia Municipal Money Market Portfolios
for the six month period ended March 31,
1995.
(3) Included in Part B:
The Registrant's financial statements, notes
thereto and auditor's report thereon included
in the Registrant's September 30, 1994 Annual
Reports to Shareholders has been filed with
the Commission and is incorporated by
reference in Part B.
All required financial statements are included or
incorporated by reference in Parts A and B hereof.
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All other financial statements and schedules are
inapplicable.
(b) Exhibits:
(1) (a) Declaration of Trust of the
Registrant dated December 22, 1988
is incorporated by reference to
Exhibit (1) of Registrant's
Registration Statement on Form N-1A
filed on December 23, 1988.
(b) Amendment No. 1 to Declaration of
Trust is incorporated by reference
to Exhibit (1)(b) of Pre-Effective
Amendment No. 2 to Registrant's
Registration Statement on Form N-1A
filed on May 11, 1989.
(c) Amendment No. 2 to the Declaration
of Trust dated December 23, 1993 is
herein incorporated by reference to
Exhibit (1)(c) of Post-Effective
Amendment No. 12 to Registrant's
Registration Statement on Form N-1A
filed on July 8, 1994.
(2) Registrant's Code of Regulations is
incorporated by reference to Exhibit
(2) of Form N-1A, filed on December
23, 1988.
(3) None.
(4) (a) Specimen Copies of Share
Certificates for Shares of
beneficial interest in Class A-1,
Class A-2, Class A-3, Class B-1,
Class B-2, Class B-3, Class C-1,
Class C-2, Class C-3, Class D-1,
Class D-2, Class D-3, Class E-1,
Class E-2, Class E-3, Class F-1,
Class F-2, Class F-3, Class G-1,
Class G-2, Class G-3, Class H-1,
Class H-2, Class H-3, Class I-1,
Class I-2, Class I-3, Class J-1,
Class J-2, Class J-3, Class K-1,
Class K-2, Class K-3, Class L-1,
Class L-2, Class L-3, Class M-1,
Class M-2, Class M-3, Class N-1,
Class N-2, Class N-3, Class O-1,
Class O-2, Class O-3, Class P-1,
Class P-2, Class P-3 of the
Registrant are herein incorporated
by
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reference to Exhibit 4 of
Post-Effective Amendment No. 6 to
Registrant's Registration Statement
on Form N-1A filed on May 8, 1992.
(b) Form of Share Certificates for
Shares of beneficial interest in
Class Q-1, Class Q-2, Class Q-3,
Class R-1, Class R-2, Class R-3,
Class S-1, Class S-2, Class S-3,
Class T-1, Class T-2, Class T-3,
Class U-1, Class U-2, Class U-3 of
the Registrant are herein
incorporated by reference to Exhibit
4(b) of Post-Effective Amendment No.
8 to Registrant's Registration
Statement on Form N-1A filed on
January 22, 1993.
(c) Form of Share Certificates for
Shares of beneficial interest in
Class V-1, Class V-2, Class V-3,
Class W-1, Class W-2, Class W-3,
Class X-1, Class X-2, Class X-3,
Class Y-1, Class Y-2 and Class Y-3
of the Registrant is incorporated
herein by reference to Exhibit
(4)(c) of Post-Effective Amendment
No. 10 to Registrant's Registration
Statement on Form N-1A filed on
November 10, 1993.
(d) Form of Share Certificates for
Shares of beneficial interest in
Class Z-1, Class Z-2 and Class Z-3.
(5) (a) Investment Advisory Agreement
between Registrant and PNC
Institutional Management Corporation
with respect to the Money Market,
Government Money Market, Municipal
Money Market, Managed Income, Growth
Equity, International Equity and
Balanced Portfolios is incorporated
by reference to Exhibit 5(a) of
Post-Effective Amendment No. 1 to
Registrant's Registration Statement
on Form N-1A filed on December 29,
1989.
(b) Letter Agreement between Registrant
and PNC Institutional Management
Corporation relating to advisory
services for the Tax-Free Income
Portfolio is incorporated herein by
reference to Exhibit 5(b) of
Post-Effective Amendment
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<PAGE> 226
No. 2 to Registrant's Registration
Statement on Form N-1A filed on April
30, 1990.
(c) Sub-Advisory Agreement between PNC
Institutional Management Corporation
and PNC Bank, National Association
with respect to the Money Market
Portfolio and Government Money
Market Portfolio is incorporated by
reference to Exhibit 5(c) of
Post-Effective Amendment No. 1 to
Registrant's Registration Statement
on Form N-1A filed on December 29,
1989.
(d) Sub-Advisory Agreement between PNC
Institutional Management Corporation
and PNC Bank, National Association
with respect to the Balanced and
Tax-Free Income Portfolios is
incorporated herein by reference to
Exhibit 5(d) of Post-Effective
Amendment No. 2 to Registrant's
Registration Statement on Form N-1A
filed on April 30, 1990.
(e) Sub-Advisory Agreement dated April
20, 1992 between PNC Institutional
Management Corporation and Provident
Capital Management, Inc. with
respect to the International Equity
Portfolio is incorporated herein by
reference to Exhibit (5)(f) of
Post-Effective Amendment No. 10 to
Registrant's Registration Statement
on Form N-1A filed on November 10,
1993.
(f) Investment Advisory Agreement dated
February 3, 1992 between Registrant
and PNC Institutional Management
Corporation relating to the
Intermediate Government, Value
Equity, Index Equity, Small Cap
Value Equity, Pennsylvania Tax-Free
Income, Ohio Tax-Free Income,
Pennsylvania Municipal Money Market
and Ohio Municipal Money Market
Portfolios is incorporated herein by
reference to Exhibit (5)(g) of
Post-Effective Amendment No. 10 to
Registrant's Registration Statement
on Form N-1A filed on November 10,
1993.
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(g) Investment Advisory Agreement dated
December 17, 1993 between the
Registrant and PNC Institutional
Management Corporation relating to
the Virginia Municipal Money Market,
Government Income, International
Fixed Income and International
Emerging Markets Portfolios is
incorporated herein by reference to
Exhibit (5)(h) of Post-Effective
Amendment No. 12 to Registrant's
Registration Statement on Form N-1A
filed on July 8, 1994.
(h) Sub-Advisory Agreement dated
February 3, 1992 between PNC
Institutional Management Corporation
and PNC Bank, National Association
with respect to the Ohio Municipal
Money Market Portfolio is
incorporated herein by reference to
Exhibit (5)(h) of Post-Effective
Amendment No. 10 to Registrant's
Registration Statement on Form N-1A
filed on November 10, 1993.
(i) Sub-Advisory Agreement dated
February 3, 1992 between PNC
Institutional Management Corporation
and PNC Bank, National Association
with respect to the Pennsylvania
Municipal Money Market Portfolio is
incorporated herein by reference to
Exhibit (5)(i) of Post-
Effective Amendment No. 10 to
Registrant's Registration Statement
on Form N-1A filed on November 10,
1993.
(j) Sub-Advisory Agreement dated
February 3, 1992 between PNC
Institutional Management Corporation
and Provident Capital Management,
Inc. with respect to the Value
Equity Portfolio is incorporated
herein by reference to Exhibit
(5)(m) of Post-Effective Amendment
No. 10 to Registrant's Registration
Statement on Form N-1A filed on
November 10, 1993.
(k) Sub-Advisory Agreement dated
February 3, 1992 between PNC
Institutional Management Corporation
and Provident Capital Management,
Inc. with respect to the Small Cap
Value Equity Portfolio is
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incorporated herein by reference to
Exhibit (5)(n) of Post-Effective
Amendment No. 10 to Registrant's
Registration Statement on Form N-1A
filed on November 10, 1993.
(l) Investment Advisory Agreement dated
March 1, 1993 between Registrant and
PNC Institutional Management
Corporation relating to the
Short-Term Bond, Intermediate-Term
Bond, Core Equity, Small Cap Growth
Equity and North Carolina Municipal
Money Market Portfolios is
incorporated herein by reference to
Exhibit (5)(p) of Post-Effective
Amendment No. 10 to Registrant's
Registration Statement on Form N-1A
filed on November 10, 1993.
(m) Sub-Advisory Agreement dated March
1, 1993 between PNC Institutional
Management Corporation and PNC Bank,
National Association relating to the
North Carolina Municipal Money
Market Portfolio is incorporated
herein by reference to Exhibit
(5)(r) of Post-Effective Amendment
No. 10 to Registrant's Registration
Statement on Form N-1A filed on
November 10, 1993.
(n) Sub-Advisory Agreement dated
September 10, 1993 between PNC
Institutional Management Corporation
and PNC Bank, National Association
relating to the Municipal Money
Market Portfolio is incorporated
herein by reference to Exhibit
(5)(s) of Post-Effective Amendment
No. 10 to Registrant's Registration
Statement on Form N-1A filed on
November 10, 1993.
(o) Sub-Advisory Agreement dated
December 17, 1993 between PNC
Institutional Management Corporation
and PNC Bank, National Association
with respect to the Virginia
Municipal Money Market Portfolio is
incorporated herein by reference to
Exhibit (5)(x) of Post-
Effective Amendment No. 12 to
Registrant's Registration Statement
on Form N-1A filed on July 8, 1994.
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(p) Sub-Advisory Agreement dated
December 17, 1993 between PNC
Institutional Management Corporation
and Provident Capital Management,
Inc. with respect to the
International Fixed Income Portfolio
is incorporated herein by reference
to Exhibit (5)(z) of Post-Effective
Amendment No. 12 to Registrant's
Registration Statement on Form N-1A
filed on July 8, 1994.
(q) Sub-Advisory Agreement dated
December 17, 1993 between PNC
Institutional Management Corporation
and Provident Capital Management,
Inc. with respect to the
International Emerging Markets
Portfolio is incorporated herein by
reference to Exhibit (5)(aa) of
Post-Effective Amendment No. 12 to
Registrant's Registration Statement
on Form N-1A filed on July 8, 1994.
(r) Form of Investment Advisory
Agreement between the Registrant and
PNC Institutional Management
Corporation relating to the New
Jersey Municipal Money Market
Portfolio.
(s) Form of Sub-Advisory Agreement
between PNC Institutional Management
Corporation and PNC Bank, National
Association with respect to the New
Jersey Municipal Money Market
Portfolio.
(t) Form of Sub-Advisory Agreement
between PNC Institutional Management
Corporation and PNC Equity Advisors
Company with respect to the Core
Equity Portfolio.
(u) Form of Sub-Advisory Agreement
between PNC Institutional Management
Corporation and PNC Equity Advisors
Company with respect to the Growth
Equity Portfolio.
(v) Form of Sub-Advisory Agreement
between PNC Institutional Management
Corporation and PNC Equity Advisors
Company with respect to the Small
Cap Growth Equity Portfolio.
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(w) Form of Sub-Advisory Agreement
between PNC Institutional Management
Corporation and PNC Equity Advisors
Company with respect to the Index
Equity Portfolio.
(x) Form of Sub-Advisory Agreement
between PNC Institutional Management
Corporation and BlackRock Financial
Management, Inc. with respect to the
Managed Income Portfolio.
(y) Form of Sub-Advisory Agreement
between PNC Institutional Management
Corporation and BlackRock Financial
Management, Inc. with respect to the
Intermediate Government Portfolio.
(z) Form of Sub-Advisory Agreement
between PNC Institutional Management
Corporation and BlackRock Financial
Management, Inc. with respect to the
Ohio Tax-Free Income Portfolio.
(aa) Form of Sub-Advisory Agreement
between PNC Institutional Management
Corporation and BlackRock Financial
Management, Inc. with respect to the
Pennsylvania Tax-Free Income
Portfolio.
(bb) Form of Sub-Advisory Agreement
between PNC Institutional Management
Corporation and BlackRock Financial
Management, Inc. with respect to the
Short-Term Bond Portfolio.
(cc) Form of Sub-Advisory Agreement
between PNC Institutional Management
Corporation and BlackRock Financial
Management, Inc. with respect to the
Intermediate-Term Bond Portfolio.
(dd) Form of Sub-Advisory Agreement
between PNC Institutional Management
Corporation and BlackRock Financial
Management, Inc. with respect to the
Government Income Portfolio.
(6) (a) Distribution Agreement between
Registrant and Provident
Distributors, Inc. dated January 31,
1994 is incorporated herein by
reference to
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<PAGE> 231
Exhibit (6)(a) of Post-Effective
Amendment No. 12 to Registrant's
Registration Statement on Form N-1A
filed on July 8, 1994.
(b) Appendix A to the Distribution
Agreement dated January 31, 1994
between Registrant and Provident
Distributors, Inc.
(c) Amendment No. 2 to the Distribution
Agreement between Registrant and
Provident Distributors, Inc. dated
October 18, 1994 is incorporated
herein by reference to Exhibit 6(c)
of Post-Effective Amendment No. 14
to Registrant's Registration
Statement on Form N-1A filed on
January 18, 1995.
(7) Fund Office Retirement
Profit-Sharing Plan and Related
Adoption Agreement.
(8) (a) Custodian Agreement dated October 4,
1989 between Registrant and PNC
Bank, National Association is
incorporated herein by reference to
Exhibit 8(a) of Post-Effective
Amendment No. 1 to Registrant's
Registration Statement on Form N-1A
filed on December 29, 1989.
(b) Amendment No. 1 to Custodian
Agreement between Registrant and PNC
Bank, National Association is
incorporated herein by reference to
Exhibit 8(b) of Post-Effective
Amendment No. 4 to Registrant's
Registration Statement on Form N-1A
filed on December 13, 1991.
(c) Amendment No. 2 dated March 1, 1993
to Custodian Agreement between
Registrant and PNC Bank, National
Association with respect to the
Short-Term Bond, Intermediate-Term
Bond, Core Equity, Small Cap Growth
Equity and North Carolina Municipal
Money Market Portfolios is
incorporated herein by reference to
Exhibit (8)(c) of Post-Effective
Amendment No. 10 to Registrant's
Registration Statement on Form N-1A
filed on November 10, 1993.
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<PAGE> 232
(d) Appendix B to Custodian Agreement
dated October 4, 1989 between
Registrant and PNC Bank, National
Association.
(e) Sub-Custodian Agreement dated April
27, 1992 among the Registrant, PNC
Bank, National Association and The
Chase Manhattan Bank is incorporated
herein by reference to Exhibit
(8)(e) of Post-Effective Amendment
No. 10 to Registrant's Registration
Statement on Form N-1A filed on
November 10, 1993.
(f) Global Sub-Custody Agreement between
Barclays Bank PLC and PNC Bank,
National Association dated October
28, 1992 is incorporated herein by
reference to Exhibit (8)(e) of Post-
Effective Amendment No. 14 to
Registrant's Registration Statement
on Form N-1A filed on January 18,
1995.
(g) Custodian Agreement between State
Street Bank and Trust Company and
PNC Bank, National Association dated
June 13, 1983 is incorporated herein
by reference to Exhibit (8)(f) of
Post-Effective Amendment No. 14 to
Registrant's Registration Statement
on Form N-1A filed on January 18,
1995.
(h) Amendment No. 1 to Custodian
Agreement between State Street Bank
and Trust Company and PNC Bank dated
November 21, 1989 is incorporated
herein by reference to Exhibit
(8)(g) of Post-Effective Amendment
No. 14 to Registrant's Registration
Statement on Form N-1A filed on
January 18, 1995.
(i) Letter Agreement between Registrant
and PNC Bank, National Association
relating to custodian services with
respect to the Tax-Free Income
Portfolio is incorporated herein by
reference to Exhibit 8(d) of
Post-Effective Amendment No. 7 to
Registrant's Registration Statement
on Form N-1A filed on December 1,
1992.
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(j) Letter Agreement between Registrant
and PNC Bank, National Association
relating to custodian services with
respect to the Ohio Municipal Money
Market, Pennsylvania Municipal Money
Market, Intermediate Government,
Ohio Tax-Free Income, Pennsylvania
Tax-Free Income, Value Equity, Index
Equity and Small Cap Value Equity
Portfolios is incorporated herein by
reference to Exhibit (8)(e) of
Post-Effective Amendment No. 7 to
Registrant's Registration Statement
on Form N-1A filed on December 1,
1992.
(k) Letter Agreement dated March 1, 1993
between Registrant and PNC Bank,
National Association relating to
custodian services with respect to
the North Carolina Municipal Money
Market, Short-Term Bond,
Intermediate-Term Bond, Small Cap
Growth Equity and Core Equity
Portfolios is incorporated herein by
reference to Exhibit (8)(h) of
Post-Effective Amendment No. 10 to
Registrant's Registration Statement
on Form N-1A filed on November 10,
1993.
(9) (a) Administration Agreement dated
January 18, 1993 among Registrant,
PFPC Inc. and Provident
Distributors, Inc. is incorporated
herein by reference to Exhibit 9(a)
of Post-Effective Amendment No. 8 to
Registrant's Registration Statement
on Form N-1A filed on January 22,
1993.
(b) Amendment No. 1 to the
Administration Agreement dated
January 18, 1993 among Registrant,
PFPC Inc. and Provident
Distributors, Inc. dated September
23, 1994 is incorporated herein by
reference to Exhibit (9)(b) of
Post-Effective Amendment No. 14 to
Registrant's Registration Statement
on Form N-1A filed on January 18,
1995.
(c) Appendix A to the Administration
Agreement dated January 18, 1993
among Registrant, PFPC Inc. and
Provident Distributors, Inc.
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<PAGE> 234
(d) Amendment No. 2 to the
Administration Agreement dated
January 18, 1993 among Registrant,
PFPC Inc. and Provident
Distributors, Inc. is incorporated
herein by reference to Exhibit
(9)(d) of Post-Effective Amendment
No. 14 to Registrant's Registration
Statement on Form N-1A filed on
January 18, 1995.
(e) Transfer Agency Agreement dated
October 4, 1989 between Registrant
and PFPC Inc. is incorporated by
reference to Exhibit 9(e) of
Post-Effective Amendment No. 1 to
Registrant's Registration Statement
on Form N-1A filed on December 29,
1989.
(f) Amendment No. 1 to Transfer Agency
Agreement dated October 4, 1989
between Registrant and PFPC Inc.
relating to the Tax-Free Income
Portfolio is incorporated by
reference to Exhibit 9(h) of
Post-Effective Amendment No. 5 to
Registrant's Registration Statement
on Form N-1A filed on February 5,
1992.
(g) Amendment No. 2 to Transfer Agency
Agreement dated October 4, 1989
between Registrant and PFPC Inc.
relating to the Pennsylvania
Municipal Money Market, Ohio
Municipal Money Market, Intermediate
Government, Ohio Tax-Free Income,
Pennsylvania Tax-Free Income, Value
Equity, Index Equity and Small Cap
Value Equity Portfolios is
incorporated herein by reference to
Exhibit 9(h) of Post-Effective
Amendment No. 4 to Registrant's
Registration Statement on Form N-1A
filed on December 13, 1991.
(h) Amendment No. 3 to Transfer Agency
Agreement dated October 4, 1989
between Registrant and PFPC Inc.
relating to the Short-Term Bond,
Intermediate-Term Bond, Core Equity,
Small Cap Growth Equity and North
Carolina Municipal Money Market
Portfolios is incorporated herein by
reference to Exhibit (9)(e) of
Post-Effective Amendment No. 10 to
Registrant's Registration Statement
on Form N-1A filed on November 10,
1993.
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<PAGE> 235
(i) Amendment No. 4 to Transfer Agency
Agreement dated October 4, 1989
between Registrant and PFPC Inc.
relating to Series B Investor Shares
of the Money Market, Managed Income,
Tax-Free Income, Intermediate
Government, Ohio Tax-Free Income,
Pennsylvania Tax-Free Income, Value
Equity, Growth Equity, Index Equity,
Small Cap Value Equity,
Intermediate-Term Bond, Small Cap
Growth Equity, Core Equity,
International Fixed Income,
Government Income, International
Emerging Markets, International
Equity and Balanced Portfolios is
incorporated herein by reference to
Exhibit (9)(i) of Post-Effective
Amendment No. 14 to Registrant's
Registration Statement on Form N-1A
filed on January 18, 1995.
(j) Appendix C to Transfer Agency
Agreement dated October 4, 1989
between Registrant and PFPC Inc.
(k) Amended and Restated Service Plan
dated January 21, 1993 for Service
Shares and Form of Servicing
Agreement for Service Shares is
incorporated herein by reference to
Exhibit 9(f) of Post-Effective
Amendment No. 8 to Registrant's
Registration Statement on Form N-1A
filed on January 22, 1993.
(l) Series B Service Plan dated
September 23, 1994.
(m) Trademark License Agreement between
Registrant and PNC Bank Corp. is
incorporated by reference to Exhibit
9(h) of Post-Effective Amendment No.
1 to Registrant's Registration
Statement on Form N-1A filed on
December 29, 1989.
(10) Opinion and Consent of Counsel.(1)
(11) (a) Consent of Coopers & Lybrand.
(b) Consent of Drinker Biddle & Reath.
- ----------------------------------
(1) Filed on October 7, 1994 under Rule 24f-2 as part of Registrant's Rule
24f-2 Notice.
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<PAGE> 236
(12) None.
(13) (a) Purchase Agreement between
Registrant and Shearson Lehman
Hutton Inc. ("Shearson") relating to
Classes A-1, B-1, C-1, D-2, E-2, F-2
and G-2 is incorporated by reference
to Exhibit 13(a) of Post-Effective
Amendment No. 1 to Registrant's
Registration Statement on Form N-1A
filed on December 29, 1989.
(b) Purchase Agreement between
Registrant and Shearson relating to
shares of Class H-2 is incorporated
herein by reference to Exhibit 13(b)
of Post-Effective Amendment No. 2 to
Registrant's Registration Statement
on Form N-1A filed on April 30,
1990.
(c) Purchase Agreement between
Registrant and Shearson relating to
shares of Class I-1, Class I-2,
Class J-1, Class J-2, Class K-2,
Class L-2, Class M-2, Class N-2,
Class O-2 and Class P-2 is
incorporated herein by reference to
Exhibit 13(c) of Post-Effective
Amendment No. 4 to Registrant's
Registration Statement on Form N-1A
filed on December 13, 1991.
(d) Purchase Agreement between
Registrant and Shearson relating to
shares of Class D-1, Class E-1,
Class F-1, Class G-1, Class H-1,
Class K-1, Class L-1, Class M-1,
Class N-1, Class O-
1, Class P-1, Class A-2, Class B-2,
Class C-2, Class I-2, Class J-2,
Class A-3, Class B-3, Class C-3,
Class D-3, Class E-3, Class F-3,
Class G-3, Class H-3, Class I-3,
Class J-3, Class K-3, Class L-3,
Class M-3, Class N-3, Class O-3 and
Class P-3 is incorporated by
reference to Exhibit (13)(d) of
Post-Effective Amendment No. 7 to
Registrant's Registration Statement
on Form N-1A filed on December 1,
1992.
(e) Purchase Agreement between the
Registrant and Pennsylvania Merchant
Group Ltd relating to shares of
Class Q-1, Class Q-2, Class Q-3,
Class R-1, Class R-2, Class R-3,
Class S-1, Class
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<PAGE> 237
S-2, Class S-3, Class T-1, Class T-2,
Class T-3, Class U-1, Class U-2 and
Class U-3 is incorporated herein by
reference to Exhibit (13)(e) of
Post-Effective No. 10 to
Registrant's Registration Statement
on Form N-1A as filed on November
10, 1993.
(f) Purchase Agreement dated September
30, 1994 between the Registrant and
Provident Distributors, Inc.
relating to shares of Class A-4,
Class D-4, Class E-4, Class F-4,
Class G-4, Class H-4, Class K-4,
Class L-4, Class M-4, Class N-4,
Class O-4, Class P-4, Class R-
4, Class S-4, Class T-4, Class U-4,
Class W-4, Class X-4, Class Y-4 is
incorporated herein by reference to
Exhibit (13)(f) of Post-Effective
Amendment No. 14 to Registrant's
Registration Statement on Form N-1A
filed on January 18, 1995.
(g) Purchase Agreement dated February 1,
1994 between the Registrant and
Provident Distributors, Inc.
relating to shares of Class V-1,
Class V-2, Class V-3, Class W-1,
Class W-2, Class W-3, Class X-1,
Class X-2, Class X-3, Class Y-1,
Class Y-2 and Class Y-3.
(h) Purchase Agreement dated August 1,
1995 between Registrant and
Provident Distributors, Inc.
relating to shares of Class Z-1,
Class Z-2 and Class Z-3.
(14) None.
(15) (a) Amended and Restated Series A
Distribution and Service Plan dated
January 21, 1993 and Form of Series
A Distribution and Servicing
Agreement is incorporated herein by
reference to Exhibit 15(a) of
Post-Effective Amendment No. 8 to
Registrant's Registration Statement
on Form N-1A filed on January 22,
1993.
(b) Series B Distribution Plan dated
September 23, 1994 is incorporated
herein by reference to Exhibit
(15)(b)
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<PAGE> 238
of Post-Effective Amendment No. 14 to
Registrant's Registration Statement
on Form N-1A filed on January 18,
1995.
(16) Schedules for computation of
performance quotations are
incorporated herein by reference to
Exhibit (16) of Post-Effective
Amendment No. 5 to Registrant's
Registration Statement on Form N-1A
filed on February 5, 1992.
Item 25. Persons Controlled by or under Common Control with Registrant
Registrant is controlled by its Board of Trustees.
Item 26. Number of Holders of Securities
Provident Distributors, Inc. has provided the initial
capitalization for and holds all of the outstanding shares of beneficial
interest of the following classes as of April 28, 1995: A-4, D-4, F-4, H-4,
K-4, N-4, O-4, Q-2, R-4, S-4, T-4, U-4, V-2, X-1, X-3 and Y-4.
With regard to the other portfolios, the following information
is as of April 28, 1995.
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Class A-1 20
Class B-1 50
Class C-1 10
Class D-1 3
Class E-1 1
Class F-1 4
Class G-1 3
Class H-1 2
Class I-1 2
Class J-1 5
Class K-1 2
Class L-1 1
Class M-1 1
Class N-1 4
Class O-1 1
Class P-1 3
Class Q-1 2
Class R-1 1
Class S-1 2
Class T-1 3
Class U-1 3
Class V-1 1
</TABLE>
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<PAGE> 239
<TABLE>
<S> <C>
Class W-1 0
Class X-1 0
Class Y-1 1
Class A-2 240
Class B-2 43
Class C-2 8
Class D-2 364
Class E-2 2204
Class F-2 286
Class G-2 697
Class H-2 236
Class I-2 1
Class J-2 14
Class K-2 131
Class L-2 52
Class M-2 577
Class N-2 527
Class O-2 173
Class P-2 787
Class Q-2 1
Class R-2 12
Class S-2 16
Class T-2 161
Class U-2 39
Class V-2 0
Class W-2 0
Class X-2 12
Class Y-2 96
Class A-3 4
Class B-3 2
Class C-3 2
Class D-3 9
Class E-3 10
Class F-3 20
Class G-3 21
Class H-3 1
Class I-3 5
Class J-3 18
Class K-3 12
Class L-3 2
Class M-3 1
Class N-3 23
Class O-3 3
Class P-3 22
Class Q-3 15
Class R-3 2
Class S-3 3
Class T-3 13
Class U-3 11
Class V-3 3
Class W-3 0
</TABLE>
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<PAGE> 240
<TABLE>
<S> <C>
Class X-3 0
Class Y-3 2
Class A-4 0
Class D-4 0
Class E-4 267
Class F-4 0
Class G-4 214
Class H-4 0
Class K-4 0
Class L-4 5
Class M-4 92
Class N-4 0
Class O-4 0
Class P-4 195
Class R-4 0
Class S-4 0
Class T-4 0
Class U-4 0
Class W-4 0
Class X-4 367
Class Y-4 0
</TABLE>
Item 27. Indemnification
Indemnification of Registrant's principal underwriter against
certain losses is provided for in Section 7 of the Distribution Agreement filed
herein as Exhibit (6)(a). Indemnification of PFPC Inc. and Provident
Distributors, Inc. in their capacity as co-administrators is provided for in
Section 7 of the Administration Agreement filed herein as Exhibit 9(e).
Indemnification of Registrant's Custodian and Transfer Agent is provided for,
respectively, in Section 22 of the Custodian Agreement filed herein as Exhibit
8(a) and Section 17 of the Transfer Agency Agreement filed herein as Exhibit
9(e). Registrant intends to obtain from a major insurance carrier a trustees'
and officers' liability policy covering certain types of errors and omissions.
In addition, Section 9.3 of the Registrant's Declaration of Trust incorporated
by reference herein as Exhibit 1(a) provides as follows:
Indemnification of Trustees, Officers, Representatives and
Employees. The Trust shall indemnify each of its Trustees against all
liabilities and expenses (including amounts paid in satisfaction of
judgments, in compromise, as fines and penalties, and as counsel fees)
reasonably incurred by him in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal, in which he may be involved or with which he may be
threatened, while as a Trustee or thereafter, by reason of his being
or having been such a Trustee except
C-18
<PAGE> 241
with respect to any matter as to which he shall have been adjudicated
to have acted in bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties, provided that as to any matter
disposed of by a compromise payment by such person, pursuant to a
consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless the Trust
shall have received a written opinion from independent legal counsel
approved by the Trustees to the effect that if either the matter of
willful misfeasance, gross negligence or reckless disregard of duty,
or the matter of bad faith had been adjudicated, it would in the
opinion of such counsel have been adjudicated in favor of such person.
The rights accruing to any person under these provisions shall not
exclude any other right to which he may be lawfully entitled, provided
that no person may satisfy any right of indemnity or reimbursement
hereunder except out of the property of the Trust. The Trustees may
make advance payments in connection with the indemnification under
this Section 9.3, provided that the indemnified person shall have
given a written undertaking to reimburse the Trust in the event it is
subsequently determined that he is not entitled to such
indemnification.
The Trustee shall indemnify officers, representatives and
employees of the Trust to the same extent that Trustees are entitled
to indemnification pursuant to this Section 9.3.
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 whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Section 9.6 of the Registrant's Declaration of Trust, filed
herein as Exhibit 1(a), also provides for the
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<PAGE> 242
indemnification of shareholders of the Registrant. Section 9.6 states as
follows:
Indemnification of Shareholders. In case any Shareholder or
former Shareholder shall be held to be personally liable solely by
reason of his being or having been a Shareholder and not because of
his acts or omissions or for some other reason, the Shareholder or
former Shareholder (or his heirs, executors, administrators or other
legal representatives or, in the case of a corporation or other
entity, its corporate or other general successor) shall be entitled
out of the assets belonging to the classes of Shares with the same
alphabetical designation as that of the Shares owned by such
Shareholder to be held harmless from and indemnified against all loss
and expense arising from such liability. The Trust shall, upon
request by the Shareholder, assume the defense of any claim made
against any Shareholder for any act or obligations of the Trust and
satisfy any judgment thereon from such assets.
Item 28. Business and Other Connections of Investment Advisers
PNC Institutional Management Corporation ("PIMC") performs
investment advisory services for Registrant and certain other investment
companies. PIMC and its predecessors have been in the business of managing the
investments of fiduciary and other accounts in the Philadelphia area since
1847. In addition to its trust business, PIMC provides commercial banking
services.
(a) To Registrant's knowledge, none of the directors or
officers of PIMC, except those set forth below, is, or has been at any time
during Registrant's past two fiscal years, engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
directors and officers and certain executives of PIMC also hold various
positions with, and engage in business for, PNC Bank Corp, which indirectly
owns all the outstanding stock of PIMC, or other subsidiaries of PNC Bank Corp.
Set forth below are the names and principal businesses of the directors and
certain executives of PIMC who are engaged in any other business, profession,
vocation or employment of a substantial nature.
(b) To Registrant's knowledge, none of the directors or
officers of PNC Bank, National Association, except those set forth below, is,
or has been at any time during Registrant's past two fiscal years, engaged in
any other business, profession, vocation or employment of a substantial nature,
except that certain directors and officers and certain executives of PNC Bank,
National Association also hold various positions with, and engage in business
for, PNC Bank Corp., which indirectly owns all
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<PAGE> 243
the outstanding stock of PNC Bank, National Association, or other subsidiaries
of PNC Bank Corp. Set forth below are the names and principal businesses of
the directors and certain executives of PNC Bank, National Association who are
engaged in any other business, profession, vocation or employment of a
substantial nature.
(c) Provident Capital Management, Inc. ("PCM") is an
indirect wholly-owned subsidiary of PNC Bank Corp. PCM currently offers
investment advisory services to institutional investors such as pension and
profit-sharing plans or trusts, insurance companies and banks. To Registrant's
knowledge, none of the directors or officers of PCM, except those set forth
below, is, or has been at any time during the Registrant's past two fiscal
years, engaged in any business, profession, vocation or employment of a
substantial nature. Set forth below are the names and principal businesses of
the directors and certain executives of PCM who are engaged in any other
business, profession, vocation or employment of a substantial nature.
(d) BlackRock Financial Management, Inc. ("BlackRock") is an
indirect wholly-owned subsidiary of PNC Bank Corp. BlackRock currently offers
investment advisory services to institutional investors such as pension and
profit-sharing plans or trusts, insurance companies and banks. To Registrant's
knowledge, none of the directors or officers of PCM, except those set forth
below, is, or has been at any time during the Registrant's past two fiscal
years, engaged in any business, profession, vocation or employment of a
substantial nature. Set forth below are the names and principal businesses of
the directors and certain executives of PCM who are engaged in any other
business, profession, vocation or employment of a substantial nature.
(e) PNC Equity Advisors Company ("PEAC") is an indirect
wholly-owned subsidiary of PNC Bank Corp. PEAC currently offers investment
advisory services to institutional investors such as pension and profit-sharing
plans or trusts, insurance companies and banks. To Registrant's knowledge,
none of the directors or officers of PEAC, except those set forth below, is, or
has been at any time during the Registrant's past two fiscal years, engaged in
any business, profession, vocation or employment of a substantial nature. Set
forth below are the names and principal businesses of the directors and certain
executives of PEAC who are engaged in any other business, profession, vocation
or employment of a substantial nature.
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<PAGE> 244
PNC INSTITUTIONAL MANAGEMENT CORPORATION
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PIMC NAME CONNECTIONS BUSINESS
- ------------- ------------------ -------------- --------
<S> <C> <C> <C>
Chairman and J. Richard Carnall Executive Vice President Banking
Director PNC Bank, National
Association (1)
Director Banking
PNC National Bank (2)
Chairman and Director Financial-
PFPC Inc. (3) Related
Services
Director Fiduciary
PNC Trust Company Activities
of New York (11)
Director Equipment
Hayden Bolts, Inc.*
Director Real
Parkway Real Estate Company* Estate
Director Investment
Provident Capital Management Advisory
Inc. (5)
Director Richard C. Caldwell Executive Vice President Banking
PNC Bank, National
Association (1)
Director, Chairman PNC Investment
Asset Management Group, Advisory
Inc. (30)
Director, PNC Equity Advisors Investment
Company * Advisory
Director PNC Bank, Banking
New England (26)
Director, PNC Bank, FSB (27) Fiduciary
Activities
Director, BlackRock Financial Investment
Management, Inc. (15) Advisory
Director Banking
PNC National Bank (2)
Director Fiduciary
PNC Trust Company Activities
of New York (11)
Director, Provident Investment
</TABLE>
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<PAGE> 245
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PIMC NAME CONNECTIONS BUSINESS
- ------------- ------------------ -------------- --------
<S> <C> <C> <C>
Capital Management Inc. (5) Advisory
Executive Vice President Bank
PNC Bank Corp. (14) Holding
Company
Director Banking
PNC Bank, New Jersey,
National Association (16)
Director Financial-
PFPC Inc. (3) Related
Services
Director Richard L. Smoot President and Chief Banking
Executive Officer
PNC Bank, National
Association (1)
Senior Vice President Bank
PNC Bank Corp. (14) Holding
Company
Director Financial-
PFPC Inc. (3) Related
Services
Director Fiduciary
PNC Trust Company of NY (11) Activities
Director, Chairman and President Banking
PNC Bank, New Jersey, National
Association (16)
Director, Chairman, and CEO Banking
PNC National Bank (2)
Chairman & Director Leasing
PNC Credit Corp (13)
Secretary Michelle L. Petrilli Chief Counsel Banking
PNC Bank, DE (20)
Secretary Financial-
PFPC Inc. (3) Related
Services
</TABLE>
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<PAGE> 246
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PIMC NAME CONNECTIONS BUSINESS
- ------------- ------------------ -------------- --------
<S> <C> <C> <C>
President and Thomas H. Nevin None.
Chief Investment
Officer
Chief Financial Nicholas M. Marsini,Jr. Senior Vice President Banking
Officer PNC Bank, National
Association (1)
Director Financial
PFPC Inc. (3) Related
Services
Senior Vice President and Banking
Chief Financial Officer
PNC Bank, Delaware (20)
Director, Vice President and Banking
Treasurer
PNC National Bank (2)
Director Banking
PNC Bank, New Jersey
National Association (16)
Director Fiduciary
PNC Trust Company of Activities
New York (11)
Director and Treasurer Holding
PNC Bancorp, Inc. (9) Company
Director and Treasurer Investment
PNC Capital Corp. (17) Activities
Director and Treasurer Banking
PNC Holding Corp. (18)
Director and Treasurer Investment
PNC Venture Corp. (19) Activities
Executive Vice Charles B. Landreth Vice President
President PNC Bank, National Association (1) Banking
Senior Vice Vincent J. Ciavardini President and Chief Financial-
President Financial Officer Related
PFPC Inc. (3) Services
</TABLE>
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<PAGE> 247
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PIMC NAME CONNECTIONS BUSINESS
- ------------- ------------------ -------------- --------
<S> <C> <C> <C>
Senior Vice Scott Moss None.
President
Senior Vice John N. Parthemore None.
President
Senior Vice Dushyant Pandit None.
President
Senior Vice James R. Smith None.
President
Group Vice William F. Walsh None.
President
Vice President, Stephen M. Wynne Executive Vice President and Financial-
Chief Chief Accounting Officer Related
Accounting PFPC Inc. (3) Services
Officer and
Assistant Secretary
Controller Pauline M. Heintz Vice President Financial-
PFPC Inc. (3) Related
Services
Vice President John R. Antczak None.
Vice President Jeffrey W. Carson None.
Vice President Katherine A. Chuppe None.
Vice President Mary J. Coldren None.
Vice President Michele C. Dillion None.
Vice President Patrick J. Ford None.
Vice President Richard Hoerner None.
Vice President Michael S. Hutchinson None.
Vice President Michael J. Milligan None.
Vice President Allyn Plambeck None.
Vice President W. Don Simmons None.
Vice President Charles Allen Stiteler None.
</TABLE>
- -------
*Information regarding this corporation can be obtained from the office of the
Secretary.
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<PAGE> 248
PNC BANK, NATIONAL ASSOCIATION
DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PNC BANK NAME CONNECTIONS BUSINESS
-------- ---- ----------- --------
<S> <C> <C> <C>
Director B.R. Brown President and C.E.O. of Coal
Consol, Inc.
Consol Plaza
Pittsburgh, PA 15241
Director Constance E. Clayton Chief, Division of Community Health Care Medical
Medical College of Pennsylvania
3300 Hinley Avenue, Office 4338
Philadelphia, PA 19129
Director Eberhard Faber, IV Chairman and C.E.O. Manufacturing
E.F.L., Inc.
450 Hedge Road
P.O. Box 49
Bearcreek, PA 18602
Director Dr. Stuart Heydt President and C.E.O. Medical
Geisinger Foundation
100 N. Academy Avenue
Danville, PA 17822
Director Edward P. Junker, III Vice Chairman Banking
PNC Bank, N.A.
Ninth and State Streets
Erie, PA 16553
Director Thomas A. McConomy President, C.E.O. and Manufacturing
Chairman, Calgon Carbon
Corporation
P.O. Box 717
Pittsburgh, PA 15230-0717
Director Robert C. Milsom Retired
PNC Bank, National Association
One PNC Plaza, Suite 2310
Pittsburgh, PA 15265
Director Thomas H. O'Brien Chairman Banking
PNC Bank, National Association
One PNC Plaza, 30th Floor
Pittsburgh, PA 15265
Director Dr. J. Dennis O'Connor Chancellor, University Education
of Pittsburgh
107 Cathedral of Learning
Pittsburgh, PA 15260
Director Rocco A. Ortenzio Chairman and C.E.O. Medical
Continental Medical
Systems, Inc.
P.O. Box 715
Mechanicsburg, PA 17055
</TABLE>
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<PAGE> 249
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Director Jane G. Pepper President Horticulture
Pennsylvania Horticultural Society
325 Walnut Street
Philadelphia, PA 19106
Director Robert C. Robb, Jr. President, Lewis, Eckert, Financial and
Robb & Company Management
425 One Plymouth Meeting Consultants
Plymouth Meeting, PA 19462
Director James E. Rohr President and C.E.O. Bank Holding
PNC Bank, National Association Company
One PNC Plaza, 30th Floor
Pittsburgh, PA 15265
Director Daniel M. Rooney President, Pittsburgh Steelers Football
Football Club of the National Football
League
300 Stadium Circle
Pittsburgh, PA 15212
Director Seth E. Schofield Chairman, President and C.E.O. Airline
USAir Group, Inc. and
USAir, Inc.
2345 Crystal Drive
Arlington, VA 22227
Director Robert M. Valentini President and C.E.O. Communications
Bell Atlantic - Pennsylvania, Inc.
One Parkway, 18th Floor
Philadelphia, PA 19102
</TABLE>
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<PAGE> 250
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
John W. Atkinson Executive Vice President None
Richard C. Caldwell Executive Vice President Director, D.R. Corp. *
Investment Officer, J.L. Caldwell Company *
Council Member, Pennsylvania
Horticultural Society (32)
Director, PFPC Inc. (3)
Executive Vice President, Investment
Management and Trust, PNC Bank Corp. (14)
J. Richard Carnall Executive Vice President Director, Franklin Institute (The) *
Director, Hayden Bolts,
Inc. *
Director, Parkway Real Estate Company *
Director, PNC Trust Company of New York
(11)
Director, Provident Capital Management,
Inc. (5)
Chairman and Director, PFPC
Inc. (3)
Chairman and Director,
PIMC (29)
Frederick C. Frank, III Executive Vice President Director, PNC National
Bank (2)
Director, PNC National Bank of New Jersey
(16)
William J. Friel Executive Vice President Director, Cedarbrook Country Club *
Advisory Board Member, Chicago Title &
Abstract *
Director, National Adoption Agency *
</TABLE>
C-28
<PAGE> 251
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
G. Robert Hoffman Executive Vice President Director, J.W. Pepper & Sons, Inc. *
Director, Land Holding Corp. of PA *
Chairman, President and Director,
Provident Realty Management, Inc. (7)
Chairman, President and Director,
Provident Realty, Inc. (8)
</TABLE>
C-29
<PAGE> 252
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Joe R. Irwin Executive Vice President Member of the Executive Committee and
Director
Blue Cross of Western Pennsylvania *
Director
Civic Light Opera
(Non-Profit Enterprise) *
Chairman of the Board
Dinamo
(Non-Profit Enterprise) *
Treasurer and Director
Girls' Hope
(Non-Profit Organization) *
Member of the Executive Committee and
Director
Greater Pittsburgh Chamber of Commerce *
Member of the Governing Council
Pennsylvania Bankers Association *
Chairman
Pennsylvania Economy League, Inc. *
Chairman, Annual Sustaining Fund Campaign
Pittsburgh Opera *
Executive Vice President and Chief
Investment Officer
PNC Bank Corp. (14)
Chairman, Chief Executive Officer and
Director
PNC Funding Corp. *
Chairman and Director
PNC International Bank *
Chairman and Director
PNC International Bank (New York) *
Chairman and Director
PNC International Investment Corporation *
Director
PNC Mortgage Bank, N.A. *
</TABLE>
C-30
<PAGE> 253
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Joe R. Irwin (Cont'd.) Director
PNC Mortgage Corp. of
America *
Director
Ruffed Grouse Society, The
(Non-Profit Enterprise) *
Edward P. Junker, III Vice Chairman Vice Chairman, PNC Bank
and Director Corp. (14)
Director, PNC Mortgage Bank, N.A. *
Director, PNC Mortgage Corp. of America *
Louis J. Myers President and CEO, PNC None
Bank, Northeast, PA
</TABLE>
C-31
<PAGE> 254
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Thomas H. O'Brien Chairman and Director Director, Allegheny Club (Non-Profit
Corporation) *
Chairman and Director, Allegheny
Conference on Community Development (Non-
Profit Organization) *
Director, Alpine Indemnity Limited *
Director, Bell Atlantic Corporation (31)
Trustee, Carnegie (The) *
Director, Central Bancorporation, Inc.
(The) *
Director, Children's Hospital (Non-Profit
Corporation) *
Director, Governor Casey's Pennsylvania
Economic Development Partnership *
Director, Hilb, Rogal and Hamilton Co. *
Chairman - Board of Visitors, Katz
Graduate School of Business *
Director, Laurel Valley Golf Club *
Director, Pittsburgh Baseball, Inc. *
Co-Chairman of the Board of Directors,
Pittsburgh Opera (The) *
President, PNC Bancorp,
Inc. (9)
Chairman, CEO & Director, PNC Bank Corp.
(14)
Director, PNC Investment Corp. (6)
Chairman and Director, PNC Trust Company
of Florida, N.A. (27)
Director, United Way of S.W.
PA (Non-Profit Organization)
</TABLE>
C-32
<PAGE> 255
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Trustee, University of Pittsburgh (31)
Charles C. Pearson, Jr. President and CEO, PNC Director and Chairman, Chamber of
Bank, Central, PA Business and Industry of Centre County *
Partner, Charrob
Investments *
Trustee, Juniata College *
Partner, LPNS c/o Cir
Realty *
Director, Second Mile *
Director, Uni-Marts, Inc. *
Partner, University Drive Associates *
John V. Petrycki President and CEO, PNC Director, Allied Arts Fund, Inc. (of
Bank, Southcentral, PA Harrisburg) *
Director, Capital Region Economic
Development Corporation *
Director, Channels *
Director, Keystone Sports Foundation *
Director, West Short YMCA *
</TABLE>
C-33
<PAGE> 256
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Edward V. Randall, Jr. President and CEO, PNC Board of Trustees, Carlow College *
Bank, Pittsburgh
Board Member, Cities in Schools *
Board of Trustees, Landmarks Financial
Corporation *
Board of Trustees, Landmarks Real Estate
Corporation *
Board Member, Pittsburgh Downtown
Partnership *
Board Member, Pittsburgh History &
Landmarks Foundation *
Director Emeritus, Pittsburgh Partnership
for Neighborhood Development *
Member, Advisory Committee Transportation
& Technology Museum *
Member, Board of Visitors University of
Pittsburgh School of Social Work (Non-
Profit Organization) *
</TABLE>
C-34
<PAGE> 257
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
James E. Rohr President, CEO and Director, Allegheny Ludlum Corporation *
Director
Director, Alpine Indemnity Limited *
Committee Member, American Bankers
Association Commercial Lending Div. Exec.
Com. *
Director, American Cancer Society *
Director, Boy Scouts of America *
Business Advisory Council, Graduate
School of Industrial Adm. Carnegie Mellon
University *
Trustee, Penn's Southwest Association *
President and Director, Pittsburgh
National Bank Foundation *
Chairman and Director, PNB Holdings, Inc. *
President and Director, PNC Bank Corp.
(14)
Director, PNC International Bank (New
York) *
Chairman, President, CEO and Director,
PNC Mortgage Bank, N.A. *
Director, PNC Mortgage Corp. of America *
Director, River City Brass Bank (Non-
Profit Corporation) *
Chairman - Advisory Board, Salvation Army
(Non-Profit Organization) *
Director, Shady Side Health, Education
and Research
Center *
Director, St. Vincent College
</TABLE>
C-35
<PAGE> 258
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
A. William Schenck, III Vice Chairman Board of Directors, Allegheny General
Hospital (Non-Profit Organization) *
Director, Consumer Bankers Association *
Board of Directors, Forward Products,
Inc. *
Board of Directors, Health & Welfare
Planning Association (Non-Profit
Organization) *
Chairman, Leadership Pittsburgh Steering
Committee *
Director, Massachusetts Company, (The) *
Board of Directors, Metropolitan
Pittsburgh Public Broadcasting, Inc.
(Non-Profit Organization) *
Joint Ownership with wife Mikell Schenck,
Mikell Schenck Associates *
1989 PBA Convention Committee Member,
Pennsylvania Bankers Association Group 8
(Non-Profit Organization) *
Chairman and Director, Pinaco, Inc. *
Board of Trustees, Pittsburgh Ballet
Theater (Non-Profit Organization) *
Regional Advisory Council Member,
Pittsburgh Cancer Institute (Non-Profit
Organization) *
Board of Trustees, Pittsburgh Center for
the Arts (Non-Profit Organization) *
Vice President and Director, Pittsburgh
National Bank Foundation *
Chairman and Director, Pittsburgh
National Life Insurance Co.
</TABLE>
C-36
<PAGE> 259
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Director, Pittsburgh Theological Seminary *
Committee Member, Pittsburgh Trust for
Cultural Resources (Non-Profit
Organization) *
Executive Vice President - PNC Retail
Banking, PNC Bank Corp. (14)
Director, PNC Mortgage Bank, N.A. *
Director, PNC Mortgage Corp. of America *
Board of Trustee, Three Rivers
Shakespeare Festival (Non-Profit
Organization) *
Board of Directors, Urban League of
Pittsburgh, Inc. (Non-Profit
Organization) *
Director, Visa U.S.A., Inc. *
Director, Wiser Oil Company *
Board of Trustee, YMCA of Pittsburgh
(Non-Profit Organization) *
</TABLE>
C-37
<PAGE> 260
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Richard L. Smoot President and CEO of PNC Trustee, Agnes Irwin School (32)
Bank, Philadelphia
Board of Council, Episcopal Community
Services (33)
Director, Greater Philadelphia Chamber of
Commerce (34)
Director, Greater Philadelphia First
Corporation (The) (35)
Director, Greater Philadelphia Urban
Affairs Coalition (The) (42)
Director, Pennsylvania
Ballet (36)
Director, Philadelphia Orchestra (The)
(37)
Chairman and Director, PNC Credit Corp.
(13)
Chairman, CEO and Director, PNC National
Bank (1)
Chairman, President and Director, PNC
National Bank of New Jersey (16)
Director, PNC Service
Corp. (4)
Director, PNC Trust Company of New York
(11)
Director, Police Athletic League of
Philadelphia (38)
Director, PFPC Inc. (3)
Director, PIMC (29)
Director, Settlement Music School (39)
Director, St. John's
College *
Director, United Negro College Fund, Inc.
(41)
Director, Widener Univ. (40)
</TABLE>
C-38
<PAGE> 261
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Herbert G. Summerfield, Jr. Executive Vice President Director, CBM-Old York Associates, Inc. *
Director, CBM-Walnut Hill, Inc. *
Director, Pennsylvania Mountain, Inc. *
Executive Vice President - PNC Real
Estate, PNC Bank Corp. (14)
Chairman and Director, PNC Realty Holding
Corp. *
Director, PNC Realty Holding Corp. of
Georgia *
Director, PNC Realty Holding Corp. of
Florida *
Director, PNC Realty Holding Corp. of
Kentucky *
Director, PNC Realty Holding Corp. of
Mississippi *
Director, PNC Realty Holding Corp. of New
Jersey *
Director, PNC Realty Holding Corp. of
Ohio *
Director, PNC Realty Holding Corp. of
Pennsylvania *
Director, PNC Realty Holding Corp. of
Texas *
Director, PNC Realty Mortgage Company *
Director, Regional Industrial Development
Corp. of Southwestern, PA *
Director, Special Asset Holdings of
Michigan, Inc. *
Malcolm C. Wilson Executive Vice President Board of Trustees, People's Light &
Theatre Company *
Senior Vice President and Director, PNC
National Bank of New Jersey (16)
</TABLE>
C-39
<PAGE> 262
PROVIDENT CAPITAL MANAGEMENT INC.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
NAME TITLE OTHER BUSINESS CONN.
---- ----- --------------------
<S> <C> <C>
Richard C. Caldwell Director See PIMC list
Ernest E. Ceilia Director Director, CIO, President, CEO, PNC
Equity Advisors Company (28)
Director, Equity Research, PNC
Asset Management Group,
Inc. (30)
Director, Equity Research, PNC
Bank, National Association (1)
Robert J. Christian Director Chairman, Director, PNC Equity
Advisors
Company (28)
Director, President, CIO, PNC Asset
Management Group, Inc. (30)
Chief Investment Officer, PNC Bank,
National Association (1)
Young D. Chin Director, President & CEO Director, PNC Asset Management
Group,
Inc. (30)
Director, PNC Equity Advisors
Company (28)
Senior Vice President, Investment
Strategy, PNC Bank, National
Association (1)
</TABLE>
C-40
<PAGE> 263
PROVIDENT CAPITAL MANAGEMENT INC.
DIRECTORS AND OFFICERS
<TABLE>
<S> <C> <C>
Timothy M. Alles Treasurer Director, PNC Trust Company of New
York (11)
Treasurer, PNC Service Corp. (4)
Vice President, PNC Bank Corp. (14)
Vice President and Controller, PNC
Bank, FSB (27)
Controller, Provident National
Financial Corp.*
Treasurer, Provident Realty Inc.
(8)
Treasurer, PNC New Jersey Credit
Corp. (10)
Beth Wagner-Coyne Vice President None
Lynn K. Shipman Secretary None
Earl J. Gaskins Vice President None
Larry Bernstein Vice President None
J. H. Hill, Jr. Vice President None
Susan D. Menzies Vice President None
Edwin B. Powell Vice President None
Herve Van Caloen Vice President None
</TABLE>
C-41
<PAGE> 264
BLACKROCK FINANCIAL MANAGEMENT INC.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
NAME TITLE OTHER BUSINESS CONN.
---- ----- --------------------
<S> <C> <C>
Scott M. Amero Managing Director Vice President, Shearson Lehman
Brothers Adjustable Rate Government
Fund
Keith T. Anderson Managing Director Vice President, Shearson Lehman
Brothers Adjustable Rate Government
Fund
Richard C. Caldwell Director See PIMC List
Wesley R. Edens Managing Director None
Laurence D. Fink Chairman and Director None
Hugh R. Frater Managing Director None
Henry Gabbay Chief Operating Officer and Managing Treasurer, Shearson Lehman Brothers
Director Adjustable Rate Government Fund
Bennett W. Golub, Ph.D. Managing Director None
Charles S. Hallac Managing Director None
Michael C. Huebsch Managing Director None
Robert S. Kapito Managing Director Vice President, Shearson Lehman
Brothers Adjustable Rate Government
Fund
P. Phillip Matthews Managing Director Vice President, The BFM
Institutional Trust
Barbara G. Novick Managing Director None
Karen H. Sabath Managing Director None
Ralph L. Schlosstein President & Director None
Joel M. Shaiman Managing Director None
J. Robert Small Principal & Controller None
Susan L. Wagner Managing Director None
</TABLE>
C-42
<PAGE> 265
PNC EQUITY ADVISORS COMPANY
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
NAME TITLE OTHER BUSINESS CONN.
---- ----- --------------------
<S> <C> <C>
Timothy M. Alles CFO, Treasurer See Provident Capital Management
List
Richard C. Caldwell Director See PIMC List
Ernest E. Cecilia Director, CIO, President & CEO See Provident Capital Management
List
Young D. Chin Director See Provident Capital Management
List
Robert J. Christian Chairman and Director See Provident Capital Management
List
Lisa P. Howard Chief Compl. Officer None
Leah L. Tompkins Secretary, Chief Legal Counsel Senior Counsel, PNC Bank, National
Association (1)
Thomas H. O'Brien CEO, PNC Bank Corp.
</TABLE>
C-43
<PAGE> 266
(1) PNC Bank, National Association, 120 S. 17th Street, Philadelphia, PA
19103; Broad & Chestnut Streets, Philadelphia, PA 19101; and 17th and
Chestnut Streets, Philadelphia, PA 19103.
(2) PNC National Bank, 103 Bellevue Parkway, Wilmington, DE 19809.
(3) PFPC Inc., 400 Bellevue Parkway, Wilmington, DE 19809.
(4) PNC Service Corp, 103 Bellevue Parkway, Wilmington, DE 19809.
(5) Provident Capital Management, Inc., 30 S. 17th Street, Suite 1500,
Philadelphia, PA 19103.
(6) PNC Investment Corp., Broad and Chestnut Streets, Philadelphia, PA
19101.
(7) Provident Realty Management, Inc., Broad and Chestnut Streets,
Philadelphia, PA 19101.
(8) Provident Realty, Inc., Broad and Chestnut Streets, Philadelphia, PA
19101.
(9) PNC Bancorp, Inc., 3411 Silverside Road, Wilmington, DE 19810.
(10) PNC New Jersey Credit Corp, 1415 Route 70 East, Suite 604, Cherry
Hill, NJ 08034.
(11) PNC Trust Company of New York, 40 Broad Street, New York, NY 10084.
(12) Provcor Properties, Inc., Broad and Chestnut Streets, Philadelphia, PA
19101.
(13) PNC Credit Corp, 103 Bellevue Parkway, Wilmington, DE 19809.
(14) PNC Bank Corp., 5th Avenue and Wood Streets, Pittsburgh, PA 15265.
(15) BlackRock Financial Management Inc., 435 Park Avenue, New York, NY
10154.
(16) PNC Bank, New Jersey, National Association, Woodland Falls Corporate
Park, 210 Lake Drive East, Cherry Hill, NJ 08002.
(17) PNC Capital Corp, 5th Avenue and Woods Streets, Pittsburgh, PA 15265.
(18) PNC Holding Corp, 222 Delaware Avenue, P.O. Box 791, Wilmington, DE
19899.
(19) PNC Venture Corp, 5th Avenue and Woods Streets, Pittsburgh, PA 15265.
(20) Bank of Delaware, 200 Delaware Avenue, Wilmington, DE 19801.
(21) Bank of Delaware Corp., 300 Delaware Avenue, Wilmington, DE 19801.
(22) Del-Vest, Inc., 300 Delaware Avenue, Wilmington, DE 19801.
(23) Marand Corp., 222 Delaware Avenue, Wilmington, DE 19801.
(24) Millsboro Insurance Agency, 300 Delaware Avenue, Wilmington, DE
19801.
(25) Roney-Richards, Inc., 300 Delaware Avenue, Wilmington, DE 19801.
(26) PNC Bank, New England (f/k/a The Massachusetts Company), 125 High
Street, Boston, MA.
(27) PNC Bank, FSB, P.O. Box 4026, Vero Beach, FL.
C-44
<PAGE> 267
(28) PNC Equity Advisors Company, 1835 Market Street, 15th Floor, Eleven
Penn Center, Philadelphia, PA 19103.
(29) PNC Institutional Management Corporation 400 Bellevue Parkway,
Wilmington, DE 19809.
(30) PNC Asset Management Group, Inc. 1835 Market Street, 15th Floor,
Eleven Penn Center, Philadelphia, PA 19103.
(31) Bell Atlantic Corporation, 1717 Arch Street, Philadelphia, PA 19102.
(32) Agnes Irwin School, Ithan Avenue and Conestoga Road, P. O. Box 407,
Rosemont, PA 19010.
(33) Episcopal Community Services, 225 South 3rd Street, Philadelphia, PA
19106.
(34) Greater Philadephia Chamber of Commerce, 1234 Market Street,
Philadelphia, PA 19107.
(35) The Greater Philadelphia First Corporation, 1818 Market Street,
Philadelphia, PA 19103.
(36) Pennsylvania Ballet, 1101 South Broad Street, Philadelphia, PA 19147.
(37) The Philadelphia Orchestra, 1420 Locust Street, Philadelphia, PA
19102.
(38) Police Athletic League of Philadelphia, 3201 North 5th Street,
Philadelphia, PA 19140.
(39) Settlement Music School, 416 Queen Street, Philadelphia, PA 19147.
(40) Widener University, One University Plaza, Chester, PA 19013.
(41) United Negro College Fund Inc., 1650 Arch Street, Philadelphia, PA
19103.
(42) The Greater Philadelphia Urban Affairs Coalition, 1207 Chestnut
Street, Philadelphia, PA 19107.
C-45
<PAGE> 268
Item 29. Principal Underwriter
(a) Provident Distributors, Inc. currently acts as
distributor for, in addition to the Registrant, Temporary Investment Fund,
Inc., Municipal Fund for Temporary Investment, Portfolios for Diversified
Investment, Municipal Fund for California Investors, Inc., and Municipal Fund
for New York Investors, Inc.
(b) The information required by this Item 29 with respect
to each director, officer or partner of Provident Distributors, Inc. is
incorporated by reference to Schedule A of FORM BD filed by Provident
Distributors, Inc. with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.
(c) Not applicable.
Item 30. Location of Accounts and Records
(1) PNC Bank, National Association, Broad and
Chestnut Streets, Philadelphia, Pennsylvania
19102 (records relating to its functions as
custodian and as sub-investment adviser.
(2) Provident Capital Management, Inc., 30 South
17th Street, Philadelphia, Pennsylvania 19103
(records relating to its functions as
sub-investment adviser to the International
Equity Portfolio).
(3) Provident Distributors, Inc., 259
Radnor-Chester Road, Suite 135, Radnor,
Pennsylvania 19807 (records relating to its
functions as distributor and
co-administrator).
(4) PNC Institutional Management Corporation,
Bellevue Corporate Center, 103 Bellevue
Parkway, Wilmington, Delaware 19809 (records
relating to its functions as investment
adviser).
(5) BlackRock Financial Management, Inc., 345
Park Avenue, New York, New York 10154
(records relating to its functions as
sub-adviser).
(6) PNC Equity Advisors Company, 1835 Market
Street, 15th Floor, Philadelphia,
Pennsylvania 19103 (records relating to its
functions as sub-adviser).
C-46
<PAGE> 269
(7) PFPC Inc., Bellevue Corporate Center, 400
Bellevue Parkway, Wilmington, Delaware 19809
(records relating to its functions as
co-administrator, transfer agent and dividend
disbursing agent).
(8) The Chase Manhattan Bank, N.A., 1285 Avenue
of the Americas, New York, New York 10019
(records relating to its function as
sub-custodian).
(9) State Street Bank and Trust Company, P.O. Box
1631, Boston, Massachusetts (records relating
to its function as sub-custodian).
(10) Barclays Bank PLC, 75 Wall Street, New York,
New York 10265 (records relating to its
function as sub-custodian).
(11) Drinker Biddle & Reath, Philadelphia National
Bank Building, 1345 Chestnut Street,
Philadelphia, Pennsylvania 19107-3496
(registrant's declaration of trust, code of
regulations and minute books).
Item 31. Management Services
None.
Item 32. Undertakings
Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's latest
annual report to shareholders upon request and without charge.
Registrant undertakes to file a Post-Effective Amendment with
respect to the New Jersey Municipal Money Market Portfolio,
using financial statements that need not be certified, within
four to six months from the effective date of this
Post-Effective Amendment No. 15.
C-47
<PAGE> 270
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 15 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Philadelphia and the Commonwealth of Pennsylvania on the 11th day of May, 1995.
THE PNC FUND
Registrant
By /s/ G. Willing Pepper
-----------------------------------
G. Willing Pepper, Chairman of
the Board and President
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 15 to the Registration Statement has been
signed by the following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Chairman of the
/s/G. Willing Pepper Board and President May 11, 1995
- --------------------- (Principal Executive
(G. Willing Pepper) Officer)
*David R. Wilmerding, Jr. Vice-Chairman of May 11, 1995
- -------------------------- the Board
(David R. Wilmerding, Jr.)
Vice-President
/s/ Edward J. Roach and Treasurer
- -------------------- (Principal
(Edward J. Roach) Financial and
Accounting Officer) May 11, 1995
*Robert R. Fortune Trustee May 11, 1995
- ------------------------
(Robert R. Fortune)
*Philip E. Coldwell Trustee May 11, 1995
- ------------------------
(Philip E. Coldwell)
*Rodney D. Johnson Trustee May 11, 1995
- ------------------------
(Rodney D. Johnson)
*Anthony M. Santomero Trustee May 11, 1995
- ------------------------
(Anthony M. Santomero)
</TABLE>
*By: /s/ Edward J. Roach
---------------------------------
Edward J. Roach, Attorney-in-Fact
<PAGE> 271
The PNC(R) Fund
POWER OF ATTORNEY
Robert R. Fortune, whose signature appears below, hereby constitutes
and appoints G. Willing Pepper and Edward J. Roach, and either of them, his
true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable The PNC Fund (the
"Company") to comply with the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended (collectively, the "Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to the Company's Registration
Statement pursuant to said Acts, including specifically, but without limiting
the generality of the foregoing, the power and authority to sign in the name
and on behalf of the undersigned as a trustee and/or officer of the Company any
and all such amendments filed with the Securities and Exchange Commission under
said Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
/s/ Robert R. Fortune
---------------------
Date: January 21, 1993
<PAGE> 272
The PNC(R) Fund
POWER OF ATTORNEY
G. Willing Pepper, whose signature appears below, hereby constitutes
and appoints Edward J. Roach his true and lawful attorney and agent, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorney and agent may deem
necessary or advisable or which may be required to enable The PNC Fund (the
"Company") to comply with the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended (collectively, the "Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to the Company's Registration
Statement pursuant to said Acts, including specifically, but without limiting
the generality of the foregoing, the power and authority to sign in the name
and on behalf of the undersigned as a trustee and/or officer of the Company any
and all such amendments filed with the Securities and Exchange Commission under
said Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorney and agent
shall do or cause to be done by virtue hereof.
/s/ G. Willing Pepper
---------------------
Date: January 21, 1993
<PAGE> 273
The PNC(R) Fund
POWER OF ATTORNEY
David R. Wilmerding, Jr., whose signature appears below, hereby
constitutes and appoints G. Willing Pepper and Edward J. Roach, and either of
them, his true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable The PNC Fund (the
"Company") to comply with the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended (collectively, the "Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to the Company's Registration
Statement pursuant to said Acts, including specifically, but without limiting
the generality of the foregoing, the power and authority to sign in the name
and on behalf of the undersigned as a trustee and/or officer of the Company any
and all such amendments filed with the Securities and Exchange Commission under
said Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
/s/ David R. Wilmerding, Jr.
----------------------------
Date: January 21, 1993
<PAGE> 274
The PNC(R) Fund
POWER OF ATTORNEY
Philip E. Coldwell, whose signature appears below, hereby constitutes
and appoints G. Willing Pepper and Edward J. Roach, and either of them, his
true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable The PNC Fund (the
"Company") to comply with the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended (collectively, the "Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to the Company's Registration
Statement pursuant to said Acts, including specifically, but without limiting
the generality of the foregoing, the power and authority to sign in the name
and on behalf of the undersigned as a trustee and/or officer of the Company any
and all such amendments filed with the Securities and Exchange Commission under
said Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
/s/ Philip E. Coldwell
----------------------
Date: September 15, 1993
<PAGE> 275
The PNC(R) Fund
POWER OF ATTORNEY
Rodney D. Johnson, whose signature appears below, hereby constitutes
and appoints G. Willing Pepper and Edward J. Roach, and either of them, his
true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable The PNC Fund (the
"Company") to comply with the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended (collectively, the "Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to the Company's Registration
Statement pursuant to said Acts, including specifically, but without limiting
the generality of the foregoing, the power and authority to sign in the name
and on behalf of the undersigned as a trustee and/or officer of the Company any
and all such amendments filed with the Securities and Exchange Commission under
said Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
/s/ Rodney D. Johnson
---------------------
Date: September 15, 1993
<PAGE> 276
The PNC(R) Fund
POWER OF ATTORNEY
Anthony M. Santomero, whose signature appears below, hereby
constitutes and appoints G. Willing Pepper and Edward J. Roach, and either of
them, his true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable The PNC Fund (the
"Company") to comply with the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended (collectively, the "Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to the Company's Registration
Statement pursuant to said Acts, including specifically, but without limiting
the generality of the foregoing, the power and authority to sign in the name
and on behalf of the undersigned as a trustee and/or officer of the Company any
and all such amendments filed with the Securities and Exchange Commission under
said Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue hereof.
/s/ Anthony Santomero
---------------------
Date: March 30, 1994
<PAGE> 277
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
(1) (a) Declaration of Trust of the Registrant dated December 22, 1988.
(b) Amendment No. 1 to Declaration of Trust.
(c) Amendment No. 2 to the Declaration of Trust dated December 23, 1993 is herein incorporated
by reference to Exhibit (1)(c) of Post-Effective Amendment No. 12 to Registrant's
Registration Statement on Form N-1A filed on July 8, 1994.
(2) Registrant's Code of Regulations.
(3) None.
(4) (a) Specimen Copies of Share Certificates for Shares of beneficial interest in Class A-1,
Class A-2, Class A-3, Class B-1, Class B-2, Class B-3, Class C-1, Class C-2, Class C-3,
Class D-1, Class D-2, Class D-3, Class E-1, Class E-2, Class E-3, Class F-1, Class F-2,
Class F-3, Class G-1, Class G-2, Class G-3, Class H-1, Class H-2, Class H-3, Class I-1,
Class I-2, Class I-3, Class J-1, Class J-2, Class J-3, Class K-1, Class K-2, Class K-3,
Class L-1, Class L-2, Class L-3, Class M-1, Class M-2, Class M-3, Class N-1, Class N-2,
Class N-3, Class O-1, Class O-2, Class O-3, Class P-1, Class P-2, Class P-3 of the
Registrant are herein incorporated by reference to Exhibit 4 of Post-Effective Amendment
No. 6 to Registrant's Registration Statement on Form N-1A filed on May 8, 1992.
(b) Form of Share Certificates for Shares of beneficial interest in Class Q-1, Class Q-2,
Class Q-3, Class R-1, Class R-2, Class R-3, Class S-1, Class S-2, Class S-3, Class T-1,
Class T-2, Class T-3, Class U-1, Class U-2, Class U-3 of the Registrant are herein
incorporated by reference to Exhibit 4(b) of Post-Effective Amendment No. 8 to
Registrant's Registration Statement on Form N-1A filed on January 22, 1993.
(c) Form of Share Certificates for Shares of beneficial interest in Class V-1, Class V-2,
Class V-3, Class W-1, Class W-2, Class W-3, Class X-1,
</TABLE>
<PAGE> 278
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
Class X-2, Class X-3, Class Y-1, Class Y-2 and Class Y-3.
(d) Form of Share Certificates for Shares of beneficial interest in Class Z-1, Class Z-2 and
Class Z-3.
(5) (a) Investment Advisory Agreement between Registrant and PNC Institutional Management
Corporation with respect to the Money Market, Government Money Market, Municipal Money
Market, Managed Income, Growth Equity, International Equity and Balanced Portfolios.
(b) Letter Agreement between Registrant and PNC Institutional Management Corporation relating
to advisory services for the Tax-Free Income Portfolio.
(c) Sub-Advisory Agreement between PNC Institutional Management Corporation and PNC Bank,
National Association with respect to the Money Market Portfolio and Government Money
Market Portfolio.
(d) Sub-Advisory Agreement between PNC Institutional Management Corporation and PNC Bank,
National Association with respect to the Balanced and Tax-Free Income Portfolios.
(e) Sub-Advisory Agreement dated April 20, 1992 between PNC Institutional Management
Corporation and Provident Capital Management, Inc. with respect to the International
Equity Portfolio.
(f) Investment Advisory Agreement dated February 3, 1992 between Registrant and PNC
Institutional Management Corporation relating to the Intermediate Government, Value
Equity, Index Equity, Small Cap Value Equity, Pennsylvania Tax-Free Income, Ohio Tax-Free
Income, Pennsylvania Municipal Money Market and Ohio Municipal Money Market Portfolios.
(g) Investment Advisory Agreement dated December 17, 1993 between the Registrant and PNC
Institutional Management Corporation relating to the Virginia Municipal Money Market,
Government Income, International Fixed Income and International Emerging Markets
Portfolios.
</TABLE>
-2-
<PAGE> 279
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C>
(h) Sub-Advisory Agreement dated February 3, 1992 between PNC Institutional Management
Corporation and PNC Bank, National Association with respect to the Ohio Municipal Money
Market Portfolio.
(i) Sub-Advisory Agreement dated February 3, 1992 between PNC Institutional Management
Corporation and PNC Bank, National Association with respect to the Pennsylvania Municipal
Money Market Portfolio.
(j) Sub-Advisory Agreement dated February 3, 1992 between PNC Institutional Management
Corporation and Provident Capital Management, Inc. with respect to the Value Equity
Portfolio.
(k) Sub-Advisory Agreement dated February 3, 1992 between PNC Institutional Management
Corporation and Provident Capital Management, Inc. with respect to the Small Cap Value
Equity Portfolio.
(l) Investment Advisory Agreement dated March 1, 1993 between Registrant and PNC Institutional
Management Corporation relating to the Short-Term Bond, Intermediate-Term Bond, Core
Equity, Small Cap Growth Equity and North Carolina Municipal Money Market Portfolios.
(m) Sub-Advisory Agreement dated March 1, 1993 between PNC Institutional Management
Corporation and PNC Bank, National Association relating to the North Carolina Municipal
Money Market Portfolio.
(n) Sub-Advisory Agreement dated September 10, 1993 between PNC Institutional Management
Corporation and PNC Bank, National Association relating to the Municipal Money Market
Portfolio.
(o) Sub-Advisory Agreement dated December 17, 1993 between PNC Institutional Management
Corporation and PNC Bank, National Association with respect to the Virginia Municipal
Money Market Portfolio.
(p) Sub-Advisory Agreement dated December 17, 1993 between PNC Institutional Management
Corporation and Provident Capital Management, Inc. with respect to the International Fixed
Income Portfolio.
(q) Sub-Advisory Agreement dated December 17, 1993 between PNC Institutional Management
Corporation
</TABLE>
-3-
<PAGE> 280
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C>
and Provident Capital Management, Inc. with respect to the International Emerging Markets
Portfolio.
(r) Form of Investment Advisory Agreement between the Registrant and PNC Institutional
Management Corporation relating to the New Jersey Municipal Money Market Portfolio.
(s) Form of Sub-Advisory Agreement between PNC Institutional Management Corporation and PNC
Bank, National Association with respect to the New Jersey Municipal Money Market
Portfolio.
(t) Form of Sub-Advisory Agreement between PNC Institutional Management Corporation and PNC
Equity Advisors Company with respect to the Core Equity Portfolio.
(u) Form of Sub-Advisory Agreement between PNC Institutional Management Corporation and PNC
Equity Advisors Company with respect to the Growth Equity Portfolio.
(v) Form of Sub-Advisory Agreement between PNC Institutional Management Corporation and PNC
Equity Advisors Company with respect to the Small Cap Growth Equity Portfolio.
(w) Form of Sub-Advisory Agreement between PNC Institutional Management Corporation and PNC
Equity Advisors Company with respect to the Index Equity Portfolio.
(x) Form of Sub-Advisory Agreement between PNC Institutional Management Corporation and
BlackRock Financial Management, Inc. with respect to the Managed Income Portfolio.
(y) Form of Sub-Advisory Agreement between PNC Institutional Management Corporation and
BlackRock Financial Management, Inc. with respect to the Intermediate Government
Portfolio.
(z) Form of Sub-Advisory Agreement between PNC Institutional Management Corporation and
BlackRock Financial Management, Inc. with respect to the Ohio Tax-Free Income Portfolio.
</TABLE>
-4-
<PAGE> 281
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
(aa) Form of Sub-Advisory Agreement between PNC Institutional Management Corporation and
BlackRock Financial Management, Inc. with respect to the Pennsylvania Tax-Free Income
Portfolio.
(bb) Form of Sub-Advisory Agreement between PNC Institutional Management Corporation and
BlackRock Financial Management, Inc. with respect to the Short-Term Bond Portfolio.
(cc) Form of Sub-Advisory Agreement between PNC Institutional Management Corporation and
BlackRock Financial Management, Inc. with respect to the Intermediate-Term Bond Portfolio.
(dd) Form of Sub-Advisory Agreement between PNC Institutional Management Corporation and
BlackRock Financial Management, Inc. with respect to the Government Income Portfolio.
(6) (a) Distribution Agreement between Registrant and Provident Distributors, Inc. dated January
31, 1994.
(b) Appendix A to the Distribution Agreement dated January 31, 1994 between Registrant and
Provident Distributors, Inc.
(c) Amendment No. 2 to the Distribution Agreement between Registrant and Provident
Distributors, Inc. dated October 18, 1994.
(7) Fund Office Retirement Profit-Sharing Plan and Related Adoption Agreement.
(8) (a) Custodian Agreement dated October 4, 1989 between Registrant and PNC Bank, National
Association.
(b) Amendment No. 1 to Custodian Agreement between Registrant and PNC Bank, National
Association.
(c) Amendment No. 2 dated March 1, 1993 to Custodian Agreement between Registrant and PNC
Bank, National Association with respect to the Short-Term Bond, Intermediate-Term Bond,
Core Equity, Small Cap Growth Equity and North Carolina Municipal Money Market Portfolios.
</TABLE>
-5-
<PAGE> 282
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
(d) Appendix B to Custodian Agreement dated October 4, 1989 between Registrant and PNC Bank,
National Association.
(e) Sub-Custodian Agreement dated April 27, 1992 among the Registrant, PNC Bank, National
Association and The Chase Manhattan Bank.
(f) Global Sub-Custody Agreement between Barclays Bank PLC and PNC Bank, National Association
dated October 28, 1992.
(g) Custodian Agreement between State Street Bank and Trust Company and PNC Bank, National
Association dated June 13, 1983.
(h) Amendment No. 1 to Custodian Agreement between State Street Bank and Trust Company and PNC
Bank dated November 21, 1989.
(i) Letter Agreement between Registrant and PNC Bank, National Association relating to
custodian services with respect to the Tax-Free Income Portfolio.
(j) Letter Agreement between Registrant and PNC Bank, National Association relating to
custodian services with respect to the Ohio Municipal Money Market, Pennsylvania Municipal
Money Market, Intermediate Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income,
Value Equity, Index Equity and Small Cap Value Equity Portfolios.
(k) Letter Agreement dated March 1, 1993 between Registrant and PNC Bank, National Association
relating to custodian services with respect to the North Carolina Municipal Money Market,
Short-Term Bond, Intermediate-Term Bond, Small Cap Growth Equity and Core Equity
Portfolios.
(9) (a) Administration Agreement dated January 18, 1993 among Registrant, PFPC Inc. and Provident
Distributors, Inc.
(b) Amendment No. 1 to the Administration Agreement dated January 18, 1993 among Registrant,
PFPC Inc. and Provident Distributors, Inc. dated September 23, 1994.
</TABLE>
-6-
<PAGE> 283
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C>
(c) Appendix A to the Administration Agreement dated January 18, 1993 among Registrant, PFPC
Inc. and Provident Distributors, Inc.
(d) Amendment No. 2 to the Administration Agreement dated January 18, 1993 among Registrant,
PFPC Inc. and Provident Distributors, Inc.
(e) Transfer Agency Agreement dated October 4, 1989 between Registrant and PFPC Inc.
(f) Amendment No. 1 to Transfer Agency Agreement dated October 4, 1989 between Registrant and
PFPC Inc. relating to the Tax-Free Income Portfolio.
(g) Amendment No. 2 to Transfer Agency Agreement dated October 4, 1989 between Registrant and
PFPC Inc. relating to the Pennsylvania Municipal Money Market, Ohio Municipal Money
Market, Intermediate Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income, Value
Equity, Index Equity and Small Cap Value Equity Portfolios.
(h) Amendment No. 3 to Transfer Agency Agreement dated October 4, 1989 between Registrant and
PFPC Inc. relating to the Short-Term Bond, Intermediate-Term Bond, Core Equity, Small Cap
Growth Equity and North Carolina Municipal Money Market Portfolios.
(i) Amendment No. 4 to Transfer Agency Agreement dated October 4, 1989 between Registrant and
PFPC Inc. relating to Series B Investor Shares of the Money Market, Managed Income, Tax-
Free Income, Intermediate Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income,
Value Equity, Growth Equity, Index Equity, Small Cap Value Equity, Intermediate-Term Bond,
Small Cap Growth Equity, Core Equity, International Fixed Income, Government Income,
International Emerging Markets, International Equity and Balanced Portfolios.
(j) Appendix C to Transfer Agency Agreement dated October 4, 1989 between Registrant and PFPC
Inc.
(k) Amended and Restated Service Plan dated January 21, 1993 for Service Shares and Form of
Servicing Agreement for Service Shares.
(l) Series B Service Plan dated September 23, 1994.
</TABLE>
-7-
<PAGE> 284
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
(m) Trademark License Agreement between Registrant and PNC Bank Corp.
(10) Opinion and Consent of Counsel.*
(11) (a) Consent of Coopers & Lybrand.
(b) Consent of Drinker Biddle & Reath.
(12) None.
(13) (a) Purchase Agreement between Registrant and Shearson Lehman Hutton Inc. ("Shearson")
relating to Classes A-1, B-1, C-1, D-2, E-2, F-2 and G-2.
(b) Purchase Agreement between Registrant and Shearson relating to shares of Class H-2.
(c) Purchase Agreement between Registrant and Shearson relating to shares of Class I-1, Class
I-2, Class J-1, Class J-2, Class K-2, Class L-2, Class M-2, Class N-2, Class O-2 and Class
P-2.
(d) Purchase Agreement between Registrant and Shearson relating to shares of Class D-1, Class
E-1, Class F-1, Class G-1, Class H-1, Class K-1, Class L-1, Class M-1, Class N-1, Class O-1,
Class P-1, Class A-2, Class B-2, Class C-2, Class I-2, Class J-2, Class A-3, Class B-3,
Class C-3, Class D-3, Class E-3, Class F-3, Class G-3, Class H-3, Class I-3, Class J-3,
Class K-3, Class L-3, Class M-3, Class N-3, Class O-3 and Class P-3.
(e) Purchase Agreement between the Registrant and Pennsylvania Merchant Group Ltd relating to
shares of Class Q-1, Class Q-2, Class Q-3, Class R-1, Class R-2, Class R-3, Class S-1,
Class S-2, Class S-3, Class T-1, Class T-2, Class T-3, Class U-1, Class U-2 and Class U-3.
(f) Purchase Agreement dated September 30, 1994 between the Registrant and Provident
Distributors, Inc. relating to shares of Class A-4, Class D-4, Class E-4, Class F-4, Class
G-4, Class H-4, Class K-4, Class L-4, Class M-4, Class N-4, Class O-4,
</TABLE>
- ----------------------------------
* Filed on October 7, 1994 under Rule 24f-2 as part of Registrant's Rule
24f-2 Notice.
-8-
<PAGE> 285
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
Class P-4, Class R-4, Class S-4, Class T-4, Class U-4, Class W-4, Class X-4, Class Y-4.
(g) Purchase Agreement dated February 1, 1994 between the Registrant and Provident
Distributors, Inc. relating to shares of Class V-1, Class V-2, Class V-3, Class W-1, Class
W-2, Class W-3, Class X-1, Class X-2, Class X-3, Class Y-1, Class Y-2 and Class Y-3.
(h) Purchase Agreement dated August 1, 1995 between Registrant and Provident Distributors,
Inc. relating to shares of Class Z-1, Class Z-2 and Class Z-3.
(14) None.
(15) (a) Amended and Restated Series A Distribution and Service Plan dated January 21, 1993 and
Form of Series A Distribution and Servicing Agreement.
(b) Series B Distribution Plan dated September 23, 1994.
(16) Schedules for computation of performance quotations are incorporated herein by reference
to Exhibit (16) of Post-Effective Amendment No. 5 to Registrant's Registration Statement
on Form N-1A filed on February 5, 1992.
</TABLE>
-9-
<PAGE> 1
DECLARATION OF TRUST EXHIBIT (1)(a)
OF
NCP FUNDS
DECLARATION OF TRUST, made as of December 22, 1988 by Patricia
L. Bickimer and Peter Meenan (the "Trustee"):
WHEREAS, the Trustees desire to establish a trust fund for the
investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and
property contributed to the trust fund hereunder shall be held and managed
under this Declaration of Trust as herein set forth below.
I.
NAME
This trust shall be known as NCP FUNDS (hereinafter called the
"Trust"), and the Trustees shall conduct the business of the Trust under that
name or any other name as they shall from time to time determine.
II.
DEFINITIONS
2.1 Definition of Certain Terms. As used in this Declaration
of Trust, the terms set forth below shall have the following meanings:
A. The "Act" refers to the Investment Company
Act of 1940, as now or hereafter amended, to the rules and regulations adopted
from time to time thereunder and to any order or orders thereunder which may
from time to time be applicable to the Trust.
B. The terms "affiliated person," "assignment"
and "interested person" shall have the respective meanings set forth in the
Act. The term "vote of a majority of outstanding Shares" shall mean the "vote
of a majority of the outstanding voting securities" as defined in the Section
2(a) (42) of the Act.
C. The "Regulations" shall refer to the Code of
Regulations of the Trust as adopted and amended from time to time.
<PAGE> 2
D. The "Declaration of Trust" shall mean this
Declaration of Trust as amended or restated from time to time.
E. "Person" shall mean a natural person, a
corporation, a partnership, an association, a joint-stock company, a trust, a
fund or any organized group of persons whether incorporated or not.
F. "Shares" means the equal proportionate
transferable units of interest of each class into which the beneficial interest
in the Trust may be classified or reclassified from time to time by the
Trustees acting under this Declaration of Trust, or in the absence of such
action, means the equal proportionate transferable units of interest into which
the entire beneficial interest in the Trust shall be divided from time to time,
and includes fractions of Shares as well as whole Shares.
G. "Shareholder" means a record owner of Shares
in the Trust.
H. The "Trustees" refers to the individual
trustees of the Trust named herein or elected in accordance with Article 6
hereof in their capacity as trustees hereunder and not as individuals and to
their successor or successors while serving in office as a trustee of the
Trust, and includes a single trustee.
I. "Trust Property" means any and all assets and
property, real or personal, tangible or intangible, which is owned or held by
or for the account of the Trust or the Trustees.
III.
PURPOSE OF TRUST; AGENT FOR SERVICE
The Trust is a Massachusetts business trust of the type
described in Chapter 182 Section 1 of the General Laws of the Commonwealth of
Massachusetts formed for the purpose of acting as a management investment
company under the Act;provided, however, that the Trust may exercise all powers
which are ordinarily exercised by or permissible for Massachusetts business
trusts.
The Agent of the Trust for Service of Process within the
Commonwealth of Massachusetts shall be: The Boston Company Advisors, Inc., One
Exchange Place, Boston, Massachusetts 02109.
-2-
<PAGE> 3
IV.
OWNERSHIP OF ASSETS OF THE TRUST
The assets of the Trust shall be held separate and apart from
any assets now or hereafter held in any capacity, other than as Trustees
hereunder, by the Trustees, including without limitation any successor
Trustees. Legal title to all the assets of the Trust shall be vested in the
Trustees as joint tenants except that the Trustees shall have power to cause
legal title to any assets of the Trust to be held by or in the name of one or
more of the Trustees, or in the name of the Trust, or in the name of any other
person as nominee, on such terms as the Trustees may reasonably determine. The
right, title and interest of the Trustees in the assets of the Trust shall vest
automatically in each person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee, such Trustee shall automatically
cease to have any right, title or interest in any of the assets of the Trust,
and the right, title and interest of such Trustee in the assets of the Trust
shall vest automatically in the remaining Trustees. Such vesting and cessation
of title shall be effective regardless of whether conveyancing documents
(pursuant to Section 6.6 hereof or otherwise) have been executed and delivered.
Except to the extent otherwise required by Article V hereof, no Shareholder
shall be deemed to have severable ownership in any individual asset of the
Trust or any right of partition or possession thereof, or shall be called upon
to assume any loss of the Trust nor can he be called upon to assume any loss of
the Trust or suffer an assessment of any kind by virtue of his ownership of
Shares, but each Shareholder shall have a proportionate undivided beneficial
interest in the assets belonging to a particular class or classes of Shares to
the extent provided in Article V. The ownership of the Trust Property of every
description and the right to conduct any business hereinbefore described shall
be vested exclusively in the Trustees, and the Shareholders shall have no
interest therein other than the beneficial interest conferred by their Shares,
and they shall have no right to call for any partition or division of any
property, profits, rights or interests of the Trust nor can they be called upon
to assume any losses of the Trust or suffer an assessment of any kind by virtue
of their ownership of Shares. The Shares shall be personal property giving
only the rights specifically set forth in this Declaration of Trust. Shares
shall not entitle any holder thereof to preference, preemptive, appraisal,
conversion or exchange rights, except as the Trustees may determine pursuant to
Article V hereof.
-3-
<PAGE> 4
V.
SHAREHOLDERS; BENEFICIAL INTEREST IN THE TRUST;
PURCHASE AND REDEMPTION OF SHARES
5.1 Shares in the Trust.
A. The beneficial interest in the Trust shall at
all times be divided into an unlimited number of full and fractional
transferable Shares with a par value of 5.001 per share. All Shares shall be
of one class, provided that subject to this Declaration of Trust and the
requirements of applicable law, the Trustees shall have the power to classify
or reclassify any unissued Shares into any number of additional classes of
Shares by setting or changing in any one or more respects, from time to time
before the issuance thereof, their designations, preferences, conversion or
other rights, voting powers, restrictions, limitations, qualifications or terms
or conditions of redemption, and provided further that the investment
objectives, policies and restrictions governing the management and operations
of the Trust, including the management of assets belonging to any class of
Shares, may from time to time be changed or supplemented by the Trustees,
subject to the requirements of the Act. The power of the Trustees to classify
or reclassify Shares shall include, without limitation, the power to classify
or reclassify any class of Shares into one or more series of such class. All
references to Shares in this Declaration of Trust which are not accompanied by
a reference to any particular class of Shares shall be deemed to apply to all
outstanding Shares of any and all classes. All references in this Declaration
of Trust to any class of Shares shall include and refer to the Shares of any
series thereof.
Upon the issuance of the first Share of a second class of
Shares classified or reclassified by the Trustees pursuant to this Section 5.1,
all Shares theretofore issued and outstanding shall automatically represent
Shares of a separate class having the preferences, conversion and other rights,
voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption provided for in this Declaration of Trust with respect
to any class of Shares. The Trustees may from time to time divide or combine
the outstanding Shares of the Trust, or of any class or classes with the same
alphabetical designation, into a greater or lesser number without thereby
changing the proportionate beneficial interest of the Shares in the Trust as so
divided or combined or in the assets belonging to such class or classes, as the
case may be.
At any time that there are no Shares outstanding of a
particular class previously established and designated, the
-4-
<PAGE> 5
Trustees may abolish that class and the establishment and designation thereof.
B. Subject always to the power of the Trustees
to classify and reclassify any unissued Shares pursuant to subsection A of this
Section 5.1, Shares of the Trust shall (unless the Trustees otherwise determine
with respect to a class of Shares at the time of establishing and designating
the same) have the following designations, preferences, conversion and other
rights, voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption:
(1) Designations. The Board of Trustees
shall give each class of Shares an alphabetical designation ("A," "B," "C,"
etc.), and may give any class of Shares such supplementary designations as the
Board may deem appropriate. More than one class of Shares may have the same
alphabetical designation.
(2) Assets Belonging to Classes With
Same Alphabetical Designation. All consideration received by the Trust for the
issue and sale of Shares of any class shall be commingled, invested and
reinvested together with the consideration received by the Trust for the issue
and sale of Shares of such other class or classes, if any, that have the same
alphabetical designation, along with all income, earnings, profits and proceeds
derived from the investment thereof, including any proceeds derived from the
sale, exchange or liquidation of such investments, any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may
be, and any general assets of the Trust not belonging to a particular class
which the Trustees may, in their sole discretion, allocate to such classes
having the same alphabetical designation, and shall irrevocably belong to the
classes with respect to which such assets, payments or funds were received or
allocated for all purposes, subject only to the rights of creditors, and shall
be so handled upon the books of account of the Trust. For purposes of this
Declaration of Trust, such assets and the income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any assets derived from any reinvestment of such
proceeds in whatever form, are referred to as "assets belonging to" such
classes. Each Share of the classes having the same alphabetical designation
shall share equally with each other Share of such classes in the assets
belonging to such classes. Shareholders of any class of Shares shall have no
right, title or interest in or to the assets belonging to any class of Shares
with a different alphabetical designation.
(3) Liabilities Belonging to Classes
With Same Alphabetical Designation. The assets belonging to classes of Shares
with the same alphabetical designation shall be charged
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with the direct liabilities in respect of such classes and shall also be
charged with such classes' proportionate share of the general liabilities of
the Trust as determined by comparing the assets belonging to such classes with
the aggregate assets of the Trust, provided, that the Board of Trustees may, in
their discretion, direct that any one or more general liabilities of the Trust
be allocated to such classes on a different basis. The liabilities so charged
to such classes are herein referred to as "liabilities belonging to" such
classes, and each Share of such classes shall be charged equally with each
other Share of a class having the same alphabetical designation with the
liabilities belonging to such classes, except that:
(a) A class of Shares shall bear
any expenses and liabilities directly attributable to such class of Shares
which the Trustees determine should be borne solely by such class, which
expenses and liabilities may include, without limitation, expenses and
liabilities incurred in connection with the distribution of Shares of such
class and expenses and liabilities incurred pursuant to agreements under which
institutions agree to provide services with respect to beneficial owners of
Shares of that class but not with respect to beneficial owners of Shares of
other classes with the same alphabetical designation; and
(b) A class of Shares shall not be
required to bear any expenses and liabilities directly attributable to one or
more other classes of Shares which the Trustees determine should be borne
solely by such other class or classes.
(4) Dividends and Distributions. Shares
of classes having the same alphabetical designation shall be entitled to such
dividends and distributions, in Shares or in cash or both, as may be declared
from time to time by the Trustees, acting in their sole discretion, with
respect to such classes, provided that such dividends and distributions shall
be paid only out of the lawfully available "assets belonging to" such classes
as such term is defined in subsection B(2) of this Section 5.1.
(5) Liquidating Distributions. In the
event of the termination of the Trust and the winding up of its affairs, the
Shareholders of classes having the same alphabetical designation shall be
entitled to receive out of the assets of the Trust available for distribution
to Shareholders, but other than general assets not belonging to any particular
class of Shares, the assets belonging to such classes and the assets so
distributable to the Shareholders of such classes shall, subject to the
allocation of certain liabilities to a particular class as set forth in
subsection B(3) of this Section 5.1, be distributed among such shareholders in
proportion to the number of Shares of
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such classes held by them and recorded in their name on the books of the Trust.
In the event that there are any general assets not belonging to any particular
class of Shares and available for distribution, the Shareholders of classes
having the same alphabetical designation shall be entitled to receive a portion
of such general assets determined by comparing the assets belonging to such
classes with the aggregate assets of the Trust; and the assets so distributable
to the shareholders of such classes shall, subject to the allocation of certain
liabilities to a particular class as set forth in subsection B(3) of this
Section 5.1, be distributed among such Shareholders in proportion to the number
of Shares of such classes held by them and recorded in their name on the books
of the Trust.
(6) Voting. The holder of each Share
shall be entitled to one vote for each full Share, and a proportionate
fractional vote for each fractional Share, irrespective of the class, then
recorded in his name on the books of the Trust, to the extent provided in
Article VIII hereof.
(7) Pre-emptive Rights. Shareholders
shall have no pre-emptive or other rights to subscribe to any additional Shares
or other securities issued by the Trust.
(8) Conversion Rights. The Trustees
shall have the authority to provide from time to time that the holders of
Shares of any class shall have the right to convert or exchange said Shares for
or into Shares of one or more other classes in accordance with such
requirements and procedures as may be established from time to time by the
Trustees.
(9) Redemption of Shares. To the extent
of the assets of the Trust legally available for such redemptions, a
Shareholder of the Trust shall have the right to require the Trust to redeem
his full and fractional Shares of any class out of assets belonging to the
classes with the same alphabetical designation as such class at a redemption
price equal to the net asset value per Share next determined after receipt of a
request to redeem in proper form as determined by the Trustees, subject to the
right of the Trustees to suspend the right of redemption of Shares or postpone
the date of payment of such redemption price in accordance with the provisions
of applicable law. The Trustees shall establish such rules and procedures as
they deem appropriate for the redemption of Shares, provided that all
redemptions shall be in accordance with the Act. Without limiting the
generality of the foregoing, the Trust shall, to the extent permitted by
applicable law, have the right at any time to redeem the Shares owned by any
holder thereof: (a) in connection with the termination of any class of Shares
as provided hereunder; (b) if the value of such Shares in the account or
accounts maintained by the Trust or its transfer agent for any class or classes
of Shares is less than the value determined from
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time to time by the Trustees as the minimum required for an account or accounts
of such class or classes, provided that the Trust shall provide a Shareholder
with written notice at least fifteen (15) days prior to effecting a redemption
of Shares as a result of not satisfying such requirement; (c) to reimburse the
Trust for any loss it has sustained by reason of the failure of such
Shareholder to make full payment for Shares purchased by such Shareholder; (d)
to collect any charge relating to a transaction effected for the benefit of
such Shareholder which is applicable to Shares as provided in the prospectus
relating to such Shares; or (e) if the net income with respect to any
particular class of Shares should be negative or it should otherwise be
appropriate to carry out the Trust's responsibilities under the Act, in each
case subject to such further terms and conditions as the Trustees may from time
to time establish. The redemption price of Shares in the Trust shall, except
as otherwise provided in this subsection, be the net asset value thereof as
determined by the Trustees from time to time in accordance with the provisions
of applicable law, less such redemption fee or other charge, if any, as may be
fixed by the Trustees. When the net income of any class with respect to which
the Trustees have, in their discretion, established a policy of maintaining a
constant net asset value per Share is negative or whenever deemed appropriate
by the Trustees in order to carry out the Trust's responsibilities under the
Act, the Trust may, without payment of compensation but in consideration of the
interests of the Trust and the holders of Shares of such class in maintaining a
constant net asset value per Share of such class, redeem pro rata from each
holder of record on such day, such number of full and fractional Shares of such
class as may be necessary to reduce the aggregate number of outstanding Shares
in order to permit the net asset value thereof to remain constant. Payment of
the redemption price, if any, shall be made in cash by the Trust at such time
and in such manner as may be determined from time to time by the Trustees
unless, in the opinion of the Trustees, which shall be conclusive, conditions
exist which make payment wholly in cash unwise or undesirable; in such event
the Trust may make payment in the assets belonging or allocable to the classes
of Shares having the same alphabetical designation as the class of the Shares
redemption of which is being sought, the value of which shall be determined as
provided herein.
(10) Termination of Classes. Without the
vote of the Shares of any class then outstanding (unless otherwise required by
applicable law), the Trustees may:
(a) Sell and convey the assets
belonging to any class or classes of Shares having the same alphabetical
designation to another trust or corporation that is a management investment
company (as defined in the Act) and is organized under the laws of any state of
the United States for consideration which may include the assumption of all
outstanding
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obligations, taxes and other liabilities, accrued or contingent, belonging to
such class(es) and which may include securities issued by such trust or
corporation. Following such sale and conveyance, and after making provision
for the payment of any liabilities belonging to such class(es) that are not
assumed by the purchaser of the assets belonging to such class(es), the Trust
may, at the Trustees' option, redeem all outstanding Shares of such class(es)
at net asset value as determined by the Trustees in accordance with the
provisions of applicable law, less such redemption fee or other charge, if any,
as may be fixed by the Trustees. Notwithstanding any other provision of this
Declaration of Trust to the contrary, the redemption price may be paid in cash
or by distribution of the securities or other consideration received by the
Trust for the assets belonging to such class(es) upon such conditions as the
Trustees deem, in their sole discretion, to be appropriate consistent with
applicable law and this Declaration of Trust;
(b) Sell and convert the assets
belonging to any class or classes of Shares having the same alphabetical
designation into money and, after making provision for the payment of all
obligations, taxes and other liabilities, accrued or contingent, belonging to
such class(es), the Trust may, at the Trustees' option, (i) redeem all
outstanding Shares of such class(es) at net asset value as determined by the
Trustees in accordance with the provisions of applicable law, less such
redemption fee or other charge, if any, as may be fixed by the Trustees upon
such conditions as the Trustees deem, in their sole discretion, to be
appropriate consistent with applicable law and this Declaration of Trust; or
(ii) combine the assets belonging to such class(es) following such sale and
conversion with the assets belonging to any one or more other class(es) of
Shares having a different alphabetical designation pursuant to and in
accordance with subsection (c) of this Section 5.1(B) (10);
(c) Combine the assets belonging to
any class or classes of Shares having the same alphabetical designation with
the assets belonging to any one or more other classes of Shares having a
different alphabetical designation if the Trustees reasonably determine that
such combination will not have a material adverse effect on the Shareholders of
any class participating in such combination. In connection with any such
combination of assets the Shares of any class then outstanding may, if so
determined by the Trustees, be converted into Shares of any other class or
classes of Shares participating in such combination, or may be redeemed, at the
option of the Trustees, at net asset value as determined by the Trustees in
accordance with the provisions of applicable law, less such redemption fee or
other charge, or conversion cost, if any, as may be fixed by the Trustees upon
such conditions as the Trustees deem, in their sole discretion, to be
appropriate consistent with applicable law
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and this Declaration of Trust. Notwithstanding any other provision of this
Declaration of Trust to the contrary, any redemption price, or part thereof,
paid pursuant to this subsection may be paid in Shares of any other class or
classes participating in such combination; or
(d) Otherwise terminate and wind up
the affairs of any class or classes of Shares having the same alphabetical
designation in accordance with this Declaration of Trust and applicable law.
In connection with such termination of a class or classes of Shares having the
same alphabetical designation and the winding up of the affairs of such
class(es), all of the powers of the Trustees under this Declaration of Trust
shall continue until the affairs of such class(es) shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust relating
to such class(es), to collect assets belonging to such class(es), to sell,
convey, assign, exchange, transfer or otherwise dispose of all or any part of
the remaining assets belonging to such class(es) to one or more persons at
public or private sale for consideration that may consist in whole or in part
of cash, securities or other property of any kind, to discharge or pay the
liabilities belonging to such class(es), and to do all other acts appropriate
to liquidate the business of such class(es), provided that the holders of
Shares of any class shall not be entitled in any liquidation to receive any
distribution upon the assets belonging to any other class that has a different
alphabetical designation.
If no Shares of a class then remain outstanding, or after the
excess of the assets belonging to any class(es) of Shares over the liabilities
belonging to such class(es) has been distributed among the Shareholders of such
class(es) as provided in this Declaration of Trust, the Trustees may authorize
the termination of such class(es) of Shares.
5.2 Purchase of Shares. The Trustees may accept investments
in the Trust from such persons for such consideration, including cash or
property, and on such other terms as they may from time to time authorize and
the Trustees may in such manner acquire other assets (including the acquisition
of assets subject to, and in connection with, the assumption of liabilities)
and businesses. The Trustees may in their discretion reject any order for the
purchase of Shares.
5.3 Net Asset Value Per Share. The net asset value per Share
of any class of Shares shall be computed at such time or times as the Trustees
may specify pursuant to the Act. Assets shall be valued and net asset value
per Share shall be determined by such person or persons as the Trustees may
appoint under the supervision of the Trustees in such manner as the Trustees
may determine not inconsistent with the Act.
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5.4 Ownership of Shares. The ownership of Shares shall be
recorded on the record books of the Trust. The Trustees may make such rules
and regulations as they consider appropriate for the issuance of Share
certificates, the transfer of Shares and similar matters. Certificates
certifying the ownership of Shares may be issued as the Trustees may determine
from time to time, provided that the Trustees shall have the power to call
outstanding Share certificates and to replace them with book entries. The
record books of the Trust shall be conclusive as to the identity of holders of
Shares and as to the number of Shares held by each Shareholder.
VI.
THE TRUSTEES
6.1 Management of the Trust. The affairs of the Trust shall
be managed by the Trustees and they shall have all powers necessary or
desirable to carry out such responsibility, including without limitation the
appointment of and delegation of responsibility to such officers, employees,
agents, and contractors as they may select.
6.2 Number and Term of Office. The number of Trustees shall
be determined from time to time by the Trustees themselves, but shall not be
more than twenty. Subject to the provisions of this section relating to
resignation or removal, the Trustees shall have the power to set and alter the
terms of office of the Trustees, and they may at any time lengthen or shorten
their own terms or make their terms of unlimited duration, provided that the
term of office of any incumbent Trustee shall continue until terminated as
provided in the concluding sentence of this Section 6.2 or, if not so
terminated until the election of such Trustee's successor in office has become
effective in accordance with this section. A Trustee shall qualify by
accepting in writing his election or appointment and agreeing to be bound by
the provisions of this Declaration of Trust. Except as otherwise provided
herein in the case of vacancies, Trustees (other than the Initial Trustees
provided in Section 6.3 hereof) shall be elected by the Shareholders at such
time or times as the Trustees shall determine that such election is required
under Section 16(a) of the Act or is otherwise advisable. Notwithstanding the
foregoing, (a) any Trustee may resign as a Trustee by written instrument signed
by him and delivered to the other Trustees at the principal business office of
the Trust (without need for prior or subsequent accounting), which shall take
effect upon such delivery or upon such later date as is specified therein; (b)
any Trustee may be removed at any time with or without cause by written
instrument, signed by a least two-thirds of the number of Trustees in office
prior to such removal, specifying the date when such removal shall become
effective; (c) any Trustee who has
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become incapacitated by illness or injury may be retired by written instrument
signed by a majority of the other Trustees; and (d) the term of a Trustee shall
terminate at his death, resignation, removal or adjudicated incompetency.
6.3 Initial Trustees. The initial Trustees shall be Peter
Meenan and Patricia L. Bickimer, who, by their execution hereof, have each
agreed to be bound by the provisions of this Declaration of Trust. The initial
Trustees shall have the power to appoint additional Trustees prior to any
public meeting.
6.4 Quorum. At all meetings of the Trustees, a majority of
the Trustees shall constitute a quorum for the transaction of business and the
action of a majority of the Trustees present at any meeting at which a quorum
is present shall be the action of the Trustees unless the concurrence of a
greater proportion is required for such action by law, the Regulations or this
Declaration of Trust. If a quorum shall not be present at any meeting of
Trustees, the Trustees present thereat may by a majority vote adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present. Meetings may be held by means of a
conference telephone circuit or similar communications equipment by means of
which all persons participating may hear each other. The Trustees may also act
without a meeting, unless provided otherwise in this Declaration of Trust or
prohibited by law, by written consents of a majority of the Trustees. As used
herein, a "majority of the Trustees" shall mean a majority of the Trustees in
office at the time in question or if there shall be only one (1) Trustee in
office then such term shall mean such Trustee.
The Trustees may appoint committees of Trustees and delegate
powers to them as provided in the Regulations. Any committee of the Trustees,
including an executive committee, if any, may act with or without a meeting. A
quorum for all meetings of any such committee shall be a majority of the
members thereof. Unless provided otherwise in this Declaration of Trust, any
action of any such committee may be taken at a meeting by vote of a majority of
the members present (a quorum being present) or without a meeting by unanimous
written consent of the members.
6.5 Vacancies. In case a vacancy shall exist by reason of an
increase in number, or for any other reason, the remaining Trustee or Trustees
may fill such vacancy by appointing such other person as he or they in their
discretion shall select. An appointment of a Trustee may be made in
anticipation of a vacancy to occur at a later date by reason of retirement or
resignation of a Trustee or an increase in the number of Trustees; provided,
that such appointment will not become effective prior to such retirement or
resignation or such
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increase in the number of Trustees. Whenever a vacancy in the number of
Trustees shall occur, until such vacancy is filled as provided in this Section
6.5, the Trustee or Trustees then in office, regardless of number, shall have
all the powers granted to the Trustees, and shall discharge all the duties
imposed on the Trustees, by this Declaration of Trust. A written instrument
certifying the existence of such vacancy signed by a majority of the Trustees
shall be conclusive evidence of the existence of such vacancy. Such
appointment shall be evidenced by a written instrument signed by a majority of
the then Trustees but the appointment shall not take effect until the
individual so named shall have qualified by accepting in writing the
appointment and agreeing to be bound by the terms of this Declaration of Trust.
A vacancy may also be filled by the Shareholders in an election held at an
annual or special meeting. As soon as any Trustee so appointed or elected
shall have qualified, the Trust estate shall vest in the new Trustee or
Trustees, together with the continuing Trustees, without any further act or
conveyance.
6.6 Effect of Death, Resignation, etc. of Trustee. The
death, resignation, removal, or incapacity of the Trustees, or any one of them,
shall not operate to annul the Trust or to revoke any existing agency created
pursuant to the terms of this Declaration of Trust. Upon the resignation or
removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall
execute and deliver such documents as the remaining Trustees shall require for
the purpose of conveying to the Trust or the remaining Trustees any Trust
property held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his legal representative shall execute and
deliver on his behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence. The failure to request or deliver such
documents shall not affect the operation of the provisions of Article IV
hereof.
6.7 Powers. The Trustees in all instances shall act as
principals and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or desirable in connection with the management of the Trust. The
Trustees shall not be bound or limited by present or future laws or customs in
regard to Trust investments, but shall have full authority and power to make
any and all investments which they, in their uncontrolled discretion, shall
deem proper to accomplish the purpose of this Trust. Without limiting the
foregoing, and subject to any applicable limitation in this Declaration of
Trust or the Regulations, the Trustees shall have power and authority:
A. To conduct, operate and carry on, either
directly or through one or more wholly-owned subsidiaries, the business of an
investment company or any other lawful business
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activity which the Trustees, in their sole and absolute discretion, consider to
be (1) incidental to the business of the Trust or any class of Shares as an
investment company, (2) conducive to or expedient for the benefit or protection
of the Trust or the Shareholders of any class of Shares, or (3) calculated in
any other manner to promote the interests of the Trust or the shareholders of
any class of Shares.
B. To adopt Regulations not inconsistent with
this Declaration of Trust providing for the conduct of the affairs of the Trust
and to amend and repeal them to the extent that they do not reserve that right
solely to the Shareholders.
C. To issue, sell, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer, and otherwise
deal in Shares of the Trust; and to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of Shares, any funds or other assets of
the Trust, whether constituting capital or surplus or otherwise, to the full
extent now or hereafter permitted by applicable law; and to divide or combine
Shares without thereby changing the proportionate beneficial interest in the
Trust.
D. To issue, acquire, hold, resell, convey,
write options on, and otherwise deal in securities, debt instruments and other
instruments and rights of a financial character and to apply to any acquisition
of securities any property of the Trust whether from capital or surplus or
otherwise.
E. To invest and reinvest cash, and to hold
cash uninvested.
F. To borrow money, issue guarantees of
indebtedness or contractural obligations of others, to sell, exchange, lend,
pledge, mortgage, hypothecate, write options on and lease any or all of the
Trust Property.
G. To act as a distributor of Shares and as
underwriter of, or broker or dealer in, securities or other property.
H. To vote or give assent, or exercise any
rights of ownership, with respect to stock or other securities or property; and
to execute and deliver proxies or powers of attorney to such Person or Persons
as the Trustees shall deem proper, granting to such Person or Persons such
power and discretion with relation to securities or property as the Trustees
shall deem proper.
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I. To exercise powers and rights of subscription
or otherwise which in any manner arise out of ownership of securities.
J. To hold any security or property in a form
not indicating any trust, whether in bearer, unregistered or other negotiable
form, or in the name of the Trustees or of the Trust or in the name of a
custodian, sub-custodian or other depositary or a nominee or nominees or
otherwise.
K. To consent to or participate in any plan for
the reorganization, consolidation or merger of any corporation or issuer, any
security of which is or was held in the Trust; and consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or issuer;
and to pay calls or subscriptions with respect to any security held in the
Trust.
L. To join with other security holders in acting
through a committee, depositary, voting trustee or otherwise, and in that
connection to deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power and
authority with relation to any security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to
pay, such portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper.
M. To enter into joint ventures, general or
limited partnerships and any other combinations or associations.
N. To enter into contracts of any kind and
description.
O. To collect all property due to the Trust, to
pay all claims, including taxes, against the assets belonging to the Trust, to
prosecute, defend, compromise, arbitrate, or otherwise adjust claims in favor
of or against the Trust or any matter in controversy including, but not limited
to, claims for taxes, to foreclose any security interest securing any
obligations by virtue of which any property is owed to the Trust, and to enter
into releases, agreements and other instruments.
P. To retain and employ any Person or Persons to
serve on behalf of the Trust as investment adviser, administrator, transfer
agent, custodian, underwriter, distributor or in such other capacities as they
consider desirable and to delegate such power and authority as they consider
desirable to any such Person or Persons.
Q. To indemnify any person with whom the Trust
has dealings.
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R. To purchase and pay for entirely out of Trust
Property such insurance as they may deem necessary or appropriate for the
conduct of the business, including without limitation, insurance policies
insuring the Trust Property and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the shareholders,
Trustees, officers, employees, agents, investment advisers or managers,
principal underwriters, or independent contractors of the Trust individually
against all claims and liabilities of every nature arising by reason of
holding, being or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such person as Shareholder,
Trustee, officer, employee, agent, investment adviser or manager, principal
underwriter, or independent contractor, including any action taken or omitted
that may be determined to constitute negligence, whether or not the Trust would
have the power to indemnify such Person against such liability.
S. To engage in and to prosecute, defend,
compromise, abandon, or adjust, by arbitration or otherwise, any actions,
suits, proceedings, disputes, claims, and demands relating to the Trust or the
Trust Property, and, out of the Trust Property, to pay or to satisfy any debts,
claims or expenses incurred in connection therewith, including those of
litigation, and such power shall include without limitation the power of the
Trustees or any appropriate committee thereof, in the exercise of their or its
good faith business judgment, to consent to dismiss any action, suit,
proceeding, dispute, claim, or demand, derivative or otherwise, brought by any
person, including a Shareholder in such shareholder's own name or in the name
of the Trust, whether or not the Trust or any of the Trustees may be named
individually therein or the subject matter arises by reason of business for or
on behalf of the Trust.
T. To establish pension, profit sharing, Share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust.
U. To determine and change the fiscal year of
the Trust and the method by which its accounts shall be kept.
V. To establish in their absolute discretion in
accordance with the provisions of applicable law the basis or method for
determining the value of the assets belonging to any class or classes of
Shares, the value of the liabilities belonging to any class or classes of
Shares, the allocation of any assets or liabilities to any class or classes of
Shares, the net asset value of any class of Shares, the times at which Shares
of any class shall be deemed to be outstanding or no longer outstanding and the
net asset value of each Share of any class for purposes of sales, redemptions,
repurchases of Shares or otherwise.
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W. To determine in accordance with generally
accepted accounting principles and practices what constitutes net profits or
net earnings, and to determine what accounting periods shall he used by the
Trust for any purpose, whether dual or any other period, including daily; to
set apart out of the assets belonging to any class or classes of Shares such
reserves of funds for such purposes as it shall determine and to abolish the
same; to declare and pay any dividends and distributions to any class of Shares
in cash, securities or other property from any assets legally available
therefor, at such intervals (which may be as frequently as daily) or on such
other periodic basis, as it shall determine; to declare such dividends or
distributions by means of a formula or other method of determination, at
meetings held less frequently than the frequency of the effectiveness of such
declaration; to establish payment dates for dividends or any other
distributions on any basis, including dates occurring less frequently than the
effectiveness of declarations thereof; and to provide for the payment of
declared dividends on a date earlier or later than the specified payment date
in the case of Shareholders redeeming their entire ownership of Shares of any
class.
X. To engage in any other lawful act or activity
in which a Massachusetts business trust or a corporation organized under the
Massachusetts Business Corporation Law may engage.
No one dealing with the Trustees shall be under any obligation
to make any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or
upon their order.
6.8 Trustees and Representatives as Shareholders. Any
Trustee, officer, representative or other agent of the Trust may acquire, own
and dispose of Shares of the Trust to the same extent as if he were not a
Trustee, officer, representative or agent; and the Trust may issue and sell or
cause to be issued and sold Shares of the Trust to, and may buy such Shares
from, any person with which such Trustee, officer, representative or agent is
affiliated subject only to the general limitations herein contained as to the
sale and purchase of such Shares; all subject to any restrictions which may be
contained in the Regulations.
6.9 Expenses; Trustee Reimbursement. The Trustees shall have
the power to incur and to pay (or shall be reimbursed) from the Trust Property
all expenses and disbursements of the Trust, including, without limitation,
interest expense, compensation payable to Trustees, officers and
representatives of the Trust, taxes, fees and commissions of every kind
incurred in connection with the affairs of the Trust, expenses of issue,
repurchase and redemption of Shares, expenses of registering and qualifying the
Trust and its Shares under Federal and State
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securities laws and regulations, charges of custodians, transfer agents,
investment advisers, distributors, service providers, administrators and
registrars, expenses of preparing and printing and distributing prospectuses,
auditing and legal expenses, expenses of reports to Shareholders, expenses of
meetings of Shareholders and proxy solicitations therefor, insurance expense,
association membership dues and such non-recurring items as may arise,
including costs and expenses of litigation to which the Trust is a party, and
for all losses and liabilities by them incurred in administering the Trust,
provided that expenses, disbursements, losses and liabilities incurred in
connection with classes of Shares having the same alphabetical designation or
in connection with the management of the assets belonging to such classes shall
be payable solely out of the assets belonging to such classes, and provided
further that the Trustees shall have a lien on the Trust Property prior to any
rights or interests of the Shareholders thereto for the payment of any
expenses, disbursements, losses and liabilities of the Trust.
6.10 Power to Carry Out Trust's Purposes; Presumptions. The
Trustees shall have power to carry out any and all acts consistent with the
Trust's purposes through branches and offices both within and without the
Commonwealth of Massachusetts, in any and all states of the United States of
America, in the District of Columbia, and in any and all commonwealths,
territories, dependencies, possessions, agencies or instrumentalities of the
United States of America and of foreign governments, and to do all such other
things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Declaration of Trust, the presumption
shall be in favor of a grant of power to the Trustees. The enumeration of any
specific power herein shall not be construed as limiting the aforesaid power.
The Trustees shall not be required to obtain any court order to deal with the
Trust Property.
6.11 Determinations by Trustees. Any determination made in
good faith and, so far as accounting matters are involved in accordance with
generally accepted accounting principles, by or pursuant to the direction of
the Trustees as to the amount and value of assets, obligations or liabilities
of the Trust or any class of Shares, as to the amount of net income of the
Trust or any class of Shares from dividends and interest for any period or
amounts at any time legally available for the payment of dividends, as to the
amount of any reserves or charges set up and the propriety thereof, as to the
time of or purpose for creating reserves or as to the use, alteration or
cancellation of any reserves or charges (whether or not any obligation or
liability for which such reserves or charges shall have been created shall
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have been paid or discharged or shall be then or thereafter required to be paid
or discharged), as to the value of any security owned by the Trust or any class
of Shares, as to the allocation of any assets or liabilities to a class or
classes of Shares, as to the times at which Shares of any class shall be deemed
to be outstanding or no longer outstanding, or as to any other matters relating
to the issuance, sale, redemption or other acquisition or disposition of
securities or Shares, and any reasonable determination made in good faith by
the Trustees as to whether any transaction constitutes a purchase of securities
on "margin," a sale of securities "short," or any underwriting of the sale of,
or a participation in any underwriting or selling group in connection with the
public distribution of, any securities, shall be final and conclusive, and
shall be binding upon the Trust and all Shareholders, past, present and future,
and Shares are issued and sold on the condition and understanding, evidenced by
the purchase of Shares or acceptance of Share certificates, that any and all
such determinations shall be binding as aforesaid.
6.12 Service in Other Capacities. Any Trustee, officer,
representative, employee or agent of the Trust, including any investment
adviser, transfer agent, administrator, distributor, custodian or underwriter
for the Trust, may serve in any other capacity on his or its own behalf or on
behalf of others, and may engage in other business activities in addition to
his or its services on behalf of the Trust, provided that such other activities
do not materially interfere with the performance of his or its duties for or on
behalf of the Trust.
VII.
AGREEMENTS WITH INVESTMENT ADVISER,
PRINCIPAL UNDERWRITER, ADMINISTRATOR,
TRANSFER AGENT, CUSTODIAN AND OTHERS
7.1 Investment Adviser. The Trustees may, on such terms and
conditions as they may in their discretion determine, enter into a written
investment advisory agreement or agreements with any Person or Persons
providing for portfolio management, investment advisory, statistical and
research facilities and other services pertaining to the assets belonging to
one or more classes of Shares. Notwithstanding any other provision hereof, the
Trustees may authorize such an investment adviser (subject to such general or
specific instructions as the Trustees may adopt) to effect purchases, sales or
exchanges of portfolio securities of such class(es) on behalf of the Trustees
and to determine the net asset value and net income of such class(es) or may
authorize any representative, officer or Trustee to effect such purchases,
sales or exchanges pursuant to the recommendations of such investment adviser
(all without further action by the Trustees).
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Any such purchases, sales and exchanges so affected shall be deemed to have
been authorized by all of the Trustees.
7.2 Administrator. The Trustees may, on such terms
conditions as they may in their discretion determine, enter into one or more
agreements with any Person or Persons providing for administrative services to
one or more classes Shares, including assistance in supervising the affairs of
such class(es) and performance of administrative, clerical and other services
considered desirable by the Trustees.
7.3 Distributor. The Trustees may, on such terms and
conditions as they may in their discretion determine, enter into one or more
distribution agreements with any Person or Persons providing for sale of Shares
of one or more classes a price at least equal to the net asset value per Share
of "such class(es) and providing for sale of the Shares of such class(es)
pursuant to arrangements by which the Trust may either agree to sell the Shares
of such class(es) to the other party to the agreement or appoint such other
party its sales agent for such Shares. Such agreement(s) may also provide for
the repurchase of Shares of such class(es) by such other party as principal or
as agent of the Trust, and may authorize the other party to enter into
agreements with others for the purpose of the distribution or repurchase of
Shares of such class(es).
7.4 Transfer Agent. The Trustees may, on such terms and
conditions as they may in their discretion determine, enter into one or more
agreements with any Person or Persons providing for transfer agency and other
services to Shareholders of any class.
7.5 Custodian. The Trustees may, on such terms and
conditions as they may in their discretion determine, enter into one or more
agreements with any Person or Persons providing for the custody and safekeeping
of the property of the Trust or any class of Shares.
7.6 Service and Distribution Plans. The Trustees may, on
such terms and conditions as they may in their discretion determine, adopt one
or more plans pursuant to which Persons may be compensated directly or
indirectly by the Trust for Shareholder servicing, administration or
distribution with respect to one or more classes of Shares, including without
limitation plans subject to Rule 12b-1 under the Act, and the Trustees may
enter into agreements pursuant to such Plans.
7.7 Parties to Agreements. The same Person may be employed
in multiple capacities under Sections 7.1 through 7.6 of this Article VII and
may receive compensation in as many capacities as such Person serves. The
Trustees may enter into any agreement of the character described in this
Article VII, or
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any other agreement necessary or appropriate to the conduct of the business of
the Trust or any class of Shares, with any Person, including any Person in
which any Trustee, officer, representative, employee or Shareholder of the
Trust may be interested, and no such agreement shall be invalidated or rendered
voidable by reason of the existence of any such relationship, nor shall any
Person holding such relationship be liable by reason of such relationship for
any loss or expense to the Trust under or by reason of said agreement or
accountable for any profit realized directly or indirectly therefrom.
VIII.
SHAREHOLDERS' VOTING POWERS AND MEETINGS
8.1 Voting Powers. The shareholders shall have power to vote
(a) for the election of Trustees as provided in Section 6.2 hereof, (b) to the
same extent as the shareholders of a Massachusetts business corporation when
considering whether a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders, (c) with respect to any of the matters and to the extent
provided in Article X hereof, (d) with respect to such additional matters
relating to the Trust as may be required by law, by this Declaration of Trust,
by the Regulations of the Trust, by any requirement applicable to or agreement
of the Trust, and as the Trustees may consider desirable. Every Shareholder of
record shall have the right to one vote for every whole Share (other than
Shares held in the treasury of the Trust) standing in his name on the books of
the Trust, and to have a proportional fractional vote for any fractional Share,
as to any matter on which the Shareholder is entitled to vote. There shall be
no cumulative voting. Shares may be voted in person or by proxy. Until Shares
are issued, the Trustees may exercise all rights of Shareholders and may take
any action required or permitted to be taken by Shareholders by law, this
Declaration of Trust or the Regulations.
8.2 Meetings. Meetings of shareholders may be called by the
Trustees as provided in the Regulations and shall be called by the Trustees
upon the written request of shareholders owning at least ten percent (10%) of
the outstanding Shares entitled to vote.
8.3 Quorum and Required Vote. The presence, in person or by
proxy, of Shareholders entitled to cast at least a majority of the votes which
all shareholders are entitled to cast on the particular matter shall constitute
a quorum for the purpose of considering such matter. Action may be taken on
all matters for which a quorum exists, irrespective of the absence of a quorum
on other matters. If a meeting cannot be organized with respect to
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a particular matter because a quorum for that matter has not attended, those
present and entitled to vote on such matter may adjourn the meeting to such
reasonable time and place as they may determine.
On any matter submitted to a vote of Shareholders, Shares with
different alphabetical class designations that are then issued and outstanding
and entitled to vote shall be voted in the aggregate and not by class except:
(1) as otherwise required by applicable law or permitted by the Board of
Trustees of the Trust, or (2) when the matter, as conclusively determined by
the Trustees, affects only the interests of the Shareholders of a class or
classes with a particular alphabetical designation (in which case only
Shareholders of the affected class or classes shall be entitled to vote
thereon).
Each Share of classes having the same alphabetical designation
shall vote together in the aggregate and not by class on all matters submitted
to a vote of the Shareholders of such classes, except that:
(1) on any matter that pertains to the
expenses and liabilities described in subsection B(3)(a) of Section 5.1 hereof
(or to any agreement, plan or other document adopted by the Trust relating to
said expenses or liabilities) and is submitted to a vote of Shareholders of the
Trust, only the particular class of Shares specified therein shall be entitled
to vote, except that: (i) if said matter affects Shares in the Trust other than
such class of Shares, such other affected Shares in the Trust shall also be
entitled to vote, and in such case the particular class of Shares so specified
shall be voted in the aggregate together with such other affected Shares and
not by class except where otherwise required by law or permitted by the Board
of Trustees of the Trust; and (ii) if said matter does not affect the
particular class of Shares specified therein, said class of Shares shall not be
entitled to vote (except where required by law or permitted by the Board of
Trustees) even though the matter is submitted to a vote of the holders of
Shares in the Trust other than Shares of such class; and
(2) on any matter that pertains to the
expenses and liabilities described in subsection B(3)(b) of Section 5.1 hereof
(or any agreement, plan or other document adopted by the Trust relating to said
expenses or liabilities) and is submitted to a vote of Shareholders of the
Trust, the particular class of Shares specified therein shall not be entitled
to vote, except where otherwise required by law or permitted by the Board of
Trustees of the Trust, and except that if said matter affects such class of
Shares, such class of Shares shall be entitled to vote, and in such case shall
be voted in the aggregate together with all other Shares in the Trust voting on
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the matter and not by class except where otherwise required by law or permitted
by the Board of Trustees.
Subject to any applicable requirements of law or of is
Declaration of Trust or the Regulations: (a) the acts, at any duly organized
meeting of the Shareholders present, in person or by proxy, entitled to cast at
least a majority of the votes which all Shareholders present are entitled to
cast on the particular matter shall be the acts of the Shareholders with
respect to that matter; and (b) in the election of Trustees, a plurality of the
Shares voting shall elect a Trustee.
8.4 Shareholder Action by Written Consent. Any action which
may be taken by Shareholders may be taken without a meeting if not less than a
majority of the Shareholders entitled to vote on the matter consent to the
action in writing and the written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
8.5 Code of Regulations. The Regulations may include further
provisions not inconsistent with this Declaration of Trust for meetings of
Shareholders, votes, record dates, notices of meetings and related matters.
IX.
LIMITATIONS OF LIABILITY AND INDEMNIFICATION
9.1 Liabilities of Classes. Liabilities belonging to classes
of Shares with the same alphabetical designation, including, without
limitation, expenses, fees, charges, taxes, and liabilities incurred or arising
in connection with such classes, or in connection with the management thereof,
shall be paid only from the assets belonging to such classes.
9.2 Limitation of Trustee Liability. Every act or thing done
or omitted, and every power exercised or obligation incurred by the Trustees or
any of them in the administration of this Trust or in connection with any
affairs, property or concerns of the Trust, whether ostensibly in their own
names or in their Trust capacity, shall be done, omitted, exercised or incurred
by them as Trustees and not as individuals. Every person contracting or
dealing with the Trustees or having any debt, claim or judgment against them or
any of them shall look only to the funds and property of the Trust for payment
or satisfaction. No Trustee or Trustees of the Trust shall ever be personally
liable for or on account of any contract, debt, tort, claim, damage, judgment
or decree arising out of or connected with the administration or preservation
of the Trust Property or the conduct of any of the affairs of the Trust. Every
note, bond,
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contract, order or other undertaking issued by the Trust or the Trustees
relating to the Trust, and stationery used by the Trust, shall include the
notice set forth in Section 9.5 of this Article IX (but the omission thereof
shall not be construed as a waiver of the foregoing provision, and shall not
render the Trustees personally liable).
It is the intention of this Section 9.2 that no Trustee shall
be subject to any personal liability whatsoever to any person for any action or
failure to act (including without limitation the failure to compel in any way
any former or acting Trustee to redress any breach of trust) except that
nothing in this Declaration of Trust shall protect any Trustee from any
liability to the Trust or its shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of his duties, or by reason of reckless disregard of his
obligations and duties as Trustee; and that all persons shall look solely to
the Trust Property belonging to a class of Shares for satisfaction of claims of
any nature arising in connection with the affairs of such class of the Trust.
9.3 Indemnification of Trustees, Officers, Representatives
and Employees. The Trust shall indemnify each of its Trustees against all
liabilities and expenses (including amounts paid in satisfaction of judgments,
in compromise, as fines and penalties, and as counsel fees) reasonably incurred
by him in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, in which he may be involved or
with which he may be threatened, while as a Trustee or thereafter, by reason of
his being or having been such a Trustee except with respect to any matter as to
which he shall have been adjudicated to have acted in bad faith, willful
misfeasance, gross negligence or reckless disregard of his duties, provided
that as to any matter disposed of by a compromise payment by such person,
pursuant to a consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless the Trust shall have
received a written opinion from independent legal counsel approved by the
Trustees to the effect that if either the matter of willful misfeasance, gross
negligence or reckless disregard of duty, or the matter of bad faith had been
adjudicated, it would in the opinion of such counsel have been adjudicated in
favor of such person. The rights accruing to any person under these provisions
shall not exclude any other right to which he may be lawfully entitled,
provided that no person may satisfy any right of indemnity or reimbursement
hereunder except out of the property of the Trust. The Trustees may make
advance payments in connection with the indemnification under this Section 9.3,
provided that the indemnified person shall have given a written undertaking to
reimburse the Trust in the event it is
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subsequently determined that he is not entitled to such indemnification.
The Trustees shall indemnify officers, representatives and
employees of the Trust to the same extent that Trustees are entitled to
indemnification pursuant to this Section 9.3.
9.4 Reliance on Experts, etc. Each Trustee, officer and
representative of the Trust shall, in the performance of his duties, be fully
and completely justified and protected with regard to any act or any failure to
act resulting from reliance in good faith upon the books of account or other
records of the Trust, upon an opinion of counsel satisfactory to the Trust, or
upon reports made to the Trust by any of its officers, representatives or
employees or by the investment adviser, the principal underwriter, selected
dealers, accountants, appraisers or other experts or consultants selected with
reasonable care by the Trustees, officers or representatives of the Trust,
regardless of whether such counsel or expert may also be a Trustee.
9.5 Limitation of Shareholder Liability. Shareholders shall
not be subject to any personal liability in connection with the assets of the
Trust for the acts or obligations of the Trust. The Trustees shall have no
power to bind any Shareholder personally or to call upon any shareholder for
the payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay by way of subscription to
any Shares or otherwise. Every obligation, contract, instrument, certificate,
Share, other security of any class of Shares or undertaking, and every other
act whatsoever executed in connection with the Trust or any class of Shares,
shall be conclusively presumed to have been executed or done by the executors
thereof only in their capacities as Trustees under the Declaration of Trust or
in their capacity as officers, employees or agents of the Trust and not
individually. Every note, bond, contract, order or other undertaking issued by
or on behalf of the Trust or the Trustees relating to the Trust or any class of
Shares, and the stationery used by the Trust, shall include a recitation
limiting the obligation represented thereby to the Trust and its assets (but
the omission of such a recitation shall not operate to bind any Shareholder),
as follows:
"The names 'NCP Funds' and 'Trustees of NCP Funds' refer
respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time
to time under a Declaration of Trust dated December 22, 1988
which is hereby referred to and a copy which is on file at the
office of the State Secretary of The Commonwealth of
Massachusetts and at the principal
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office of the Trust. The obligations of 'NCP Funds' entered
into in the name or on behalf thereof by any of the Trustees,
officers, representatives or agents are made not individually,
but in such capacities, and are not binding upon any of the
Trustees, Shareholders, officers, representatives or agents of
the Trust personally, but bind only the Trust Property, and
all persons dealing with any class of shares of the Trust must
look solely to the Trust Property belonging to such class for
the enforcement of any claims against the Trust."
The rights accruing to a Shareholder under this Section 9.5
shall not exclude any other right to which such Shareholder may be lawfully
entitled, nor shall anything herein contained restrict the right of the Trust
to indemnify or reimburse a Shareholder in any appropriate situation even
though not specifically provided for herein, provided that a Shareholder of any
class of shares shall be indemnified only from assets belonging to the classes
of Shares with the same alphabetical designation.
9.6 Indemnification of Shareholders. In case any Shareholder
or former Shareholder shall be held to be personally liable solely by reason of
his being or having been a shareholder and not because of his acts or omissions
or for some other reason, the Shareholder or former Shareholder (or his heirs,
executors, administrators or other legal representatives or, in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled out of the assets belonging to the classes of Shares with the same
alphabetical designation as that of the Shares owned by such Shareholder to be
held harmless from and indemnified against all loss and expense arising from
such liability. The Trust shall, upon request by the Shareholder, assume the
defense of any claim made against any Shareholder for any act or obligations of
the Trust and satisfy any judgment thereon from such assets.
X.
MISCELLANEOUS
10.1 Trust Not a Partnership. It is hereby expressly
declared that a Massachusetts business trust and not a partnership, joint
venture, corporation, joint stock company or any form of legal relationship
other than a trust is created hereby. Nothing herein shall be construed to
make the Shareholders, either by themselves or with the Trustees, partners or
members of a joint stock association. No Trustee hereunder shall have any
power to bind personally either a representative
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of the Trust or any officer or shareholder. All persons extending credit to,
contracting with or having any claim against the Trust or the Trustees shall
look only to the assets of the Trust for payment under such credit, contract or
claim; and neither the shareholders, the officers nor the Trustees, whether
past, present or future, shall be personally liable therefor.
10.2 No Bond or Surety. The Trustees shall not be required
to give any bond as such, nor any surety if a bond is required.
10.3 Duration of Trust. This Trust shall continue without
limitation of time, provided that the Trust or any class of Shares may be
terminated at any time in accordance with the provisions of this Declaration of
Trust and applicable law.
10.4 Merger, Consolidation and Sale of Assets. The Trust may
merge into or consolidate with any other corporation, association, trust or
other organization or may sell, lease or exchange all or substantially all of
the Trust Property, including its good will, upon such terms and conditions and
for such consideration when and as authorized by vote or written consent of the
Trustees and approved by the affirmative vote of the holders of not less than
two-thirds of the shares outstanding and entitled to vote, voting in the
aggregate and not by class except to the extent that applicable law may require
voting by class, or by an instrument or instruments in writing without a
meeting consented to by the holders of not less than two-thirds of such Shares,
voting in the aggregate and not by class except to the extent that applicable
law may require voting by class, provided that if such merger, consolidation,
sale, lease or exchange is recommended by the Trustees, such may be approved by
a vote of the majority of the outstanding shares, voting in the aggregate and
not by class except to the extent that applicable law may require voting by
class or by an instrument or instruments in writing without a meeting consented
to by the holders of not less than a majority of such Shares, voting in the
aggregate and not by class except to the extent that applicable law may require
voting by class.
10.5 Incorporation. With the approval of the holders of a
majority of the outstanding Shares, voting in the aggregate and not by class
except to the extent that applicable law may require voting by class, the
Trustees may cause to be organized, or assist in organizing, a corporation or
corporations under the law of any jurisdiction, to carry on any affairs in
which the Trust shall directly or indirectly have any interest, and to transfer
the Trust Property to any such Person in exchange for any Shares or securities
thereof or otherwise, and to lend money, to subscribe for the Shares or
securities of, and enter into any contracts with any such Person in which the
Trust holds or is about to acquire securities or any other interest. The
Trustees
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may also cause a merger or consolidation between the Trust or any successor
thereto and any such Person if and to the extent permitted by law. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships associations or organizations and selling, conveying or
transferring a portion of the Trust Property to such Person(s).
10.6 Filing of Copies, References, Headings. The original
instrument of this Declaration of Trust and of each amendment hereto shall be
filed with the State Secretary of the Commonwealth of Massachusetts as provided
by law and copies thereof shall be kept at the office of the Trust where they
may be inspected by any Shareholder. Each amendment so filed shall be
accompanied by a certificate signed and acknowledged by a Trustee or by the
Secretary or any assistant Secretary of the Trust stating that such action was
duly taken in the manner provided herein, and unless such amendment or such
certificate sets forth some later time for the effectiveness of such amendment,
such amendment shall be effective upon its filing. A restated Declaration of
Trust, integrating into a single instrument all of the provisions of the
Declaration of Trust that are then in effect and operative, may be executed
from time to time by a majority of the Trustees and shall, upon filing with the
State Secretary of the Commonwealth of Massachusetts, be conclusive evidence of
all amendments contained therein and may thereafter be referred to in lieu of
the initial Declaration of Trust and the various amendments thereto. Anyone
dealing with the Trust may rely on a certificate by a representative of the
Trust as to whether or not any such amendment hereto may have been made and as
to any matters in connection with the Trust hereunder, with the same effect as
if it were the original, and may rely on a copy certified by a representative
of the Trust to be a copy of this instrument or of any amendment thereto.
Headings are placed herein for convenience of reference only and, in the case
of any conflict, the text of this instrument, rather than the headings, shall
control. This instrument may be executed in any number of counterparts each of
which shall be deemed an original. All signatures to this instrument need not
appear on the same page.
10.7 Applicable Law. The Trust set forth in this instrument
is a trust made in the Commonwealth of Massachusetts and is to be governed by
and construed and administered according the laws of said Commonwealth.
10.8 Provisions in Conflict With Law or Regulations.
A. No provision of this Declaration of Trust
shall be effective to:
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(1) Require a waiver of compliance with
any provision of the Securities Act of 1933, as amended, or the Act, or of any
valid rule, regulation or order of the Securities and Exchange Commission
thereunder; or
(2) Protect or purport to protect any
Trustee or officer of the Trust against any liability to the Trust or its
Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
B. The provisions of this Declaration of Trust
are severable, and if the Trustees shall determine with the advice of counsel
that any of such provisions is in conflict with the Act, the regulated
investment company provisions of the Internal Revenue Code, Chapter 182 of the
General Laws of the Commonwealth of Massachusetts or with any other applicable
law or regulation, then in such event the conflicting provision shall be deemed
never to have constituted a part of this Declaration of Trust, provided that
such determination shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
C. If any provision of this Declaration of Trust
shall be held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration of Trust in any jurisdiction.
10.9 Amendment of Declaration of Trust.
A. This Declaration of Trust may be amended upon
a resolution to that effect being adopted by the Trustees and approved by the
affirmative vote of the holders of not less than a majority of the outstanding
Shares, voting in the aggregate and not by class except to the extent that
applicable law may require voting by class.
B. Notwithstanding any other provision hereof,
until such time as a Registration Statement under the Securities Act of 1933,
as amended, covering the first public offering of securities of the Trust shall
have become effective, this Declaration of Trust may be terminated or amended
in any respect by the affirmative vote of a majority of the Trustees.
C. The Trustees may amend this Declaration of
Trust without a vote of shareholders to change the name of the Trust or to cure
any error or ambiguity or if they deem it necessary to conform this Declaration
of Trust to the
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requirements of applicable state or federal laws or regulations, including
without limitation the requirements of the regulated investment company
provisions of the Internal Revenue Code, but the Trustees shall not be liable
for failing so to do.
D. Notwithstanding any other provision hereof,
this Declaration of Trust may not be amended in any manner whatsoever that
would impair the exemption from personal liability of the Trustees and
Shareholders of the Trust or that would permit an assessment upon any
Shareholder.
IN WITNESS WHEREOF, the undersigned have executed this
Declaration of Trust in the capacities indicated, this 22nd day of December,
1988.
/s/ Patricia L. Bickimer
--------------------------------------
Patricia L. Bickimer, Initial Trustee
/s/ Peter Meenan
--------------------------------------
Peter Meenan, Initial Trustee
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M A S S A C H U S E T T S
Suffolk, ss.:
On this 22nd day of December, 1988, personally appeared before
me Patricia L. Bickimer and Peter Meenan, each known to me and known to me to
be the individuals described in and who execute the foregoing Declaration of
Trust, and each acknowledged the said Declaration of Trust to be her and his
free act and deed.
/s/Elizabeth A. DiFanchi
--------------------------------------
Notary Public
[NOTARIAL SEAL] My Commission Expires: 6-8-90
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EXHIBIT (1)(b)
AMENDMENT NO. 1 TO DECLARATION OF TRUST
DATED DECEMBER 22, 1988
The undersigned, Assistant Secretary of The PNC(R) Fund (the "Fund"),
does hereby certify that at a meeting of the Board of Trustees held on April
21, 1989, the following resolutions were unanimously approved by the trustees
of the Fund and that said resolutions continue in full force and effect as of
the date hereof:
WHEREAS, Article X, Section 10.9B of the Fund's Declaration of
Trust dated as of December 22, 1988 (the "Declaration of Trust")
provides that, until such time as a Registration Statement under the
Securities Act of 1933, as amended, covering the first public offering
of securities of the Fund shall have become effective, the Declaration
of Trust may be amended in any respect by the affirmative vote of a
majority of the trustees;
RESOLVED, that pursuant to the authorization described above,
the Declaration of Trust shall be amended in the following respect:
Article I of the Declaration of Trust is amended to change the
name of the Fund from "NCP Funds" to "The PNC Fund", and all
other appropriate references in the Declaration of Trust are
amended to reflect the fact that the name of the Fund is "The
PNC Fund";
FURTHER RESOLVED, that any officer of the Fund be, and each of
them hereby is, authorized to execute, seal and deliver any and all
documents, instruments, certificates, papers and writings; to file the
same with any public official including, without limitation, the
Secretary of the Commonwealth of Massachusetts and the Boston City
Clerk; and to do any and all other acts, in the name of the Fund and
on its behalf, as may be required or desirable in connection with or
in furtherance of the foregoing resolution; and
FURTHER RESOLVED, that the foregoing amendment to the
Declaration of Trust shall be effective upon the filing of
<PAGE> 2
an instrument containing the same with the Secretary of the
Commonwealth of Massachusetts and the Boston City Clerk.
WITNESS my hand and seal this 4th day of May, 1989.
/s/Patricia L. Bickimer
------------------------
Patricia L. Bickimer
Assistant Secretary
COMMONWEALTH OF MASSACHUSETTS )
) ss.
CITY OF BOSTON
Then personally appeared Patricia L. Bickimer, Assistant Secretary of
The PNC Fund, and acknowledged this instrument to be her free act and deed this
4th day of May, 1989.
/s/Annamarie D'Angelo
------------------------
Notary Public
My commission expires: 11/17/89
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<PAGE> 1
EXHIBIT (1)(C)
THE PNC(R) FUND
(A MASSACHUSETTS BUSINESS TRUST)
AMENDMENT NO. 2 TO DECLARATION OF TRUST
DATED DECEMBER 22, 1988;
CERTIFICATE OF CLASSIFICATION OF SHARES
The undersigned, Secretary of The PNC(R) Fund (the "Fund"),
does hereby certify that at a meeting of the Board of Trustees held on June 24,
1993, the following resolutions were unanimously approved by the trustees of
the Fund and that said resolutions continue in full force and effect as of the
date hereof:
APPROVAL OF AMENDMENT TO THE FUND'S DECLARATION OF TRUST TO APPOINT A
NEW AGENT FOR SERVICE OF PROCESS IN MASSACHUSETTS.
RESOLVED, that pursuant to Article X, Section 10.9 of the
Fund's Declaration of Trust, the second paragraph of Article III of
the Declaration of Trust shall be amended to read as follows:
The Agent of the Trust for Service of Process within
the Commonwealth of Massachusetts shall be: CT
Corporation System, 2 Oliver Street, Boston,
Massachusetts 02109.
FURTHER RESOLVED, that any officer of the Fund be, and each of
them hereby is, authorized to execute, seal and deliver any and all
documents, instruments, certificates, papers and writings; to file the
same with any public official including, without limitation, the
Secretary of the Commonwealth of Massachusetts and the Boston City
Clerk; and to do any and all other acts, in the name of the Fund and
on its behalf, as may be required or desirable in connection with or
in furtherance of the foregoing resolution; and
FURTHER RESOLVED, that the foregoing amendment to the
Declaration of Trust shall be effective upon the approval of a
majority of the outstanding shares of the Fund and the filing of an
instrument containing the amendment with the Secretary of the
Commonwealth of Massachusetts and the Boston City Clerk.
The undersigned also certifies that the following resolution
was duly adopted by the shareholders of the Fund at a Special Meeting of
Shareholders held on September 10, 1993:
RESOLVED, that pursuant to Article X, Section 10.9 of the
Fund's Declaration of Trust, the second paragraph of
<PAGE> 2
Article III of the Declaration of Trust shall be amended to read as
follows:
The Agent of the Trust for Service of Process within
the Commonwealth of Massachusetts shall be: CT
Corporation System, 2 Oliver Street, Boston,
Massachusetts 02109.
The undersigned also certifies that at a meeting of the Board
of Trustees held on January 21, 1993, the following resolutions were duly
adopted by the trustees of the Fund and that said resolutions continue in full
force and effect as of the date hereof:
APPROVAL OF NEW CLASSES OF SHARE.
RESOLVED, that pursuant to Article V of the Fund's Declaration
of Trust, an unlimited number of authorized, unissued and unclassified
shares of beneficial interest of the Fund be, and hereby are,
classified into separate classes of shares with the designations:
Class Q-1, Class Q-2 and Class Q-3, representing interests in the
Service, Investor and Institutional Shares, respectively, of the North
Carolina Municipal Money Market Portfolio; Class R-1, Class R-2 and
Class R-3, representing interests in the Service, Investor and
Institutional Shares, respectively, in the Short-Term Bond Portfolio;
Class S-1, Class S-2 and Class S-3, representing interests in the
Service, Investor and Institutional Shares, respectively, in the
Intermediate-Term Bond Portfolio; Class T-1, Class T-2 and Class T-3,
representing interests in the Service, Investor and Institutional
Shares, respectively, of the Small Cap Growth Equity Portfolio; and
Class U-1, Class U-2 and Class U-3, representing interests in the
Service, Investor and Institutional Shares, respectively, of the Core
Equity Portfolio;
FURTHER RESOLVED, that each share of each such Class shall
have all of the preferences, conversion and other rights, voting
powers, restrictions, limitations, qualifications and terms and
conditions of redemption that are set forth in the Fund's Declaration
of Trust with respect to its shares of beneficial interest; and
FURTHER RESOLVED, that the officers of the Fund be, and each
hereby is, authorized and empowered to execute, seal and deliver any
and all documents, instruments, papers and writings, including, but
not limited to, any instrument to be filed with the State Secretary of
the Commonwealth of Massachusetts or the Boston City Clerk, and to do
any and all other acts, in the name of the Fund and on its behalf, as
he, she or they may deem necessary or desirable in
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<PAGE> 3
connection with or in furtherance of the foregoing resolutions, such
determination to be conclusively evidenced by such actions.
The undersigned also certifies that at a meeting of the Board
of Trustees held on December 17, 1993, the following resolutions were duly
adopted by the trustees of the Fund and that said resolutions continue in full
force and effect as of the date hereof:
APPROVAL OF NEW CLASS OF SHARE.
RESOLVED, that pursuant to Article V of the Fund's Declaration
of Trust, an unlimited number of authorized, unissued and unclassified
shares of beneficial interest of the Fund be, and hereby are,
classified into separate classes of shares with the designations:
Class V-1, Class V-2 and Class V-3, representing interests in the
Service, Investor and Institutional Shares, respectively, of the
Virginia Municipal Money Market Portfolio; Class W-1, Class W-2 and
Class W-3, representing interests in the Service, Investor and
Institutional Shares, respectively, in the International Fixed Income
Portfolio; Class X-1, Class X-2 and Class X-3, representing interests
in the Service, Investor and Institutional Shares, respectively, in
the Government Income Portfolio; and Class Y-1, Class Y-2 and Class
Y-3, representing interests in the Service, Investor and Institutional
Shares, respectively, of the International Emerging Markets Portfolio.
FURTHER RESOLVED, that each share of each such Class shall
have all of the preferences, conversion and other rights, voting
powers, restrictions, limitations, qualifications and terms and
conditions of redemption that are set forth in the Fund's Declaration
of Trust with respect to its shares of beneficial interest; and
FURTHER RESOLVED, that the officers of the Fund be, and each
hereby is, authorized and empowered to execute and deliver any and all
documents, instruments, papers and writings, including, but not
limited to, any instrument to be filed with the State Secretary of the
Commonwealth of Massachusetts or the Boston City Clerk, and to do any
and
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<PAGE> 4
all other acts, in the name of the Fund and on its behalf, as he, she
or they may deem necessary or desirable in connection with or in
furtherance of the foregoing resolutions.
WITNESS my hand and seal this 23rd day of December,
1993.
/s/ Morgan R. Jones
--------------------------
Morgan R. Jones, Esq.
Secretary
COMMONWEALTH OF PENNSYLVANIA )
) ss.
CITY OF PHILADELPHIA )
Then personally appeared Morgan R. Jones, Secretary of The
PNC(R) Fund, and acknowledged this instrument to be his free act and deed this
23rd day of December, 1993.
/s/ Dorothea A. Natale
--------------------------
Notary Public
My commission expires:
August 22, 1996
-4-
<PAGE> 1
EXHIBIT (2)
CODE OF REGULATIONS
of
NCP FUNDS
ARTICLE I
TRUSTEES
1.1 Number and Term of Office. The number of Trustees shall
be such number, not more than twenty (20), as may be fixed from time to time by
the Trustee(s). Each Trustee shall hold office until the next meeting of the
Shareholders following his election or appointment as a Trustee at which
trustees are elected and until his successor shall have been elected and
qualified.
1.2 Place of Meetings; Telephone Meetings. Meetings of the
Trustees, regular or special, shall be held at the principal office of the
Trust or at such other place as the Trustees may from time to time determine.
The Trustees or any committee thereof may participate in a meeting of the
Trustees or of such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting may hear each other at the same time and participation by such means
shall constitute presence in person at the meeting except for the purpose of
voting on any investment advisory agreement or distribution plan of the Trust.
1.3 Regular Meetings. Regular meetings of the Trustees may
be held without notice at such time and at the
<PAGE> 2
principal office of the Trust or at such other place as the Trustees
may from time to time determine.
1.4 Special Meetings. Special meetings of the Trustees may
be called by the President on one day's notice to each Trustee; special
meetings of the Trustees shall be called by the President or Secretary in like
manner and on like notice on the written request of three Trustees.
1.5 Committees. The Trustees may by resolution passed by a
majority of the Trustees appoint from among its members an executive committee
and other committees composed of two or more Trustees, and may delegate to such
committees, in the intervals between meetings of the Trustees, any or all of
the powers of the Trustees in the management of the business and affairs of the
Trust, except the power to issue Shares in the Trust or to recommend to
Shareholders any action requiring Shareholder approval.
1.6 Chairman of the Board. The Trustees may at any time
appoint one of their number as Chairman of the Board, who shall serve at the
pleasure of the Trustees and shall perform and execute such duties as the
Trustees may from time to time provide but who shall not by reason of
performing or executing these duties be deemed an officer or employee of the
Trust.
1.7 Compensation. Any Trustee, whether or not a salaried
officer, employee, or agent of the Trust, may be compensated for his services
as a Trustee or as a member of a committee, or as Chairman of the Trustees or
Chairman of a
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<PAGE> 3
committee, by fixed periodic payments or by fees for attendance at meetings or
by both, and in addition may be reimbursed for transportation and other
expenses, all in such manner and amounts as the Trustees may from time to time
determine.
ARTICLE II
SHAREHOLDERS
2.1 Meetings. Meetings of the Shareholders of the Trust may
be called by the Trustees and shall be called by the Trustees whenever required
by law or upon the written request of the holders of at least ten percent (10%)
of the outstanding Shares entitled to vote.
2.2 Notice. Written notice, stating the place, day and hour
of each meeting of the Shareholders and the general nature of the business to
be transacted shall be given by, or at the direction of, the person calling the
meeting to each Shareholder of record entitled to vote at the meeting at least
ten days prior to the day named for the meeting, unless in a particular case a
longer period of notice is required by law.
2.3 Shareholders' List. The officer or agent having charge
of the transfer books for Shares of the Trust shall make, at least five days
before each meeting of the shareholders, a complete list of the Shareholders
entitled to vote at the meeting, arranged in alphabetical order and including
the address of and the number of Shares held by each such Shareholder. The
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<PAGE> 4
list shall be kept on file at the office of the Trust and shall be subject to
inspection by any Shareholder at any time during usual business hours and shall
also be produced and kept open at the time and place of each meeting of
Shareholders and shall be subject to inspection by any Shareholder during each
meeting of Shareholders.
2.4 Record Date. The Trustees may fix a time (during which
they may close the Share transfer books of the Trust) not more than ninety (90)
days prior to the date of any meeting of the Shareholders, or the date fixed
for the payment of any dividend, or the date of the allotment of rights or the
date when any change or conversion or exchange of Shares shall go into effect,
as a record date for the determination of the Shareholders entitled to notice
of, or to vote at, any such meeting, or entitled to receive payment of any such
dividend, or to receive any such allotment of rights, or to exercise such
rights, as the case may be. In such case, only such Shareholders as shall be
Shareholders of record at the close of business on the date so fixed shall be
entitled to notice of, or to vote at, such meeting or to receive payment of
such dividend, or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any Shares on the
books of the Trust after any record date fixed, as aforesaid.
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<PAGE> 5
ARTICLE III
NOTICES
3.1 Form. Notices to the Trustees shall be oral or by
telephone or telegram or in writing delivered personally or mailed to the
Trustees at their addresses appearing on the books of the Trust. Notices to
the Shareholders shall be in writing and delivered personally or mailed to the
Shareholders at their addresses appearing on the books of the Trust. oral
notice shall be deemed to be given when given directly to the person required
to be notified and notice by mail shall be deemed to be given when deposited in
the United States mail or with a telegraph office for transmission. Notice to
the Trustees need not state the purpose of a regular or special meeting of the
Trustees or committee.
3.2 Waiver. Whenever any notice of the time, place or
purpose of any meeting of the Shareholders, the Trustees or a committee is
required to be given under the provisions of Massachusetts law or under the
provisions of the Declaration of Trust or these Regulations, a waiver thereof
in writing, signed by the person or persons entitled to such notice and filed
with the records of the meeting, whether before or after the holding thereof,
or actual attendance at the meeting of the Shareholders in person or by proxy,
or at the meeting of the Trustees or the committee in person, shall be deemed
equivalent to the giving of such notice to such persons.
-5-
<PAGE> 6
ARTICLE IV
OFFICERS
4.1 Number. The officers of the Trust shall be chosen by the
Trustees and shall include a President, a Secretary and a Treasurer. The Board
of Trustees may from time to time elect or appoint one or more Vice Presidents,
Assistant Secretaries and Assistant Treasurers.
4.2 Other Officers. The Trustees from time to time may
appoint such other officers and agents as they shall deem advisable, who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as the Trustees may from time to time prescribe. The Trustees may
delegate to one or more officers or agents the power to appoint any such
subordinate officers or agents and to prescribe the respective rights, terms of
office, authorities and duties.
4.3 Election and Tenure. The officers of the Trust shall be
chosen by the Trustees. Two or more offices may be held by the same person but
no officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law, the Declaration of Trust or
these Regulations to be executed, acknowledged or verified by two or more
officers. Any officer or agent may be removed by the Trustees. An officer of
the Trust may resign by filing a written resignation with the President or with
the Trustees or with the Secretary. Any vacancy occurring in any office of the
Trust by
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<PAGE> 7
death, resignation, removal or otherwise may be filled by the Trustees.
4.4 Compensation. The salaries or other compensation of all
officers and agents of the Trust shall be fixed by the Trustees, except that
the Trustees may delegate to any committee the power to fix the salary or other
compensation of any officer or agent of the Trust.
4.5 President. The President shall be the chief executive
officer of the Trust; unless a Chairman has been designated, he shall preside
at all meetings of the Trustees and of the Shareholders; he shall be, ex
officio, a member of all standing committees; and he shall see that all orders
and resolutions of the Trustees are carried into effect. He, or such person as
he may designate, shall sign, execute and acknowledge, in the name of the
Trust, deeds, mortgages, bonds, contracts and other instruments authorized by
the Trustees, except in the case where the signing and execution thereof shall
be delegated by the Trustees to some other officer or agent of the Trust. The
President shall also be the chief administrative officer of the Trust and shall
perform such other duties and shall have such other powers as the Trustees may
from time to time prescribe.
4.6 Vice Presidents. The Vice Presidents, in the order of
their seniority, shall, in the absence or disability of the President, perform
the duties and exercise the powers of the President, and shall perform such
other duties as the Trustees may from time to time prescribe.
-7-
<PAGE> 8
4.7 Secretary. The Secretary shall attend all meetings of
the Trustees and of the Shareholders and shall record all the proceedings
thereof and shall perform like duties for any committee when required. He
shall give, or cause to be given, notice of meetings of the Trustees and of the
Shareholders, and shall perform such other duties as may be prescribed by the
Trustees or the President, under whose supervision he shall' be. He shall keep
in safe custody the seal of the Trust and, when authorized by the Trustees,
affix and attest the same to any instrument requiring it, provided that, in
lieu of affixing the seal of the Trust to any document, it shall be sufficient
to meet the requirements of any law, rule or regulation relating to a seal to
affix the word "(SEAL)" adjacent to the signature of the authorized officer of
the Trust. The Trustees may give general authority to any other officer to
affix the seal of the Trust and to attest the affixing by his signature.
4.8 Assistant Secretaries. The Assistant Secretaries, in
order of their seniority, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties as the Trustees may from time to time prescribe.
4.9 Treasurer. The Treasurer shall be the chief financial
officer of the Trust. He shall be responsible for the maintenance of its
accounting records and shall render to the Trustees when the Trustees so
require an account of all the
-8-
<PAGE> 9
Trust's financial transactions and a report of the financial condition of the
Trust.
4.10 Assistant Treasurers. The Assistant Treasurers, in the
order of their seniority, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer and shall perform
such other duties as the Trustees may from time to time prescribe.
ARTICLE V
INVESTMENT RESTRICTIONS
The Trustees may from time to time adopt such restrictions
upon the investment of the assets of the Trust, or amendments thereto, as they
may consider necessary or desirable, provided that any such restriction or
amendment shall be approved by a majority of the outstanding Shares of the
Trust entitled to vote thereon if required by the Investment Company Act of
1940, as amended.
ARTICLE VI
GENERAL PROVISIONS
6.1 Inspection of Books. The Trustees may from time to time
determine whether and to what extent, and at what times and places, and under
what conditions and regulations the accounts and books of the Trust or any of
them shall be open to
-9-
<PAGE> 10
inspection by the Shareholders; and no Shareholder shall have any right to
inspect any account or book or document of the Trust except as conferred by law
or authorized by the Trustees or by resolution of the shareholders.
6.2 Reports. The Trust shall transmit to by the holders
and/or file with federal and state regulatory agencies such reports of its
operations as the Trustees shall consider necessary or desirable or as may be
required by law.
6.3 Bonding of Officers and Employees. All officers and
employees of the Trust shall be bonded to such extent, and in such manner, as
may be required by law.
6.4 Transfer of Shares. Transfer of Shares made on the books
of the Trust at the direction of named on the Trust's books or named in the
certificates for such Shares (if issued), or by his attorney lawfully
constituted in writing, and upon surrender of the certificate or certificates
for such Shares (if issued) properly together with a proper request for
redemption, to transfer agent, with such evidence of the authenticity of such
transfer, authorization and other matters as the Trust or its agents may
reasonably require, and subject to such reasonable conditions and requirements
as may be r the Trust or its agents; or if the Trustees shall by resolution so
provide, transfer of Shares may be made in manner provided by law.
-10-
<PAGE> 11
ARTICLE VII
AMENDMENTS
This Code of Regulations may be altered or repealed by the
Trustees at any regular or special meeting of the Trustees.
-11-
<PAGE> 1
EXHIBIT (5)(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of October 4, 1989 between THE PNC(R) FUND,
a Massachusetts business trust (the "Fund"), and PROVIDENT INSTITUTIONAL
MANAGEMENT CORPORATION, a Delaware corporation (the "Adviser").
WHEREAS, the Fund is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Fund desires to retain Adviser to furnish
investment advisory services to the Fund and the Adviser is willing to so
furnish such services;
NOW THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) The Fund hereby appoints Adviser to act as
investment adviser to the Fund's Money Market, Tax-Free Money Market,
Government Money Market, Capital Appreciation, Total Return, Managed Income and
International Portfolios (collectively, the "Portfolios") for the period and on
the terms set forth in this Agreement. Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
(b) In the event that the Fund establishes one or
more portfolios other than the Portfolios with respect to which it desires to
retain Adviser to act as investment adviser hereunder, the Fund shall notify
Adviser in writing. If Adviser is willing to render such services under this
Agreement it shall notify the Fund in writing whereupon, subject to such
shareholder approval as may be required pursuant to Paragraph 10 hereof, such
portfolio shall become a Portfolio hereunder and shall be subject to the
provisions of this Agreement to the same extent as the Portfolios named above
in subparagraph (a) except to the extent that said provisions (including those
relating to the compensation payable by the Fund to Adviser) are modified with
respect to such portfolio in writing by the Fund and Adviser at the time.
2. Sub-Contractors. It is understood that Adviser will
from time to time employ or associate with such person or persons as Adviser
may believe to be particularly fitted to assist it in the performance of this
Agreement; provided,
<PAGE> 2
however, that the compensation of such person or persons shall be paid by
Adviser and that Adviser shall be as fully responsible to the Fund for the acts
and omissions of any subcontractor as it is for its own acts and omissions.
Without limiting the generality of the foregoing, it is agreed that investment
advisory services to the Money Market, Government Money Market and Total Return
Portfolios shall be provided by Provident National Bank, that investment
advisory services to the Tax-Free Money Market, Capital Appreciation and
Managed Income Portfolios shall be provided by The Central Trust Company, N.A.
and that investment advisory services to the International Portfolio shall be
provided by Provident Capital Management, Inc. (together the "Sub-Advisers")
pursuant to sub-advisory agreements agreeable to the Fund and approved in
accordance with the provisions of the 1940 Act (together the "Sub-Advisory
Agreements").
3. Delivery of Documents. The Fund has furnished
Adviser with copies, properly certified or authenticated, of each of the
following:
(a) Resolutions of the Fund's Board of Trustees
authorizing the appointment of Adviser as the Portfolios'
adviser and approving this Agreement;
(b) The Fund's Declaration of Trust as filed with
the State Secretary of the Commonwealth of Massachusetts and
the Boston City Clerk on December 22, 1988;
(c) The Fund's Code of Regulations;
(d) The Fund's Notification of Registration on
Form N-8A under the 1940 Act as filed with the Securities and
Exchange Commission ("SEC") on December 23, 1988;
(e) The Fund's Registration Statement on Form
N-1A (the "Registration Statement") under the Securities Act
of 1933 and the 1940 Act, as filed with the SEC on December
23, 1988, and all amendments thereto; and
(f) The Fund's most recent prospectuses for the
Portfolios (such prospectuses together with the related
statements of additional information, as currently in effect
and all amendments and supplements thereto, are herein called
"Prospectuses").
The Fund will furnish Adviser from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
-2-
<PAGE> 3
4. Services. Subject to the supervision of the Fund's
Board of Trustees, Adviser will (either directly or through the Sub-AdviserS
and other sub-contractors employed by it in accordance with Section 2 hereof)
provide a continuous investment program for each of the Portfolios, including
investment research and management with respect to all securities, investments,
cash and cash equivalents in the Portfolios. Adviser will (either directly or
through the Sub-Advisers and other sub-contractors employed by it in
accordance with Paragraph 2 hereof) determine from time to time what securities
and other investments will be purchased, retained or sold by the Portfolios and
will place the daily orders for the purchase or sale of securities. Adviser
will provide the services rendered by it under this Agreement in accordance
with each Portfolio's investment objective, policies and restrictions as stated
in the Portfolio's Prospectus (as currently in effect and as it may be amended
or supplemented from time to time) and the resolutions of the Fund's Board of
Trustees. Adviser further agrees that it:
(a) will comply with all applicable rules and
regulations of the SEC and will in addition conduct its
activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other
provisions of this paragraph, in placing orders with brokers
and dealers, Adviser will attempt to obtain the best price and
the most favorable execution of its orders. In placing
orders, Adviser will consider the experience and skill of the
firm's securities traders as well as the firm's financial
responsibility and administrative efficiency. Consistent with
this obligation, Adviser may, subject to the approval of the
Fund's Board of Trustees, select brokers on the basis of the
research, statistical and pricing services they provide to a
Portfolio and other clients of Adviser or a Sub-Adviser.
Information and research received from such brokers will be in
addition to, and not in lieu of, the services required to be
performed by Adviser hereunder. A commission paid to such
brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction,
provided that Adviser determines in good faith that such
commission is reasonable in terms of either the transaction or
the overall responsibility of Adviser and Sub-Advisers to the
Portfolios and their other clients and that the total
commissions paid by a Portfolio will be reasonable in relation
to the benefits to the Portfolio over the long-term. In
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<PAGE> 4
addition, Adviser is authorized to take into account the sale
of shares of the Fund in allocating purchase and sale orders
for portfolio securities to brokers or dealers (including
brokers and dealers that are affiliated with Adviser, the Sub-
Advisers or the Fund's distributor) in compliance with
applicable law. In no instance, however, will a Portfolio's
securities be purchased from or sold to Advisers, the
Sub-Adviser, the Fund's distributor or any affiliated person
thereof, except to the extent permitted by the SEC or by
applicable law;
(c) will maintain books and records with respect
to each Portfolio's securities transactions and will furnish
the Fund's Board of Trustees such periodic and special reports
as the Board may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder
independently of the commercial banking operations of its
affiliates. When Adviser makes investment recommendations for
a Portfolio, its investment advisory personnel will not
inquire or take into consideration whether the issuer of
securities proposed for purchase or sale for the Portfolio's
account are customers of the commercial departments of its
affiliates. In dealing with commercial customers, Adviser and
the Sub-Advisers inquire or take into consideration whether
securities of those customers are held by the Fund; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information
relative to the Fund, any of the Portfolios and the Fund's
prior, current 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 in writing by the Fund,
which approval shall not be unreasonably withheld and may not
be withheld where 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 Fund.
5. Services Not Exclusive. Adviser's services hereunder
are not deemed to be exclusive, and Adviser shall be free to render similar
services to others so long as its services under this Agreement are not
impaired thereby.
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<PAGE> 5
6. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Adviser hereby agrees that all
records which it maintains for each Portfolio are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. Adviser further agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act.
7. Expenses. During the term of this Agreement, Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction changes, if
any) purchased or sold for any of the Portfolios.
8. Compensation.
(a) For the services provided and the expenses
assumed pursuant to this Agreement, the Fund will pay Adviser and Adviser will
accept as full compensation therefor a fee, computed daily and paid monthly, at
the following annual rates: for the Money Market, Tax-Free Money Market and
Government Money Market Portfolios, .45% of the first $1 billion of each
Portfolio's average daily net assets, .40% of the next $1 billion of each
Portfolio's average daily net assets, .375% of the next $1 billion of such
Portfolio's average daily net assets and .35% of the average daily net assets
of each Portfolio in excess of $3 billion; for the Capital Appreciation and
Total Return Portfolios, .55% of the first $1 billion of their respective
average daily net assets, .50% of the next $1 billion of their respective
average daily net assets, .475% of the next $1 billion of their respective
average daily net assets and .45% of their respective average daily net assets
in excess of $3 billion; for the Managed Income Portfolio, .50% of its first $1
billion of average daily net assets, .45% of its next $1 billion of average
daily net assets, .425% of its next $l billion of average daily net assets and
.40% of its average daily net assets in excess of $3 billion; for the
International Portfolio, .75% of its first $1 billion of average daily net
assets, .70% of its next $1 billion of average daily net assets, .675% of its
next $1 billion of average daily net assets and .65% of its average daily net
assets in excess of $3 billion. Such fee as is attributable to each Portfolio
shall be a separate charge to such Portfolio and shall be the several (and not
joint or joint and several) obligation of such Portfolio.
(b) If in any fiscal year the aggregate expenses
of one or more Portfolios (as defined under the securities regulations of any
state having jurisdiction over the Fund) exceed the expense limitations of any
such state, Adviser will
-5-
<PAGE> 6
bear its share of the amount of such excess in proportion to the aggregate fees
otherwise payable to it hereunder and to the Fund's co-administrators under
their administration agreements with the Fund. The obligation of the Adviser
to reimburse the Fund under this Paragraph 8(b) is limited in any fiscal year
to the amount of its fees otherwise payable hereunder attributable to all
Portfolios for such fiscal year, provided, however, that notwithstanding the
foregoing, Adviser shall reimburse the Fund for the full amount of its share of
any such excess expenses regardless of the amount of fees otherwise payable to
it during such fiscal year to the extent that the securities regulations of any
state having jurisdiction over the Fund so require. Such expense
reimbursement, if any, will be estimated, reconciled and paid on a monthly
basis.
9. Limitation of Liability. Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund 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 its part in the performance of its duties or from
reckless disregard by it of its obligations or duties under this Agreement.
10. Duration and Termination. This Agreement will become
effective as of the date hereof with respect to the Portfolios listed in
Section 1(a) hereof and, with respect to any additional Portfolio, on the date
of receipt by the Fund of notice from the Adviser in accordance with Section
1(b) hereof that the Adviser is willing to serve as investment adviser with
respect to such portfolio, provided that this Agreement (as supplemented by the
terms specified in any notice and agreement pursuant to Section 1(b) hereof)
shall have been approved by the shareholders of the Portfolios in accordance
with the requirements of the 1940 Act, and, unless sooner terminated as
provided herein, shall continue in effect with respect to each such Portfolio
until October 3, 1991. Thereafter, if not terminated, this Agreement shall
continue in effect with respect to a particular Portfolio for successive annual
periods ending on October 3, provided such continuance is specifically approved
at least annually (a) by vote of a majority of those members of the Fund's
Board of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Fund's Board of Trustees or by vote of a majority of
the outstanding voting securities of such Portfolio. Notwithstanding the
foregoing, this Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty, by the Fund (by vote of the Fund's
Board of Trustees or by vote of a majority of the outstanding voting securities
of such Portfolio),
-6-
<PAGE> 7
or by Adviser on sixty days' written notice. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meanings of such terms in the 1940 Act.)
11. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
12. Release. The names "The PNC Fund" and "Trustees of
The PNC Fund" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated December 22, 1988 which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "The PNC Fund" entered into in the name or on behalf thereof by
any of the Trustees, officers, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, Shareholders, officers, representatives or agents of the Trust
personally, but bind only the Trust Property (as defined in the Declaration of
Trust), and all persons dealing with any class of shares of the Trust must look
solely to the Trust Property belonging to such class for the enforcement of any
claims against the Trust.
13. Miscellaneous. The captions in this Agreement are
included for convenience or 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 on, and shall inure to
the benefit of, the parties hereto and their respective successors and shall be
governed by Delaware law.
14. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
-7-
<PAGE> 8
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.
Attest: THE PNC FUND
By:/s/ Morgan R. Jones By:/s/ Edward J. Roach
-------------------- ----------------------
its: Secretary its: Treasurer
Attest: PROVIDENT INSTITUTIONAL
(Corporate Seal) MANAGEMENT CORPORATION
By:/s/ By:/s/ J. Richard Carnall
----------------------
its: its:
-8-
<PAGE> 1
EXHIBIT (5)(b)
April 6, 1990
Provident Institutional Management Corporation
Bellevue Corporate Center
103 Bellevue Parkway
Wilmington, DE 19809
Dear Sirs or Mesdames:
In connection with the establishment of a Tax-Free Income
Portfolio (the "Portfolio") of The PNC(R) Fund (the "Fund"), the Fund hereby
notifies you that it requests you to serve as investment adviser for the
Portfolio under, except as modified herein, the terms and conditions set forth
in the Investment Advisory Agreement dated October 4, 1989 between you and the
Fund. Investment advisory services to the Portfolio shall be provided by
Provident National Bank ("Provident") pursuant to the Sub-Advisory Agreement
dated the date hereof between you and Provident. For the services provided and
the expenses assumed pursuant to this letter agreement, the Fund will pay you
as full compensation therefor a fee computed daily and paid monthly at the
annual rate of .50% of the Portfolio's first $1 billion of average daily net
assets, .45% of the Portfolio's next $1 billion of average daily net assets,
.425% of the Portfolio's next $1 billion of average daily net assets and .40%
of the Portfolio's average daily net assets in excess of $3 billion.
If you wish to accept this request, please sign this letter
and return one fully executed copy to the undersigned, whereupon this letter
shall be binding upon you and the Fund. This letter may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
Very truly yours,
THE PNC(R) FUND
By:/s/ Edward J. Roach,
Treasurer
Agreed to and Accepted this
6th day of April, 1990:
PROVIDENT INSTITUTIONAL MANAGEMENT CORPORATION
By:/s/ Ernest Cecilia
<PAGE> 1
EXHIBIT (5)(c)
SUB-ADVISORY AGREEMENT
(Money Market and
Government Money Market Portfolios)
AGREEMENT dated as of October 4, 1989 between PROVIDENT
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation ("Adviser"), and
PROVIDENT NATIONAL BANK, a national banking association ("Sub-Adviser").
WHEREAS, Adviser has agreed to furnish investment advisory
services to the Money Market and Government Money Market Portfolios (the
"Portfolios") of The PNC(R) Fund (the "Fund"), an open-end, management
investment company registered under the Investment Company Act of 1940 ("1940
Act");
WHEREAS, Adviser wishes to retain Sub-Adviser to provide it
with investment research and statistical services in connection with Adviser's
advisory activities on behalf of the Portfolios;
WHEREAS, the advisory agreement between Adviser and the Fund
dated the date hereof (such Agreement or the most recent successor agreement
between such parties relating to advisory services to the Portfolios is
referred to herein as the "Advisory Agreement") specifically provides that
Adviser will sub-contract investment advisory services with respect to the
Portfolios to Sub-Adviser pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's sole
shareholder have approved this Agreement, and Sub-Adviser is willing to furnish
such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser to
act as sub-adviser with respect to the Portfolios as provided in Section 2 of
the Advisory Agreement. Sub-Adviser accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
<PAGE> 2
2. Services of Sub-Adviser. Subject to the oversight
and supervision of Adviser and the Fund's Board of Trustees, Sub-Adviser will
provide the Portfolios investment research and credit analysis concerning
prospective and existing Portfolio investments, make recommendations with
respect to the Portfolios' continuous investment program, supply Adviser
computer facilities and operating personnel, and provide such statistical
services as Adviser may from time to time reasonably request. Sub-Adviser will
provide the services rendered by it under this Agreement in accordance with
each Portfolio's investment objective, policies and restrictions as stated in
the Portfolio's Prospectus and Statement of Additional Information (as
currently in effect and as they may be amended or supplemented from time to
time) and the resolutions adopted by the Fund's Board of Trustees.
3. Other Sub-Adviser Covenants. Sub-Adviser further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will maintain or cause Adviser to maintain
books and records with respect to each Portfolio's securities transactions and
will render to Adviser and the Fund's Board of Trustees such periodic and
special reports as they may request;
(c) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Adviser makes
investment recommendations for a Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or of its affiliates. In dealing with commercial
customers, Sub-Adviser will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(d) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
any of the Portfolios and the Fund's prior, current 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 Fund, which approval shall not
be unreasonably withheld and may not be withheld where Sub-Adviser may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to
-2-
<PAGE> 3
divulge such information by duly constituted authorities, or when so requested
by the Fund.
4. Services Not Exclusive. Sub-Adviser's services
hereunder are not deemed to be exclusive, and Sub-Adviser shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Adviser hereby agrees that
all records which it maintains for each Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any of such records upon
the Fund's request. Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Adviser will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for any of the Portfolios.
7. Compensation. For the services which Sub-Adviser
will render to Adviser under this Agreement, Adviser will pay to Sub-Adviser a
fee, computed daily and payable monthly, at an annual rate of .05% of each of
the Portfolio's average daily net assets.
If the Adviser waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to any Portfolio, the Sub-Adviser will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to such
Portfolio to the aggregate fees otherwise payable by the Fund to the Adviser
under the Advisory Agreement with respect to the same Portfolio. Adviser shall
inform Sub-Adviser prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Adviser will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Adviser or by the Portfolios 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
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<PAGE> 4
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to a
Portfolio as provided herein, shall continue in effect with respect to each
Portfolio until October 3, 1991. Thereafter, if not terminated, this Agreement
shall continue in effect with respect to a particular Portfolio for successive
annual periods ending on October 3, provided, such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of
the Fund's Board of Trustees who are not interested persons of any party to
this Agreement, cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Fund's Board of Trustees or by a vote of a
majority of the outstanding voting securities of such Portfolio.
Notwithstanding the foregoing, this Agreement may be terminated with respect to
a Portfolio at any time, without the payment of any penalty, by the Fund (by
vote of the Fund's Board of Trustees or by vote of a majority of the
outstanding voting securities of such Portfolio), or by Adviser or Sub-Adviser,
on 60 days' written notice and will terminate automatically upon any
termination of the Advisory Agreement between the Fund and the Adviser. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of, the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
-4-
<PAGE> 1
EXHIBIT (5)(d)
SUB-ADVISORY AGREEMENT
(Total Return and Tax-Free Income Portfolios)
AGREEMENT dated as of April 6, 1990 between PROVIDENT
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation (the "Adviser"),
and PROVIDENT NATIONAL BANK, a national banking association ("Sub-Adviser").
WHEREAS, Adviser has agreed to furnish investment advisory
services to the Total Return and Tax-Free Income Portfolios (the "Portfolios")
of The PNC\ Fund (the "Fund"), an open-end, management investment company
registered under the Investment Company Act of 1940 ("1940 Act");
WHEREAS, Adviser wishes to retain Sub-Adviser to provide
investment advisory services to the Portfolios;
WHEREAS, the advisory agreement between Adviser and the Fund
dated October 4, 1989 and the letter Agreement dated the date hereof, between
Adviser and the Fund (such Agreements or the most recent successor agreement
between such parties relating to advisory services to the Portfolios is
referred to herein as the "Advisory Agreements") specifically provides that
Adviser will sub-contract investment advisory services with respect to the
Portfolios to Sub-Adviser pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act; and
WHEREAS, the Board of Trustees of the Fund and the Fund's sole
shareholder have approved this Agreement, and Sub-Adviser is willing to furnish
such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser to
act as sub-adviser with respect to the Portfolios as provided in Section 2 of
the Advisory Agreement. Sub-Adviser accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Service of Sub-Adviser. Subject to the oversight and
supervision of Adviser and the Fund's Board of Trustees, Sub-Adviser will
supervise the day-to-day operations of the Portfolios and perform the following
services: (i) provide
<PAGE> 2
investment research and credit analysis concerning the Portfolios' investments,
(ii) conduct a continual program of investment of the Portfolios' assets, (iii)
determine what portion of the Portfolios' assets will be invested in cash, cash
equivalents and money market instruments, (iv) place orders for all purchases
and sales of the investments made for the Portfolios, and (v) maintain the
books and records as are required to support Fund operations (in conjunction
with record-keeping and accounting performed by Adviser). In addition,
Sub-Adviser will keep the Fund and Adviser informed of developments materially
affecting the Fund and shall, on its own initiative, furnish to the Fund from
time to time whatever information Sub-Adviser believes appropriate for this
purpose. Sub-Adviser will communicate to Adviser on each day that a purchase
or sale of an instrument is effected for either Portfolio (i) the name of the
issuer, (ii) the amount of the purchase or sale, (iii) the name of the broker
or dealer, if any, through which the purchase or sale will be effected, (iv)
the CUSIP number of the instrument, if any, and (v) such other information as
Adviser may reasonably require for purposes of fulfilling its obligations to
the Fund under the Advisory Agreement. Sub-Adviser will provide the services
rendered by it under this Agreement in accordance with each Portfolios'
investment objective, policies and restrictions as stated in the Portfolio's
Prospectus and Statement of Additional Information (as currently in effect and
as they may be amended or supplemented from time to time), and the resolutions
of the Fund's Board of Trustees.
3. Other Sub-Adviser Covenants. Sub-Adviser further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Adviser will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Adviser will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Adviser may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to a
Portfolio and other clients of Adviser or Sub-Adviser. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Adviser hereunder. A commission
paid to such brokers may be
-2-
<PAGE> 3
higher than that which another qualified broker would have charged for
effecting the same transaction, provided that Sub-Adviser determines in good
faith that such commission is reasonable in terms either of the transaction or
the overall responsibility of Adviser and Sub-Adviser to the Portfolios and
their other clients and that the total commissions paid by a Portfolio will be
reasonable in relation to the benefits to the Portfolio over the long-term. In
addition, Sub-Adviser is authorized to take into account the sale of shares of
the Fund in allocating purchase and sale orders for portfolio securities to
brokers or dealers (including brokers and dealers that are affiliated with
Adviser, Sub-Adviser or the Fund's distributor), provided that Sub-Adviser
believes that the quality of the transaction and the commission are comparable
to what they would be with other qualified firms. In no instance, however,
will a Portfolio's securities be purchased from or sold to the Adviser,
Sub-Adviser, the Fund's distributor or any affiliated person thereof, except to
the extent permitted by the SEC or by applicable law;
(c) will maintain books and records with respect
to each Portfolio's securities transactions and will render to Adviser and the
Fund's Board of Trustees such periodic and special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Adviser makes
investment recommendations for a Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or its affiliates. In dealing with commercial
customers, Sub-Adviser will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolios and the Fund's prior, current 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 Fund, which approval shall not
be unreasonably withheld and may not be withheld where Sub-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 Fund.
-3-
<PAGE> 4
4. Services Not Exclusive. Sub-Adviser's services
hereunder are not deemed to be exclusive, and Sub-Adviser shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Adviser hereby agrees that
all records which it maintains for each Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any of such records upon
the Fund's request. Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Adviser will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which Sub-Adviser
will render to Adviser under this Agreement, Adviser will pay to Sub-Adviser a
fee, computed daily and payable monthly, at the following annual rates for the
specified Portfolios: Total Return Portfolio, .40% of its first $1 billion of
average daily net assets, .35% of its next $1 billion of average daily net
assets, .325% of its next $1 billion of average daily net assets and .30% of
its average daily net assets in excess of $3 billion; and Tax-Free Income
Portfolio, .35% of its first $1 billion of average daily net assets, .30% of
its next $1 billion of average daily net assets, .275% of its next $1 billion
in average daily net assets and .25% of its average daily net assets in excess
of $3 billion.
If the Adviser waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to a Portfolio, the Sub-Adviser will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to such
Portfolio to the aggregate fees otherwise payable by the Fund to the Adviser
under the Advisory Agreement with respect to the same Portfolio. Adviser shall
inform Sub-Adviser prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Adviser will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Adviser or by the Portfolios in connection with the performance of this
Agreement, except a loss resulting from a
-4-
<PAGE> 5
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 its part in the performance of its duties or from reckless
disregard by it of its obligations or duties under this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated as provided
herein, shall continue in effect with respect to a Portfolio until October 3,
1991. Thereafter, if not terminated, this Agreement shall continue in effect
with respect to a particular Portfolio for successive annual periods ending on
October 3, provided such continuance is specifically approved at least annually
(a) by the vote of a majority of those members of the Fund's Board of Trustees
who are not interested persons of any party to this Agreement, cast in person
at a meeting called for the purpose of voting on such approval, and (b) by the
Fund's Board of Trustees or by a vote of a majority of the outstanding voting
securities of such Portfolio. Notwithstanding the foregoing, this Agreement
may be terminated with respect to a Portfolio at any time, without the payment
of any penalty, by the Fund (by vote of the Fund's Board of Trustees or by vote
of a majority of the outstanding voting securities of such Portfolio), or by
Adviser or Sub-Adviser, on 60 days' written notice and will terminate
automatically upon any termination of the Advisory Agreement between the Fund
and Adviser. This Agreement will also immediately terminate in the event of
its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" shall have
the same meanings of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of, the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall
-5-
<PAGE> 6
constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
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.
PROVIDENT INSTITUTIONAL
MANAGEMENT CORPORATION
By: /s/ Ernest E. Cecilia
---------------------
its:
PROVIDENT NATIONAL BANK
By: /s/ J. Richard Carnall
----------------------
its:
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<PAGE> 1
EXHIBIT (5)(e)
SUB-ADVISORY AGREEMENT
(International Equity Portfolio)
AGREEMENT dated as of April 20, 1992 between PROVIDENT
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation (the "Adviser"),
and PROVIDENT CAPITAL MANAGEMENT, INC., a Pennsylvania corporation
("Sub-Adviser").
WHEREAS, Adviser has agreed to furnish investment advisory
services to the International Equity Portfolio (the "Portfolio") of The PNC(R)
Fund (the "Fund"), an open-end, management investment company registered under
the Investment Company Act of 1940 ("1940 Act");
WHEREAS, Adviser wishes to retain Sub-Adviser to provide it
with investment research and statistical services in connection with Adviser's
advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Adviser and the Fund
dated October 4, 1989 (such Agreement or the most recent successor agreement
between such parties relating to advisory services to the Portfolio is referred
to herein as the "Advisory Agreement") specifically provides that Adviser will
sub-contract investment advisory services with respect to the Portfolio to
Sub-Adviser pursuant to a sub-advisory agreement agreeable to the Fund and
approved in accordance with the provisions of the 1940 Act; and
WHEREAS, the Board of Trustees of the Fund and the Fund's sole
shareholder have approved this Agreement, and Sub-Adviser is willing to furnish
such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser to
act as sub-adviser with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Adviser accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Service of Sub-Adviser. Subject to the oversight and
supervision of Adviser and the Fund's Board of Trustees, Sub-Adviser will
supervise the day-to-day operations of the Portfolio
<PAGE> 2
and perform the following services: (i) provide investment research and credit
analysis concerning the Portfolio's investments, (ii) conduct a continual
program of investment of the Portfolio's assets, (iii) determine what portion
of the Portfolio's assets will be invested in cash, cash equivalents and money
market instruments, (iv) place orders for all purchases and sales of the
investments made for the Portfolio, and (v) maintain the books and records as
are required to support Fund operations (in conjunction with record-keeping and
accounting performed by Adviser). In addition, Sub-Adviser will keep the Fund
and Adviser informed of developments materially affecting the Fund and shall,
on its own initiative, furnish to the Fund from time to time whatever
information Sub-Adviser believes appropriate for this purpose. Sub-Adviser
will communicate to Adviser on each day that a purchase or sale of an
instrument is effected for the Portfolio (i) the name of the issuer, (ii) the
amount of the purchase or sale, (iii) the name of the broker or dealer, if any,
through which the purchase or sale will be effected, (iv) the CUSIP number of
the instrument, if any, and (v) such other information as Adviser may
reasonably require for purposes of fulfilling its obligations to the Fund under
the Advisory Agreement. Sub-Adviser will provide the services rendered by it
under this Agreement in accordance with each Portfolio's investment objective,
policies and restrictions as stated in the Portfolio's Prospectus and Statement
of Additional Information (as currently in effect and as they may be amended or
supplemented from time to time), and the resolutions of the Fund's Board of
Trustees.
3. Other Sub-Adviser Covenants. Sub-Adviser further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Adviser will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Adviser will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Adviser may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Adviser or Sub-Adviser. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-
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<PAGE> 3
Adviser hereunder. A commission paid to such brokers may be higher than that
which another qualified broker would have charged for effecting the same
transaction, provided that Sub-Adviser determines in good faith that such
commission is reasonable in terms either of the transaction or the overall
responsibility of Adviser and Sub-Adviser to the Portfolio and their other
clients and that the total commissions paid by the Portfolio will be reasonable
in relation to the benefits to the Portfolio over the long-term. In addition,
Sub-Adviser is authorized to take into account the sale of shares of the Fund
in allocating purchase and sale orders for portfolio securities to brokers or
dealers (including brokers and dealers that are affiliated with Adviser,
Sub-Adviser or the Fund's distributor), provided that Sub-Adviser believes that
the quality of the transaction and the commission are comparable to what they
would be with other qualified firms. In no instance, however, will the
Portfolio's securities be purchased from or sold to the Adviser, Sub-Adviser,
the Fund's distributor or any affiliated person thereof, except to the extent
permitted by the SEC or by applicable law;
(c) will maintain or cause Adviser to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Adviser and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Adviser makes
investment recommendations for a Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or its affiliates. In dealing with commercial
customers, Sub-Adviser will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
and any of the Portfolio's and the Fund's prior, current 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 Fund, which approval
shall not be unreasonably withheld and may not be withheld where Sub-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 Fund.
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<PAGE> 4
4. Services Not Exclusive. Sub-Adviser's services
hereunder are not deemed to be exclusive, and Sub-Adviser shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Adviser hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any of such records upon
the Fund's request. Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Adviser will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which Sub-Adviser
will render to Adviser under this Agreement, Adviser will pay to Sub-Adviser a
fee, computed daily and payable monthly, at the following annual rates: .60%
of the Portfolio's first $1 billion of average daily net assets, .55% of the
Portfolio's next $1 billion of average daily net assets, .525% of the
Portfolio's next $1 billion of average daily net assets and .50% of the
Portfolio's average net assets in excess of $3 billion.
If the adviser waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Adviser will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Adviser
under the Advisory Agreement with respect to the Portfolio. Adviser shall
inform Sub-Adviser prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Adviser will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Adviser or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
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<PAGE> 5
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated as provided
herein, shall continue in effect with respect to the Portfolio until October 3,
1993. Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the Portfolio for successive annual periods ending on October
3, provided such continuance is specifically approved at least annually (a) by
the vote of a majority of those members of the Fund's Board of Trustees who are
not interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the
Fund's Board of Trustees or by a vote of a majority of the outstanding voting
securities of the Portfolio. Notwithstanding the foregoing, this Agreement may
be terminated with respect to the Portfolio at any time, without the payment of
any penalty, by the Fund (by vote of the Fund's Board of Trustees or by vote of
a majority of the outstanding voting securities of the Portfolio), or by
Adviser or Sub-Adviser, on 60 days' written notice and will terminate
automatically upon any termination of the Advisory Agreement between the Fund
and Adviser. This Agreement will also immediately terminate in the event of
its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" shall have
the same meanings of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of, the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall
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<PAGE> 6
constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the date and
year first above written.
PROVIDENT INSTITUTIONAL
MANAGEMENT CORPORATION
By:/s/ Thomas H. Nevin
-------------------
its: President
PROVIDENT CAPITAL MANAGEMENT, INC.
By:
------------------------------
its:
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<PAGE> 1
EXHIBIT (5)(f)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of February 3, 1992 between THE PNC(R) FUND,
a Massachusetts business trust (the "Fund"), and PROVIDENT INSTITUTIONAL
MANAGEMENT CORPORATION, a Delaware corporation (the "Advisor").
WHEREAS, the Fund is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Fund desires to retain Advisor to furnish
investment advisory services to the Fund and the Advisor is willing to so
furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) The Fund hereby appoints Advisor to act as
investment advisor to the Fund's additional investment portfolios: Intermediate
Government Portfolio, Value Equity Portfolio, Index Equity Portfolio, Special
Equity Portfolio, Pennsylvania Tax-Free Income Portfolio, Ohio Tax-Free Income
Portfolio, Pennsylvania Tax-Free Money Market Portfolio and Ohio Tax-Free
Money Market Portfolio (collectively, the "Portfolios") for the period and on
the terms set forth in this Agreement. Advisor accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
(b) In the event that the Fund establishes one or
more portfolios other than the Portfolios with respect to which it desires to
retain Advisor to act as investment adviser hereunder, the Fund shall notify
the Advisor in writing. If Advisor is willing to render such services under
this Agreement it shall notify the Fund in writing whereupon, subject to such
shareholder approval as may be required pursuant to Paragraph 10 hereof, such
portfolio shall become a portfolio hereunder and shall be subject to the
provisions off this Agreement to the same extent as the Portfolios named above
in subparagraph (a) except to the extent that said provisions (including those
relating to the compensation payable by the Fund to Advisor) are modified with
respect to such portfolio in writing by the Fund and Advisor at the time.
2. Sub-Contractors. It is understood that Advisor will
from time to time employ or associate with such person or
<PAGE> 2
persons as Advisor may believe to be particularly fitted to assist it in the
performance of this Agreement; provided, however, that the compensation of such
person or persons shall be paid by Advisor and that Advisor shall be as fully
responsible to the Fund for the acts and omissions of any subcontractor as it
is for its own acts and omissions. Such person or persons shall be employed
pursuant to sub-advisory agreements agreeable to the Fund and approved in
accordance with the provisions of the 1940 Act.
3. Delivery of Documents. The Fund has furnished the
Advisor with copies, properly certified or authenticated, of each of the
following:
(a) Resolutions of the Fund's Board of Trustees
authorizing the appointment of Advisor as the
Portfolios' advisor and approving this
Agreement;
(b) The Fund's Declaration of Trust as filed with
the State Secretary of the Commonwealth of
Massachusetts and the Boston City Clerk on
December 22, 1988;
(c) The Fund's Code of Regulations;
(d) The Fund's Notification of Registration on
Form N-8A under the 1940 Act as filed with
the Securities and Exchange Commission
("SEC") on December 23, 1988;
(e) The Fund's Registration Statement on Form
N-1A (the "Registration Statement") under the
Securities Act of 1933 and 1940 Act, as filed
with the SEC on December 23, 1988, and all
amendments thereto; and
(f) The Fund's most recent prospectuses for the
Portfolios (such prospectuses together with
the related statements of additional
information, as currently in effect and all
amendments and supplements thereto, are
herein called "Prospectuses").
The Fund will furnish Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
4. Services. Subject to the supervision of the Fund's
Board of Trustees, Advisor will (either directly or through the sub-advisors
and other sub-contractors employed by it
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<PAGE> 3
in accordance with Section 2 hereof) provide a continuous investment program
for each of the Portfolios, including investment research and management with
respect to all securities, investments, cash and cash equivalents in the
Portfolios. Advisor will (either directly or through the sub-advisors and
other sub-contractors employed by it in accordance with Paragraph 2 hereof)
determine from time to time what securities and other investments will be
purchased, retained or sold by the Portfolios and will place the daily orders
for the purchase or sale of securities. Advisor will provide the services
rendered by it under this Agreement in accordance with each Portfolio's
investment objective, policies and restrictions as stated in such Portfolio's
Prospectus (as currently in effect and as it may be amended or supplemented
from time to time) and the resolutions of the Fund's Board of Trustees.
Advisor further agrees that it:
(a) will comply with all applicable rules and
regulations of the SEC and will in addition
conduct its activities under this Agreement
in accordance with other applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject
to the other provisions of this paragraph, in
placing orders with brokers and dealers,
Advisor will attempt to obtain the best price
and the most favorable execution of its
orders. In placing orders, Advisor will
consider the experience and skill of the
firm's securities traders as well as the
firm's financial responsibility and
administrative efficiency. Consistent with
this obligation, Advisor may, subject to the
approval of the Fund's Board of Trustees,
select brokers on the basis of the research,
statistical and pricing services they provide
to a Portfolio and other clients of Advisor
or a sub-advisor. Information and research
received from such brokers will be in
addition to, and not in lieu of, the services
required to be performed by Advisor
hereunder. A commission paid to such brokers
may be higher than that which another
qualified broker would have charged for
effecting the same transaction, provided that
Advisor determines in good faith that such
commission is reasonable in terms of either
the transaction or the overall responsibility
of Advisor and sub-advisors to the Portfolios
and their other clients and that the total
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<PAGE> 4
commissions paid by a Portfolio will be
reasonable in relation to the benefits to the
Portfolio over the long-term. In addition,
Advisor is authorized to take into account
the sale of shares of the Fund in allocating
purchase and sale orders for portfolio
securities to brokers or dealers (including
brokers and dealers that are affiliated with
Advisor, the sub-advisors or the Fund's
distributor) in compliance with applicable
law. In no instance, however, will a
Portfolio's securities be purchased from or
sold to Advisor, the Sub-Advisor, the Fund's
distributor or any affiliated person thereof,
except to the extent permitted by the SEC or
by applicable law;
(c) will maintain books and records with respect
to each portfolio's securities transactions
and will furnish the Fund's Board of Trustees
such periodic and special reports as the
Board may request;
(d) will maintain a policy and practice of
conducting its investment advisory services
hereunder independently of the commercial
banking operations of its affiliates. When
Advisor makes investment recommendations for
a Portfolio, its investment advisory
personnel will not inquire or take into
consideration whether the issuer of
securities proposed for purchase or sale for
a Portfolio's account are customers of the
commercial departments of its affiliates. In
dealing with commercial customers, Advisor
and the sub-advisors will not inquire or take
into consideration whether securities of
those customers are held by the Fund; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other
information relative to the Fund, any of the
Portfolios and the Fund's prior, current 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 Fund, which approval shall not be
unreasonably withheld and may not be withheld
where Advisor may be exposed to civil or
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<PAGE> 5
criminal contempt proceedings for failure to
comply, when requested to divulge such
information by duly constituted authorities,
or when so requested by the Fund.
5. Services Not Exclusive. Advisor's services hereunder
are not deemed to be exclusive, and Advisor shall be free to render similar
services to others so long as its services under this Agreement are not
impaired thereby.
6. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Advisor hereby agrees that all
records which it maintains for each Portfolio are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. Advisor 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.
7. Expenses. During the term of this Agreement, Advisor
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction changes, if
any) purchased or sold for any of the Portfolios.
8. Compensation.
(a) For the services provided and the expenses
assumed pursuant to this Agreement the Fund will pay Advisor and Advisor will
accept as full compensation therefor a fee, computed daily and payable monthly,
at the following annual rates: for the Ohio Tax-Free Money Market Portfolio and
Pennsylvania Tax-Free Money Market Portfolio, .45% of the first $1 billion of
each Portfolio's average daily net assets, .40% of the next $1 billion of each
Portfolio's average daily net assets, and .375% of the next $1 billion of each
Portfolio's average daily net assets and .35% of the average daily net assets
of each Portfolio in excess of $3 billion; for the Value Equity Portfolio and
Special Equity Portfolio, .55% of the first $1 billion of each Portfolio's
average daily net assets, .50% of the next $1 billion of each Portfolio's
average daily net assets, .475% of the next $1 billion of each Portfolio's
average daily net assets and .45% of each Portfolio's average daily net assets
in excess of $3 billion; for the Intermediate Government Portfolio, Ohio
Tax-Free Income Portfolio and Pennsylvania Tax-Free Income Portfolio, .50% of
each Portfolio's first $1 billion of average daily net assets, .45% of each
Portfolio's next $1 billion of average daily net assets, .425% of each
Portfolio's next $1 billion of average daily net assets and .40% of each
Portfolio's average daily net assets in excess of $3 billion; for the Index
Equity Portfolio,
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<PAGE> 6
.20% of its average daily net assets. Such fee as is attributable to each
Portfolio shall be a separate charge to such Portfolio and shall be the several
(and not joint or joint and several) obligation of such Portfolio.
(b) If in any fiscal year the aggregate expenses
of one or more Portfolios (as defined under the securities regulations of any
state having jurisdiction over the Fund) exceed the expense limitations of any
such state, Advisor will bear its share of the amount of such excess in
proportion to the aggregate fees otherwise payable to it hereunder and to the
Fund's co-administrators under their administration agreements with the Fund.
The obligation of the Advisor to reimburse the Fund under this Paragraph 8(b)
is limited in any fiscal year to the amount of its fees otherwise payable
hereunder attributable to all Portfolios for such fiscal year, provided,
however, that notwithstanding the foregoing, Advisor shall reimburse the Fund
for the full amount of its share of any such excess expenses regardless of the
amount of fees otherwise payable to it during such fiscal year to the extent
that the securities regulations of any state having jurisdiction over the Fund
so require. Such expense reimbursement, if any, will be estimated, reconciled
and paid on a monthly basis.
9. Limitation of Liability. Advisor shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund in connection with the performance of this Agreement except a loss
resulting from a breach of fiduciary duty respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations or duties under this Agreement.
10. Duration and Termination. This Agreement will become
effective as of the date hereof with respect to the Portfolios listed in
Section 1(a) hereof and, with respect to any additional portfolio, on the date
of receipt by the Fund of notice from the Advisor in accordance with Section
1(b) hereof that the Advisor is willing to serve as investment advisor with
respect to such Portfolio, provided that this Agreement (as supplemented by
terms specified in any notice and agreement pursuant to Section 1(b) hereof)
shall have been approved by the shareholders of the Portfolios in accordance
with the requirements of the 1940 Act, and, unless sooner terminated as
provided herein, shall continue in effect with respect to each such Portfolio
until October 3, 1993. Thereafter, if not terminated, this Agreement shall
continue effect with respect to the particular Portfolio for success annual
periods ending on October 3, provided such continue is specifically approved at
least annually (a) by vote of a majority of those members of the
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<PAGE> 7
Fund's Board of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Fund's Board of Trustees or by vote of a majority of
the outstanding voting securities of such Portfolio. Notwithstanding the
foregoing, this Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty, by the Fund (by vote of the Fund's
Board of Trustees or by vote of a majority of the outstanding voting securities
of such Portfolio), or by Advisor on sixty days' written notice. This
Agreement will immediately terminate in the event of its assignment (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning as such terms
in the 1940 Act.)
11. Amendment of this Agreement. No provision of
Agreement may be changed, waived, discharged or terminated orally, but only an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
12. Release. The names "The PNC(R) Fund" and "Trustees
of The PNC(R) Fund" refer respectively to the Trust created and the Trustees,
as trustees but not individually or personally, acting from time to time under
a Declaration of Trust dated December 22, 1988 which is hereby referred to and
a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of the "The PNC Fund" entered into in the name or on behalf thereof
by any of the Trustees, officers, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, shareholders, officers, representatives or agents of the Trust
personally, but bind only the Trust Property (as defined in the Declaration of
Trust), and all persons dealing with any class of shares of Trust must look
solely to the Trust Property belonging to such class for the enforcement of any
claims against the Trust.
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 on, and shall inure to
the benefit of, the parties hereto and their respective successors and shall be
governed by Delaware law.
14. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall
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<PAGE> 8
constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
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 PNC FUND
(SEAL) By:/s/ Edward J. Roach
-------------------------------
PROVIDENT INSTITUTIONAL
MANAGEMENT CORPORATION
(SEAL) By:/s/ Thomas Nevin
---------------------------
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<PAGE> 1
INVESTMENT ADVISORY AGREEMENT EXHIBIT (5)(g)
AGREEMENT made as of December 17, 1993 between THE PNC(R)
FUND, a Massachusetts business trust (the "Fund"), and PNC INSTITUTIONAL
MANAGEMENT CORPORATION, a Delaware corporation (the "Advisor").
WHEREAS, the Fund is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Fund desires to retain Advisor to furnish
investment advisory services to the Fund and the Advisor is willing to so
furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) The Fund hereby appoints Advisor to act as
investment advisor to the Fund's additional investment portfolios: Government
Income, International Emerging Markets, International Fixed Income and Virginia
Municipal Money Market Portfolios (collectively, the "Portfolios") for the
period and on the terms set forth in this Agreement. Advisor accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
(b) In the event that the Fund establishes one or
more portfolios other than the Portfolios with respect to which it desires to
retain Advisor to act as investment adviser hereunder, the Fund shall notify
the Advisor in writing. If Advisor is willing to render such services under
this Agreement it shall notify the Fund in writing whereupon, subject to such
shareholder approval as may be required pursuant to Paragraph 10 hereof, such
portfolio shall become a portfolio hereunder and shall be subject to the
provisions of this Agreement to the same extent as the Portfolios named above
in subparagraph (a) except to the extent that said provisions (including those
relating to the compensation payable by the Fund to Advisor) are modified with
respect to such portfolio in writing by the Fund and Advisor at the time.
2. Sub-Contractors. It is understood that Advisor will
from time to time employ or associate with such person or persons as Advisor
may believe to be particularly fitted to assist it in the performance of this
Agreement; provided, however, that the compensation of such person or persons
shall be
<PAGE> 2
paid by Advisor and that Advisor shall be as fully responsible to the
Fund for the acts and omissions of any subcontractor as it is for its own acts
and omissions. Such person or persons shall be employed pursuant to
sub-advisory agreements agreeable to the Fund and approved in accordance with
the provisions of the 1940 Act.
3. Delivery of Documents. The Fund has furnished the
Advisor with copies, properly certified or authenticated, of each of the
following:
(a) Resolutions of the Fund's Board of Trustees
authorizing the appointment of Advisor as the
Portfolios' advisor and approving this
Agreement;
(b) The Fund's Declaration of Trust as filed with
the State Secretary of the Commonwealth of
Massachusetts and the Boston City Clerk on
December 22, 1988;
(c) The Fund's Code of Regulations;
(d) The Fund's Notification of Registration on
Form N-8A under the 1940 Act as filed with
the Securities and Exchange Commission
("SEC") on December 23, 1988;
(e) The Fund's Registration Statement on Form
N-1A (the "Registration Statement") under the
Securities Act of 1933 and 1940 Act, as filed
with the SEC on December 23, 1988, and all
amendments thereto; and
(f) The Fund's most recent prospectuses for the
Portfolios (such prospectuses together with
the related statements of additional
information, as currently in effect and all
amendments and supplements thereto, are
herein called "Prospectuses").
The Fund will furnish Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
4. Services. Subject to the supervision of the Fund's
Board of Trustees, Advisor will (either directly or through the sub-advisors
and other sub-contractors employed by it in accordance with Section 2 hereof)
provide a continuous investment program for each of the Portfolios, including
investment research and management with respect to all
-2-
<PAGE> 3
securities, investments, cash and cash equivalents in the Portfolios. Advisor
will (either directly or through the sub-advisors and other sub-contractors
employed by it in accordance with Paragraph 2 hereof) determine from time to
time what securities and other investments will be purchased, retained or sold
by the Portfolios and will place the daily orders for the purchase or sale of
securities. Advisor will provide the services rendered by it under this
Agreement in accordance with each Portfolio's investment objective, policies
and restrictions as stated in such Portfolio's Prospectus (as currently in
effect and as it may be amended or supplemented from time to time) and the
resolutions of the Fund's Board of Trustees. Advisor further agrees that it:
(a) will comply with all applicable rules and
regulations of the SEC and will in addition
conduct its activities under this Agreement
in accordance with other applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject
to the other provisions of this paragraph, in
placing orders with brokers and dealers,
Advisor will attempt to obtain the best price
and the most favorable execution of its
orders. In placing orders, Advisor will
consider the experience and skill of the
firm's securities traders as well as the
firm's financial responsibility and
administrative efficiency. Consistent with
this obligation, Advisor may, subject to the
approval of the Fund's Board of Trustees,
select brokers on the basis of the research,
statistical and pricing services they provide
to a Portfolio and other clients of Advisor
or a sub-advisor. Information and research
received from such brokers will be in
addition to, and not in lieu of, the services
required to be performed by Advisor
hereunder. A commission paid to such brokers
may be higher than that which another
qualified broker would have charged for
effecting the same transaction, provided that
Advisor determines in good faith that such
commission is reasonable in terms of either
the transaction or the overall responsibility
of Advisor and sub-advisors to the Portfolios
and their other clients and that the total
commissions paid by a Portfolio will be
reasonable in relation to the benefits to the
Portfolio over the long-term. In addition,
-3-
<PAGE> 4
Advisor is authorized to take into account
the sale of shares of the Fund in allocating
purchase and sale orders for portfolio
securities to brokers or dealers (including
brokers and dealers that are affiliated with
Advisor, the sub-advisors or the Fund's
distributor) in compliance with applicable
law. In no instance, however, will a
Portfolio's securities be purchased from or
sold to Advisor, the Sub-Advisor, the Fund's
distributor or any affiliated person thereof,
except to the extent permitted by the SEC or
by applicable law;
(c) will maintain books and records with respect
to each Portfolio's securities transactions
and will furnish the Fund's Board of Trustees
such periodic and special reports as the
Board may request;
(d) will maintain a policy and practice of
conducting its investment advisory services
hereunder independently of the commercial
banking operations of its affiliates. When
Advisor makes investment recommendations for
a Portfolio, its investment advisory
personnel will not inquire or take into
consideration whether the issuer of
securities proposed for purchase or sale for
a Portfolio's account are customers of the
commercial departments of its affiliates. In
dealing with commercial customers, Advisor
and the sub-advisors will not inquire or take
into consideration whether securities of
those customers are held by the Fund; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other
information relative to the Fund, any of the
Portfolios and the Fund's prior, current 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 Fund, which approval shall not be
unreasonably withheld and may not be withheld
where Advisor may be exposed to civil or
criminal contempt proceedings for failure to
comply, when requested to divulge such
-4-
<PAGE> 5
information by duly constituted authorities,
or when so requested by the Fund.
5. Services Not Exclusive. Advisor's services hereunder
are not deemed to be exclusive, and Advisor shall be free to render similar
services to others so long as its services under this Agreement are not
impaired thereby.
6. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Advisor hereby agrees that all
records which it maintains for each Portfolio are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. Advisor 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.
7. Expenses. During the term of this Agreement, Advisor
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction changes, if
any) purchased or sold for any of the Portfolios.
8. Compensation.
(a) For the services provided and the expenses
assumed pursuant to this Agreement the Fund will pay Advisor and Advisor will
accept as full compensation therefor a fee, computed daily and payable monthly,
at the following annual rates: for the Virginia Municipal Money Market
Portfolio, .45% of the first $1 billion of the Portfolio's average daily net
assets, .40% of the next $1 billion of the Portfolio's average daily net
assets, .375% of the next $1 billion of the Portfolio's average daily net
assets and .35% of the average daily net assets of the Portfolio in excess of
$3 billion; for the International Fixed Income Portfolio, .55% of the first $1
billion of the Portfolio's average daily net assets, .50% of the next $1
billion of the Portfolio's average daily net assets, .475% of the next $1
billion of the Portfolio's average daily net assets and .45% of the average
daily net assets of the Portfolio in excess of $3 billion; for the Government
Income Portfolio, .50% of the first $1 billion of the Portfolio's average daily
net assets, .45% of the next $1 billion of the Portfolio's average daily net
assets, .425% of the next $1 billion of the Portfolio's average daily net
assets and .40% of the average daily net assets of the Portfolio in excess of
$3 billion; and for the International Emerging Markets Portfolio, 1.25% of the
first $1 billion of the Portfolio's average daily net assets, 1.20% of the next
$1 billion of the Portfolio's average daily net assets, 1.155% of the next $1
billion of the Portfolio's average daily net assets
-5-
<PAGE> 6
and 1.10% of the average daily net assets of the Portfolio in excess of $3
billion. Such fee as is attributable to each Portfolio shall be a separate
charge to such Portfolio and shall be the several (and not joint or joint and
several) obligation of such Portfolio.
(b) If in any fiscal year the aggregate expenses
of one or more Portfolios (as defined under the securities regulations of any
state having jurisdiction over the Fund) exceed the expense limitations of any
such state, Advisor will bear its share of the amount of such excess in
proportion to the aggregate fees otherwise payable to it hereunder and to the
Fund's co-administrators under their administration agreements with the Fund.
The obligation of the Advisor to reimburse the Fund under this Paragraph 8(b)
is limited in any fiscal year to the amount of its fees otherwise payable
hereunder attributable to all Portfolios for such fiscal year, provided,
however, that notwithstanding the foregoing, Advisor shall reimburse the Fund
for the full amount of its share of any such excess expenses regardless of the
amount of fees otherwise payable to it during such fiscal year to the extent
that the securities regulations of any state having jurisdiction over the Fund
so require. Such expense reimbursement, if any, will be estimated, reconciled
and paid on a monthly basis.
9. Limitation of Liability. Advisor shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations or duties under this Agreement.
10. Duration and Termination. This Agreement will become
effective as of the date hereof with respect to the Portfolios listed in
Section 1(a) hereof and, with respect to any additional portfolio, on the date
of receipt by the Fund of notice from the Advisor in accordance with Section
1(b) hereof that the Advisor is willing to serve as investment advisor with
respect to such Portfolio, provided that this Agreement (as supplemented by the
terms specified in any notice and agreement pursuant to Section 1(b) hereof)
shall have been approved by the shareholders of the Portfolios in accordance
with the requirements of the 1940 Act, and, unless sooner terminated as
provided herein, shall continue in effect with respect to each such Portfolio
until October 3, 1994. Thereafter, if not terminated, this Agreement shall
continue in effect with respect to the particular Portfolio for successive
annual periods ending on October 3, provided such continuance is specifically
approved
-6-
<PAGE> 7
at least annually (a) by vote of a majority of those members of the Fund's
Board of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Fund's Board of Trustees or by vote of a majority of
the outstanding voting securities of such Portfolio. Notwithstanding the
foregoing, this Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty, by the Fund (by vote of the Fund's
Board of Trustees or by vote of a majority of the outstanding voting securities
of such Portfolio), or by Advisor on sixty days' written notice. This
Agreement will immediately terminate in the event of its assignment (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning as such terms
in the 1940 Act.)
11. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
12. Release. The names "The PNC(R) Fund" and "Trustees
of The PNC(R) Fund" refer respectively to the Trust created and the Trustees,
as trustees but not individually or personally, acting from time to time under
a Declaration of Trust dated December 22, 1988 which is hereby referred to and
a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of the "The PNC Fund" entered into in the name or on behalf thereof
by any of the Trustees, officers, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, Shareholders, officers, representatives or agents of the Trust
personally, but bind only the Trust Property (as defined in the Declaration of
Trust), and all persons dealing with any class of shares of the Trust must look
solely to the Trust Property belonging to such class for the enforcement of any
claims against the Trust.
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 on, and shall inure to
the benefit of, the parties hereto and their respective successors and shall be
governed by Delaware law.
-7-
<PAGE> 8
14. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
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 PNC FUND
By:/s/ Edward J. Roach
--------------------------
Treasurer
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:/s/ Thomas H. Nevin
--------------------------
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<PAGE> 1
EXHIBIT (5)(h)
SUB-ADVISORY AGREEMENT
(Ohio Tax-Free Money Market Portfolio)
AGREEMENT dated as of February 3, 1992 between PROVIDENT
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation ("Adviser"), and
PROVIDENT NATIONAL BANK, a national banking association ("Sub-Adviser").
WHEREAS, Adviser has agreed to furnish investment advisory
services to the Ohio Tax-Free Money Market Portfolio (the "Portfolio") of The
PNC(R) Fund (the "Fund"), an open-end, management investment company registered
under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Adviser wishes to retain the Sub-Adviser to provide
it with investment research and statistical services in connection with
Adviser's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Adviser and the Fund
dated the date hereof (such Agreement or the most recent successor agreement
between such parties relating to advisory services to the portfolio is referred
to herein as the "Advisory Agreement") specifically provides that Adviser will
sub-contract investment advisory services with respect to the Portfolio to
Sub-Adviser pursuant to a sub-advisory agreement agreeable to the Fund and
approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's sole
shareholder have approved this Agreement, and Sub-Adviser is willing to furnish
such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Adviser accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Adviser. Subject to the oversight
and supervision of Adviser and the Fund's Board of Trustees, Sub-Adviser will
provide the Portfolio investment research and credit
<PAGE> 2
analysis concerning prospective and existing Portfolio investments, make
recommendations with respect to the Portfolio's continuous Investment program,
supply Adviser computer facilities and operating personnel, and provide such
statistical services as Adviser may from time to time reasonably request.
Sub-Adviser will provide the services rendered by it under this Agreement in
accordance with the Portfolio's investment objective, policies and restrictions
as stated in the Portfolio's Prospectus and statement of Additional Information
(as currently in effect and as they may be amended or supplemented from time to
time) and the resolutions adopted by the Fund's Board of Trustees.
3. Other Sub-Adviser Covenants. Sub-Adviser further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will maintain or cause Adviser to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Adviser and the Fund's Board of Trustees such periodic and
special reports as they may request;
(c) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Adviser makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or of its affiliates. In dealing with commercial
customers, Sub-Adviser will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(d) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
any of the Portfolio and the Fund's prior, current 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 Fund, which approval shall not
be unreasonably withheld and may not be withheld where Sub-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 Fund.
-2-
<PAGE> 3
4. Services Not Exclusive. Sub-Adviser's services
hereunder are not deemed to be exclusive, and Sub-Adviser shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Adviser hereby agrees that
all records which it maintains for each Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Adviser will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for any of the Portfolios.
7. Compensation. For the services which the Sub-Adviser
will render to Adviser under this Agreement, Adviser will pay to Sub-Adviser a
fee, computed daily and payable monthly, at an annual rate of .05% of the
Portfolio's average daily net assets.
If the Adviser waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Adviser will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to such
Portfolio to the aggregate fees otherwise payable by the Fund to the Adviser
under the Advisory Agreement with respect to the same Portfolio. Adviser shall
inform Sub-Adviser prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Adviser will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Adviser or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner
-3-
<PAGE> 4
terminated with respect to the Portfolio as provided herein, shall continue in
effect with respect to the Portfolio until October 3, 1993. Thereafter, if not
terminated, this Agreement shall continue in effect with respect to the
Portfolio for successive annual periods ending on October 3, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to a Portfolio at any time, without the payment of any penalty, by
the Fund (by vote of the Fund's Board of Trustees or by vote of a majority of
the outstanding voting securities of the Portfolio), or by Adviser or
Sub-Adviser, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Adviser. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall
-4-
<PAGE> 5
constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
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.
PROVIDENT INSTITUTIONAL
MANAGEMENT CORPORATION
(SEAL) By:/s/ Thomas H. Nevin
-------------------
PROVIDENT NATIONAL BANK
-------------------------------
(SEAL) By:/s/ J. Richard Carnall
----------------------
-5-
<PAGE> 1
EXHIBIT (5)(i)
SUB-ADVISORY AGREEMENT
(Pennsylvania Tax-Free Money Market Portfolio)
AGREEMENT dated as of February 3, 1992 between PROVIDENT
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation ("Advisor"), and
PROVIDENT NATIONAL BANK, a national banking association ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Pennsylvania Tax-Free Money Market Portfolio (the "Portfolio")
of The PNC(R) Fund (the "Fund"), an open-end, management investment company
registered under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated the date hereof (such Agreement or the most recent successor agreement
between such parties relating to advisory services to the Portfolio is referred
to herein as the "Advisory Agreement") specifically provides that Advisor will
sub-contract investment advisory services with respect to the Portfolio to
Sub-Advisor pursuant to a sub-advisory agreement agreeable to the Fund and
approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's sole
shareholder have approved this Agreement, and Sub-Advisor is willing to furnish
such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
provide the Portfolio investment research and credit
<PAGE> 2
analysts concerning prospective and existing Portfolio investments, make
recommendations with respect to the Portfolio's continuous investment program,
supply Advisor computer facilities and operating personnel, and provide such
statistical services as Advisor may from time to time reasonably request.
Sub-Advisor will provide the services rendered by it under this Agreement in
accordance with the Portfolio's investment objective, policies and restrictions
as stated in the Portfolio's Prospectus and Statement of Additional Information
(as currently in effect and as they may be amended or supplemented from time to
time) and the resolutions adopted by the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(c) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or of its affiliates. In dealing with commercial
customers, Sub-Advisor will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(d) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
any of the Portfolio and the Fund's prior, current 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 Fund, which approval shall not
be unreasonably withheld and may not be withheld where Sub-Advisor 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 Fund.
-2-
<PAGE> 3
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for each Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for any of the Portfolios.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at an annual rate of .05% of the
Portfolio's average daily net assets.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to such
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the same Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner
-3-
<PAGE> 4
terminated with respect to the Portfolio as provided herein, shall continue in
effect with respect to the Portfolio until October 3, 1993. Thereafter, if not
terminated, this Agreement shall continue in effect with respect to the
Portfolio for successive annual periods ending on October 3, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to a Portfolio at any time, without the payment of any penalty, by
the Fund (by vote of the Fund's Board of Trustees or by vote of a majority of
the outstanding voting securities of the Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall
-4-
<PAGE> 5
constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
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.
PROVIDENT INSTITUTIONAL
MANAGEMENT CORPORATION
(SEAL) By:/s/ Thomas H. Nevin
-------------------
(SEAL) PROVIDENT NATIONAL BANK
By:/s/ J. Richard Carnall
----------------------
-5-
<PAGE> 1
EXHIBIT (5)(j)
SUB-ADVISORY AGREEMENT
(Value Equity Portfolio)
AGREEMENT dated as of February 3, 1992 between PROVIDENT
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation ("Advisor"), and
PROVIDENT CAPITAL MANAGEMENT INC., a Pennsylvania corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Value Equity Portfolio (the "Portfolio") of The PNC(R) Fund
(the "Fund"), an open-end, management investment company registered under the
Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated the date hereof (such Agreement or the most recent successor agreement
between such parties relating to advisory services to the Portfolio is referred
to herein as the "Advisory Agreement") specifically provides that Advisor will
sub-contract investment advisory services with respect to the Portfolio to
Sub-Advisor pursuant to a sub-advisory agreement agreeable to the Fund and
approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's sole
shareholder have approved this Agreement, and Sub-Advisor is willing to furnish
such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio
<PAGE> 2
and perform the following services: (i) provide investment research and credit
analysis concerning the Portfolio's investments, (ii) conduct a continual
program of investment of the Portfolio's assets, (iii) determine what portion
of the Portfolio's assets will be invested in cash, cash equivalents and money
market instruments, (iv) place orders for all purchases and sales of the
investments made for the Portfolio, and (v) maintain the books and records as
are required to support Fund operations (in conjunction with record-keeping and
accounting functions performed by Advisor). In addition, Sub-Advisor will keep
the Fund and Advisor informed of developments materially affecting the Fund and
shall, on its own initiative, furnish to the Fund from time to time whatever
information Sub-Advisor believes appropriate for this purpose. Sub-Advisor
will communicate to Advisor on each day that a purchase or sale of an
instrument is effected for the Portfolio (i) the name of the issuer, (ii) the
amount of the purchase or sale, (iii) the name of the broker or dealer, if any,
through which the purchase or sale will be effected, (iv) the CUSIP nor of the
instrument, if any, and (v) such other information as Advisor may reasonably
require for purposes of fulfilling its obligations to the Fund under the
Advisory Agreement. Sub-Advisor will provide the services rendered by it under
this Agreement in accordance with the Portfolio's investment objective,
policies and restrictions as stated in the Portfolio's Prospectus and Statement
of Additional Information (as currently in effect and as they may be amended or
supplemented from time to time), and the resolutions of the Fund's Board of
Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-
-2-
<PAGE> 3
Advisor hereunder. A commission paid to such brokers may be higher than that
which another qualified broker would have charged for effecting the same
transaction, provided that Sub-Advisor determines in good faith that such
commission is reasonable in terms either of the transaction or the overall
responsibility of Advisor and Sub-Advisor to the Portfolio and their other
clients and that the total commissions paid by the Portfolio will be reasonable
in relation to the benefits to the Portfolio over the long-term. In addition,
Sub-Advisor is authorized to take into account the sale of shares of the Fund
in allocating purchase and sale orders for portfolio securities to brokers or
dealers (including brokers and dealers that are affiliated with Advisor,
Sub-Advisor or the Fund's distributor), provided that Sub-Advisor believes that
the quality of the transaction and the commission are comparable to what they
would be with other qualified firms. In no instance, however, will a
Portfolio's securities be purchased from or sold to the Advisor, Sub-Advisor,
the Fund's distributor or any affiliated person thereof, except to the extent
permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or of its affiliates. In dealing with commercial
customers, Sub-Advisor will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
any of the Portfolio and the Fund's prior, current 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 Fund, which approval shall not
be unreasonably withheld and may not be withheld where sub-Advisor 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 Fund.
-3-
<PAGE> 4
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for each Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for any of the Portfolios.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rate for the
Value Equity Portfolio, .40% of the Portfolio's first $1 billion of average
daily net assets, .35% of its next $1 billion of average daily net assets,
.325% of its next $1 billion of average daily net assets, and .30% of its
average daily net assets in excess of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to any Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to such
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the same Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
-4-
<PAGE> 5
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein, shall continue in effect with respect to the
portfolio until October 3, 1993. Thereafter, if not terminated, this Agreement
shall continue in effect with respect to the Portfolio for successive annual
periods ending on October 3, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the Fund's
Board of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Fund's Board of Trustees or by a vote of a majority of
the outstanding voting securities of the Portfolio. Notwithstanding the
foregoing, this Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty, by the Fund (by vote of the Fund's
Board of Trustees or by vote of a majority of the outstanding voting securities
of the Portfolio), or by Advisor or Sub-Advisor, on 60 days' written notice and
will terminate automatically upon any termination of the Advisory Agreement
between the Fund and Advisor. This Agreement will also immediately terminate
in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall
-5-
<PAGE> 6
constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
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.
PROVIDENT INSTITUTIONAL
MANAGEMENT CORPORATION
(SEAL) By:/s/ Thomas H. Nevin
-------------------
PROVIDENT CAPITAL MANAGEMENT,
INC.
(SEAL) By:/s/ J. Richard Carnall
----------------------
-6-
<PAGE> 1
EXHIBIT (5)(k)
SUB-ADVISORY AGREEMENT
(Special Equity Portfolio)
AGREEMENT dated as of February 3, 1992 between PROVIDENT
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation ("Advisor"), and
PROVIDENT CAPITAL MANAGEMENT, INC., a Pennsylvania corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Special Equity Portfolio (the "Portfolio") of The PNC(R) Fund
(the "Fund"), an open-end, management investment company registered under the
Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated the date hereof (such Agreement or the most recent successor agreement
between such parties relating to advisory services to the Portfolio is referred
to herein as the "Advisory Agreement") specifically provides that Advisor will
sub-contract investment advisory services with respect to the Portfolio to
Sub-Advisor pursuant to a sub-advisory agreement agreeable to the Fund and
approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's sole
shareholder have approved this Agreement, and Sub-Advisor is willing to furnish
such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning the
Portfolio's investments, (ii) conduct a continual program of investment of
<PAGE> 2
the Portfolio's assets, (iii) determine what portion of the Portfolio's assets
will be invested in cash, cash equivalents and money market instruments, (iv)
place orders for all purchases and sales of the investments made for the
Portfolio, and (v) maintain the books and records as are required to support
Fund operations (in conjunction with record-keeping and accounting functions
performed by Advisor). In addition, Sub-Advisor will keep the Fund and Advisor
informed of developments materially affecting the Fund and shall, on its own
initiative, furnish to the Fund from time to time whatever information
Sub-Advisor believes appropriate for this purpose. Sub-Advisor will
communicate to Advisor on each day that a purchase or sale of an instrument is
effected for the Portfolio (i) the name of the issuer, (ii) the amount of the
purchase or sale, (iii) the name of the broker or dealer, if any, through which
the purchase or sale will be effected, (iv) the CUSIP number of the instrument,
if any, and (v) such other information as Advisor may reasonably require for
purposes of fulfilling its obligations to the Fund under the Advisory
Agreement. Sub-Advisor will provide the services rendered by it under this
Agreement in accordance with the Portfolio's investment objective, policies and
restrictions as stated in the Portfolio's Prospectus and Statement of
Additional Information (as currently in effect and as they may be amended or
supplemented from time to time), and the resolutions of the Fund's Board of
Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided that Sub-
-2-
<PAGE> 3
Advisor determines in good faith that such commission is reasonable in terms
either of the transaction or the overall responsibility of Advisor and
Sub-Advisor to the Portfolio and their other clients and that the total
commissions paid by the Portfolio will be reasonable in relation to the
benefits to the Portfolio over the long-term. In addition, Sub-Advisor is
authorized to take into account the sale of shares of the Fund in allocating
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with Advisor, Sub-Advisor or
the Fund's distributor), provided that Sub-Advisor believes that the quality of
the transaction and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will a Portfolio's securities
be purchased from or sold to the Advisor, Sub-Advisor, the Fund's distributor
or any affiliated person thereof, except to the extent permitted by the SEC or
by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or of its affiliates. In dealing with commercial
customers, Sub-Advisor will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
any of the Portfolio and the Fund's prior, current 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 Fund, which approval shall not
be unreasonably withheld and may not be withheld where Sub-Advisor 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 Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall
-3-
<PAGE> 4
be free to render similar services to others so long as its services under this
Agreement are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 Under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for each Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for any of the Portfolios.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rate for the
Special Equity Portfolio, .40% of the Portfolio's first $1 billion of average
daily net assets, .35% of its next $1 billion of average daily net assets,
.325% of its next $1 billion of average daily net assets, and .30% of its
average daily net assets in excess of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to any Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to such
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the same Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
-4-
<PAGE> 5
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein: shall continue in effect with respect to the
Portfolio until October 3, 1993. Thereafter, if not terminated, this Agreement
shall continue in effect with respect to the Portfolio for successive annual
periods ending on October 3, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the Fund's
Board of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Fund's Board of Trustees or by a vote of a majority of
the outstanding voting securities of the Portfolio. Notwithstanding the
foregoing, this Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty, by the Fund (by vote of the Fund's
Board of Trustees or by vote of a majority of the outstanding voting securities
of the Portfolio), or by Advisor or Sub-Advisor, on 60 days' written notice and
will terminate automatically upon any termination of the Advisory Agreement
between the Fund and Advisor. This Agreement will also immediately terminate
in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall
-5-
<PAGE> 6
constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
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.
PROVIDENT INSTITUTIONAL
MANAGEMENT CORPORATION
(SEAL) By:/s/ Thomas H. Nevin
-------------------
PROVIDENT CAPITAL MANAGEMENT,
INC.
(SEAL) By:/s/ J. Richard Carnall
----------------------
-6-
<PAGE> 1
EXHIBIT (5)(l)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of March 1, 1993 between THE PNC(R) FUND, a
Massachusetts business trust (the "Fund"), and PNC INSTITUTIONAL MANAGEMENT
CORPORATION, a Delaware corporation (the "Advisor").
WHEREAS, the Fund is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund desires to retain Advisor to furnish
services to the Fund and the Advisor is willing to so furnish services.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) Fund hereby appoints Advisor to act as
investment advisor to the Fund's: North Carolina Municipal Money Market
Portfolio, Short-Term Bond Portfolio, Intermediate-Term Bond Portfolio, Small
Cap Growth Equity Portfolio and Core Equity Portfolio (collectively, the
"Portfolios") for the period and on the terms set forth in this Agreement.
Advisor accepts such appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
(b) In the event that the Fund establishes one or
more other than the Portfolios with respect to which it desires to retain
Advisor to act as investment advisor hereunder, the Fund shall notify Advisor
in writing. If Advisor is willing to render such services under this Agreement
it shall notify the Fund in writing whereupon, subject to such shareholder
approval as may be required pursuant to Paragraph 10 hereof, such portfolio
shall become a portfolio hereunder and shall be subject to the provisions of
this Agreement to the same extent as the Portfolios named above in subparagraph
(a) except to the extent that said provisions (including those relating to the
compensation payable by the Fund to Advisor) are modified with respect to such
portfolio in writing by the Fund and Advisor at the time.
2. Sub-Contractors. It is understood that Advisor will
from time to time employ or associate with such person or persons as Advisor
may believe to be particularly fitted to assist it in the performance of this
Agreement; provided, however, that the compensation of such person or persons
shall be
-9-
<PAGE> 2
paid by Advisor and that Advisor shall be as fully responsible to the Fund for
the acts and omissions of any subcontractor as it is for its own acts and
omissions. Such person or persons shall be employed pursuant to sub-advisory
agreements agreeable to the Fund and approved in accordance with the provisions
of the 1940 Act.
3. Delivery of Documents. The Fund has furnished the
Advisor with copies, properly certified or authenticated, of each of the
following:
(a) Resolutions of the Fund's Board of Trustees
authorizing the appointment of Advisor as the
Portfolios' advisor and approving this
Agreement;
(b) The Fund's Declaration of Trust as filed with
the State Secretary of the Commonwealth of
Massachusetts and the Boston City Clerk on
December 22, 1988;
(c) The Fund's Code of Regulations;
(d) The Fund's Notification of Registration on
Form N-8A under the 1940 Act as filed with
the Securities and Exchange Commission
("SEC") on December 23, 1988;
(e) The Fund's Registration Statement on Form
N-1A under the Securities Act of 1933 and the
1940 Act, as filed with the SEC on December
23, 1988, and all amendments thereto (the
"Registration Statement"); and
(f) The Fund's most recent prospectuses for the
Portfolios (such prospectuses together with
the related statements of additional
information, as currently in effect and all
amendments and supplements thereto, are
herein called "Prospectuses").
The Fund will furnish Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
4. Services. Subject to the supervision of the Fund's
Board of Trustees, Advisor will (either directly or through the sub-advisors
and other sub-contractors employed by it in accordance with Section 2 hereof)
provide a continuous investment program for each of the Portfolios, including
investment research and management with respect to all
-2-
<PAGE> 3
securities, investments, cash and cash equivalents in the Portfolios. Advisor
will (either directly or through the sub-advisors and other sub-contractors
employed by it in accordance with Paragraph 2 hereof) determine from time to
time what securities and other investments will be purchased, retained or sold
by the Portfolios and will place the daily orders for the purchase or sale of
securities. Advisor will provide the services rendered by it under this
Agreement in accordance with each Portfolio's investment objective, policies
and restrictions as stated in such Portfolio's Prospectus (as currently in
effect and as it may be amended or supplemented from time to time) and the
resolutions of the Fund's Board of Trustees. Advisor further agrees that it:
(a) will comply with all applicable rules and
regulations of the SEC and will in addition
conduct its activities under this Agreement
in accordance with other applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject
to the other provisions of this paragraph, in
placing orders with brokers and dealers,
Advisor will attempt to obtain the best price
and the most favorable execution of its
orders. In placing orders, Advisor will
consider the experience and skill of the
firm's securities traders as well as the
firm's financial responsibility and
administrative efficiency. Consistent with
this obligation, Advisor may, subject to the
approval of the Fund's Board of Trustees,
select brokers on the basis of the research,
statistical and pricing services they provide
to a Portfolio and other clients of Advisor
or a sub-advisor. Information and research
received from such brokers will be in
addition to, and not in lieu of, the services
required to be performed by Advisor
hereunder. A commission paid to such brokers
may be higher than that which another
qualified broker would have charged for
effecting the same transaction, provided that
Advisor determines in good faith that such
commission is reasonable in terms of either
the transaction or the overall responsibility
of Advisor and sub-advisors to the Portfolios
and their other clients and that the total
commissions paid by a Portfolio will be
reasonable in relation to the benefits to the
Portfolio over the long-term. In addition,
-3-
<PAGE> 4
Advisor is authorized to take into account
the sale of shares of the Fund in allocating
purchase and sale orders for portfolio
securities to brokers or dealers (including
brokers and dealers that are affiliated with
Advisor, the sub-advisors or the Fund's
distributor) in compliance with applicable
law. In no instance, however, will a
Portfolio's securities be purchased from or
sold to Advisor, the Sub-Advisor, the Fund's
distributor or any affiliated person thereof,
except to the extent permitted by the SEC or
by applicable law;
(c) will maintain books and records with respect
to each Portfolio's securities transactions
and will furnish the Fund's Board of Trustees
such periodic and special reports as the
Board may request;
(d) will maintain a policy and practice of
conducting its investment advisory services
hereunder independently of the commercial
banking operations of its affiliates. When
Advisor makes investment recommendations for
a Portfolio, its investment advisory
personnel will not inquire or take into
consideration whether the issuer of
securities proposed for purchase or sale for
a Portfolio's account are customers of the
commercial departments of its affiliates. In
dealing with commercial customers, Advisor
and the sub-advisors will not inquire or take
into consideration whether securities of
those customers are held by the Fund; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other
information relative to the Fund, any of the
Portfolios and the Fund's prior, current 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 Fund, which approval shall not be
unreasonably withheld and may not be withheld
where Advisor may be exposed to civil or
criminal contempt proceedings for failure to
comply, when requested to divulge such
-4-
<PAGE> 5
information by duly constituted authorities,
or when so requested by the Fund.
5. Services Not Exclusive. Advisor's services hereunder
are not deemed to be exclusive, and Advisor shall be free to render similar
services to others so long as its services under this Agreement are not
impaired thereby.
6. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Advisor hereby agrees that all
records which it maintains for each Portfolio are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. Advisor 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.
7. Expenses. During the term of this Agreement, Advisor
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction changes, if
any) purchased or sold for any of the Portfolios.
8. Compensation.
(a) For the services provided and the expenses
assumed pursuant to this Agreement the Fund will pay Advisor and Advisor will
accept as full compensation therefor a fee, computed daily and payable monthly,
at the following annual rates: for the North Carolina Municipal Money Market
Portfolio, .45% of the first $1 billion of the Portfolio's average daily net
assets, .40% of the next $1 billion of the Portfolio's average daily net
assets, .375% of the next $1 billion of the Portfolio's average daily net
assets and .35% of the average daily net assets of the Portfolio in excess of
$3 billion; for the Small Cap Growth Equity Portfolio and the Core Equity
Portfolio, .55% of the first $1 billion of each Portfolio's average daily net
assets, .50% of the next $1 billion of each Portfolio's average daily net
assets, .475% of the next $1 billion of each Portfolio's average daily net
assets and .45% of each Portfolio's average daily net assets in excess of $3
billion; for the Short-Term Bond Portfolio and the Intermediate-Term Bond
Portfolio, .50% of each Portfolio's first $1 billion of average daily net
assets, .45% of each Portfolio's next $1 billion of average daily net assets,
.425% of each portfolio's next $1 billion of average daily net assets and .40%
of each Portfolio's average daily net assets in excess of $3 billion. Such fee
as is attributable to each Portfolio shall be a separate charge to such
Portfolio and shall be the several (and not joint or joint and several)
obligation of such Portfolio.
-5-
<PAGE> 6
(b) If in any fiscal year the aggregate expenses
of one or more Portfolios (as defined under the securities regulations of any
state having jurisdiction over the Fund) exceed the expense limitations of any
such state, Advisor will bear its share of the amount of such excess in
proportion to the aggregate fees otherwise payable to it hereunder and to the
Fund's co-administrators under their administration agreements with the Fund.
The obligation of the Advisor to reimburse the Fund under this Paragraph 8(b)
is limited in any fiscal year to the amount of its fees otherwise payable
hereunder attributable to all Portfolios for such fiscal year, provided,
however, that notwithstanding the foregoing, Advisor shall reimburse the Fund
for the full amount of its share of any such excess expenses regardless of the
amount of fees otherwise payable to it during such fiscal year to the extent
that the securities regulations of any state having jurisdiction over the Fund
so require. Such expense reimbursement, if any, will be estimated, reconciled
and paid on a monthly basis.
9. Limitation of Liability. Advisor shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations or duties under this Agreement.
10. Duration and Termination. This Agreement will become
effective as of the date hereof with respect to the Portfolios listed in
Section 1(a) hereof and, with respect to any additional portfolio, on the date
of receipt by the Fund of notice from the Advisor in accordance with Section
1(b) hereof that the Advisor is willing to serve as investment advisor with
respect to such Portfolio, provided that this Agreement (as supplemented by the
terms specified in any notice and agreement pursuant to section 1(b) hereof)
shall have been approved by the shareholders of the Portfolios in accordance
with the requirements of the 1940 Act and, unless sooner terminated as provided
herein, shall continue in effect with respect to each such Portfolio until
October 3, 1993. Thereafter, if not terminated, this Agreement shall continue
in effect with respect to the particular Portfolio for successive annual
periods ending on October 3, provided such continuance is specifically approved
at least annually (a) by vote of a majority of those members of the Fund's
Board of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Fund's Board of Trustees or by vote of a majority of
the outstanding voting securities of such Portfolio. Notwithstanding the
-6-
<PAGE> 7
foregoing, this Agreement may be terminated with respect to a Portfolio at any
time, without the payment of any penalty, by the Fund (by vote of the Fund's
Board of Trustees or by vote of a majority of the outstanding voting securities
of such Portfolio), or by Advisor on sixty days' written notice. This
Agreement will immediately terminate in the event of its assignment. (As used
in this Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning as such terms
in the 1940 Act.)
11. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
12. Release. "The PNC Fund" and "Trustees of The PNC(R)
Fund" refer respectively to the Trust created and the Trustees, as trustees but
not individually or personally, acting from time to time under a Declaration of
Trust dated December 22, 1988 which is hereby referred to and a copy of which
is on file at the office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of the Trust. The obligations of the
"The PNC Fund" entered into in the name or on behalf thereof by any of the
Trustees, officers, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders,
officers, representatives or agents of the Fund personally, but bind only the
Trust Property (as defined in the Declaration of Trust), and all persons
dealing with any class of shares of the Fund must look solely to the Trust
Property belonging to such class for the enforcement of any claims against the
Fund.
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, statue, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of, the parties hereto and their respective successors and shall be
governed by Delaware law.
14. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
-7-
<PAGE> 8
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 PNC FUND
(SEAL) By:/s/ Edward J. Roach
-------------------
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
(SEAL) By:/s/ Thomas Nevin
----------------
-8-
<PAGE> 1
EXHIBIT (5)(m)
SUB-ADVISORY AGREEMENT
(North Carolina Municipal Money Market Portfolio)
AGREEMENT dated as of March 1, 1993 between PNC INSTITUTIONAL
MANAGEMENT CORPORATION, a Delaware corporation ("Advisor"), and PNC BANK,
NATIONAL ASSOCIATION ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the North Carolina Municipal Money Market Portfolio (the
"Portfolio") of The PNC(R) Fund (the "Fund"), an open-end, management
investment company registered under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated the date hereof (such Agreement or the most recent successor agreement
between such parties relating to advisory services to the Portfolios is
referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investments advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's sole
shareholder have approved this Agreement, and Sub-Advisor is willing to furnish
such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
provide the Portfolio investment research and credit analysis concerning
prospective and existing Portfolio
<PAGE> 2
investments, make recommendations with respect to the Portfolio's continuous
investment program, supply Advisor computer facilities and operating personnel,
and provide such statistical services as Advisor may from time to time
reasonably request. Sub-Advisor will provide the services rendered by it under
this Agreement in accordance with the Portfolio's investment objective,
policies and restrictions as stated in the Portfolio's Prospectus and Statement
of Additional Information (as currently in effect and as they may be amended or
supplemented from time to time) and the resolutions adopted by the Fund's Board
of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(c) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or of its affiliates. In dealing with commercial
customers, Sub-Advisor will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(d) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall
-2-
<PAGE> 3
be free to render similar services to others so long as its services under this
Agreement are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at an annual rate of .05% of the
Portfolio's average daily net assets.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated as provided
herein, shall continue in effect until October 3, 1993. Thereafter, if not
terminated, this Agreement
-3-
<PAGE> 4
shall continue in effect for successive annual periods ending on October 3,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
at any time, without the payment of any penalty, by the Fund (by vote of the
Fund's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio), or by Advisor or Sub-Advisor, on 60 days' written
notice and will terminate automatically upon any termination of the Advisory
Agreement between the Fund and Advisor. This Agreement will also terminate
immediately in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall
-4-
<PAGE> 5
constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
(SEAL) By:/s/ Thomas H. Nevin
-------------------
PNC BANK, NATIONAL ASSOCIATION
(SEAL) By:/s/ Robert J. Christian
-----------------------
-5-
<PAGE> 1
EXHIBIT (5)(n)
SUB-ADVISORY AGREEMENT
(Municipal Money Market Portfolio)
AGREEMENT dated as of September 10, 1993 between PNC
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation ("Advisor"), and
PNC BANK, NATIONAL ASSOCIATION, a national banking association ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Municipal Money Market Portfolio (the "Portfolio") of The
PNC(R) Fund (the "Fund"), an open-end, management investment company registered
under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated October 4, 1989 (such Agreement or the most recent successor agreement
between such parties relating to advisory services to the Portfolio is referred
to herein as the "Advisory Agreement") specifically provides that Advisor will
sub-contract investment advisory services with respect to the Portfolio to
Sub-Advisor pursuant to a sub-advisory agreement agreeable to the Fund and
approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and
mutual covenants herein contained, it is agreed between the parties hereto as
follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
provide the Portfolio investment research and credit
<PAGE> 2
analysis concerning prospective and existing Portfolio investments, make
recommendations with respect to the Portfolio's continuous investment program,
supply Advisor computer facilities and operating personnel, and provide such
statistical services as Advisor may from time to time reasonably request.
Sub-Advisor will provide the services rendered by it under this Agreement in
accordance with the Portfolio's investment objective, policies and restrictions
as stated in the Portfolio's Prospectus and Statement of Additional Information
(as currently in effect and as they may be amended or supplemented from time to
time) and the resolutions adopted by the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(c) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or of its affiliates. In dealing with commercial
customers, Sub-Advisor will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(d) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
-2-
<PAGE> 3
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at an annual rate of .05% of the
Portfolio's average daily net assets.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner
-3-
<PAGE> 4
terminated with respect to the Portfolio as provided herein, shall continue in
effect with respect to the Portfolio until October 3, 1994. Thereafter, if not
terminated, this Agreement shall continue in effect with respect to the
Portfolio for successive annual periods ending on October 3, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purposed of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of the Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
-4-
<PAGE> 5
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
(SEAL) By:/s/ Thomas H. Nevin
-------------------
(SEAL) PNC BANK, NATIONAL ASSOCIATION
By:/s/ Robert J. Christian
------------------------
-5-
<PAGE> 1
EXHIBIT (5)(o)
SUB-ADVISORY AGREEMENT
(Virginia Municipal Money Market Portfolio)
AGREEMENT dated as of December 17, 1993 between PNC
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation ("Advisor"), and
PNC BANK, NATIONAL ASSOCIATION, a national banking association ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Virginia Municipal Money Market Portfolio (the "Portfolio") of
The PNC(R) Fund (the "Fund"), an open-end, management investment company
registered under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of December 17, 1993 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
provide the Portfolio investment research and credit
<PAGE> 2
analysis concerning prospective and existing Portfolio investments, make
recommendations with respect to the Portfolio's continuous investment program,
supply Advisor with computer facilities and operating personnel, and provide
such statistical services as Advisor may from time to time reasonably request.
Sub-Advisor will provide the services rendered by it under this Agreement in
accordance with the Portfolio's investment objective, policies and restrictions
as stated in the Portfolio's Prospectus and Statement of Additional Information
(as currently in effect and as they may be amended or supplemented from time to
time) and the resolutions adopted by the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(c) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or of its affiliates. In dealing with commercial
customers, Sub-Advisor will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(d) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
-2-
<PAGE> 3
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at an annual rate of .05% of the
Portfolio's average daily net assets.
If the Advisor waives any or all of its advisory fee payable under the
Advisory Agreement, or reimburses the Fund pursuant to Section 8(b) of that
Agreement, with respect to the Portfolio, the Sub-Advisor will bear its share
of the amount of such waiver or reimbursement by waiving fees otherwise payable
to it hereunder on a proportionate basis to be determined by comparing the
aggregate fees otherwise payable to it hereunder with respect to the Portfolio
to the aggregate fees otherwise payable by the Fund to the Advisor under the
Advisory Agreement with respect to the Portfolio. Advisor shall inform
Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner
-3-
<PAGE> 4
terminated with respect to the Portfolio as provided herein, shall continue in
effect with respect to the Portfolio until October 3, 1994. Thereafter, if not
terminated, this Agreement shall continue in effect with respect to the
Portfolio for successive annual periods ending on October 3, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of such Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
-4-
<PAGE> 5
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:/s/ Thomas Nevin
--------------------------
PNC BANK, NATIONAL ASSOCIATION
By:/s/ Robert J. Christian
--------------------------
-5-
<PAGE> 1
EXHIBIT (5)(p)
SUB-ADVISORY AGREEMENT
(International Fixed Income Portfolio)
AGREEMENT dated as of December 17, 1993 between PNC
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation ("Advisor"), and
PROVIDENT CAPITAL MANAGEMENT, INC. ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the International Fixed Income Portfolio (the "Portfolio") of The
PNC(R) Fund (the "Fund"), an open-end, management investment company registered
under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of December 17, 1993 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment
<PAGE> 2
research and credit analysis concerning the Portfolio's investments, (ii)
conduct a continual program of investment of the Portfolio's assets, (iii)
determine what portion of the Portfolio's assets will be invested in cash, cash
equivalents and money market instruments, (iv) place orders for all purchases
and sales of the investments made for the Portfolio, and (v) maintain the books
and records as are required to support Fund operations (in conjunction with
record-keeping and accounting functions performed by Advisor). In addition,
Sub-Advisor will keep the Fund and Advisor informed of developments materially
affecting the Fund and shall, on its own initiative, furnish to the Fund from
time to time whatever information Sub-Advisor believes appropriate for this
purpose. Sub-Advisor will communicate to Advisor on each day that a purchase
or sale of an instrument is effected for the Portfolio (i) the name of the
issuer, (ii) the amount of the purchase or sale, (iii) the name of the broker
or dealer, if any, through which the purchase or sale will be effected, (iv)
the CUSIP number of the instrument, if any, and (v) such other information as
Advisor may reasonably require for purposes of fulfilling its obligations to
the Fund under the Advisory Agreement. Sub-Advisor will provide the services
rendered by it under this Agreement in accordance with the Portfolio's
investment objective, policies and restrictions as stated in the Portfolio's
Prospectus and Statement of Additional Information (as currently in effect and
as they may be amended or supplemented from time to time), and the resolutions
of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be
-2-
<PAGE> 3
higher than that which another qualified broker would have charged for
effecting the same transaction, provided that Sub-Advisor determines in good
faith that such commission is reasonable in terms either of the transaction or
the overall responsibility of Advisor and Sub-Advisor to the Portfolio and
their other clients and that the total commissions paid by the Portfolio will
be reasonable in relation to the benefits to the Portfolio over the long-term.
In addition, Sub-Advisor is authorized to take into account the sale of shares
of the Fund in allocating purchase and sale orders for portfolio securities to
brokers or dealers (including brokers and dealers that are affiliated with
Advisor, Sub-Advisor or the Fund's distributor), provided that Sub-Advisor
believes that the quality of the transaction and the commission are comparable
to what they would be with other qualified firms. In no instance, however,
will the Portfolio's securities be purchased from or sold to the Advisor,
Sub-Advisor, the Fund's distributor or any affiliated person thereof, except to
the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or of its affiliates. In dealing with commercial
customers, Sub-Advisor will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
-3-
<PAGE> 4
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rates for the
Portfolio: .40% of its first $1 billion of average daily net assets, .35% of
the next $1 billion of average daily net assets; .325% of its next $1 billion
of average daily net assets; and .30% of its average daily net assets in excess
of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
-4-
<PAGE> 5
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein, shall continue in effect with respect to the
Portfolio until October 3, 1994. Thereafter, if not terminated, this Agreement
shall continue in effect with respect to the Portfolio for successive annual
periods ending on October 3, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the Fund's
Board of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Fund's Board of Trustees or by a vote of a majority of
the outstanding voting securities of the Portfolio. Notwithstanding the
foregoing, this Agreement may be terminated with respect to the Portfolio at
any time, without the payment of any penalty, by the Fund (by vote of the
Fund's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio), or by Advisor or Sub-Advisor, on 60 days' written
notice and will terminate automatically upon any termination of the Advisory
Agreement between the Fund and Advisor. This Agreement will also immediately
terminate in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
-5-
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:/s/ Edward J. Roach
------------------------------
PROVIDENT CAPITAL MANAGEMENT, INC.
By:/s/ Thomas H. Nevin
------------------------------
-6-
<PAGE> 1
EXHIBIT (5)(q)
SUB-ADVISORY AGREEMENT
(International Emerging Markets Portfolio)
AGREEMENT dated as of December 17, 1993 between PNC
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation ("Advisor"), and
PROVIDENT CAPITAL MANAGEMENT, INC. ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the International Emerging Markets Portfolio (the "Portfolio") of
The PNC(R) Fund (the "Fund"), an open-end, management investment company
registered under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of December 17, 1993 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and
mutual covenants herein contained, it is agreed between the parties hereto as
follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment
<PAGE> 2
research and credit analysis concerning the Portfolio's investments, (ii)
conduct a continual program of investment of the Portfolio's assets, (iii)
determine what portion of the Portfolio's assets will be invested in cash, cash
equivalents and money market instruments, (iv) place orders for all purchases
and sales of the investments made for the Portfolio, and (v) maintain the books
and records as are required to support Fund operations (in conjunction with
record-keeping and accounting functions performed by Advisor). In addition,
Sub-Advisor will keep the Fund and Advisor informed of developments materially
affecting the Fund and shall, on its own initiative, furnish to the Fund from
time to time whatever information Sub-Advisor believes appropriate for this
purpose. Sub-Advisor will communicate to Advisor on each day that a purchase
or sale of an instrument is effected for the Portfolio (i) the name of the
issuer, (ii) the amount of the purchase or sale, (iii) the name of the broker
or dealer, if any, through which the purchase or sale will be effected, (iv)
the CUSIP number of the instrument, if any, and (v) such other information as
Advisor may reasonably require for purposes of fulfilling its obligations to
the Fund under the Advisory Agreement. Sub-Advisor will provide the services
rendered by it under this Agreement in accordance with the Portfolio's
investment objective, policies and restrictions as stated in the Portfolio's
Prospectus and Statement of Additional Information (as currently in effect and
as they may be amended or supplemented from time to time), and the resolutions
of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be
-2-
<PAGE> 3
higher than that which another qualified broker would have charged for
effecting the same transaction, provided that Sub-Advisor determines in good
faith that such commission is reasonable in terms either of the transaction or
the overall responsibility of Advisor and Sub-Advisor to the Portfolio and
their other clients and that the total commissions paid by the Portfolio will
be reasonable in relation to the benefits to the Portfolio over the long-term.
In addition, Sub-Advisor is authorized to take into account the sale of shares
of the Fund in allocating purchase and sale orders for portfolio securities to
brokers or dealers (including brokers and dealers that are affiliated with
Advisor, Sub-Advisor or the Fund's distributor), provided that Sub-Advisor
believes that the quality of the transaction and the commission are comparable
to what they would be with other qualified firms. In no instance, however,
will the Portfolio's securities be purchased from or sold to the Advisor,
Sub-Advisor, the Fund's distributor or any affiliated person thereof, except to
the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or of its affiliates. In dealing with commercial
customers, Sub-Advisor will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
-3-
<PAGE> 4
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rates for the
Portfolio: 1.10% of the first $1 billion of average daily net assets; 1.05% of
the next $1 billion of average daily net assets; 1.005% of the next $1 billion
of average daily net assets; and .95% of the average daily net assets in excess
of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
-4-
<PAGE> 5
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein, shall continue in effect with respect to the
Portfolio until October 3, 1994. Thereafter, if not terminated, this Agreement
shall continue in effect with respect to the Portfolio for successive annual
periods ending on October 3, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the Fund's
Board of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Fund's Board of Trustees or by a vote of a majority of
the outstanding voting securities of the Portfolio. Notwithstanding the
foregoing, this Agreement may be terminated with respect to the Portfolio at
any time, without the payment of any penalty, by the Fund (by vote of the
Fund's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio), or by Advisor or Sub-Advisor, on 60 days' written
notice and will terminate automatically upon any termination of the Advisory
Agreement between the Fund and Advisor. This Agreement will also immediately
terminate in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
-5-
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:/s/ Thomas Nevin
-------------------------------
PROVIDENT CAPITAL MANAGEMENT, INC.
By:/s/ Thomas S. Stewart
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EXHIBIT (5)(r)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of March 28, 1995 between THE PNC(R) FUND, a
Massachusetts business trust (the "Fund"), and PNC INSTITUTIONAL MANAGEMENT
CORPORATION, a Delaware corporation (the "Adviser").
WHEREAS, the Fund is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Fund desires to retain Adviser to furnish
investment advisory services to the Fund and the Adviser is willing to so
furnish such services;
NOW THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
a. The Fund hereby appoints Adviser to act as
investment adviser to the Fund's New Jersey Municipal Money Market Portfolio
(the "Portfolio") for the period and on the terms set forth in this Agreement.
Adviser accepts such appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
b. In the event that the Fund establishes one or
more portfolios other than the Portfolio with respect to which it desires to
retain Adviser to act as investment adviser hereunder, the Fund shall notify
Adviser in writing. If Adviser is willing to render such services under this
Agreement it shall notify the Fund in writing whereupon, subject to such
shareholder approval as may be required pursuant to Paragraph 10 hereof, such
portfolio shall become a Portfolio hereunder and shall be subject to the
provisions of this Agreement to the same extent as the Portfolios named above
in subparagraph (a) except to the extent that said provisions (including those
relating to the compensation payable by the Fund to Adviser) are modified with
respect to such portfolio in writing by the Fund and Adviser at the time.
2. Sub-Contractors. It is understood that Adviser will
from time to time employ or associate with such person or persons as Adviser
may believe to be particularly fitted to assist it in the performance of this
Agreement; provided, however, that the compensation of such person or persons
shall be paid by Adviser and that Adviser shall be as fully responsible to the
Fund for the acts and omissions of any subcontractor as it is for its own acts
and omissions. Without limiting the generality
<PAGE> 2
of the foregoing, it is agreed that investment advisory services to the
Portfolio shall be provided by PNC Bank, National Association ( the
"Sub-Adviser") pursuant to a sub-advisory agreement agreeable to the Fund and
approved in accordance with the provisions of the 1940 Act (the "Sub-Advisory
Agreement").
3. Delivery of Documents. The Fund has furnished
Adviser with copies, properly certified or authenticated, of each of the
following:
a. Resolutions of the Fund's Board of Trustees
authorizing the appointment of Adviser as the Portfolio's
adviser and approving this Agreement;
b. The Fund's Declaration of Trust as filed with
the State Secretary of the Commonwealth of Massachusetts and
the Boston City Clerk on December 22, 1988;
c. The Fund's Code of Regulations;
d. The Fund's Notification of Registration on
Form N-8A under the 1940 Act as filed with the Securities and
Exchange Commission ("SEC") on December 23, 1988;
e. The Fund's Registration Statement on Form
N-1A (the "Registration Statement") under the Securities Act
of 1933 and the 1940 Act, as filed with the SEC on December
23, 1988, and all amendments thereto; and
f. The Fund's most recent prospectus for the
Portfolio (such prospectus together with the related
statements of additional information, as currently in effect
and all amendments and supplements thereto, is herein called
"Prospectus").
The Fund will furnish Adviser from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
4. Services. Subject to the supervision of the Fund's
Board of Trustees, Adviser will (either directly or through the Sub-Adviser and
other sub-contractors employed by it in accordance with Section 2 hereof)
provide a continuous investment program for the Portfolio, including investment
research and management with respect to all securities, investments, cash and
cash equivalents in the Portfolio. Adviser will (either directly or through
the Sub-Adviser and other sub-contractors employed by it in accordance with
Paragraph 2 hereof) determine from time to time what securities and other
investments will be purchased, retained or sold by the Portfolio and will place
the daily orders for the purchase or sale of securities.
<PAGE> 3
Adviser will provide the services rendered by it under this Agreement in
accordance with the Portfolio's investment objective, policies and restrictions
as stated in the Portfolio's Prospectus (as currently in effect and as it may
be amended or supplemented from time to time) and the resolutions of the Fund's
Board of Trustees. Adviser further agrees that it:
a. will comply with all applicable rules and
regulations of the SEC and will in addition conduct its
activities under this Agreement in accordance with other
applicable law;
b. will place orders either directly with the
issuer or with any broker or dealer. Subject to the other
provisions of this paragraph, in placing orders with brokers
and dealers, Adviser will attempt to obtain the best price and
the most favorable execution of its orders. In placing
orders, Adviser will consider the experience and skill of the
firm's securities traders as well as the firm's financial
responsibility and administrative efficiency. Consistent with
this obligation, Adviser may, subject to the approval of the
Fund's Board of Trustees, select brokers on the basis of the
research, statistical and pricing services they provide to a
Portfolio and other clients of Adviser or a Sub-Adviser.
Information and research received from such brokers will be in
addition to, and not in lieu of, the services required to be
performed by Adviser hereunder. A commission paid to such
brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction,
provided that Adviser determines in good faith that such
commission is reasonable in terms of either the transaction or
the overall responsibility of Adviser and Sub-Adviser to the
Portfolio and their other clients and that the total
commissions paid by a Portfolio will be reasonable in relation
to the benefits to the Portfolio over the long-term. In
addition, Adviser is authorized to take into account the sale
of shares of the Fund in allocating purchase and sale orders
for portfolio securities to brokers or dealers (including
brokers and dealers that are affiliated with Adviser, the
Sub-Adviser or the Fund's distributor) in compliance with
applicable law. In no instance, however, will a Portfolio's
securities be purchased from or sold to Adviser, the
Sub-Adviser, the Fund's distributor or any affiliated person
thereof, except to the extent permitted by the SEC or by
applicable law;
c. will maintain books and records with respect
to each Portfolio's securities transactions and will furnish
the Fund's Board of Trustees such periodic and special reports
as the Board may request;
<PAGE> 4
d. will maintain a policy and practice of
conducting its investment advisory services hereunder
independently of the commercial banking operations of its
affiliates. When Adviser makes investment recommendations for
a Portfolio, its investment advisory personnel will not
inquire or take into consideration whether the issuer of
securities proposed for purchase or sale for the Portfolio's
account are customers of the commercial departments of its
affiliates. In dealing with commercial customers, Adviser and
the Sub-Adviser inquire or take into consideration whether
securities of those customers are held by the Fund; and
e. will treat confidentially and as proprietary
information of the Fund all records and other information
relative to the Fund, any of the Portfolio's and the Fund's
prior, current 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 in writing by the Fund,
which approval shall not be unreasonably withheld and may not
be withheld where 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 Fund.
5. Services Not Exclusive. Adviser's services hereunder
are not deemed to be exclusive, and Adviser shall be free to render similar
services to others so long as its services under this Agreement are not
impaired thereby.
6. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Adviser hereby agrees that all
records which it maintains for each Portfolio are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. Adviser further agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act.
7. Expenses. During the term of this Agreement, Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction changes, if
any) purchased or sold for the Portfolio.
8. Compensation.
a. For the services provided and the expenses
assumed pursuant to this Agreement, the Fund will pay Adviser and
<PAGE> 5
Adviser will accept as full compensation therefor a fee, computed daily and
paid monthly, at the following annual rates for the Portfolio: .45% of the
first $1 billion of the Portfolio's average daily net assets, .40% of the next
$1 billion of the Portfolio's average daily net assets, .375% of the next $1
billion of the Portfolio's average daily net assets and .35% of the average
daily net assets of the Portfolio's assets in excess of $3 billion;
b. If in any fiscal year the aggregate expenses
of the Portfolio (as defined under the securities regulations of any state
having jurisdiction over the Fund) exceeds the expense limitations of any such
state, Adviser will bear its share of the amount of such excess in proportion
to the aggregate fees otherwise payable to it hereunder and to the Fund's
co-administrators under their administration agreements with the Fund. The
obligation of the Adviser to reimburse the Fund under this Paragraph 8(b) is
limited in any fiscal year to the amount of its fees otherwise payable
hereunder attributable to the Portfolio for such fiscal year, provided,
however, that notwithstanding the foregoing, Adviser shall reimburse the Fund
for the full amount of its share of any such excess expenses regardless of the
amount of fees otherwise payable to it during such fiscal year to the extent
that the securities regulations of any state having jurisdiction over the Fund
so require. Such expense reimbursement, if any, will be estimated, reconciled
and paid on a monthly basis.
9. Limitation of Liability. Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund 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 its part in the performance of its duties or from
reckless disregard by it of its obligations or duties under this Agreement.
10. Duration and Termination. This Agreement will become
effective as of the date hereof with respect to the Portfolio listed in Section
1(a) hereof and, with respect to any additional Portfolio, on the date of
receipt by the Fund of notice from the Adviser in accordance with Section 1(b)
hereof that the Adviser is willing to serve as investment adviser with respect
to such portfolio, provided that this Agreement (as supplemented by the terms
specified in any notice and agreement pursuant to Section 1(b) hereof) shall
have been approved by the shareholders of the Portfolio in accordance with the
requirements of the 1940 Act, and, unless sooner terminated as provided herein,
shall continue in effect with respect to each such Portfolio until March 31,
1996. Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the Portfolio for successive annual periods ending on March 31,
provided such continuance is specifically approved at least
<PAGE> 6
annually (a) by vote of a majority of those members of the Fund's Board of
Trustees who are not interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Fund's Board of Trustees or by vote of a majority of the outstanding
voting securities of such Portfolio. Notwithstanding the foregoing, this
Agreement may be terminated with respect to the Portfolio at any time, without
the payment of any penalty, by the Fund (by vote of the Fund's Board of
Trustees or by vote of a majority of the outstanding voting securities of the
Portfolio), or by Adviser on sixty days' written notice. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meanings of such
terms in the 1940 Act.)
11. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
12. Release. The names "The PNC Fund" and "Trustees of
The PNC Fund" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated December 22, 1988 which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "The PNC Fund" entered into in the name or on behalf thereof by
any of the Trustees, officers, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, Shareholders, officers, representatives or agents of the Trust
personally, but bind only the Trust Property (as defined in the Declaration of
Trust), and all persons dealing with any class of shares of the Trust must look
solely to the Trust Property belonging to such class for the enforcement of any
claims against the Trust.
13. Miscellaneous. The captions in this Agreement are
included for convenience or 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 on, and shall inure to
the benefit of, the parties hereto and their respective successors and shall be
governed by Delaware law.
14. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
<PAGE> 7
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.
Attest: THE PNC FUND
By: By:
-------------------- --------------------
Attest: PROVIDENT INSTITUTIONAL
(Corporate Seal) MANAGEMENT CORPORATION
By: By:
its: ------------------------
its:
<PAGE> 1
EXHIBIT (5)(s)
SUB-ADVISORY AGREEMENT
(New Jersey Municipal Money Market Portfolio)
AGREEMENT dated as of ________ __, 1995 between PNC
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation ("Advisor"), and
PNC BANK, NATIONAL ASSOCIATION, a national banking association ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the New Jersey Municipal Money Market Portfolio (the "Portfolio")
of The PNC(R) Fund (the "Fund"), an open-end, management investment company
registered under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of ______________ __, 1995 (such Agreement or the most recent
successor agreement between such parties relating to advisory services to the
Portfolio is referred to herein as the "Advisory Agreement") specifically
provides that Advisor will sub-contract investment advisory services with
respect to the Portfolio to Sub-Advisor pursuant to a sub-advisory agreement
agreeable to the Fund and approved in accordance with the provisions of the
1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
provide the Portfolio investment research and credit
<PAGE> 2
analysis concerning prospective and existing Portfolio investments, make
recommendations with respect to the Portfolio's continuous investment program,
supply Advisor with computer facilities and operating personnel, and provide
such statistical services as Advisor may from time to time reasonably request.
Sub-Advisor will provide the services rendered by it under this Agreement in
accordance with the Portfolio's investment objective, policies and restrictions
as stated in the Portfolio's Prospectus and Statement of Additional Information
(as currently in effect and as they may be amended or supplemented from time to
time) and the resolutions adopted by the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(c) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of it and its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of it or of its affiliates. In dealing with commercial
customers, Sub-Advisor will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
(d) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
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<PAGE> 3
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at an annual rate of .05% of the
Portfolio's average daily net assets.
If the Advisor waives any or all of its advisory fee payable under the
Advisory Agreement, or reimburses the Fund pursuant to Section 8(b) of that
Agreement, with respect to the Portfolio, the Sub-Advisor will bear its share
of the amount of such waiver or reimbursement by waiving fees otherwise payable
to it hereunder on a proportionate basis to be determined by comparing the
aggregate fees otherwise payable to it hereunder with respect to the Portfolio
to the aggregate fees otherwise payable by the Fund to the Advisor under the
Advisory Agreement with respect to the Portfolio. Advisor shall inform
Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner
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<PAGE> 4
terminated with respect to the Portfolio as provided herein, shall continue in
effect with respect to the Portfolio until March 31, 1996. Thereafter, if not
terminated, this Agreement shall continue in effect with respect to the
Portfolio for successive annual periods ending on March 31, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of such Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
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<PAGE> 5
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-------------------------
PNC BANK, NATIONAL ASSOCIATION
By:
--------------------------
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EXHIBIT (5)(t)
SUB-ADVISORY AGREEMENT
(Core Equity Portfolio)
AGREEMENT dated as of April 3, 1995 between PNC Institutional
Management Corporation, a Delaware corporation ("Advisor"), and PNC Equity
Advisors Company, a Delaware corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Core Equity Portfolio (the "Portfolio") of The PNC(R) Fund (the
"Fund"), an open-end, management investment company registered under the
Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of March 1, 1993 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning the
Portfolio's
<PAGE> 2
investments, (ii) conduct a continual program of investment of the Portfolio's
assets, (iii) determine what portion of the Portfolio's assets will be invested
in cash, cash equivalents and money market instruments, (iv) place orders for
all purchases and sales of the investments made for the Portfolio, and (v)
maintain the books and records as are required to support Fund operations (in
conjunction with record-keeping and accounting functions performed by Advisor).
In addition, Sub-Advisor will keep the Fund and Advisor informed of
developments materially affecting the Fund and shall, on its own initiative,
furnish to the Fund from time to time whatever information Sub-Advisor believes
appropriate for this purpose. Sub-Advisor will communicate to Advisor on each
day that a purchase or sale of an instrument is effected for the Portfolio (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the name
of the broker or dealer, if any, through which the purchase or sale will be
effected, (iv) the CUSIP number of the instrument, if any, and (v) such other
information as Advisor may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-Advisor will provide
the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Portfolio's Prospectus and Statement of Additional Information (as currently in
effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have
<PAGE> 3
charged for effecting the same transaction, provided that Sub-Advisor
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of Advisor and Sub-Advisor to the
Portfolio and their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long-term. In addition, Sub-Advisor is authorized to take into account the
sale of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with Advisor, Sub-Advisor or the Fund's distributor), provided that
Sub-Advisor believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will the Portfolio's securities be purchased from or sold to the
Advisor, Sub-Advisor, the Fund's distributor or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of its affiliates; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
<PAGE> 4
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rates for the
Portfolio: .40% of its first $1 billion of average daily net assets; .35% of
its next $1 billion of average daily net assets; .325% of its next $1 billion
of average daily net assets; and .30% of its average daily net assets in excess
of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein,
<PAGE> 5
shall continue in effect with respect to the Portfolio until March 31, 1996.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Portfolio for successive annual periods ending on March 31,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of the Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-----------------------------
PNC EQUITY ADVISORS COMPANY
By:
-----------------------------
<PAGE> 1
EXHIBIT (5)(U)
SUB-ADVISORY AGREEMENT
(Growth Equity Portfolio)
AGREEMENT dated as of April 3, 1995 between PNC Institutional
Management Corporation, a Delaware corporation ("Advisor"), and PNC Equity
Advisors Company, a Delaware corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Growth Equity Portfolio (the "Portfolio") of The PNC(R) Fund
(the "Fund"), an open-end, management investment company registered under the
Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of October 4, 1989 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning the
Portfolio's
<PAGE> 2
investments, (ii) conduct a continual program of investment of the Portfolio's
assets, (iii) determine what portion of the Portfolio's assets will be invested
in cash, cash equivalents and money market instruments, (iv) place orders for
all purchases and sales of the investments made for the Portfolio, and (v)
maintain the books and records as are required to support Fund operations (in
conjunction with record-keeping and accounting functions performed by Advisor).
In addition, Sub-Advisor will keep the Fund and Advisor informed of
developments materially affecting the Fund and shall, on its own initiative,
furnish to the Fund from time to time whatever information Sub-Advisor believes
appropriate for this purpose. Sub-Advisor will communicate to Advisor on each
day that a purchase or sale of an instrument is effected for the Portfolio (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the name
of the broker or dealer, if any, through which the purchase or sale will be
effected, (iv) the CUSIP number of the instrument, if any, and (v) such other
information as Advisor may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-Advisor will provide
the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Portfolio's Prospectus and Statement of Additional Information (as currently in
effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have
<PAGE> 3
charged for effecting the same transaction, provided that Sub-Advisor
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of Advisor and Sub-Advisor to the
Portfolio and their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long-term. In addition, Sub-Advisor is authorized to take into account the
sale of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with Advisor, Sub-Advisor or the Fund's distributor), provided that
Sub-Advisor believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will the Portfolio's securities be purchased from or sold to the
Advisor, Sub-Advisor, the Fund's distributor or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of its affiliates; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
<PAGE> 4
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rates for the
Portfolio: .40% of its first $1 billion of average daily net assets; .35% of
its next $1 billion of average daily net assets; .325% of its next $1 billion
of average daily net assets; and .30% of its average daily net assets in excess
of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein,
<PAGE> 5
shall continue in effect with respect to the Portfolio until March 31, 1996.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Portfolio for successive annual periods ending on March 31,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of the Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
----------------------------
PNC EQUITY ADVISORS COMPANY
By:
----------------------------
<PAGE> 1
EXHIBIT (5)(v)
SUB-ADVISORY AGREEMENT
(Small Cap Growth Equity Portfolio)
AGREEMENT dated as of April 3, 1995 between PNC Institutional
Management Corporation, a Delaware corporation ("Advisor"), and PNC Equity
Advisors Company, a Delaware corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Small Cap Growth Equity Portfolio (the "Portfolio") of The
PNC(R) Fund (the "Fund"), an open-end, management investment company registered
under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of March 1, 1993 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning the
Portfolio's
<PAGE> 2
investments, (ii) conduct a continual program of investment of the Portfolio's
assets, (iii) determine what portion of the Portfolio's assets will be invested
in cash, cash equivalents and money market instruments, (iv) place orders for
all purchases and sales of the investments made for the Portfolio, and (v)
maintain the books and records as are required to support Fund operations (in
conjunction with record-keeping and accounting functions performed by Advisor).
In addition, Sub-Advisor will keep the Fund and Advisor informed of
developments materially affecting the Fund and shall, on its own initiative,
furnish to the Fund from time to time whatever information Sub-Advisor believes
appropriate for this purpose. Sub-Advisor will communicate to Advisor on each
day that a purchase or sale of an instrument is effected for the Portfolio (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the name
of the broker or dealer, if any, through which the purchase or sale will be
effected, (iv) the CUSIP number of the instrument, if any, and (v) such other
information as Advisor may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-Advisor will provide
the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Portfolio's Prospectus and Statement of Additional Information (as currently in
effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have
<PAGE> 3
charged for effecting the same transaction, provided that Sub-Advisor
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of Advisor and Sub-Advisor to the
Portfolio and their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long-term. In addition, Sub-Advisor is authorized to take into account the
sale of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with Advisor, Sub-Advisor or the Fund's distributor), provided that
Sub-Advisor believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will the Portfolio's securities be purchased from or sold to the
Advisor, Sub-Advisor, the Fund's distributor or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of its affiliates; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
<PAGE> 4
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rates for the
Portfolio: .40% of its first $1 billion of average daily net assets; .35% of
its next $1 billion of average daily net assets; .325% of its next $1 billion
of average daily net assets; and .30% of its average daily net assets in excess
of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein,
<PAGE> 5
shall continue in effect with respect to the Portfolio until March 31, 1996.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Portfolio for successive annual periods ending on March 31,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of the Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-----------------------------
PNC EQUITY ADVISORS COMPANY
By:
-----------------------------
<PAGE> 1
EXHIBIT (5)(w)
SUB-ADVISORY AGREEMENT
(Index Equity Portfolio)
AGREEMENT dated as of April 3, 1995 between PNC Institutional
Management Corporation, a Delaware corporation ("Advisor"), and PNC Equity
Advisors Company, a Delaware corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Index Equity Portfolio (the "Portfolio") of The PNC(R) Fund
(the "Fund"), an open-end, management investment company registered under the
Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of February 3, 1992 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning the
Portfolio's
<PAGE> 2
investments, (ii) conduct a continual program of investment of the Portfolio's
assets, (iii) determine what portion of the Portfolio's assets will be invested
in cash, cash equivalents and money market instruments, (iv) place orders for
all purchases and sales of the investments made for the Portfolio, and (v)
maintain the books and records as are required to support Fund operations (in
conjunction with record-keeping and accounting functions performed by Advisor).
In addition, Sub-Advisor will keep the Fund and Advisor informed of
developments materially affecting the Fund and shall, on its own initiative,
furnish to the Fund from time to time whatever information Sub-Advisor believes
appropriate for this purpose. Sub-Advisor will communicate to Advisor on each
day that a purchase or sale of an instrument is effected for the Portfolio (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the name
of the broker or dealer, if any, through which the purchase or sale will be
effected, (iv) the CUSIP number of the instrument, if any, and (v) such other
information as Advisor may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-Advisor will provide
the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Portfolio's Prospectus and Statement of Additional Information (as currently in
effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have
<PAGE> 3
charged for effecting the same transaction, provided that Sub-Advisor
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of Advisor and Sub-Advisor to the
Portfolio and their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long-term. In addition, Sub-Advisor is authorized to take into account the
sale of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with Advisor, Sub-Advisor or the Fund's distributor), provided that
Sub-Advisor believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will the Portfolio's securities be purchased from or sold to the
Advisor, Sub-Advisor, the Fund's distributor or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of its affiliates; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
<PAGE> 4
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the annual rate of .15% of the
Portfolio's average daily net assets.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein, shall continue in effect with respect to the
Portfolio until March 31, 1996. Thereafter, if not terminated, this Agreement
shall continue in effect with respect to the Portfolio for
<PAGE> 5
successive annual periods ending on March 31, provided such continuance is
specifically approved at least annually (a) by the vote of a majority of those
members of the Fund's Board of Trustees who are not interested persons of any
party to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Fund's Board of Trustees or by a vote
of a majority of the outstanding voting securities of the Portfolio.
Notwithstanding the foregoing, this Agreement may be terminated with respect to
the Portfolio at any time, without the payment of any penalty, by the Fund (by
vote of the Fund's Board of Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio), or by Advisor or Sub-Advisor,
on 60 days' written notice and will terminate automatically upon any
termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-----------------------------
PNC EQUITY ADVISORS COMPANY
By:
-----------------------------
<PAGE> 1
EXHIBIT (5)(x)
SUB-ADVISORY AGREEMENT
(Managed Income Portfolio)
AGREEMENT dated as of March 29, 1995 between PNC Institutional
Management Corporation, a Delaware corporation ("Advisor"), and BlackRock
Financial Management, Inc., a Delaware corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Managed Income Portfolio (the "Portfolio") of The PNC(R) Fund
(the "Fund"), an open-end, management investment company registered under the
Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of October 4, 1989 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning the
Portfolio's
<PAGE> 2
investments, (ii) conduct a continual program of investment of the Portfolio's
assets, (iii) determine what portion of the Portfolio's assets will be invested
in cash, cash equivalents and money market instruments, (iv) place orders for
all purchases and sales of the investments made for the Portfolio, and (v)
maintain the books and records as are required to support Fund operations (in
conjunction with record-keeping and accounting functions performed by Advisor).
In addition, Sub-Advisor will keep the Fund and Advisor informed of
developments materially affecting the Fund and shall, on its own initiative,
furnish to the Fund from time to time whatever information Sub-Advisor believes
appropriate for this purpose. Sub-Advisor will communicate to Advisor on each
day that a purchase or sale of an instrument is effected for the Portfolio (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the name
of the broker or dealer, if any, through which the purchase or sale will be
effected, (iv) the CUSIP number of the instrument, if any, and (v) such other
information as Advisor may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-Advisor will provide
the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Portfolio's Prospectus and Statement of Additional Information (as currently in
effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have
<PAGE> 3
charged for effecting the same transaction, provided that Sub-Advisor
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of Advisor and Sub-Advisor to the
Portfolio and their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long-term. In addition, Sub-Advisor is authorized to take into account the
sale of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with Advisor, Sub-Advisor or the Fund's distributor), provided that
Sub-Advisor believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will the Portfolio's securities be purchased from or sold to the
Advisor, Sub-Advisor, the Fund's distributor or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of its affiliates; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
<PAGE> 4
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rates for the
Portfolio: .35% of its first $1 billion of average daily net assets; .30% of
its next $1 billion of average daily net assets; .275% of its next $1 billion
of average daily net assets; and .25% of its average daily net assets in excess
of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein,
<PAGE> 5
shall continue in effect with respect to the Portfolio until March 31, 1996.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Portfolio for successive annual periods ending on March 31,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of the Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-----------------------------
BLACKROCK FINANCIAL
MANAGEMENT, INC.
By:
-----------------------------
<PAGE> 1
EXHIBIT (5)(y)
SUB-ADVISORY AGREEMENT
(Intermediate Government Portfolio)
AGREEMENT dated as of March 29, 1995 between PNC Institutional
Management Corporation, a Delaware corporation ("Advisor"), and BlackRock
Financial Management, Inc., a Delaware corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Intermediate Government Portfolio (the "Portfolio") of The
PNC(R) Fund (the "Fund"), an open-end, management investment company registered
under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of February 3, 1992 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning the
Portfolio's
<PAGE> 2
investments, (ii) conduct a continual program of investment of the Portfolio's
assets, (iii) determine what portion of the Portfolio's assets will be invested
in cash, cash equivalents and money market instruments, (iv) place orders for
all purchases and sales of the investments made for the Portfolio, and (v)
maintain the books and records as are required to support Fund operations (in
conjunction with record-keeping and accounting functions performed by Advisor).
In addition, Sub-Advisor will keep the Fund and Advisor informed of
developments materially affecting the Fund and shall, on its own initiative,
furnish to the Fund from time to time whatever information Sub-Advisor believes
appropriate for this purpose. Sub-Advisor will communicate to Advisor on each
day that a purchase or sale of an instrument is effected for the Portfolio (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the name
of the broker or dealer, if any, through which the purchase or sale will be
effected, (iv) the CUSIP number of the instrument, if any, and (v) such other
information as Advisor may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-Advisor will provide
the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Portfolio's Prospectus and Statement of Additional Information (as currently in
effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have
<PAGE> 3
charged for effecting the same transaction, provided that Sub-Advisor
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of Advisor and Sub-Advisor to the
Portfolio and their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long-term. In addition, Sub-Advisor is authorized to take into account the
sale of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with Advisor, Sub-Advisor or the Fund's distributor), provided that
Sub-Advisor believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will the Portfolio's securities be purchased from or sold to the
Advisor, Sub-Advisor, the Fund's distributor or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of its affiliates; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
<PAGE> 4
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rates for the
Portfolio: .35% of its first $1 billion of average daily net assets; .30% of
its next $1 billion of average daily net assets; .275% of its next $1 billion
of average daily net assets; and .25% of its average daily net assets in excess
of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein,
<PAGE> 5
shall continue in effect with respect to the Portfolio until March 31, 1996.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Portfolio for successive annual periods ending on March 31,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of the Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-----------------------------
BLACKROCK FINANCIAL
MANAGEMENT, INC.
By:
-----------------------------
<PAGE> 1
EXHIBIT (5)(z)
SUB-ADVISORY AGREEMENT
(Ohio Tax-Free Income Portfolio)
AGREEMENT dated as of March 29, 1995 between PNC Institutional
Management Corporation, a Delaware corporation ("Advisor"), and BlackRock
Financial Management, Inc., a Delaware corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Ohio Tax-Free Income Portfolio (the "Portfolio") of The PNC(R)
Fund (the "Fund"), an open-end, management investment company registered under
the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of February 3, 1992 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning the
Portfolio's
<PAGE> 2
investments, (ii) conduct a continual program of investment of the Portfolio's
assets, (iii) determine what portion of the Portfolio's assets will be invested
in cash, cash equivalents and money market instruments, (iv) place orders for
all purchases and sales of the investments made for the Portfolio, and (v)
maintain the books and records as are required to support Fund operations (in
conjunction with record-keeping and accounting functions performed by Advisor).
In addition, Sub-Advisor will keep the Fund and Advisor informed of
developments materially affecting the Fund and shall, on its own initiative,
furnish to the Fund from time to time whatever information Sub-Advisor believes
appropriate for this purpose. Sub-Advisor will communicate to Advisor on each
day that a purchase or sale of an instrument is effected for the Portfolio (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the name
of the broker or dealer, if any, through which the purchase or sale will be
effected, (iv) the CUSIP number of the instrument, if any, and (v) such other
information as Advisor may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-Advisor will provide
the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Portfolio's Prospectus and Statement of Additional Information (as currently in
effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have
<PAGE> 3
charged for effecting the same transaction, provided that Sub-Advisor
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of Advisor and Sub-Advisor to the
Portfolio and their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long-term. In addition, Sub-Advisor is authorized to take into account the
sale of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with Advisor, Sub-Advisor or the Fund's distributor), provided that
Sub-Advisor believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will the Portfolio's securities be purchased from or sold to the
Advisor, Sub-Advisor, the Fund's distributor or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of its affiliates; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
<PAGE> 4
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rates for the
Portfolio: .35% of its first $1 billion of average daily net assets; .30% of
its next $1 billion of average daily net assets; .275% of its next $1 billion
of average daily net assets; and .25% of its average daily net assets in excess
of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein,
<PAGE> 5
shall continue in effect with respect to the Portfolio until March 31, 1996.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Portfolio for successive annual periods ending on March 31,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of the Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-----------------------------
BLACKROCK FINANCIAL
MANAGEMENT, INC.
By:
-----------------------------
<PAGE> 1
EXHIBIT (5)(aa)
SUB-ADVISORY AGREEMENT
(Pennsylvania Tax-Free Income Portfolio)
AGREEMENT dated as of March 29, 1995 between PNC Institutional
Management Corporation, a Delaware corporation ("Advisor"), and BlackRock
Financial Management, Inc., a Delaware corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Pennsylvania Tax-Free Income Portfolio (the "Portfolio") of The
PNC(R) Fund (the "Fund"), an open-end, management investment company registered
under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of February 3, 1992 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning the
Portfolio's
<PAGE> 2
investments, (ii) conduct a continual program of investment of the Portfolio's
assets, (iii) determine what portion of the Portfolio's assets will be invested
in cash, cash equivalents and money market instruments, (iv) place orders for
all purchases and sales of the investments made for the Portfolio, and (v)
maintain the books and records as are required to support Fund operations (in
conjunction with record-keeping and accounting functions performed by Advisor).
In addition, Sub-Advisor will keep the Fund and Advisor informed of
developments materially affecting the Fund and shall, on its own initiative,
furnish to the Fund from time to time whatever information Sub-Advisor believes
appropriate for this purpose. Sub-Advisor will communicate to Advisor on each
day that a purchase or sale of an instrument is effected for the Portfolio (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the name
of the broker or dealer, if any, through which the purchase or sale will be
effected, (iv) the CUSIP number of the instrument, if any, and (v) such other
information as Advisor may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-Advisor will provide
the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Portfolio's Prospectus and Statement of Additional Information (as currently in
effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have
<PAGE> 3
charged for effecting the same transaction, provided that Sub-Advisor
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of Advisor and Sub-Advisor to the
Portfolio and their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long-term. In addition, Sub-Advisor is authorized to take into account the
sale of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with Advisor, Sub-Advisor or the Fund's distributor), provided that
Sub-Advisor believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will the Portfolio's securities be purchased from or sold to the
Advisor, Sub-Advisor, the Fund's distributor or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of its affiliates; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
<PAGE> 4
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rates for the
Portfolio: .35% of its first $1 billion of average daily net assets; .30% of
its next $1 billion of average daily net assets; .275% of its next $1 billion
of average daily net assets; and .25% of its average daily net assets in excess
of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein,
<PAGE> 5
shall continue in effect with respect to the Portfolio until March 31, 1996.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Portfolio for successive annual periods ending on March 31,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of the Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-----------------------------
BLACKROCK FINANCIAL
MANAGEMENT, INC.
By:
-----------------------------
<PAGE> 1
EXHIBIT (5)(bb)
SUB-ADVISORY AGREEMENT
(Short-Term Bond Portfolio)
AGREEMENT dated as of March 29, 1995 between PNC Institutional
Management Corporation, a Delaware corporation ("Advisor"), and BlackRock
Financial Management, Inc., a Delaware corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Short-Term Bond Portfolio (the "Portfolio") of The PNC(R) Fund
(the "Fund"), an open-end, management investment company registered under the
Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of March 1, 1993 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning the
Portfolio's
<PAGE> 2
investments, (ii) conduct a continual program of investment of the Portfolio's
assets, (iii) determine what portion of the Portfolio's assets will be invested
in cash, cash equivalents and money market instruments, (iv) place orders for
all purchases and sales of the investments made for the Portfolio, and (v)
maintain the books and records as are required to support Fund operations (in
conjunction with record-keeping and accounting functions performed by Advisor).
In addition, Sub-Advisor will keep the Fund and Advisor informed of
developments materially affecting the Fund and shall, on its own initiative,
furnish to the Fund from time to time whatever information Sub-Advisor believes
appropriate for this purpose. Sub-Advisor will communicate to Advisor on each
day that a purchase or sale of an instrument is effected for the Portfolio (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the name
of the broker or dealer, if any, through which the purchase or sale will be
effected, (iv) the CUSIP number of the instrument, if any, and (v) such other
information as Advisor may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-Advisor will provide
the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Portfolio's Prospectus and Statement of Additional Information (as currently in
effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have
<PAGE> 3
charged for effecting the same transaction, provided that Sub-Advisor
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of Advisor and Sub-Advisor to the
Portfolio and their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long-term. In addition, Sub-Advisor is authorized to take into account the
sale of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with Advisor, Sub-Advisor or the Fund's distributor), provided that
Sub-Advisor believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will the Portfolio's securities be purchased from or sold to the
Advisor, Sub-Advisor, the Fund's distributor or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of its affiliates; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
<PAGE> 4
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rates for the
Portfolio: .35% of its first $1 billion of average daily net assets; .30% of
its next $1 billion of average daily net assets; .275% of its next $1 billion
of average daily net assets; and .25% of its average daily net assets in excess
of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein,
<PAGE> 5
shall continue in effect with respect to the Portfolio until March 31, 1996.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Portfolio for successive annual periods ending on March 31,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of the Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-----------------------------
BLACKROCK FINANCIAL
MANAGEMENT, INC.
By:
-----------------------------
<PAGE> 1
EXHIBIT (5)(cc)
SUB-ADVISORY AGREEMENT
(Intermediate-Term Bond Portfolio)
AGREEMENT dated as of March 29, 1995 between PNC Institutional
Management Corporation, a Delaware corporation ("Advisor"), and BlackRock
Financial Management, Inc., a Delaware corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Intermediate-Term Bond Portfolio (the "Portfolio") of The
PNC(R) Fund (the "Fund"), an open-end, management investment company registered
under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of March 1, 1993 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning the
Portfolio's
<PAGE> 2
investments, (ii) conduct a continual program of investment of the Portfolio's
assets, (iii) determine what portion of the Portfolio's assets will be invested
in cash, cash equivalents and money market instruments, (iv) place orders for
all purchases and sales of the investments made for the Portfolio, and (v)
maintain the books and records as are required to support Fund operations (in
conjunction with record-keeping and accounting functions performed by Advisor).
In addition, Sub-Advisor will keep the Fund and Advisor informed of
developments materially affecting the Fund and shall, on its own initiative,
furnish to the Fund from time to time whatever information Sub-Advisor believes
appropriate for this purpose. Sub-Advisor will communicate to Advisor on each
day that a purchase or sale of an instrument is effected for the Portfolio (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the name
of the broker or dealer, if any, through which the purchase or sale will be
effected, (iv) the CUSIP number of the instrument, if any, and (v) such other
information as Advisor may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-Advisor will provide
the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Portfolio's Prospectus and Statement of Additional Information (as currently in
effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have
<PAGE> 3
charged for effecting the same transaction, provided that Sub-Advisor
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of Advisor and Sub-Advisor to the
Portfolio and their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long-term. In addition, Sub-Advisor is authorized to take into account the
sale of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with Advisor, Sub-Advisor or the Fund's distributor), provided that
Sub-Advisor believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will the Portfolio's securities be purchased from or sold to the
Advisor, Sub-Advisor, the Fund's distributor or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of its affiliates; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
<PAGE> 4
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rates for the
Portfolio: .35% of its first $1 billion of average daily net assets; .30% of
its next $1 billion of average daily net assets; .275% of its next $1 billion
of average daily net assets; and .25% of its average daily net assets in excess
of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein,
<PAGE> 5
shall continue in effect with respect to the Portfolio until March 31, 1996.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Portfolio for successive annual periods ending on March 31,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of the Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-----------------------------
BLACKROCK FINANCIAL
MANAGEMENT, INC.
By:
-----------------------------
<PAGE> 1
EXHIBIT (5)(dd)
SUB-ADVISORY AGREEMENT
(Government Income Portfolio)
AGREEMENT dated as of March 29, 1995 between PNC Institutional
Management Corporation, a Delaware corporation ("Advisor"), and BlackRock
Financial Management, Inc., a Delaware corporation ("Sub-Advisor").
WHEREAS, Advisor has agreed to furnish investment advisory
services to the Government Income Portfolio (the "Portfolio") of The PNC(R)
Fund (the "Fund"), an open-end, management investment company registered under
the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Advisor wishes to retain the Sub-Advisor to provide
it with investment research and statistical services in connection with
Advisor's advisory activities on behalf of the Portfolio;
WHEREAS, the advisory agreement between Advisor and the Fund
dated as of December 17, 1993 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Portfolio
is referred to herein as the "Advisory Agreement") specifically provides that
Advisor will sub-contract investment advisory services with respect to the
Portfolio to Sub-Advisor pursuant to a sub-advisory agreement agreeable to the
Fund and approved in accordance with the provisions of the 1940 Act;
WHEREAS, the Board of Trustees of the Fund and the Fund's
shareholders have approved this Agreement, and Sub-Advisor is willing to
furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Advisor hereby appoints Sub-Advisor to
act as sub-advisor with respect to the Portfolio as provided in Section 2 of
the Advisory Agreement. Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Services of Sub-Advisor. Subject to the oversight
and supervision of Advisor and the Fund's Board of Trustees, Sub-Advisor will
supervise the day-to-day operations of the Portfolio and perform the following
services: (i) provide investment research and credit analysis concerning the
Portfolio's
<PAGE> 2
investments, (ii) conduct a continual program of investment of the Portfolio's
assets, (iii) determine what portion of the Portfolio's assets will be invested
in cash, cash equivalents and money market instruments, (iv) place orders for
all purchases and sales of the investments made for the Portfolio, and (v)
maintain the books and records as are required to support Fund operations (in
conjunction with record-keeping and accounting functions performed by Advisor).
In addition, Sub-Advisor will keep the Fund and Advisor informed of
developments materially affecting the Fund and shall, on its own initiative,
furnish to the Fund from time to time whatever information Sub-Advisor believes
appropriate for this purpose. Sub-Advisor will communicate to Advisor on each
day that a purchase or sale of an instrument is effected for the Portfolio (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the name
of the broker or dealer, if any, through which the purchase or sale will be
effected, (iv) the CUSIP number of the instrument, if any, and (v) such other
information as Advisor may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-Advisor will provide
the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Portfolio's Prospectus and Statement of Additional Information (as currently in
effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.
3. Other Sub-Advisor Covenants. Sub-Advisor further
agrees that it:
(a) will comply with all applicable Rules and
Regulations of the Securities and Exchange Commission (the "SEC") and will in
addition conduct its activities under this Agreement in accordance with other
applicable law;
(b) will place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions of this
paragraph, in placing orders with brokers and dealers, Sub-Advisor will attempt
to obtain the best price and the most favorable execution of its orders. In
placing orders, Sub-Advisor will consider the experience and skill of the
firm's securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with this obligation, Sub-Advisor may,
subject to the approval of the Fund's Board of Trustees, select brokers on the
basis of the research, statistical and pricing services they provide to the
Portfolio and other clients of Advisor or Sub-Advisor. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Sub-Advisor hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have
<PAGE> 3
charged for effecting the same transaction, provided that Sub-Advisor
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of Advisor and Sub-Advisor to the
Portfolio and their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long-term. In addition, Sub-Advisor is authorized to take into account the
sale of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with Advisor, Sub-Advisor or the Fund's distributor), provided that
Sub-Advisor believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will the Portfolio's securities be purchased from or sold to the
Advisor, Sub-Advisor, the Fund's distributor or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(c) will maintain or cause Advisor to maintain
books and records with respect to the Portfolio's securities transactions and
will render to Advisor and the Fund's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When Sub-Advisor makes
investment recommendations for the Portfolio, its investment advisory personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Portfolio's account are customers of the
commercial department of its affiliates; and
(e) will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
the Portfolio and the Fund's prior, current 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 Fund, which approval shall not be unreasonably
withheld and may not be withheld where Sub-Advisor 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
Fund.
4. Services Not Exclusive. Sub-Advisor's services
hereunder are not deemed to be exclusive, and Sub-Advisor shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
<PAGE> 4
5. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, Sub-Advisor hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund
and further agrees to surrender promptly to the Fund any such records upon the
Fund's request. Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement,
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities, commodities,
and other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Portfolio.
7. Compensation. For the services which the Sub-Advisor
will render to Advisor under this Agreement, Advisor will pay to Sub-Advisor a
fee, computed daily and payable monthly, at the following annual rates for the
Portfolio: .35% of its first $1 billion of average daily net assets; .30% of
its next $1 billion of average daily net assets; .275% of its next $1 billion
of average daily net assets; and .25% of its average daily net assets in excess
of $3 billion.
If the Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Fund pursuant to Section 8(b)
of that Agreement, with respect to the Portfolio, the Sub-Advisor will bear its
share of the amount of such waiver or reimbursement by waiving fees otherwise
payable to it hereunder on a proportionate basis to be determined by comparing
the aggregate fees otherwise payable to it hereunder with respect to the
Portfolio to the aggregate fees otherwise payable by the Fund to the Advisor
under the Advisory Agreement with respect to the Portfolio. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Limitation on Liability. Sub-Advisor will not be
liable for any error of judgment or mistake of law or for any loss suffered by
Advisor or by the Portfolio 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 its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof and, unless sooner terminated with respect to
the Portfolio as provided herein,
<PAGE> 5
shall continue in effect with respect to the Portfolio until March 31, 1996.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Portfolio for successive annual periods ending on March 31,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Trustees or by a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the Portfolio at any time, without the payment of any penalty,
by the Fund (by vote of the Fund's Board of Trustees or by vote of a majority
of the outstanding voting securities of the Portfolio), or by Advisor or
Sub-Advisor, on 60 days' written notice and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and Advisor. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding on, and shall inure to
the benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, each of which shall constitute an original
counterpart, and all of which, together, shall constitute one Agreement.
<PAGE> 6
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.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-----------------------------
BLACKROCK FINANCIAL
MANAGEMENT, INC.
By:
-----------------------------
<PAGE> 1
EXHIBIT 6(a)
THE PNC(R) FUND
DISTRIBUTION AGREEMENT
Agreement dated as of January 31, 1994 between THE PNC(R)
FUND, a Massachusetts business trust (the "Company"), and Provident
Distributors, Inc., a Delaware corporation (the "Distributor").
WHEREAS, the Company is an open-end, diversified management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Company desires to retain the Distributor as its
distributor to provide for the sale and distribution of each class and series
of units of beneficial interest ("shares") in each of the Company's investment
portfolios (individually, a "Fund," collectively, the "Funds") as listed on
Appendix A (as such Appendix may, from time to time, be supplemented (or
amended)), and the Distributor is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth and intending to be legally bound, the parties hereto agree
as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Company hereby
appoints the Distributor as distributor of each class and series of shares in
each of the Company's Funds on the terms and for the period set forth in this
Agreement. The Distributor hereby accepts such appointment and agrees to
render the services and duties set forth in Section 3 below. In the event that
the Company establishes additional classes or investment portfolios other than
the Funds listed on Appendix A with respect to which it desires to retain the
Distributor to act as distributor hereunder, the Company shall notify the
Distributor, whereupon such Appendix A shall be supplemented (or amended) and
such portfolio shall become a Fund hereunder and shall be subject to the
provisions of this Agreement to the same extent as the Funds (except to the
extent that said provisions may be modified in writing by the Company and
Distributor at the time).
2. DELIVERY OF DOCUMENTS. The Company has furnished the
Distributor with copies, properly certified or authenticated, of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
a. The Company's Declaration of Trust, filed
with the Secretary of State of the Commonwealth of Massachusetts on December
22, 1988, as amended (the "Charter");
<PAGE> 2
b. The Company's Code of Regulations, as amended
and supplemented ("Code");
c. Resolutions of the Company's Board of
Trustees authorizing the execution and delivery of this Agreement;
d. The Company's most recent amendment to its
Registration Statement under the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act on Form N-1A as filed with the Securities and Exchange
Commission (the "Commission") on January 7, 1994, relating to its Funds (the
Registration Statement, as presently in effect and as amended or supplemented
from time to time, is herein called the "Registration Statement");
e. The Company's most recent Prospectuses and
Statements of Additional Information and all amendments and supplements thereto
(such Prospectuses and Statements of Additional Information and supplements
thereto, as presently in effect and as from time to time amended and
supplemented, are herein called the "Prospectuses"); and
f. The Company's Amended and Restated Service
Plan and related Distribution and Servicing Agreement and form of broker-dealer
agreement.
3. SERVICES AND DUTIES. The Distributor enters into the
following covenants with respect to its services and duties:
a. The Distributor agrees to sell, as agent,
from time to time during the term of this Agreement, shares upon the terms and
at the current offering price as described in the Prospectuses. The
Distributor will act only in its own behalf as principal in making agreements
with selected dealers. No broker-dealer or other person which enters into a
selling or servicing agreement with the Distributor shall be authorized to act
as agent for the Company or its Funds in connection with the offering or sale
of shares to the public or otherwise. The Distributor shall use its best
efforts to sell shares of each class of each of the Funds but shall not be
obligated to sell any certain number of shares.
b. The Distributor shall prepare or review,
provide advice with respect to, and file with the federal and state agencies or
other organization as required by federal, state, and other applicable laws and
regulations, all sales literature (advertisements, brochures and shareholder
- 2 -
<PAGE> 3
communications) for each of the Funds and any class of shares thereof.
c. In performing all of its services and duties
as Distributor, the Distributor will act in conformity with the Charter, Code,
Prospectuses and resolutions and other instructions of the Company's Board of
Trustees and will comply with the requirements of the 1933 Act, the Securities
Exchange Act of 1934, the 1940 Act and all other applicable federal or state
law.
d. The Distributor will bear the cost of (i)
printing and distributing any Prospectus (including any supplement thereto) to
persons who are not shareholders, and (ii) preparing, printing and distributing
any literature, advertisement or material which is primarily intended to result
in the sale of shares; provided, however, that the Distributor shall not be
obligated to bear the expenses incurred by the Company in connection with the
preparation and printing of any amendment to any Registration Statement or
Prospectus necessary for the continued effective registration of the shares
under the 1933 Act and state securities laws and the distribution of any such
document to existing shareholders of the Company's Funds.
e. The Company shall have the right to suspend
the sale of shares at any time in response to conditions in the securities
markets or otherwise, and to suspend the redemption of shares of any Fund at
any time permitted by the 1940 Act or the rules and regulations of the
Commission ("Rules").
f. The Company reserves the right to reject any
order for shares but will not do so arbitrarily or without reasonable cause.
4. FORFEITURE OF SALES CHARGES. If any shares sold by
the Distributor under the terms of this Agreement are redeemed or repurchased
by the Fund or by the Distributor as agent or are tendered for redemption
within seven business days after the date of confirmation of the original
purchase of said shares, the Distributor shall forfeit the amount above the net
asset value received by it in respect of such shares, provided that the
portion, if any, of such amount re-allowed by the Distributor to broker-dealers
or other persons shall be repayable to the Company only to the extent recovered
by the Distributor from the broker-dealer or other person concerned. The
Distributor shall include in the form of agreement with such broker-dealers and
other persons a corresponding provision for the forfeiture by them of their
concession with respect to shares sold by them or their principals and redeemed
or repurchased by the Company or by the
- 3 -
<PAGE> 4
Distributor as agent (or tendered for redemption) within seven business days
after the date of confirmation of such initial purchases.
5. LIMITATIONS OF LIABILITY. The Distributor shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Company in connection with the matters to which this Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless disregard by it
of its obligations and duties under this Agreement.
6. PROPRIETARY AND CONFIDENTIAL INFORMATION. The
Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Company all records and
other information relative to the Company and its Funds 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 Company,
which approval shall not be unreasonably withheld and may not be withheld where
the 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 Company.
7. INDEMNIFICATION.
a. The Company represents and warrants to the
Distributor that the Registration Statement contains, and that the Prospectuses
at all times will contain, all statements required by the 1933 Act and the
Rules of the Commission, will in all material respects conform to the
applicable requirements of the 1933 Act and the Rules and will not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation or warranty in this Section 7 shall apply to statements or
omissions made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Distributor or either of the
Company's co-administrators expressly for use in the Registration Statement or
Prospectuses.
b. The Company on behalf of each Fund agrees
that each Fund will indemnify, defend and hold harmless the Distributor, its
several officers, and directors, and any person
- 4 -
<PAGE> 5
who controls the Distributor within the meaning of Section 15 of the 1933 Act,
from and against any losses, claims, damages or liabilities, joint or several,
to which the Distributor, its several officers, and directors, and any person
who controls the Distributor within the meaning of Section 15 of the 1933 Act,
may become subject under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectuses or in any application or other document executed by or on behalf
of the Company with respect to such Fund or are based upon information
furnished by or on behalf of the Company with respect to such Fund filed in any
state in order to qualify the shares under the securities or blue sky laws
thereof ("Blue Sky application") or arise out of, or are based upon, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Distributor, its several officers, and directors, and any
person who controls the Distributor within the meaning of Section 15 of the
1933 Act, for any legal or other expenses reasonably incurred by the
Distributor, its several officers, and directors, and any person who controls
the Distributor within the meaning of Section 15 of the 1933 Act, in
investigating, defending or preparing to defend any such action, proceeding or
claim; provided, however, that the Company shall not be liable in any case to
the extent that such loss, claim, damage or liability arises out of, or is
based upon, any untrue statement, alleged untrue statement, or omission or
alleged omission made in the Registration Statement, the Prospectus or any Blue
Sky application with respect to such Fund in reliance upon and in conformity
with written information furnished to the Company by or on behalf of the
Distributor or either of the Company's co-administrators specifically for
inclusion therein or arising out of the failure of the Distributor to deliver a
current Prospectus.
c. The Company on behalf of each Fund shall not
indemnify any person pursuant to this Section 7 unless the court or other body
before which the proceeding was brought has rendered a final decision on the
merits that such person was not liable by reason of his or her willful
misfeasance, bad faith or gross negligence in the performance of his or her
duties, or his or her reckless disregard of any obligations and duties, under
this Agreement ("disabling conduct") or, in the absence of such a decision, a
reasonable determination (based upon a review of the facts) that such person
was not liable by reason of disabling conduct has been made by the vote of a
majority of a quorum of the trustees of the Company who are neither "interested
parties"
- 5 -
<PAGE> 6
(as defined in the 1940 Act) nor parties to the proceeding, or by independent
legal counsel in a written opinion.
d. The Distributor will indemnify and hold
harmless the Company and each of its Funds and its several officers and
trustees, and any person who controls the Company within the meaning of Section
15 of the 1933 Act, from and against any losses, claims, damages or
liabilities, joint or several, to which any of them may become subject under
the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Prospectus or any Blue Sky
application, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Company or any of its several officers and trustees by or on
behalf of the Distributor or either of the Company's co-administrators
specifically for inclusion therein, and will reimburse the Company and its
several officers, trustees and such controlling persons for any legal or other
expenses reasonably incurred by any of them in investigating, defending or
preparing to defend any such action, proceeding or claim.
e. The obligations of each Fund under this
Section 7 shall be the several (and not the joint or joint and several)
obligation of each Fund.
8. DURATION AND TERMINATION. This Agreement shall
become effective upon its execution as of the date first written above and,
unless sooner terminated as provided herein, shall continue until October 3,
1994. Thereafter, if not terminated, this Agreement shall continue
automatically for successive terms of one year, provided that such continuance
is specifically approved at least annually (a) by a vote of a majority of those
members of the Company's Board of Trustees who are not parties to this
Agreement or "interested persons" of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the
Company's Board of Trustees or by vote of a "majority of the outstanding voting
securities" of the Company; provided, however, that this Agreement may be
terminated by the Company at any time, without the payment of any penalty, by
vote of a majority of the entire Board of Trustees or by a vote of a "majority
of the outstanding voting securities" of the Company on 60 days' written notice
to the Distributor, or by the Distributor at any time, without the payment of
any penalty, on
- 6 -
<PAGE> 7
90-days' written notice to the Company. This Agreement will automatically and
immediately terminate in the event of its "assignment." (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meanings as such terms
have in the 1940 Act.)
9. 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 an enforcement of
the change, waiver, discharge or termination is sought.
10. NOTICES. Notices of any kind to be given to the
Company hereunder by the Distributor shall be in writing and shall be duly
given if mailed or delivered to the Company at Bellevue Park Corporate Center,
Suite 152, 103 Bellevue Parkway, Wilmington, Delaware 19809, Attention: Mr.
Edward J. Roach, Vice President and Treasurer, with a copy to Morgan R. Jones,
Esq., Secretary, 1100 PNB Building, 1345 Chestnut Street, Philadelphia,
Pennsylvania 19107-3496, or at such other address or to such individual as
shall be so specified by the Company to the Distributor. Notices of any kind
to be given to the Distributor hereunder by the Company shall be in writing and
shall be duly given if mailed or delivered to Provident Distributors, Inc., 259
Radnor-Chester Road, Suite 120, Radnor, Pennsylvania 19087, Attention: Monroe
J. Haegele or at such other address or to such other individual as shall be so
specified by the Distributor to the Company.
11. MISCELLANEOUS.
a. 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.
b. The names "The PNC(R) Fund" and "Trustees of
The PNC(R) Fund" refer specifically to the trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated December 22, 1988, which is hereby referred to and a
copy of which is on file
- 7 -
<PAGE> 8
at the office of the State Secretary of the Commonwealth of Massachusetts and
at the principal office of the Company. The obligations of "The PNC(R) Fund"
entered into in the name or on behalf thereof by any of the Trustees, officers,
representatives or agents are not made individually, but in such capacities,
and are not binding upon any of the Trustees, shareholders, representatives or
agents of the Company personally, but bind only the Trust property (as defined
in the Declaration of Trust), and all persons dealing with any Fund or class of
shares of the Company must look solely to the Trust property belonging to such
Fund or class for the enforcement of any claims against the Company.
12. COUNTERPARTS. This Agreement may be executed in
counterparts, all of which together shall constitute one and the same
instrument.
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 PNC(R) FUND
By: /s/ Edward J. Roach
------------------------
Treasurer
PROVIDENT DISTRIBUTORS, INC.
By: /s/ Monroe Haegle
------------------------
Title:
- 8 -
<PAGE> 1
EXHIBIT (6)(b)
APPENDIX A
to the
DISTRIBUTION AGREEMENT
between
The PNC(R) Fund
and
Provident Distributors, Inc.
- ------------------------------------------------------------------------------
Money Market Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Municipal Money Market Portfolio (Institutional Shares, Service Shares and
Series A Investor Shares)
Government Money Market Portfolio (Institutional Shares, Service Shares and
Series A Investor Shares)
Ohio Municipal Money Market Portfolio (Institutional Shares, Service Shares and
Series A Investor Shares)
Pennsylvania Municipal Money Market Portfolio (Institutional Shares, Service
Shares and Series A Investor Shares)
North Carolina Municipal Money Market Portfolio (Institutional Shares, Service
Shares and Series A Investor Shares)
Managed Income Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Tax-Free Income Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Intermediate Government Portfolio (Institutional Shares, Service Shares, Series
A Investor Shares and Series B Investor Shares)
Ohio Tax-Free Income Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Pennsylvania Tax-Free Income Portfolio (Institutional Shares, Service Shares,
Series A Investor Shares and Series B Investor Shares)
Short-Term Bond Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Intermediate-Term Bond Portfolio (Institutional Shares, Service Shares, Series
A Investor Shares and Series B Investor Shares)
<PAGE> 2
Value Equity Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Growth Equity Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Index Equity Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Small Cap Value Equity Portfolio (Institutional Shares, Service Shares, Series
A Investor Shares and Series B Investor Shares)
International Equity Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor shares)
Balanced Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Small Cap Growth Equity Portfolio (Institutional Shares, Service Shares, Series
A Investor Shares and Series B Investor Shares)
Core Equity Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Government Income Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
International Emerging Markets Portfolio (Institutional Shares, Service Shares,
Series A Investor Shares and Series B Investor Shares)
International Fixed Income Portfolio (Institutional Shares, Service Shares,
Series A Investor Shares and Series B Investor Shares)
Virginia Municipal Money Market Portfolio (Institutional Shares, Service Shares
and Series A Investor Shares)
New Jersey Municipal Money Market Portfolio (Institutional Shares, Service
Shares and Series A Investor Shares)
Agreed to and accepted as of March 28, 1995
THE PNC(R) FUND
By:
------------------------
PROVIDENT DISTRIBUTORS, INC.
By:
---------------------------
<PAGE> 1
EXHIBIT 6(c)
The PNC (R) Fund
Amendment No. 2 to the Distribution Agreement
This Amendment dated as of 18th day of October, 1994, is
entered into between The PNC FUND, a Massachusetts business trust (the
"Company") and Provident Distributors, Inc. ("PDI"), a Delaware corporation
(the "Distributor").
WHEREAS, the Company and the Distributor have entered into a
Distribution Agreement dated as of January 31, 1994, and amended on September
23, 1994 (the "Distribution Agreement"), pursuant to which the Company
appointed the Distributor to act as distributor to the Company;
WHEREAS, the parties hereto desire to amend the Distribution
Agreement to restate the substance of Amendment No. 1 to the Distribution
Agreement and to clarify the payment of certain fees to the Distributor; and
WHEREAS, except to the extent amended hereby, the Distribution
Agreement shall remain unchanged and in full force and effect, and is hereby
ratified and confirmed in all respects as amended hereby.
NOW, THEREFORE, the parties hereby, intending to be legally
bound, hereby agree as follows:
1. Amendment No. 1 to the Distribution Agreement is hereby
superseded by this Agreement.
2. Paragraph (f) of Section 2 (relating to the delivery of
documents) is amended to read in its entirety as follows:
"(f) The Company's Distribution and Service Plan and
related Distribution and Servicing Agreement relating
to Series A Investor Class Shares and the Company's
Series B Distribution Agreement relating to the
Company's Series B Investor Class Shares."
3. The following paragraph is inserted into the Distribution
Agreement as paragraph 3A:
"3A. PAYMENTS RELATING TO DISTRIBUTION PLANS. Payments by the
Company relating to any distribution plan within the meaning of Rule
12b-1 under the 1940 Act (a "Plan") adopted by the Company's Board of
Trustees shall be payable to the Distributor or his assignees, all in
accordance with the terms and conditions of such Plan."
<PAGE> 2
4. The following paragraph is inserted into the Distribution
Agreement as paragraph 3B:
"3B. PAYMENTS OF SALES CHARGES. Any front-end sales charges
or deferred sales charges payable in connection with purchases of
Series A Investor Class Shares and Series B Investor Class Shares,
respectively, shall be payable to the Distributor or his assignees,
all in accordance with the Company's registration statement."
5. Section 8 of the Distribution Agreement is amended to read
in its entirety as follows:
"8. DURATION AND TERMINATION. This Agreement shall
become effective upon its execution as of the date first written above
and, unless sooner terminated as provided herein, shall continue until
March 31, 1995. Thereafter, if not terminated, this Agreement shall
continue automatically for successive terms of one year, provided that
such continuance is specifically approved at least annually (a) by a
vote of a majority of those members of the Company's Board of Trustees
who are not parties to this Agreement or "interested persons" of any
such party, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Company's Board of Trustees or
by vote of a "majority of the outstanding voting securities" of the
Company; provided, however, that this Agreement may be terminated by
the Company at any time, without the payment of any penalty, by vote
of a majority of the entire Board of Trustees or by a vote of a
"majority of the outstanding voting securities" of the Company on 60
days' written notice to the Distributor, or by the Distributor at any
time, without the payment of any penalty, on 90-days' written notice
to the Company. This Agreement will automatically and immediately
terminate in the event of its "assignment." (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meanings as
such terms have in the 1940 Act.)"
-2-
<PAGE> 3
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date and year first written above.
The PNC(R) Fund
By: /Edward J. Roach/
----------------------------
Name: Edward J. Roach
--------------------------
Title: Vice President
-------------------------
Provident Distributors, Inc.
By: /Monroe Haegele/
--------------------------
Name: Monroe Haegele
--------------------------
Title: Chief Executive Officer
-------------------------
-3-
<PAGE> 1
EXHIBIT 7
DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT
SPONSORED
BY
DRINKER BIDDLE & REATH
PHILADELPHIA, PENNSYLVANIA
[ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN ]
NAME OF PLAN OF ADOPTING EMPLOYER
[ MUNICIPAL FUND FOR TEMPORARY INVESTMENT ]
NAME OF ADOPTING EMPLOYER
(REV. 06/94)
(C)DRINKER BIDDLE & REATH 1995
<PAGE> 2
TABLE OF CONTENTS
PART I - PLAN
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Article I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Accrual Computation Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accrued Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Adjustment Factor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Administrative Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Adoption Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Affiliated Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 Appropriate Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.8 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Computation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Controlled Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 Defined Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14 Defined Contribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 Determination Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.18 Early Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 Earned Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.21 Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 Elective Deferral Account(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.23 Elective Deferral Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 Eligibility Computation Period(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.25 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 Employee Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.27 Employee Pension Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.28 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.29 Employer Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.30 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.31 Employer Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.32 Employment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.33 Entry Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.34 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.35 Excess Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.36 Family Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.37 Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.38 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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1.39 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.40 Hourly Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.41 Inactive Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.42 Insurance Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.43 Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.44 Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.45 Key Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.46 Leased Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.47 Limitation Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.48 Limitation Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.49 Matching Account(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.50 Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.51 Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.52 Non-Resident Alien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.53 Normal Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.54 Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.55 One-Year Break In Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.56 Owner-Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.57 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.58 Participant Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.59 Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.60 Permissive Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.61 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.62 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.63 Plan Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.64 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.65 Prior Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.66 Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.67 QVEC Account(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.68 Qualified Domestic Relations Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.69 Qualified Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.70 Qualified Nonelective Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.71 Qualified Voluntary Employee Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.72 Qualifying Employer Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.73 Reemployment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.74 Required Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.75 Rollover Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.76 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.77 Salaried Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.78 Self-Employed Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.79 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.80 Sponsoring Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.81 Spouse or Surviving Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.82 Taxable Wage Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.83 Taxable Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.84 Top-Heavy Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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1.85 Top-Heavy Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.86 Top-Heavy Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.87 Transfer Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.88 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.89 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.90 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.91 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.92 Union Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.93 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.94 Vested Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.95 Vesting Computation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.96 Welfare Benefit Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.97 Year of Service for Benefit Accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.98 Year of Service for Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1.99 Year of Service for Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Article II PARTICIPATION UNDER PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.1 Adoption of Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.2 Eligibility Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.3 Additional Rules Relating to Plan Participation. . . . . . . . . . . . . . . . . . . . . . . 23
2.4 Plans Covering Owner-Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Article III CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.1 Employer Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.2 Participant Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.3 Qualified Voluntary Employee Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.4 Elective Deferral Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.5 Matching Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.6 Contributions Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.7 Return of Employer Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.8 Limitations on Allocations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.9 Rollover Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.10 Transfers of Accounts from and to Other
Qualified Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.11 Top-Heavy Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Article IV ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.1 Separate Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Article V ALLOCATION OF CONTRIBUTIONS, EARNINGS AND FORFEITURES . . . . . . . . . . . . . . . . . . . . 50
5.1 Allocations of Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.2 Advice to Trustee re Allocations of Contributions and Direct Transfers. . . . . . . . . . . . 51
5.3 Valuations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.4 Allocation of Increases and Decreases. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.5 Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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Article VI INVESTMENT OF ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.1 Investment of Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.2 Insurance Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.3 Voting and Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Article VII BENEFITS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.1 Benefit Determination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.2 Designation of Beneficiary and Election with Respect to
Death Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.3 Normal Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.4 Early Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.5 Participation after Normal Retirement Date. . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.6 Separation from Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.7 Disability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.8 Death. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.9 Commencement of Payments; Deferral of Payments; Minimum
Distribution Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.10 Withdrawals during Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.11 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.12 QVEC Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.13 Incidental Benefit Rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.14 Joint and Survivor Annuity Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.15 Waiver of 30-day Notice Requirements for Certain Distributions . . . . . . . . . . . . . . . 84
Article VIII NONALIENATION OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.1 Benefits Not Alienable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.2 Special Provision with Respect to Qualified Domestic Relations
Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Article IX THE ADMINISTRATIVE COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.1 Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.2 Administrative Committee Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.3 Responsibilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.4 Contracting for Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
9.5 Expenses of Administrative Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Article X CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.1 Claims for Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.2 Appeals Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Article XI THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.1 Acceptance of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.2 Resignation of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.3 Removal of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.4 Appointment of Successor Trustee upon Occurrence of Certain Events . . . . . . . . . . . . . . 88
11.5 Successor Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
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11.6 Meetings and Actions of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.7 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.8 Trustee's Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.9 General Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.10 Payments to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.11 Investment of Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.12 Accounts, Reports and Governmental Filings. . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.13 Information to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.14 Benefit Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.15 Trust Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.16 Participants Exclusively to Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.17 Employment of Counsel, Agents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.18 Compromise of Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.19 Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.20 Execution of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.21 No Discrimination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.22 Decision of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.23 Funding Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Article XII THE INSURER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.1 Insurer's Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.2 Information to Insurer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.3 Benefit Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.4 Annuities Must be Nontransferable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.5 Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.6 Distribution of Insurance Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.7 Conflict with Insurance Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.8 Dividends or Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Article XIII THE INVESTMENT MANAGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.2 Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.3 Act in Interest of Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.4 Directions from Investment Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Article XIV FIDUCIARY RESPONSIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
14.1 Fiduciary Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
14.2 Allocation of Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
14.3 Exclusive Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
14.4 Transfer or Maintenance of Indicia of Ownership of Plan
Assets Outside United States Prohibited. . . . . . . . . . . . . . . . . . . . . . . . . . . 94
14.5 Liability of Fiduciary for Breach of Co-Fiduciary. . . . . . . . . . . . . . . . . . . . . . 94
14.6 Prohibited Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
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Article XV PLAN AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.2 Limitations upon Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.3 Rights of Trustee upon Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
15.4 Significant Reduction in Rate of Future Benefit Accruals. . . . . . . . . . . . . . . . . . . 98
Article XVI PLAN TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
16.1 Right to Discontinue Contributions and/or to Terminate Plan and Trust. . . . . . . . . . . . 99
16.2 Termination of Plan on Happening of Certain Events. . . . . . . . . . . . . . . . . . . . . . 99
16.3 Continuance of Trust after Complete Discontinuance of
Contributions to Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
16.4 Distribution of Trust Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
16.5 Distributees whose Whereabouts are Unknown. . . . . . . . . . . . . . . . . . . . . . . . . . 100
Article XVII SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLAN . . . . . . . . . . . . . . . . . . . 100
17.1 Successor to Employer under Plan and Trust. . . . . . . . . . . . . . . . . . . . . . . . . . 100
17.2 Merger or Consolidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Article XVIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.1 No Right to Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.2 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.3 Bonding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.4 Agent for Service of Legal Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.5 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.6 Unclaimed Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.7 Reports Furnished to Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
18.8 Reports Available to Participant and Beneficiaries. . . . . . . . . . . . . . . . . . . . . . 102
18.9 Reports upon Request. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
18.10 Controlled Group Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
18.11 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
18.12 Insurance and Indemnification for Liability. . . . . . . . . . . . . . . . . . . . . . . . . 103
18.13 No Retention of Interest in Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
18.14 Termination of Plan and Trust under Rule Against Perpetuities. . . . . . . . . . . . . . . . 103
18.15 Notice to Interested Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
18.16 Effective Date of Adoption of Plan and Trust Agreement. . . . . . . . . . . . . . . . . . . . 104
18.17 Restatement of Existing Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
18.18 Individual Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
18.19 Failure of Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Article XIX ADOPTION OF PLAN BY AFFILIATED EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . . . . . 104
19.1 Adoption of Plan and Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
19.2 Withdrawal from Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
19.3 Exclusive Purpose of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
19.4 Application of Withdrawal Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
19.5 Single Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
19.6 Adopting Employer Appointed Agent of Adopting Affiliated Employers . . . . . . . . . . . . . . 106
PART II - ADOPTION AGREEMENTS
PROFIT-SHARING (401(K)) PLAN (REGIONAL PROTOTYPE PLAN NUMBER 001)
ADOPTION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
MONEY PURCHASE PLAN (REGIONAL PROTOTYPE PLAN NUMBER 002) ADOPTION
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
</TABLE>
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PART I
DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT
ARTICLE I
DEFINITIONS
The following words and phrases, as used in the Plan and
Adoption Agreement, shall have the following meanings unless the context
clearly indicates otherwise:
1.1 ACCRUAL COMPUTATION PERIOD. "ACCRUAL COMPUTATION PERIOD"
shall mean the Plan Year except as otherwise elected in the applicable Adoption
Agreement.
1.2 ACCRUED BENEFIT. "ACCRUED BENEFIT" shall mean the amounts
credited to a Participant's Employer, Elective Deferral, Matching, Participant,
Rollover, Transfer and QVEC Accounts and other accounts (e.g., Qualified
Matching Contribution and Qualified Nonelective Contribution accounts)
including the proceeds of Insurance Contracts, if any, on the life of the
Participant.
1.3 ADJUSTMENT FACTOR. "ADJUSTMENT FACTOR" shall mean the
cost-of-living adjustment factor prescribed by the Secretary of the Treasury
under section 415(d) of the Code for years beginning after December 31, 1987,
as applied to such items and in such manner as the Secretary shall provide.
1.4 ADMINISTRATIVE COMMITTEE. "ADMINISTRATIVE COMMITTEE" shall
mean the committee appointed by the Employer to administer the Plan. The
name(s) of the member(s) of the Administrative Committee and his (their)
address(es) shall be indicated in the Adoption Agreement.
1.5 ADOPTION AGREEMENT. "ADOPTION AGREEMENT" shall mean the
document executed by the Employer and the Trustee under which the Employer has
elected to establish or continue a qualified retirement plan and trust under
the terms of this Plan and Trust Agreement. If the Employer desires to
establish a profit-sharing or a profit-sharing 401(k) plan, the Employer shall
adopt the Profit-Sharing (401(k)) Plan Adoption Agreement. If the Employer
desires to establish a money purchase plan, the Employer shall adopt the Money
Purchase Plan Adoption Agreement.
1.6 AFFILIATED EMPLOYER. "AFFILIATED EMPLOYER" shall mean the
Employer and any corporation which is a member of a controlled group of
corporations (as defined in section 414(b) of the Code) which includes the
Employer; any trade or business (whether or not incorporated) which is under
common control (as defined in section 414(c) of the Code) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in section 414(m) of the Code) which
includes the Employer; and any other entity required to be aggregated with the
Employer pursuant to regulations under section 414(o) of the Code.
1.7 APPROPRIATE FORM. "APPROPRIATE FORM" shall mean the form
prescribed or provided by the Administrative Committee for the particular
purpose.
(C) DRINKER BIDDLE & REATH 1995
<PAGE> 10
1.8 BENEFICIARY. "BENEFICIARY" shall mean the Surviving Spouse of
a Participant, but if there is no Surviving Spouse, or, if the Surviving Spouse
previously consented in a manner conforming to a qualified election as provided
in Article VII, then such other person or persons or legal entity as may be
designated by the Participant to receive benefits payable under the Plan after
the Participant's death, or the personal or legal representative of a deceased
Participant. Prior to August 23, 1984, "Beneficiary" shall mean such person or
persons or legal entity as may be designated by the Participant to receive
benefits payable under the Plan after the Participant's death, or the personal
or legal representative of a deceased Participant.
1.9 CODE. "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
1.10 COMPENSATION. "COMPENSATION" shall mean Limitation
Compensation as that term is defined in Section 1.47. For any Self-Employed
Person covered under the Plan, Compensation shall mean Earned Income.
Compensation shall include only that compensation which is actually paid to the
Participant during the determination period. Except as provided elsewhere in
the Plan, the determination period is the Accrual Computation Period elected by
the Employer in the Adoption Agreement. If no election is made, the
determination period is the Plan Year.
Notwithstanding the above, if elected by the Employer in the Adoption
Agreement, Compensation shall include any amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is not includible
in the gross income of the Employee under sections 125, 402(e)(3), 402(h)(1)(B)
or 403(b) of the Code.
(A) LIMITATION FOR PLAN YEARS BEGINNING BEFORE JANUARY 1,
1994. Effective for Plan Years beginning on or after January 1, 1989, and
before January 1, 1994, the annual compensation of each Participant taken
into account for determining all benefits provided under the Plan for any
plan year shall not exceed $200,000, as adjusted by the Adjustment Factor
except that the dollar increase in effect on January 1 of any calendar year
is effective for plan years beginning in such calendar year and the first
adjustment to the $200,000 limitation is effective on January 1, 1990. If
the period for determining compensation used in calculating an Employee's
allocation for a determination period is a short plan year (i.e., shorter
than 12 months) the annual compensation limit is an amount equal to the
otherwise applicable compensation limit multiplied by the fraction, the
numerator of which is the number of months in the short plan year, and the
denominator of which is 12.
If Compensation for any prior determination period is taken
into account in determining an Employee's allocations or benefits for the
current determination period, the compensation for such prior period is subject
to the applicable annual compensation limit in effect for that prior period.
For this purpose, for periods beginning before January 1, 1990, the applicable
annual compensation limit is $200,000.
(B) LIMITATION FOR PLAN YEARS BEGINNING ON OR AFTER
JANUARY 1, 1994. In addition to other applicable limitations set forth in
the Plan, and notwithstanding any other provisions of the Plan to the
contrary, for plan years beginning on or after January 1, 1994, the annual
compensation of each Participant taken into account for determining all
benefits provided under the Plan for any plan year shall not exceed
$150,000, as adjusted for increases in the cost-of-living in accordance with
section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect
for a calendar year applies to any determination period beginning in such
calendar year.
If a determination period consists of fewer than 12 months,
the annual compensation limit is an amount equal to the otherwise applicable
annual compensation limit multiplied by a fraction, the numerator of which is
the number of months in the short determination period, and the denominator of
which is 12.
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<PAGE> 11
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under section 401(a)(17) of the
Code shall mean the OBRA '93 annual compensation limit set forth in this
provision.
If compensation for any prior determination period is taken
into account in determining a Participant's allocations for the current Plan
Year, the compensation for such prior determination period is subject to
applicable annual compensation limit in effect for that prior determination
period. For this purpose, in determining allocations in plan years
beginning on or after January 1, 1989, the annual compensation limit in
effect for determination periods beginning before that date is $200,000. In
addition, in determining allocations in plan years beginning on or after
January 1, 1994, the annual compensation limit in effect for determination
periods beginning before that date is $150,000.
In determining the Compensation of a Participant for purposes of the
limitations of Section 1.10(A) and (B), the rules of section 414(q)(6) of the
Code shall apply, except in applying such rules, the term "family" shall
include only the spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the year. If, as
a result of the application of such rules, the adjusted annual compensation
limitation is exceeded, then (except for purposes of determining the portion of
Compensation up to the integration level if this Plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's Compensation as determined under this
Section 1.10 prior to the application of this limitation.
1.11 COMPUTATION PERIOD. "COMPUTATION PERIOD" shall mean any 12
consecutive month period.
1.12 CONTROLLED GROUP. "CONTROLLED GROUP" shall mean a group of
employers, of which the Employer is a member and which group constitutes:
(A) A controlled group of corporations (as defined in
section 414(b) of the Code);
(B) Trades or businesses (whether or not incorporated)
which are under common control (as defined in section 414(c) of the Code);
(C) Trades or businesses (whether or not incorporated)
which constitute an affiliated service group (as defined in section 414(m)
of the Code); or
(D) Any other entity required to be aggregated with the
Employer pursuant to section 414(o) of the Code and the Treasury regulations
thereunder.
Solely for the purpose of applying Section 3.8, the phrase "more than
50 percent" shall be substituted for the phrase "at least 80 percent" each
place it appears in section 1563(a)(1) of the Code.
If the Employer adopting the Plan is a member of a Controlled Group,
the Employer shall so indicate in the Adoption Agreement.
1.13 DEFINED BENEFIT PLAN. "DEFINED BENEFIT PLAN" shall mean any
Employee Pension Benefit Plan which is not a Defined Contribution Plan.
1.14 DEFINED CONTRIBUTION PLAN. "DEFINED CONTRIBUTION PLAN" shall
mean any Employee Pension Benefit Plan which provides for an individual account
for each Participant and for benefits based solely upon
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<PAGE> 12
the amount contributed to the Participant's account and any income, expenses,
gains and losses, and any forfeitures of accounts of other Participants which
may be allocated to such Participant's account.
1.15 DETERMINATION DATE. "DETERMINATION DATE" shall mean, with
respect to any Employee Pension Benefit Plan, except as otherwise provided in
Treasury regulations, the last day of the preceding plan year or, in the case
of the first plan year of any plan, the last day of such plan year.
1.16 DETERMINATION PERIOD. "DETERMINATION PERIOD" shall mean the
Plan Year containing the Determination Date and the four preceding Plan Years.
1.17 DISABILITY. "DISABILITY" shall mean the inability to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or to be
of long continued or indefinite duration. The permanence and degree of such
impairment shall be supported by medical evidence satisfactory to the
Administrative Committee. If elected by the Employer in the Adoption
Agreement, nonforfeitable contributions shall be made to the Plan on behalf of
each disabled Participant who is a Non-Highly Compensated Employee.
1.18 EARLY RETIREMENT DATE. "EARLY RETIREMENT DATE" shall mean the
date, if any, specified in the Adoption Agreement.
1.19 EARNED INCOME. "EARNED INCOME" shall mean the net earnings of
a Self-Employed Person from self-employment in the trade or business with
respect to which the Plan is established, for which personal services of the
Self-Employed Person are a material income-producing factor. Net earnings will
be determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings shall be reduced by
contributions by the Employer to a qualified plan to the extent deductible
under section 404 of the Code.
Net earnings shall be determined with regard to the deduction allowed
to the taxpayer by section 164(f) of the Code for Taxable Years beginning after
December 31, 1989.
1.20 EFFECTIVE DATE. "EFFECTIVE DATE" shall mean the date on which
the Employer's Plan becomes effective, as indicated in the Adoption Agreement.
1.21 ELECTIVE DEFERRALS. "ELECTIVE DEFERRALS" shall mean
contributions made to the Plan during the Plan Year by the Employer, at the
election of the Participant, in lieu of cash compensation and shall include
contributions made pursuant to a salary reduction agreement or other deferral
mechanism. Moreover, with respect to any taxable year of a Participant, such
Participant's Elective Deferral is the sum of all employer contributions made
on behalf of such Participant pursuant to an election to defer under any
qualified cash or deferred arrangement as described in section 401(k) of the
Code, any simplified employee pension cash or deferred arrangement as described
in section 402(h)(l)(B) of the Code, any eligible deferred compensation plan
under section 457 of the Code, any plan as described under section 501(c)(18)
of the Code, and any employer contributions made on the behalf of a Participant
for the purchase of an annuity contract under section 403(b) of the Code
pursuant to a salary reduction agreement. Elective Deferrals shall not include
any deferrals properly distributed as excess annual additions.
1.22 ELECTIVE DEFERRAL ACCOUNT(S). "ELECTIVE DEFERRAL ACCOUNT(S)"
shall mean the account established by the Administrative Committee with the
Trustee for each Participant, which account shall be invested as provided in
Article VI on behalf of the Participant for whom such Elective Deferral Account
has
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<PAGE> 13
been established, and to which Elective Deferral Contributions on behalf of
such Participant, and the earnings and losses thereon, shall be allocated.
1.23 ELECTIVE DEFERRAL CONTRIBUTIONS. "ELECTIVE DEFERRAL
CONTRIBUTIONS" shall mean Employer contributions through salary reduction under
Section 3.4.
1.24 ELIGIBILITY COMPUTATION PERIOD(S). "ELIGIBILITY COMPUTATION
PERIOD(S)" shall mean the Computation Period(s) determined under (A) or (B)
below.
(A) NORMAL RULE. Unless the Adoption Agreement provides
otherwise, the Eligibility Computation Period(s) shall be the Computation
Period(s) commencing on an Employee's Employment Commencement Date and the
anniversaries of the Employee's Employment Commencement Date.
(B) ALTERNATE RULE. If the Adoption Agreement so
provides, the initial Eligibility Computation Period shall be the
Computation Period commencing on an Employee's Employment Commencement Date
and the succeeding Eligibility Computation Period(s) shall commence with the
first Plan Year which begins prior to the first anniversary of the
Employee's Employment Commencement Date regardless of whether the Employee
is entitled to be credited with the number of Hours of Service required by
the Adoption Agreement (not to exceed 1,000 Hours of Service) during the
initial Eligibility Computation Period. An Employee who is credited with
the number of Hours of Service required by the Adoption Agreement (not to
exceed 1,000 Hours of Service) in both the initial Eligibility Computation
Period and the first Plan Year which commences prior to the first
anniversary of the Employee's initial Eligibility Computation Period shall
be credited with two Years of Service for Eligibility for purposes of
participation in the Plan.
Years of Service for Eligibility and One-Year Breaks In Service for
eligibility shall be measured by the same Eligibility Computation Periods.
This provision is not applicable if the elapsed time method is selected in
Section A.2.2(B)(2) of the Adoption Agreement.
1.25 EMPLOYEE. "EMPLOYEE" shall mean any employee of the Employer
or of any other employer required to be aggregated with such Employer under
sections 414(b), (c), (m) or (o) of the Code and shall also include any Leased
Employee deemed to be an employee of any employer described in the preceding
clause as provided in sections 414(n) or (o) of the Code.
1.26 EMPLOYEE CONTRIBUTIONS. "EMPLOYEE CONTRIBUTIONS" shall mean
contributions to the Plan made by a Participant during the Plan Year.
1.27 EMPLOYEE PENSION BENEFIT PLAN. "EMPLOYEE PENSION BENEFIT
PLAN" shall mean any plan described in section 415(k)(1) of the Code.
1.28 EMPLOYER. "EMPLOYER" shall mean the adopting individual(s) or
business entity(ies). For purposes of applying the provisions of sections 401,
410, 411, 415 and 416 of the Code, all employees of a Controlled Group shall be
treated as employed by a single employer.
1.29 EMPLOYER ACCOUNT. "EMPLOYER ACCOUNT" shall mean the account
established by the Administrative Committee with the Trustee for each
Participant, which shall be invested as provided in Article VI on behalf of the
Participant for whom such Employer Account has been established, and to which
the Employer Contributions on behalf of such Participant and the earnings and
losses thereon shall be allocated.
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<PAGE> 14
1.30 EMPLOYER CONTRIBUTIONS. "EMPLOYER CONTRIBUTIONS" shall mean
Employer contributions under Section 3.1 of the Plan.
1.31 EMPLOYER SECURITY. "EMPLOYER SECURITY" shall mean an employer
security (as such term is defined in section 407(d)(1) of ERISA) issued by an
Employer or other Controlled Group member.
1.32 EMPLOYMENT COMMENCEMENT DATE. "EMPLOYMENT COMMENCEMENT DATE"
shall mean the date on which an Employee first performs an hour of service.
For purposes of this Section 1.32, hour of service shall mean each hour for
which an Employee is paid or is entitled to payment for the performance of
services for the Employer.
1.33 ENTRY DATE. "ENTRY DATE" shall mean the date designated in
the Adoption Agreement as the date on which an Employee shall become an active
Participant in the Plan.
1.34 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
1.35 EXCESS COMPENSATION. "EXCESS COMPENSATION" shall mean
Compensation in excess of the lesser of:
(A) The Taxable Wage Base; or
(B) The dollar amount set forth in the Adoption Agreement.
1.36 FAMILY MEMBER. "FAMILY MEMBER" shall mean an individual
described in section 414(q)(6)(B) of the Code.
1.37 FIDUCIARY. "FIDUCIARY" shall mean any person who:
(A) Exercises any discretionary authority or
discretionary control respecting management of the Plan or exercises any
authority or control respecting management or disposition of its assets;
(B) Renders investment advice for a fee or other
compensation, direct or indirect, with respect to any moneys or other
property of the Plan or has authority or responsibility to do so; or
(C) Has any discretionary authority or discretionary
responsibility in administering the Plan.
1.38 HIGHLY COMPENSATED EMPLOYEE. "HIGHLY COMPENSATED EMPLOYEE"
shall mean highly compensated active Employees and highly compensated former
Employees.
(A) ACTIVE EMPLOYEES.
(1) A highly compensated active Employee includes
any Employee who performs services for the Employer during the
determination year and who, during the look-back year:
(a) Received Compensation from the
Employer in excess of $75,000 (as adjusted by the Adjustment
Factor);
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<PAGE> 15
(b) Received Compensation from the
Employer in excess of $50,000 (as adjusted by the Adjustment
Factor) and was a member of the top-paid group for such year;
or
(c) Was an officer of the Employer and
received Compensation during such year that is greater than 50
percent of the dollar limitation in effect under section
415(b)(l)(A) of the Code. If elected by the Employer in the
Adoption Agreement, Section 1.38(A)(1)(a) shall be modified by
substituting $50,000 for $75,000 and Section 1.38(A)(1)(b)
shall be disregarded. This simplified definition of Highly
Compensated Employee shall apply only to Employers that
maintain significant business activities (and employ
Employees) in at least two significantly separate geographic
areas.
(2) A highly compensated active Employee also
includes any Employee who would be described in Section 1.38(A)(1)(a),
(b) or (c), if the term "determination year" were substituted for the
term "look-back year" and the Employee was one of the 100 Employees
who received the most Compensation from the Employer during the
determination year.
(3) A highly compensated active Employee also
includes any Employee who is a five-percent owner at any time during
the look-back year or determination year.
If elected by the Employer in the Adoption Agreement, Section
1.38(A)(1)(a) and (b) shall be modified by substituting $50,000 for $75,000
in Section 1.38(A)(1)(a) and by disregarding Section 1.38(A)(1)(b). This
simplified definition of Highly Compensated Employee shall apply only to
employers that maintain significant business activities (and employ
employees) in at least two significantly separate geographic areas.
If no officer has satisfied the Compensation requirement of
Section 1.38(A)(1)(c) above during either a determination year or look-back
year, the highest paid officer for such year shall be treated as a highly
compensated Employee.
For purposes of this Section 1.38, the determination year
shall be the Plan Year and the look-back year shall be the 12-month period
immediately preceding the determination year. However, the Employer may
elect, in the applicable Adoption Agreement, to make the look-back year
calculation for a determination year on the basis of the calendar year
ending with or within the applicable determination year (or, in the case of
a determination year that is shorter than 12 months, the calendar year
ending with or within the 12-month period ending with the end of the
applicable determination year). In such case, the Employer must make the
determination year calculation for the determination year on the basis of
the period (if any) by which the applicable determination year extends
beyond such calendar year (i.e., the lag period). If the Employer elects to
make the calendar year calculation election with respect to one plan, entity
or arrangement, such election must apply to all plans, entities and
arrangements of the Employer and such election must be provided for in the
plan. This election and the calculation are subject to the requirements and
provisions of Treas. Reg. Section 1.414(q)-1T Q- and A-14, as modified by
Proposed Treas. Reg. Section 1.414(q)-1T.
(B) FORMER EMPLOYEES. A highly compensated former
Employee includes any Employee who separated from service (or was deemed to
have separated) prior to the determination year, performs no service for the
Employer during the determination year, and was a highly compensated active
Employee for either the separation year or any determination year ending on
or after the Employee's 55th birthday.
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<PAGE> 16
If an Employee is, during a determination year or look-back
year, a Family Member of either a five-percent owner who is an active or
former Employee or a highly compensated Employee who is one of the ten most
highly compensated Employees ranked on the basis of Compensation paid by the
Employer during such year, then the Family Member and the five-percent owner
or top-ten highly compensated Employee shall be aggregated. In such case,
the Family Member and five-percent owner or top-ten highly compensated
Employee shall be treated as a single Employee receiving Compensation and
Plan contributions or benefits equal to the sum of such Compensation and
contributions or benefits of the Family Member and five-percent owner or
top-ten highly compensated Employee.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of Employees in the
top-paid group, the top 100 Employees, the number of Employees treated as
officers and the Compensation that is considered, shall be made in
accordance with section 414(q) of the Code and the Treasury regulations
thereunder.
1.39 HOUR OF SERVICE. "HOUR OF SERVICE" shall mean an hour of
service determined as follows:
(A) An "Hour of Service" shall mean:
(1) Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the Employer;
(2) Each hour for which an Employee is paid, or
entitled to payment, by the Employer on account of a period of time
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty,
military duty or leave of absence; and
(3) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer,
provided that the same Hours of Service shall not be credited under
Section 1.39(A)(1) or Section 1.39(A)(2) and under Section 1.39(A)(3).
(B) Effective for Plan Years beginning after December 31,
1984, solely for purposes of determining whether a One-Year Break In
Service, as defined in Section 1.55, for participation and vesting purposes
has occurred in a Computation Period, an Employee who is absent from work
for maternity or paternity reasons shall receive credit for the Hours of
Service which would otherwise have been credited to such Employee but for
such absence, or in any case in which such Hours of Service cannot be
determined, eight Hours of Service per day of such absence. For purposes of
this Section 1.39(B), an absence from work for maternity or paternity
reasons means an absence:
(1) By reason of the pregnancy of the Employee;
(2) By reason of the birth of a child of the
Employee;
(3) By reason of the placement of a child with
the Employee in connection with the adoption of such child by such
Employee; or
(4) For purposes of caring for such child for a
period beginning immediately following such birth or placement.
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<PAGE> 17
The Hours of Service credited under this Section 1.39(B) shall be credited
(i) in the Computation Period in which the absence begins if the crediting
is necessary to prevent a One-Year Break In Service in that Computation
Period, or (ii) in all other cases, in the following Computation Period.
(C) Notwithstanding Section 1.39(A)(2),
(1) No more than 501 Hours of Service shall be
credited under Section 1.39(A)(2) to an Employee on account of any
single continuous period during which the Employee performs no duties
(whether or not such period occurs in a single Computation Period);
(2) Hours of Service shall not be credited under
Section 1.39(A)(2) to an Employee for payments made or due under a
plan maintained solely for the purpose of complying with any
applicable workers' compensation, unemployment compensation or
disability insurance laws;
(3) Hours of Service shall not be credited under
Section 1.39(A)(2) to an Employee for any payment which solely
reimburses him for medical or medically related expenses he has
incurred; and
(4) Hours of Service shall not be credited under
Section 1.39(A)(2) to an Employee for any payments made or due to him
under this Plan or any other pension or profit-sharing plan maintained
by the Employer.
(D) In the case of a payment which is made, or due, on
account of a period during which an Employee performs no duties, and which
results in the crediting of Hours of Service under Section 1.39(A)(2), or in
the case of an award or agreement for back pay, to the extent that such
award or agreement is made with respect to a period described in Section
1.39(A)(2), the number of Hours of Service to be credited shall be
determined in accordance with 29 CFR Section 2530.200b-2(b).
(E) Hours of Service described in Section 1.39(A)(1)
shall be credited to the Employee for the Computation Period in which the
duties are performed. Hours of Service under Section 1.39(A)(2) shall be
calculated and credited to service Computation Periods in accordance with 29
CFR Section 2530.200b-2 which is incorporated herein by this reference.
Hours of Service under Section 1.39(A)(3) shall be credited to the Employee
for the Computation Period(s) to which the award or agreement pertains
rather than to the Computation Period in which the award, agreement or
payment is made.
(F) This Section 1.39 shall not be construed so as to
alter, amend, modify, invalidate, impair or supersede any law of the United
States or any rule or regulation issued under any such law. The nature and
extent of credit for Hours of Service recognized under this Section 1.39
shall be determined under such law.
(G) In the case of an Employee who is on leave of absence
for service on active duty in the Armed Forces of the United States, such
Employee shall receive upon return to the service of the Employer, in
addition to credit for Hours of Service to which such Employee is entitled
under this Section 1.39, such other credit as may be prescribed by Federal
laws relating to military service and veterans' reemployment rights.
(H) Hours of Service shall be credited for employment
with other members of an affiliated service group (under section 414(m) of
the Code) and of other members of a Controlled Group of which the
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<PAGE> 18
adopting Employer is a member. Hours of Service shall also be credited for
any individual required under section 414(n) of the Code to be considered an
Employee of any employer aggregated under sections 414(b), 414(c), or 414(m)
of the Code or section 414(o) of the Code and the Treasury regulations
thereunder.
(I) Except as otherwise provided in Section 1.39(B), the
number of Hours of Service to be credited to an Employee in a Computation
Period shall be determined in the following manner:
(1) In the case of an Employee for whom the
Employer maintains records of his hours worked and hours for which
payment is made or due, the number of Hours of Service to be credited
to such Employee in a Computation Period shall be determined from such
records.
(2) In the case of an Employee for whom the
Employer does not maintain records of his hours worked and hours for
which payment is made or due, the number of Hours of Service to be
credited to such Employee in a Computation Period shall be determined
on the basis of periods of employment which shall be the payroll
periods of the Employer applicable to such Employee. An Employee
shall be credited with a number of Hours of Service, determined in
accordance with the following table, for each of his payroll periods
in which he actually has at least one Hour of Service:
<TABLE>
<CAPTION>
PAYROLL PERIOD HOURS OF SERVICE CREDITED
-------------- -------------------------
<S> <C>
Daily 10
Weekly 45
Semi-monthly 95
Monthly 190
</TABLE>
1.40 HOURLY EMPLOYEE. "HOURLY EMPLOYEE" shall mean any Employee
who is compensated by the Employer on an hourly-rated basis.
1.41 INACTIVE PARTICIPANT. "INACTIVE PARTICIPANT" shall mean any
Employee or former Employee who has ceased to be a Participant and on whose
behalf an account is maintained under the Plan.
1.42 INSURANCE CONTRACTS. "INSURANCE CONTRACTS" shall mean fixed
or variable annuities, endowments and any other form or type of life insurance
contract or combination thereof issued by an Insurer. Each Insurance Contract
shall be held and owned by the Trustee in accordance with the terms of the
Plan.
1.43 INSURER. "INSURER" shall mean any life insurance company
which is licensed to do business in the State where the Employer's principal
office is located.
1.44 INVESTMENT MANAGER. "INVESTMENT MANAGER" shall mean the
investment manager, if any, appointed by the Employer to manage and invest all
or any portion of the assets of the Plan. Such Investment Manager shall:
(A) Have the power to manage, acquire or dispose of any
Plan assets committed to it;
(B) Be registered as an investment adviser under the
Investment Advisers Act of 1940; and
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<PAGE> 19
(C) Have acknowledged in writing that it is a Fiduciary
with respect to the Plan and that it is bonded as required by ERISA.
The name(s) and address(es) of any Investment Manager(s) shall
be indicated in the Adoption Agreement.
1.45 KEY EMPLOYEE. "KEY EMPLOYEE" shall mean any Employee or
former Employee of the Employer who, at any time during the Determination
Period, is:
(A) An officer of the Employer having an annual
compensation which exceeds 50 percent of the dollar limitation under section
415(b)(1)(A) of the Code;
(B) An owner (or considered an owner under section 318 of
the Code) of one of the ten largest interests in the Employer if such
individual's compensation from the Employer exceeds 100 percent of the
dollar limitation under section 415(c)(1)(A) of the Code;
(C) A five-percent owner of the Employer; or
(D) A one-percent owner of the Employer having annual
compensation from the Employer of more than $150,000.
For the purposes of this Section 1.45, Key Employees shall
also include their beneficiaries.
Compensation means compensation as defined in Section A.1.47
of the Adoption Agreement, but including amounts contributed by the Employer
pursuant to a salary reduction arrangement which are excludable from the
Employee's gross income under sections 125, 402(e)(3), 402(h)(1)(B) or
403(b) of the Code.
For purposes of Section 1.45(A), no more than 50 Employees
(or, if less, the greater of three or ten percent of the Employees) shall be
treated as officers.
For purposes of Section 1.45(B), if two Employees have the
same interest in the Employer, the Employee having the greater amount of
compensation from the Employer shall be treated as having the larger
interest.
The determination of who is a Key Employee shall be made in
accordance with section 416(i)(l) of the Code and the Treasury regulations
thereunder.
1.46 LEASED EMPLOYEE. "LEASED EMPLOYEE" shall mean any person
(other than an employee of the recipient) who pursuant to an agreement between
the recipient and any other person ("leasing organization") has performed
services for the recipient (or for the recipient and related persons determined
in accordance with section 414(n)(6) of the Code) on a substantially full-time
basis for a period of at least one year, provided such services are of a type
historically performed by employees in the business field of the recipient
employer. Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer.
A Leased Employee shall not be considered an employee of the recipient
if:
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<PAGE> 20
(A) Such employee is covered by a money purchase pension plan
providing: (1) a nonintegrated employer contribution rate of at least ten
percent of compensation, as defined in section 415(c)(3) of the Code, but
including amounts contributed pursuant to a salary reduction agreement which
are excludable from the employee's gross income under section 125, section
402(e)(3), section 402(h)(1)(B) or section 403(b) of the Code, (2) immediate
participation, and (3) full and immediate vesting; and
(B) Leased Employees do not constitute more than 20 percent
of the recipient's nonhighly compensated workforce.
1.47 LIMITATION COMPENSATION. "LIMITATION COMPENSATION" shall mean
one of the following, as elected by the Employer in the Adoption Agreement:
(A) INFORMATION REQUIRED TO BE REPORTED UNDER SECTIONS 6041,
6051, AND 6052 OF THE CODE (WAGES, TIPS AND OTHER COMPENSATION AS REPORTED
ON FORM W-2). Limitation Compensation shall mean wages within the meaning
of section 3401(a) of the Code and all other payments of compensation to an
Employee by the Employer (in the course of the Employer's trade or business)
for which the Employer is required to furnish the Employee a written
statement under sections 6041(d), 6051(a)(3), and 6052 of the Code.
Limitation Compensation must be determined without regard to any rules under
section 3401(a) of the Code that limit the remuneration included in wages
based on the nature or location of the employment or the services performed
(such as the exception for agricultural labor in section 3401(a)(2) of the
Code).
(B) SECTION 3401(A) WAGES. Limitation Compensation shall
mean wages as defined in section 3401(a) of the Code for the purposes of
income tax withholding at the source but determined without regard to any
rules that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception
for agricultural labor in section 3401(a)(2) of the Code).
(C) 415 SAFE-HARBOR COMPENSATION. Limitation Compensation
shall mean wages, salaries, fees for professional services and other
amounts received (without regard to whether or not an amount is paid in
cash) for personal services actually rendered in the course of employment
with the Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses, fringe benefits
and reimbursements or other expense allowances under a nonaccountable plan
(as described in Treas. Reg. Section 1.62-2(c)) and excluding the
following:
(1) Employer contributions to a deferred
compensation plan which are not includible in the Employee's gross
income for the taxable year in which contributed or Employer
contributions made on behalf of the Employee to a simplified employee
pension plan to the extent such contributions are deductible by the
Employee or any distributions from a deferred compensation plan;
(2) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property) held
by the Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock option;
and
(4) Other amounts which receive special tax
benefits, or Employer contributions (whether or not under a salary
reduction agreement) toward the purchase of an annuity contract
described
-12-
<PAGE> 21
in section 403(b) of the Code (whether or not the contributions are
actually excludable from the gross income of the Employee).
For any Self-Employed Person, individual compensation shall mean
Earned Income.
Notwithstanding the above, Limitation Compensation for a Participant
in a Defined Contribution Plan who is permanently and totally disabled (as
defined in section 22(e)(3) of the Code) is the Limitation Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Limitation Compensation paid immediately before
becoming permanently and totally disabled; such imputed Limitation Compensation
for the disabled Participant may be taken into account only if the Participant
is not a Highly Compensated Employee and contributions made on behalf of such
Participant are nonforfeitable when made.
For purposes of this Section 1.47, Limitation Compensation shall only
include compensation actually paid or made available during the applicable
Limitation Year. Notwithstanding the preceding sentence, an Employer may
include in Limitation Compensation amounts earned but not paid in a Limitation
Year because of the timing of pay periods and pay days if these amounts are
paid during the first few weeks of the next Limitation Year, the amounts are
included on a uniform and consistent basis with respect to all similarly
situated Participants, and no compensation is included in more than one
limitation period.
1.48 LIMITATION YEAR. "LIMITATION YEAR" shall mean the calendar
year unless another Computation Period is designated pursuant to a written
resolution adopted by the Employer.
1.49 MATCHING ACCOUNT(S). "MATCHING ACCOUNT(S)" shall mean the
account established by the Administrative Committee with the Trustee for each
Participant, which account shall be invested as provided in Article VI on
behalf of the Participant for whom such Matching Account has been established
and to which Matching Contributions on behalf of such Participant and the
earnings and losses thereon shall be allocated.
1.50 MATCHING CONTRIBUTION. "MATCHING CONTRIBUTION" shall mean any
contribution to the Plan made by the Employer for the Plan Year and allocated
to a Participant's Matching Account by reason of the Participant's Participant
Contributions or other Employee Contributions and/or by reason of the
Participant's Elective Deferral Contributions.
1.51 NON-HIGHLY COMPENSATED EMPLOYEE. "NON-HIGHLY COMPENSATED
EMPLOYEE" shall mean an Employee of the Employer who is neither a Highly
Compensated Employee nor a Family Member.
1.52 NON-RESIDENT ALIEN. "NON-RESIDENT ALIEN" shall mean any
non-resident alien (within the meaning of section 7701(b)(1)(B) of the Code)
who receives no earned income (within the meaning of section 911(d)(2) of the
Code), which constitutes United States source income (within the meaning of
section 861(a)(3) of the Code).
1.53 NORMAL RETIREMENT AGE. "NORMAL RETIREMENT AGE" shall mean the
age (not less than age 62 nor more than age 65) and/or time specified in the
Adoption Agreement.
1.54 NORMAL RETIREMENT DATE. "NORMAL RETIREMENT DATE" shall mean
the Valuation Date coincident with, or immediately following, the date on which
a Participant attains his Normal Retirement Age.
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<PAGE> 22
1.55 ONE-YEAR BREAK IN SERVICE. "ONE-YEAR BREAK IN SERVICE" shall
mean a one-year break in service computed under the regular method or the
elapsed time method, as defined below, based on the election made in the
Adoption Agreement.
(A) REGULAR METHOD. A One-Year Break In Service shall
mean a Computation Period during which the Employee has not completed more
than the number of Hours of Service (not to exceed 500 Hours of Service)
indicated in the Adoption Agreement.
(B) ELAPSED TIME METHOD. A One-Year Break In Service
shall mean a one-year period of severance in which an Employee does not have
one Hour of Service.
(1) GENERAL RULES. For purposes of determining
an Employee's initial or continued eligibility to participate in the
Plan or the nonforfeitable interest in the Participant's account
balance derived from Employer contributions (except for "Periods of
Service" (as defined in Section 1.97(B)(4)) which may be disregarded
on account of the "rule of parity" described in Section 2.3 and
Section A.7.6(B) of the Adoption Agreement), an Employee shall receive
credit for the aggregate of all time period(s) commencing with the
Employee's Employment or Reemployment Commencement Date and ending on
the date a break in service begins. An Employee shall also receive
credit for any "Period of Severance" (as defined in Section
1.97(B)(6)) of less than 12 consecutive months. Fractional periods of
a year shall be expressed in terms of days.
Each Employee shall share in Employer contributions
for the period beginning on the date the Employee commences
participation under the Plan and ending on the date on which such
Employee severs employment with the Employer or is no longer a member
of an eligible class of Employees.
If the Employer is a member of an affiliated service group
(under section 414(m) of the Code), a controlled group of corporations
(under section 414(b) of the Code), a group of trades or businesses
under common control (under section 414(c)of the Code), or any other
entity required to be aggregated with the Employer pursuant to section
414(o) of the Code, service shall be credited for any employment for
any period of time for any other member of such group. Service shall
also be credited for any individual required under section 414(n) of
the Code or section 414(o) of the Code to be considered an Employee of
any Employer aggregated under section 414(b), (c), or (m) of the Code.
For purposes of this Section 1.55(B), a One-Year
Break In Service occurs if:
(a) An Employee severs service and does
not return within 12 months from the date of severance (e.g.,
the date on which he quits, is discharged or retires); or
(b) An Employee is absent from service
(e.g., by reason of Disability (except as otherwise provided
in the Plan), vacation, or leave of absence) and severs
employment during such absence (e.g., he quits, is discharged
or retires) and does not return to service on or before the
first anniversary of the date on which the Employee was first
absent.
(2) EXCEPTION FOR MATERNITY OR PATERNITY LEAVE.
In the case of an individual who is absent from work for maternity or
paternity reasons, the 12-consecutive month period beginning on the
first anniversary of the first date of such absence shall not
constitute a One-Year Break In Service.
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<PAGE> 23
For purposes of this Section 1.55(B)(2), an absence from work for
maternity or paternity reasons means an absence:
(a) By reason of the pregnancy of an
individual;
(b) By reason of the birth of a child of
the individual;
(c) By reason of the placement of a
child with the individual in connection with the adoption of
such child by such individual; or
(d) For purposes of caring for such
child for a period beginning immediately following such birth
or placement.
In the case of a leave of absence due to service in the Armed Forces
or the United States, the Employee must return to active employment with the
Employer within the period prescribed under the reemployment provisions of the
Title 38, Chapter 43 of the United States Code. Any leave of absence
authorized by the Employer shall be granted under uniform rules so that all
Participants under similar circumstances shall be treated alike.
1.56 OWNER-EMPLOYEE. "OWNER-EMPLOYEE" shall mean a Self-Employed
Person who is a sole proprietor, or who is a partner owning more than ten
percent of either the capital or profits interest of the partnership.
1.57 PARTICIPANT. "PARTICIPANT" shall mean any Employee who, on
the first applicable Entry Date, has met the requirements for participation in
the Plan as provided in Article II.
1.58 PARTICIPANT ACCOUNT. "PARTICIPANT ACCOUNT" shall mean the
account established by the Administrative Committee with the Trustee for each
Participant, which shall be invested as provided in Article VI on behalf of the
Participant for whom such Participant Account has been established, and to
which the Participant Contributions and the earnings or losses thereon shall be
allocated.
1.59 PARTICIPANT CONTRIBUTIONS. "PARTICIPANT CONTRIBUTIONS" shall
mean Participant contributions under Section 3.2.
1.60 PERMISSIVE AGGREGATION GROUP. "PERMISSIVE AGGREGATION GROUP"
shall mean the Required Aggregation Group of plans plus any other plan or plans
of the Employer which, when considered as a group with the Required Aggregation
Group, would continue to satisfy the requirements of sections 401(a)(4) and 410
of the Code.
1.61 PLAN. "PLAN" shall mean the Employer's Defined Contribution
Plan and Trust Agreement as set forth in this document and in the applicable
Adoption Agreement, and as it may be amended from time to time. As adopted by
the Employer, the Plan shall be a profit-sharing plan, a profit-sharing 401(k)
plan or a money purchase plan, as indicated in the applicable Adoption
Agreement.
1.62 PLAN ADMINISTRATOR. "PLAN ADMINISTRATOR" shall mean the
Administrative Committee.
1.63 PLAN SPONSOR. "PLAN SPONSOR" shall mean the sponsor of the
Plan as designated in the Adoption Agreement.
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<PAGE> 24
1.64 PLAN YEAR. "PLAN YEAR" shall mean the Computation Period
indicated in the Adoption Agreement. Plan Year shall also include any such
period completed before the Effective Date of the Plan.
1.65 PRIOR PLAN. "PRIOR PLAN" shall mean a prior qualified plan of
the Employer which is amended and restated into the Plan under the Adoption
Agreement applicable to such Employer.
1.66 PROFITS. "PROFITS" shall mean, in the case of a for-profit
Employer, the earnings and profits of the Employer for the Taxable Year but
before provision for income taxes (Federal, State and local) and before
deduction of Employer contributions hereunder or under any other pension or
profit-sharing plan of the Employer and/or accumulated earnings and profits as
computed by the Employer in accordance with generally accepted accounting
principles. Profits shall mean, in the case of a not-for-profit Employer, the
excess of such Employer's receipts over expenditures, whether such excess
results from the performance of such Employer's functions for which it is
recognized as exempt from Federal income tax, or from investments or other
business activity.
1.67 QVEC ACCOUNT(S). "QVEC ACCOUNT(S)" shall mean the account(s)
established by the Administrative Committee with the Trustee for each
Participant who has made Qualified Voluntary Employee Contributions to the
Plan, which QVEC Account(s) shall be invested as provided in Article VI on
behalf of the Participant for whom such QVEC Account(s) has (have) been
established, and to which the Participant's Qualified Voluntary Employee
Contributions have been and the earnings or losses thereon shall be, allocated.
1.68 QUALIFIED DOMESTIC RELATIONS ORDER. "QUALIFIED DOMESTIC
RELATIONS ORDER" shall mean a qualified domestic relations order as described
in section 414(p) of the Code.
1.69 QUALIFIED MATCHING CONTRIBUTION. "QUALIFIED MATCHING
CONTRIBUTION" shall mean a Matching Contribution which is subject to the
distribution and nonforfeitability requirements of section 401(k) of the Code
when made. Any Qualified Matching Contribution to the Plan shall be credited
to a separate Qualified Matching Contribution account maintained for the
Participant on whose behalf such Qualified Matching Contribution is made.
1.70 QUALIFIED NONELECTIVE CONTRIBUTION. "QUALIFIED NONELECTIVE
CONTRIBUTION" shall mean a contribution (other than Matching Contributions or
Qualified Matching Contributions) made by the Employer and allocated to
Participants' accounts that the Participant may not elect to receive in cash
until distributed from the Plan; that are 100 percent vested and nonforfeitable
when made; and that are distributable only in accordance with the distribution
provisions that are applicable to Elective Deferrals and Qualified Matching
Contributions; Qualified Nonelective Contributions to the Plan shall be
credited to a separate Qualified Nonelective Contribution account maintained
for the Participant on whose behalf such Qualified Nonelective Contribution is
made.
1.71 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS. "QUALIFIED
VOLUNTARY EMPLOYEE CONTRIBUTIONS" shall mean qualified voluntary employee
contributions within the meaning of section 219(e)(2) of the Code.
1.72 QUALIFYING EMPLOYER SECURITY. "QUALIFYING EMPLOYER SECURITY"
shall mean an Employer Security which is stock or a marketable obligation as
provided in sections 407(d)(5) and 407(e) of ERISA. The classes of Employer
Securities which are to be considered Qualifying Employer Securities may be
limited in the Adoption Agreement.
1.73 REEMPLOYMENT COMMENCEMENT DATE. "REEMPLOYMENT COMMENCEMENT
DATE" shall mean
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<PAGE> 25
the first day, following a separation from service, on which an Employee
performs an hour of service. For purposes of this Section 1.73, an hour of
service shall mean each hour for which an Employee is paid or is entitled to
payment for the performance of services for the Employer.
1.74 REQUIRED AGGREGATION GROUP. "REQUIRED AGGREGATION GROUP"
shall mean:
(A) Each qualified plan of the Employer in which at least
one Key Employee participates or participated at any time during the
Determination Period (regardless of whether the Plan has terminated);and
(B) Any other qualified plan of the Employer which
enables a plan described in Section 1.74(A) to meet the requirements of
sections 401(a)(4) or 410 of the Code.
1.75 ROLLOVER ACCOUNT. "ROLLOVER ACCOUNT" shall mean the account
established by the Administrative Committee with the Trustee for each
Participant or other Employee who has made a Rollover Contribution to the Plan,
which Rollover Account shall be invested as provided in Article VI on behalf of
the Participant or other Employee for whom such Rollover Account has been
established and to which the Participant's or other Employee's Rollover
Contributions and the earnings and losses thereon shall be allocated.
1.76 ROLLOVER CONTRIBUTIONS. "ROLLOVER CONTRIBUTIONS" shall mean,
on or before December 31, 1992, "rollover amounts" which are contributed to the
Trustee on or before the 60th day immediately following the day the
contributing Participant or other Employee receives such "rollover amount".
The term "rollover amount" means:
(A) The entire amount (including money and any other
property) in an Individual Retirement Account or Individual Retirement
Annuity (as defined in section 408 of the Code) maintained for the benefit
of the Participant or other Employee making the Rollover Contribution, which
amount has been distributed from such individual retirement account or
individual retirement annuity; or
(B) Part or all of the amount received by such
Participant or other Employee from an employee's trust described in section
401(a) of the Code which is exempt from tax under section 501(a) of the
Code.
Such amount shall, however, only constitute a "rollover
amount" if the amount described in Section 1.76(A) or 1.76(B) is solely
attributable to a plan termination distribution, as that term is described in
section 402(a)(5) of the Code, or to a lump-sum distribution, as defined in
section 402(e)(4)(A) of the Code, or to an accumulated deductible employee
contribution distribution, as described in section 402(a)(5) of the Code, from
either a trust described in section 401(a) of the Code or from an annuity plan
described in section 403(a) of the Code, plus the earnings thereon. For
purposes of rolling-over property other than money under this Section 1.76, the
transfer of an amount equal to any portion of the proceeds from the sale of
property received in the distribution, including any excess in fair market
value of property on sale over the fair market value on distribution, shall
constitute a "rollover amount".
Effective January 1, 1993, "Rollover Contributions" shall mean
eligible rollover distributions within the meaning of section 402(c)(4) or
section 402(f)(2) of the Code, as in effect on and after January 1, 1993,
provided such eligible rollover distributions are transferred to the Plan
within 60 days of the date received by the Participant or other Employee.
Effective January 1, 1993, "Rollover Contributions" shall also mean such
eligible rollover distributions within the meaning of section 402(f)(2)(A) and
which are made in the form of a
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<PAGE> 26
direct trustee-to-trustee transfer described in section 401(a)(31) of the Code
as in effect on and after January 1, 1993.
1.77 SALARIED EMPLOYEE. "SALARIED EMPLOYEE" shall mean any
Employee who is not an Hourly Employee.
1.78 SELF-EMPLOYED PERSON. "SELF-EMPLOYED PERSON" shall mean an
individual who has earned income for the Taxable Year from the trade or
business for which the Plan is established or an individual who would have had
earned income but for the fact the trade or business had no Profits for the
Taxable Year.
1.79 SERVICE. "SERVICE" shall mean service with the Employer or
any related employer who adopts this Plan. If the Employer adopting the Plan
is maintaining the Plan of a predecessor employer, then service for such
predecessor shall be treated as Service for the Employer. Service for a
predecessor employer shall otherwise be treated as Service for the Employer
only to the extent provided in Section 2.2 and in the Adoption Agreement.
In the event the Plan is an amendment and restatement of a Prior Plan
in accordance with Section 18.17, if the Prior Plan credited service for
eligibility, and/or vesting on the basis of the elapsed time method (as
described in Treas. Reg. Section 1.410(a)-7), unless and to the extent the
Employer continues to use the elapsed time method under this Plan, a
Participant shall receive Service credit as of the effective date of the
amendment, for a number of Years of Service for Eligibility and/or Years of
Service for Vesting (as applicable) equal to the number of 1-year periods of
service credited to the Participant under the Prior Plan as of the effective
date of the amendment. In addition, if the effective date of the amendment is
a date other than the first day of a Computation Period, a Participant shall
receive credit, in the Computation Period, which includes the effective date of
the amendment, for a number of Hours of Service determined under one of the
equivalencies set forth in Section 1.39(I) (unless the Employer maintains
records for the Participant on an hourly basis, in which case actual hours
shall be credited) for the fractional part of a period of service credited to
the Participant under the elapsed time method as of the effective date of the
amendment. The equivalency to be used for this purpose shall be selected by
the Employer in the Adoption Agreement.
1.80 SPONSORING ORGANIZATION. "SPONSORING ORGANIZATION" shall mean
DRINKER BIDDLE & REATH, a law firm which has its principal office at
Philadelphia National Bank Building, 1345 Chestnut Street, Philadelphia, PA
19107-3496.
1.81 SPOUSE or SURVIVING SPOUSE. "SPOUSE" or "SURVIVING SPOUSE"
shall mean the spouse or surviving spouse of a Participant, provided that a
former spouse shall be treated as the spouse or surviving spouse and a current
spouse shall not be treated as the spouse or surviving spouse to the extent
provided under a Qualified Domestic Relations Order.
1.82 TAXABLE WAGE BASE. "TAXABLE WAGE BASE" shall mean, with
respect to any Plan Year, the maximum amount of earnings which on the first day
of such Plan Year may be considered wages for such Plan Year under section
3121(a)(1) of the Code.
1.83 TAXABLE YEAR. "TAXABLE YEAR" shall mean the fiscal period
adopted by the Employer for filing its Federal income tax returns.
1.84 TOP-HEAVY PLAN. "TOP-HEAVY PLAN" shall mean this Plan if, for
any Plan Year beginning after December 31, 1983, any of the following
conditions exists:
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(A) If the Top-Heavy Ratio for this Plan exceeds 60
percent and this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group;
(B) If this Plan is a part of a Required Aggregation
Group but not part of a Permissive Aggregation Group and the Top-Heavy Ratio
for the Required Aggregation Group exceeds 60 percent.
(C) If this Plan is a part of a Required Aggregation
Group and part of a Permissive Aggregation Group and the Top-Heavy Ratio for
the Permissive Aggregation Group exceeds 60 percent.
1.85 TOP-HEAVY RATIO. "TOP-HEAVY RATIO" shall mean a fraction
determined as follows:
(A) If the Employer maintains one or more Defined
Contribution Plans (including any simplified employee pension plan) and the
Employer has not maintained any Defined Benefit Plan which, during the
Determination Period, has or has had accrued benefits, the Top-Heavy Ratio
for this Plan alone or for the Required or Permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of the account
balances of all Key Employees as of the Determination Date(s) (including any
part of any account balance distributed in the Determination Period), and
the denominator of which is the sum of all account balances (including any
part of any account balance distributed in the Determination Period), both
computed in accordance with section 416 of the Code and the Treasury
regulations thereunder. Both the numerator and denominator of the Top-
Heavy Ratio are increased to reflect any contribution not actually made as
of the Determination Date, but which is required to be taken into account on
that date under section 416 of the Code and the Treasury regulations
thereunder.
(B) If the Employer maintains one or more Defined
Contribution Plans (including any simplified employee pension plan) and the
Employer maintains or has maintained one or more Defined Benefit Plans which
during the Determination Period has or has had any accrued benefits, the
Top-Heavy Ratio for any Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which is the sum of account
balances under the aggregated Defined Contribution Plan or Plans for all Key
Employees, determined in accordance with Section 1.85(A) above, and the
present value of accrued benefits under the aggregated Defined Benefit Plan
or Plans for all Key Employees as of the Determination Date(s), and the
denominator of which is the sum of the account balances under the aggregated
Defined Contribution Plan or Plans for all Participants, determined in
accordance with Section 1.85(A) above, and the present value of accrued
benefits under the Defined Benefit Plan or Plans for all Participants as of
the Determination Date(s), all determined in accordance with section 416 of
the Code and the Treasury regulations thereunder. The accrued benefits
under a Defined Benefit Plan in both the numerator and denominator of the
Top-Heavy Ratio are increased for any distribution of an accrued benefit
made in the Determination Period.
For purposes of Section 1.85(A) and Section 1.85(B) above, the
value of account balances and the present value of accrued benefits shall be
determined as of the most recent Top-Heavy Valuation Date that falls within or
ends with the 12-month period ending on the Determination Date, except as
provided in section 416 of the Code and the Treasury regulations thereunder for
the first and second plan years of a Defined Benefit Plan. The account
balances and accrued benefits of a Participant (1) who is not a Key Employee
but who was a Key Employee in a prior year, or (2) who has not been credited
with at least one hour of service with any Employer maintaining the plan at any
time during the Determination Period shall be disregarded. The calculation of
the Top-Heavy Ratio, and the extent to which distributions, rollovers, and
transfers are taken into account shall be made in accordance with section 416
of the Code and the Treasury regulations thereunder. Deductible employee
contributions shall not be taken into account for purposes of computing the
Top-Heavy
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Ratio. When aggregating plans, the value of account balances and accrued
benefits shall be calculated with reference to the Determination Dates that
fall within the same calendar year.
The accrued benefit of a Participant other than a Key Employee
shall be determined under the method, if any, that uniformly applies for
accrual purposes under all Defined Benefit Plans maintained by the Employer, or
if there is no such method, as if such benefit accrued not more rapidly than
the slowest accrual rate permitted under the fractional rule of section
411(b)(1)(C) of the Code.
Present value shall be determined in accordance with the
mortality and interest assumptions set forth in the Adoption Agreement.
1.86 TOP-HEAVY VALUATION DATE. "TOP-HEAVY VALUATION DATE" shall
mean the date selected by the Employer in the Adoption Agreement as of which
account balances or accrued benefits are valued for purposes of calculating the
Top-Heavy Ratio.
1.87 TRANSFER ACCOUNT. "TRANSFER ACCOUNT" shall mean the account
established by the Administrative Committee with the Trustee for each
Participant who has had transferred to the Plan assets from another qualified
plan pursuant to Section 3.10, which Transfer Account shall be invested as
provided in Article VI on behalf of the Participant for whom such Transfer
Account was established and the assets and the earnings and losses thereon have
been allocated.
1.88 TRUST. "TRUST" shall mean the legal entity established by
this Plan and Trust Agreement and by the Adoption Agreement by which the Plan
contributions shall be received, held, invested and disbursed to, or for the
benefit of, Participants or Beneficiaries of Participants, or both.
1.89 TRUST AGREEMENT. "TRUST AGREEMENT" shall mean the Trust
Agreement as set forth in this document and as it may be amended from time to
time.
1.90 TRUST FUND. "TRUST FUND" shall mean all funds received by the
Trustee and the property in which said funds shall be invested, together with
all income, profits and increments thereon less any withdrawals and losses
incurred thereon.
1.91 TRUSTEE. "TRUSTEE" shall mean the individual trustee(s)
(subject to the requirements of any applicable Federal Securities laws) or
corporate trustee(s) designated by the Employer in the Adoption Agreement.
1.92 UNION EMPLOYEE. "UNION EMPLOYEE" shall mean any Employee who
is included in a unit of employees covered by an agreement which the Secretary
of Labor finds to be a collective bargaining agreement between the Employer and
a bargaining representative of such person, if there is evidence that
retirement benefits were the subject of good faith bargaining between such
bargaining representative and the Employer.
1.93 VALUATION DATE. "VALUATION DATE" shall mean the last day of
each Plan Year and such other date or dates as may be provided for in the
applicable Adoption Agreement.
1.94 VESTED ACCRUED BENEFIT. "VESTED ACCRUED BENEFIT" shall mean
that portion of a Participant's Accrued Benefit which has become nonforfeitable
under the Plan.
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1.95 VESTING COMPUTATION PERIOD. "VESTING COMPUTATION PERIOD"
shall mean the Computation Period measured by the Plan Year. Years of Service
for Vesting and One-Year Breaks In Service for vesting shall be measured by the
Vesting Computation Period.
1.96 WELFARE BENEFIT FUND. "WELFARE BENEFIT FUND"shall mean a
welfare benefit fund as defined in section 419(e) of the Code.
1.97 YEAR OF SERVICE FOR BENEFIT ACCRUAL. "YEAR OF SERVICE FOR
BENEFIT ACCRUAL" shall mean any Year of Service for Benefit Accrual computed
under the regular method or the elapsed time method, as defined below, based on
the election made in the Adoption Agreement.
(A) REGULAR METHOD. A Year of Service for Benefit
Accrual shall mean any Accrual Computation Period during which a Participant
has completed not less than the number of Hours of Service (not to exceed
1,000 Hours of Service) with the Employer indicated in the Adoption
Agreement. If the Participant has completed a Year of Service for Benefit
Accrual but is not in the service of the Employer at the end of the Accrual
Computation Period, a Year of Service for Benefit Accrual shall be credited
except to the extent otherwise provided in Section 2.3(G), Section 3.11 and
in the Adoption Agreement.
(B) ELAPSED TIME METHOD. A Year of Service for Benefit
Accrual shall mean a "Period of Service," as defined below, (which shall be
the equivalent of a Year of Service for Benefit Accrual under the regular
method) with the Employer based on a Participant's actual period of
employment with the Employer, irrespective of the number of hours actually
worked during such period and during which the Participant completes 12
"Months of Service" as defined below. All periods of employment with the
Employer, including "Periods of Severance," as defined below, of less than
12 consecutive months shall be aggregated unless there is a "One-Year Period
of Severance". A "Period of Service" shall be credited for each completed
12 months of service (365 days) with the Employer, which need not be
consecutive. A partial Year of Service for Benefit Accrual shall be
credited for any "Period of Service" with the Employer of less than 12
months calculated to the nearest 1/12th based on a fraction, where the
numerator shall be the actual "Months of Service" and the denominator shall
be 12 "Months of Service". For purposes of determining "Periods of Service"
under the elapsed time method, the following terms shall apply:
(1) "DATE OF SEVERANCE (TERMINATION)" shall mean
the earlier of:
(a) The actual date a Participant quits,
is discharged, dies or retires; or
(b) The first anniversary of the date a
Participant is absent from work with the Employer (with or
without pay) for any other reason.
(2) "ELAPSED TIME" shall mean the total "Period
of Service" which has elapsed between a Participant's Employment
Commencement Date or Reemployment Commencement Date with the Employer
and "Date of Severance (Termination)" by the Employer, including
"Periods of Severance" where a "One-Year Period of Severance" does not
occur.
(3) "HOUR OF SERVICE" shall mean each hour for
which an Employee is paid or entitled to payment for the performance
of duties for the Employer.
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(4) "PERIOD OF SERVICE" shall mean each completed
12 "Months of Service" (whether or not consecutive) during the total
"Elapsed Time" while a Participant is employed by the Employer,
regardless of the number of hours worked.
(5) "MONTH OF SERVICE" shall mean 30 days of
"Elapsed Time".
(6) "PERIOD OF SEVERANCE" shall mean the time
between the actual "Date of Severance (Termination)" by the Employer,
as defined above, and the subsequent date, if any, on which the
Participant performs an "Hour of Service", as defined above, with the
Employer.
(7) "ONE-YEAR PERIOD OF SEVERANCE" shall mean a
12-month period following a Participant's "Date of Severance
(Termination)", as defined above, in which a Participant does not have
one "Hour of Service" with the Employer.
1.98 YEAR OF SERVICE FOR ELIGIBILITY. "YEAR OF SERVICE FOR
ELIGIBILITY" shall mean any Eligibility Computation Period in which a
Participant has completed not less than the number of Hours of Service (not to
exceed 1,000 Hours of Service) indicated in the Adoption Agreement. For
purposes of this Section 1.98, Service with a Predecessor Employer shall be
included to the extent provided in Sections 1.79 and 2.2 and in the applicable
Adoption Agreement. If less than one Year of Service for Eligibility is
required for participation in the Plan, the eligibility period shall be
computed without regard to the number of Hours of Service completed. This
provision is not applicable if the elapsed time method is selected in Section
A.2.2(B)(2) of the Adoption Agreement.
1.99 YEAR OF SERVICE FOR VESTING. "YEAR OF SERVICE FOR VESTING"
shall mean any Year of Service for Vesting computed under the regular method or
the elapsed time method, as defined below, based on the election made in the
Adoption Agreement.
(A) REGULAR METHOD. A Year of Service for Vesting shall
mean any Vesting Computation Period indicated in the Adoption Agreement
during which an Employee has completed not less than the number of Hours of
Service (not to exceed 1,000 Hours of Service) with the Employer indicated
in the Adoption Agreement.
(B) ELAPSED TIME METHOD. A Year of Service for Vesting
shall mean a "Period of Service", as defined in Section 1.97(B)(4), (which
shall be the equivalent of a Year of Service for Vesting under the regular
method) with the Employer based on an Employee's actual period of employment
with the Employer, irrespective of the number of hours actually worked
during such period and during which the Employee has completed 12 "Months of
Service" as defined in Section 1.97(B)(5) with the Employer. All periods of
employment with the Employer, including "Periods of Severance", as defined
in Section 1.97(B)(6), of less than 12 consecutive months shall be
aggregated unless there is a "One-Year Period of Severance", as defined in
Section 1.97(B)(7). A "Period of Service" shall be credited for each
completed 12 "Months of Service" (365 days) with the Employer, which need
not be consecutive. A partial Year of Service for Vesting shall be credited
for any "Period of Service" with the Employer of less than 12 months
calculated to the nearest 1/12th based on a fraction, where the numerator
shall be the actual "Months of Service" and the denominator shall be 12
"Months of Service". For purposes of this Section 1.99, Service with a
predecessor employer shall be included to the extent provided in Sections
1.79 and 2.2 and in the Adoption Agreement.
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ARTICLE II
PARTICIPATION UNDER PLAN
2.1 ADOPTION OF PLAN. An Employer shall adopt the Plan by
executing the Adoption Agreement.
2.2 ELIGIBILITY REQUIREMENTS. To be eligible for participation in
the Plan, an Employee must satisfy both of the following eligibility
requirements:
(A) The Employee must be a member of an eligible class of
Employees as specified by the Employer in the Adoption Agreement; and
(B) The Employee must have completed the period of
Service and attained the age specified by the Employer in the Adoption
Agreement.
Upon satisfaction of the requirements of Sections 2.2(A) and 2.2(B) as
specified in the Adoption Agreement, an Employee shall become a Participant in
the Plan on the Entry Date specified in the Adoption Agreement, unless the
Employee separated from service with the Employer before the Entry Date. An
Employee who has met all the requirements for eligibility, as set forth in this
Article II and in the Adoption Agreement, but who separates from service with
the Employer before the Entry Date and has not been rehired before the Entry
Date, shall become a Participant in the Plan on his Reemployment Commencement
Date. In the case of any such eligible Employee who is rehired before the
Entry Date, such eligible Employee shall become a Participant on such Entry
Date. Employees who have completed such requirements prior to the Effective
Date shall become Participants as of the Effective Date. Except as otherwise
provided in Section 1.79, service with a predecessor employer shall be included
as Service with the Employer for purposes of eligibility to participate under
the Plan only to the extent provided in the Adoption Agreement and to the
extent required by the Secretary of the Treasury or his delegate.
2.3 ADDITIONAL RULES RELATING TO PLAN PARTICIPATION. The
following additional rules relating to the Plan Participation apply:
(A) EMPLOYEES REQUIRED TO COMPLETE MORE THAN ONE YEAR OF
SERVICE FOR ELIGIBILITY. If an Employee who is required to complete more
than one Year of Service for Eligibility as an eligibility requirement has a
One-Year Break In Service before satisfying such requirement, Service prior
to such Break shall be disregarded.
(B) REHIRED FORMER PARTICIPANTS WITH NONFORFEITABLE
RIGHTS. A former Participant shall become a Participant immediately upon
his return to the employ of the Employer, if such former Participant had a
nonforfeitable right to all or a portion of his Employer Account at the time
of his termination.
(C) REHIRED FORMER PARTICIPANTS WITHOUT NONFORFEITABLE
RIGHTS. A former Participant who did not have a nonforfeitable right to any
portion of his Employer Account at the time of his termination shall be
considered, upon his reemployment, a new Employee for eligibility purposes,
if the number of consecutive One-Year Breaks In Service equals or exceeds
the greater of (1) five or (2) the aggregate number of Years of Service for
Eligibility before such Breaks. If such former Participant's Years of
Service for Eligibility before his termination may not be disregarded
pursuant to the preceding sentence, such former Participant shall
participate immediately upon his reemployment.
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(D) PARTICIPANTS WHO BECOME INELIGIBLE EMPLOYEES. In the
event a Participant becomes ineligible to participate because he is no
longer a member of an eligible class of Employees, but has not incurred a
One-Year Break In Service, such Employee shall participate immediately upon
his return to an eligible class of Employees. If such Participant incurs a
One-Year Break In Service, his eligibility to participate shall be
determined pursuant to Section 2.3(B) or 2.3(C).
(E) INELIGIBLE EMPLOYEES WHO BECOME ELIGIBLE. In the
event an Employee who is not a member of the eligible class of Employees
becomes a member of the eligible class, such Employee shall participate
immediately, if such Employee has satisfied the minimum age and service
requirements and would have previously become a Participant had he been in
the eligible class.
(F) DURATION OF PARTICIPATION. After an Employee becomes
a Participant in the Plan, the Employee's active participation shall
continue until the earlier of the Participant's death, retirement,
Disability, or termination of employment with the Employer. However, except
as otherwise provided in Section 3.11 and in the Adoption Agreement, no
Participant shall share in Employer Contributions in any Plan Year in which
such Participant does not complete a Year of Service for Benefit Accrual and
meet the other eligibility requirements of Sections 2.2 and 2.3.
(G) PARTICIPANTS WHO SEPARATE BEFORE END OF PLAN YEAR.
Subject to Section 3.11, a Participant whose employment is terminated before
the end of a Plan Year but after he has completed the number of Hours of
Service required for a Year of Service for Benefit Accrual shall share in
Employer contributions for such Plan Year only if the Adoption Agreement so
provides.
(H) LEASED EMPLOYEES.
(1) GENERAL. If the Employer has Leased
Employees, such Leased Employees shall participate in the Plan only
if, and to the extent, provided in the Adoption Agreement of such
Employer.
(2) SAFE-HARBOR. Notwithstanding any other
provisions of the Plan, for purposes of determining the number or
identity of Highly Compensated Employees or for purposes of the
pension requirements of section 414(n)(3) of the Code, the Employees
of the Employer shall include individuals defined as Employees in
Section 1.25. This provision was effective December 31, 1986.
2.4 PLANS COVERING OWNER-EMPLOYEES. If this Plan, as adopted by
the applicable Adoption Agreement, provides contributions or benefits for one
or more Owner-Employees who control both the business for which this Plan, as
adopted by the applicable Adoption Agreement, is established and one or more
other trades or businesses, this Plan and the plan established for other trades
or businesses must, when looked at as a single plan, satisfy sections 401(a)
and (d) of the Code for the employees of this and all other trades or
businesses.
If the Plan, as adopted by the applicable Adoption Agreement, provides
contributions or benefits for one or more Owner-Employees who control one or
more other trades or businesses, the employees of the other trades or
businesses must be included in a plan which satisfies sections 401(a) and (d)
of the Code and which provides contributions and benefits not less favorable
than provided for Owner-Employees under this Plan.
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If an individual is covered as an Owner-Employee under the plans of two or more
trades or businesses which are not controlled and the individual controls a
trade or business, then the contributions or benefits of the employees under
the plan of the trades or businesses which are controlled must be as favorable
as those provided for him under the most favorable plan of the trade or
business which is not controlled.
For purposes of this Section 2.4, an Owner-Employee, or two or more
Owner-Employees, will be considered to control a trade or business if the
Owner-Employee, or two or more Owner-Employees together:
(A) Own the entire interest in an unincorporated trade or
business; or
(B) In the case of a partnership, own more than 50
percent of either the capital interest or the profits interest in the
partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees shall be treated as owning any interest in a partnership which
is owned, directly or indirectly, by a partnership which such Owner-Employee,
or such two or more Owner-Employees, are considered to control within the
meaning of the preceding sentence.
ARTICLE III
CONTRIBUTIONS
3.1 EMPLOYER CONTRIBUTIONS. Employer Contributions shall be
determined as follows:
(A) MONEY PURCHASE PLAN. If the Plan is a money purchase
plan, this Section 3.1(A) applies and the Employer Contribution shall be
determined in accordance with the applicable Money Purchase Plan Adoption
Agreement.
(B) PROFIT-SHARING OR PROFIT-SHARING 401(K) PLAN. If the
Plan is a profit-sharing plan or a profit-sharing 401(k) plan, the
Profit-Sharing (401(k)) Adoption Agreement applies and contributions shall
be made in accordance with such Adoption Agreement and this Section 3.1(B).
(1) AMOUNT. Except as otherwise provided in
Section 3.11(G), for each Plan Year during the continuance of the
Plan, the Employer shall contribute to the Trustee such amount as
shall be authorized by the Employer, in its sole discretion, provided
that the amount of the Employer Contribution for any Plan Year shall
not exceed the lesser of:
(a) The amount allowable as a deduction,
if the Employer is a for-profit organization, for computing
Federal income tax under the applicable provisions of the Code
for the Taxable Year which ends with or within such Plan Year
or, if the Employer is a not-for-profit organization, an
amount not in excess of reasonable compensation for services
rendered by the Participants for the Employer for the Taxable
Year which ends with or within such Plan Year; or
(b) The limitations set forth in Section
3.8 below.
(2) PROFITS NOT REQUIRED. Unless the Adoption
Agreement provides otherwise, effective for Plan Years beginning after
December 31, 1985, the Employer shall, notwithstanding any
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other provision of the Plan, make all contributions to the Plan
without regard to current or accumulated Profits for the Taxable Year
or Years ending with or within such Plan Year. Notwithstanding the
foregoing, the Plan shall continue to be designed to qualify as a
profit-sharing plan for purposes of sections 401(a), 402, 412 and 417
of the Code.
(3) QUALIFIED NONELECTIVE CONTRIBUTIONS AND
QUALIFIED MATCHING CONTRIBUTIONS.
(a) ELECTION. If the Plan provides for
Elective Deferral Contributions, the Employer may elect to
make Qualified Nonelective Contributions and/or Qualified
Matching Contributions under the Plan on behalf of Employees
as provided in the Adoption Agreement.
In addition, in lieu of distributing "Excess
Contributions" as provided in Section 3.4(B)(4), or "Excess
Aggregate Contributions" as provided in Section 3.2(G), and to
the extent elected by the Employer in the Adoption Agreement,
the Employer may make Qualified Nonelective Contributions
and/or Qualified Matching Contributions on behalf of
Non-Highly Compensated Employees that are sufficient to
satisfy either the "Actual Deferral Percentage" (ADP) (as
defined in Section 3.4(B)) test or the "Average Contribution
Percentage" (ACP) (as defined in Section 3.2(F)) test, or
both, pursuant to Treasury regulations under the Code.
(b) VESTING AND ACCOUNTS. The
Participant's Accrued Benefit derived from Qualified
Nonelective Contributions and Qualified Matching Contributions
and the earnings thereon shall be nonforfeitable at all times.
Separate accounts for Qualified Nonelective Contributions and
Qualified Matching Contributions shall be maintained for each
Participant on whose behalf such contributions are made. Each
account shall be credited with the applicable contributions
and earnings or losses thereon.
(C) TIME AND TYPE OF CONTRIBUTIONS. Employer
Contributions, for any Plan Year, shall be paid to the Trustee if the
Employer's Plan is a profit-sharing or profit-sharing 401(k) plan, no later
than the due date (including extensions of time) for filing the Employer's
Federal income tax return for the Taxable Year which ends with or within
such Plan Year or if the Employer's Plan is a money purchase plan no later
than the time required by the rules of section 412(m) of the Code but in no
event later than the due date (including extensions of time) for filing the
Employer's Federal income tax return for the Taxable Year which ends with or
within such Plan Year.
3.2 PARTICIPANT CONTRIBUTIONS. Participant Contributions shall be
determined as follows:
(A) AMOUNT. Unless this Plan is a profit-sharing 401(k)
plan, this Plan shall not accept Employee Contributions and Matching
Contributions for Plan Years beginning after the Plan Year in which this
Plan is adopted by the Employer. Employee Contributions for Plan Years
beginning after December 31, 1986, together with any Matching Contributions
as defined in section 401(m) of the Code, shall be limited so as to meet the
nondiscrimination test of section 401(m) of the Code. Participant
Contributions on or after such date are only permitted or required if the
Plan is a profit-sharing 401(k) plan. In such case, Participants are not
required to make Participant Contributions under the Plan, unless the
Adoption Agreement provides otherwise. If, however, the Plan is a
profit-sharing 401(k) plan and the Employer has elected in the Adoption
Agreement to permit Participant Contributions, a Participant may, subject to
the limitations of Section 3.2 and Section 3.8, make cash contributions
under the Plan in any Plan Year in any amount up to ten percent of the
aggregate Compensation (as defined in Section 1.10 before any modifications
thereto in the Adoption
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Agreement) received by such Participant for all periods of participation in
the Plan reduced by any Participant Contributions made by such Participant
under this Plan during such period. This limitation applies in the
aggregate to voluntary contributions by any Participant to two or more
qualified plans maintained by the same Employer. Mandatory Participant
Contributions are subject to the requirements of the Adoption Agreement.
(B) PARTICIPANT CONTRIBUTIONS AND EARNINGS THEREON
NONFORFEITABLE. The interest of each Participant in his Participant
Contributions and the earnings thereon shall be nonforfeitable at all times.
(C) MANNER OF MAKING CONTRIBUTIONS. Participant
Contributions shall be made in cash and paid to the Employer. Participant
Contributions may be made by regular payroll deductions from his
Compensation, if the Adoption Agreement so provides, or in any other way
approved by the Employer. For a Participant Contribution to be deemed to be
credited to a Participant's Participant Account for any particular
Limitation Year, such Participant Contribution must be made to the Plan not
later than 30 days following the end of such Limitation Year. Participant
Contributions shall be paid to the Trustee by the Employer as soon as is
administratively possible after receipt by the Employer.
(D) CHANGE OF PARTICIPANT CONTRIBUTION RATE. If the
Adoption Agreement provides for Participant Contributions by regular payroll
deductions from the Participant's Compensation, a Participant, by 30 days'
written notice to the Administrative Committee, may elect to change his
Participant Contribution rate (but not retroactively) within the limits
specified herein, to discontinue making Participant Contributions, or to
resume Participant Contributions.
(E) RESPONSIBILITY OF TRUSTEE. The Trustee shall be
accountable for Participant Contributions received by it, but shall have no
duty to require any Participant Contributions to be delivered to it nor to
determine that the Participant Contributions received are of the correct
amount or are correctly attributed by the Administrative Committee to the
Participants who made them.
(F) LIMITATIONS ON EMPLOYEE CONTRIBUTIONS AND MATCHING
CONTRIBUTIONS - AVERAGE CONTRIBUTION PERCENTAGE TEST REQUIREMENT.
(1) TEST. The "Average Contribution Percentage"
(ACP) for Participants who are Highly Compensated Employees for each
Plan Year and the ACP for Participants who are Non-Highly Compensated
Employees for the same Plan Year must satisfy one of the following two
tests:
(a) The ACP for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the ACP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by 1.25; or
(b) The ACP for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the ACP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by two, provided
that the ACP for Participants who are Highly Compensated
Employees does not exceed the ACP for Participants who are
Non-Highly Compensated Employees by more than two percentage
points.
(2) SPECIAL RULES. The following special rules
apply:
(a) MULTIPLE USE. If one or more Highly
Compensated Employees participate in both a cash or deferred
arrangement (CODA) and a plan subject to the ACP test
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maintained by the Employer and the sum of the "Actual Deferral
Percentage" (ADP), as defined below in Section 3.4(B), and the
ACP of those Highly Compensated Employees subject to either or
both tests exceeds the "Aggregate Limit," then the
"Contribution Percentages" of those Highly Compensated
Employees who also participate in a CODA shall be reduced
(beginning with such Highly Compensated Employee whose
"Contribution Percentage" is the highest) so that the limit is
not exceeded. The amount by which each Highly Compensated
Employee's "Contribution Percentage Amount" is reduced shall
be treated as an "Excess Aggregate Contribution." The ADP and
ACP of the Highly Compensated Employees shall be determined
after any corrections required to meet the ADP and ACP tests.
Multiple use does not occur if both the ADP and ACP of the
Highly Compensated Employees do not exceed 1.25 multiplied by
the ADP and ACP of the Non-Highly Compensated Employees.
(b) MULTIPLE PLANS. For purposes of
this Section 3.2(F), the "Contribution Percentage" for any
Participant who is a Highly Compensated Employee and who is
eligible to have "Contribution Percentage Amounts" allocated
to his account under two or more plans described in section
401(a) of the Code, or CODAs that are maintained by the
Employer, shall be determined as if the total of such
"Contribution Percentage Amounts" were made under each plan.
If a Highly Compensated Employee participates in two or more
CODAs that have different plan years, all CODAs ending with or
within the same calendar year shall be treated as a single
arrangement. Notwithstanding the foregoing, certain plans
shall be treated as separate if mandatorily disaggregated
pursuant to Treasury regulations under section 401(m) of the
Code.
(c) AGGREGATION. In the event that this
Plan satisfies the requirements of sections 401(m), 401(a)(4)
or 410(b) of the Code only if aggregated with one or more
other plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if aggregated
with this Plan, then this Section 3.2(F) shall be applied by
determining the ACP of Employees as if all such plans were a
single plan. For Plan Years beginning after December 31,
1989, plans may be aggregated in order to satisfy section
401(m) of the Code only if they have the same plan year.
(d) FAMILY AGGREGATION. For purposes of
determining the "Contribution Percentage" of a Participant who
is a five-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the "Contribution Percentage
Amounts" and "Applicable Compensation" of such Participant
shall include the "Contribution Percentage Amounts" and
"Applicable Compensation" for the Plan Year of Family Members.
Family Members, with respect to Highly Compensated Employees,
shall be disregarded as separate Employees in determining the
ACP both for Participants who are Non-Highly Compensated
Employees and for Participants who are Highly Compensated
Employees.
(e) TIMING. For purposes of the ACP
test, "Employee Contributions" are considered to have been
made in the Plan Year in which contributed to the Trust.
Matching Contributions, Qualified Matching Contributions and
Qualified Nonelective Contributions shall be considered made
for a Plan Year if made no later than the end of the 12-month
period beginning on the day after the close of the Plan Year.
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(f) RECORDS. The Employer shall
maintain records sufficient to demonstrate satisfaction of the
ACP test and the amount of Qualified Nonelective Contributions
or Qualified Matching Contributions, or both, used in such
test.
(g) OTHER REQUIREMENTS. The
determination and treatment of the "Contribution Percentage"
of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
(3) DEFINITIONS. The following definitions apply:
(a) "AGGREGATE LIMIT" shall mean the sum
of (i) 125 percent of the greater of (AA) the ADP of the
Non-Highly Compensated Employees eligible under the CODA for
the Plan Year or (BB) the ACP of Non-Highly Compensated
Employees eligible under the Plan subject to section 401(m) of
the Code for the Plan Year beginning with or within the Plan
Year of the CODA, and (ii) two plus the lesser of (AA) or (BB)
above, but in no event shall this amount exceed 200 percent of
the lesser of (AA) or (BB) above. However, the "Aggregate
Limit," for Plan Years beginning before the later of January
1, 1992, or the date that is 60 days after publication of
final Treasury regulations under section 401(m) of the Code,
shall be the greater of (aa) the "Aggregate Limit," as
calculated under the preceding sentence, or (bb) the sum of
(AAA) 125 percent of the lesser of (AAAA) the ADP of the Non-
Highly Compensated Employees eligible under the CODA for the
Plan Year, or (BBBB) the ACP of the Non-Highly Compensated
Employees eligible under the Plan subject to section 401(m) of
the Code for the Plan Year beginning with or within the Plan
Year of the CODA, and (BBB) two plus the greater of (AAAA) or
(BBBB) above, but in no event shall this amount exceed 200
percent of the greater of (AAAA) or (BBBB) above.
(b) "AVERAGE CONTRIBUTION PERCENTAGE
(ACP)" shall mean the average of the "Contribution
Percentages" of the "Eligible Participants" in a group.
(c) "CONTRIBUTION PERCENTAGE" shall mean
the ratio (expressed as a percentage) of the Participant's
"Contribution Percentage Amounts" to the Participant's
"Applicable Compensation" for the Plan Year (whether or not
the Employee was a Participant for the entire Plan Year).
(d) "CONTRIBUTION PERCENTAGE AMOUNTS"
shall mean the sum of the "Employee Contributions", Matching
Contributions and Qualified Matching Contributions (to the
extent not taken into account for purposes of the ADP test)
made under the Plan on behalf of the Participant for the Plan
Year. Such Contribution Percentage Amounts shall not include
Matching Contributions that are forfeited either to correct
"Excess Aggregate Contributions" as defined below, or because
the contributions to which they relate are "Excess Elective
Deferrals" under Section 3.4, "Excess Contributions" under
Section 3.4, or "Excess Aggregate Contributions" under this
Section 3.2. If so elected in the Adoption Agreement, the
Employer may include Qualified Nonelective Contributions in
the "Contribution Percentage Amounts." The Employer also may
elect to use Elective Deferrals in the "Contribution
Percentage Amounts" so long as the ADP test is met before the
Elective Deferrals are used in the ACP test and continues to
be met following the exclusion of those Elective Deferrals
that are used to meet the ACP test.
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(e) "ELIGIBLE PARTICIPANT" shall mean
any Employee who is eligible to make an "Employee
Contribution" or an Elective Deferral (if the Employer takes
such contributions into account in the calculation of the
"Contribution Percentage"), or to receive a Matching
Contribution (including forfeitures) or a Qualified Matching
Contribution. If an "Employee Contribution" is required as a
condition of participation in the Plan, any Employee who would
be a Participant in the Plan if such Employee made such an
"Employee Contribution" shall be treated as an "Eligible
Participant" on behalf of whom no "Employee Contributions" are
made.
(f) "EMPLOYEE CONTRIBUTION" shall mean
any contribution made to the Plan by or on behalf of a
Participant that is included in the Participant's gross income
in the Plan Year in which made and that is maintained under a
separate account to which earnings and losses are allocated.
(g) "APPLICABLE COMPENSATION" shall mean
compensation (i) within the meaning of section 414(s)(1) of
the Code for the Plan Year for which a determination under
this Section 3.2(F) is being made, plus (ii) any amount
contributed by the Employer for such Plan Year pursuant to a
salary reduction agreement and which is not includible in
gross income under section 125, 402(e)(3), 402(h)(1)(B) or
403(b) of the Code.
(G) DISTRIBUTION OF "EXCESS AGGREGATE CONTRIBUTIONS".
(1) IN GENERAL. Notwithstanding any other
provision of this Plan, "Excess Aggregate Contributions", plus any
income and minus any loss allocable thereto, shall be forfeited, if
forfeitable, or, if not forfeitable, distributed no later than the
last day of each Plan Year to Participants to whose accounts such
"Excess Aggregate Contributions" were allocated for the preceding Plan
Year. If such "Excess Aggregate Contributions" are distributed more
than two and one-half months after the last day of the Plan Year in
which such "Excess Aggregate Contributions" arose, a ten percent
excise tax will be imposed on the Employer maintaining the plan with
respect to such "Excess Aggregate Contributions". Such distributions
shall be made to Highly Compensated Employees on the basis of the
respective portions of the "Excess Aggregate Contributions"
attributable to each of such Employees. "Excess Aggregate
Contributions" of Participants who are subject to the Family Member
aggregation rules of section 414(q)(6) of the Code shall be allocated
among the Family Members in proportion to the "Employee Contributions"
and Matching Contributions (or amounts treated as Matching
Contributions) of each Family Member that is combined to determine the
combined ACP. "Excess Aggregate Contributions" shall be treated as
"Annual Additions" (within the meaning of Section 3.8(D)(1)) under the
Plan.
(2) DETERMINATION OF INCOME OR LOSS. "Excess
Aggregate Contributions" shall be adjusted for any income or loss.
The income or loss allocable to "Excess Aggregate Contributions" is
the income or loss allocable to the Participant's "Employee
Contribution" account, Matching Contribution account, Qualified
Matching Contribution account (if any, and if all amounts therein are
not used in the ADP test) and, if applicable, Qualified Nonelective
Contribution account and Elective Deferral account for the Plan Year
multiplied by a fraction, the numerator of which is such Participant's
"Excess Aggregate Contributions" for the Plan Year and the denominator
of which is the Participant's account balance(s) attributable to
"Contribution Percentage Amounts" without regard to any income or loss
occurring during such Plan Year. Income or loss allocable to the
period between the end of the Plan Year and the date of distribution
shall be disregarded in determining income or loss.
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<PAGE> 39
(3) FORFEITURES OF "EXCESS AGGREGATE
CONTRIBUTIONS". Forfeitures of "Excess Aggregate Contributions" may
either be reallocated to the accounts of Non-Highly Compensated
Employees or applied to reduce Employer contributions, as elected by
the Employer in the Adoption Agreement with respect to Matching
Contributions.
(4) ACCOUNTING FOR "EXCESS AGGREGATE
CONTRIBUTIONS". "Excess Aggregate Contributions" shall be forfeited,
if forfeitable or distributed on a pro-rata basis from the
Participant's "Employee Contribution" account, Matching Contribution
account and Qualified Matching Contribution account (and, if
applicable, the Participant's Qualified Nonelective Contribution
account or Elective Deferral account, or both).
(5) DEFINITIONS. The following definitions apply:
(a) "EXCESS AGGREGATE CONTRIBUTIONS"
shall mean, with respect to any Plan Year, the excess of:
(i) The aggregate "Contribution
Percentage Amounts" actually taken into account in
computing the ACP of Highly Compensated Employees for
such Plan Year, over
(ii) The maximum "Contribution
Percentage Amounts" permitted by the ACP test
(determined by reducing contributions made on behalf
of Highly Compensated Employees in order of their
"Contribution Percentages" beginning with the highest
of such percentages).
Such determination shall be made after first
determining "Excess Elective Deferrals" under Section 3.4 and
then determining "Excess Contributions" under Section 3.4.
(6) VESTING AND ACCOUNTS. The Participant's
Accrued Benefit derived from Employee Contributions shall be
nonforfeitable at all times. Separate accounts for Employee
Contributions shall be maintained for each Participant. Each account
shall be credited with the applicable contributions and earnings
thereon.
3.3 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS. The rules
relating to Qualified Voluntary Employee Contributions are as follows:
(A) NOT PERMITTED AFTER DECEMBER 31, 1986. No Qualified
Voluntary Employee Contributions shall be permitted after December 31, 1986.
Contributions made prior to that date shall be maintained in separate
accounts. Such accounts shall share in gains or losses of the Trust in the
manner described in Article V. No part of such accounts shall be used to
purchase life insurance. Withdrawals from such accounts are provided for in
Sections 7.10(B) and 7.12.
(B) QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTION AND
EARNINGS THEREON VESTED AT ALL TIMES. The interest of each Participant in
any Qualified Voluntary Employee Contributions made on his behalf before
January 1, 1987, and the earnings thereon shall be nonforfeitable at all
times.
(C) RESPONSIBILITY OF TRUSTEE. The Trustee shall be
accountable for Qualified Voluntary Employee Contributions received by it,
but shall have no duty to determine that the Qualified Voluntary
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Employee Contributions received are of the correct amount or are correctly
allocated by the Employer to the Participants who made them.
3.4 ELECTIVE DEFERRAL CONTRIBUTIONS. The rules relating to
Elective Deferral Contributions are as follows:
(A) AMOUNT. If the Adoption Agreement provides for
Elective Deferral Contributions, the Employer shall make an Elective
Deferral Contribution to the Plan on behalf of each Participant who has
elected to defer a portion of the Compensation otherwise payable for the
Plan Year and have it contributed to the Plan. Such an election may only be
made pursuant to a written salary reduction agreement between the Employer
and the Participant. The agreement shall be on the Appropriate Form
prescribed by the Administrative Committee, and the agreement shall specify
the percentage or amount of Compensation that the Participant desires to
defer (but in no event may Elective Deferral Contributions exceed for any
Plan Year, after taking into account any Employer Contributions for such
Plan Year under this Plan and under any other qualified profit-sharing or
qualified stock-bonus plan the amount allowable under Section 3.1(B)(1) for
the Taxable Year which ends with or within such Plan Year, or the
limitations set forth in Section 3.8 below). A Participant shall not be
permitted to enter into more than one salary reduction agreement in the
periods specified in the Adoption Agreement, and the agreement for any such
period must be entered into before the first day of such period. The
Elective Deferral Contribution made for a Participant shall be in an amount
equal to the amount specified in the Participant's salary reduction
agreement; provided, however, that the Elective Deferral Contribution
otherwise to be made for a Participant shall be reduced if and to the extent
necessary to comply with the limitations of Section 3.4(B). An Elective
Deferral Contribution made for a Participant shall be allocated to his
Elective Deferral Account pursuant to Section 5.1(D). In the event the
requirements of Section 3.4(B) would not otherwise be met, but only if the
Adoption Agreement so provides, the Employer may make, on behalf of
Non-Highly Compensated Employees, for any Plan Year, such Qualified
Nonelective Contributions as are necessary to meet the requirements of
Section 3.4(B). Such Employer Qualified Nonelective Contributions must be
made by the Employer no later than 30 days after the end of the Plan Year.
Such Employer Qualified Nonelective Contributions shall be separately
accounted for and no portion of such Employer Qualified Nonelective
Contributions attributable to Plan Years beginning after December 31, 1988,
may be withdrawn upon hardship of the Participant. Moreover, such Employer
Qualified Nonelective Contributions must satisfy all other requirements
relating to Qualified Nonelective Contributions as set forth in Section
1.70. The CODA provisions may not be integrated with social security.
(B) ELECTIVE DEFERRALS.
(1) MAXIMUM AMOUNT OF ELECTIVE DEFERRALS.
Effective as of January 1, 1987, no Employee shall be permitted to
have Elective Deferrals made under this Plan during the taxable year
of such Employee in excess of $7,000 multiplied by the Adjustment
Factor as provided by the Secretary of the Treasury and as in effect
at the beginning of such taxable year of the Employee. The foregoing
limit shall not apply to Elective Deferrals of amounts attributable to
service performed in 1986 and described in section 1105(c)(5) of the
Tax Reform Act of 1986.
(2) "ACTUAL DEFERRAL PERCENTAGE" TEST
REQUIREMENT. The "Actual Deferral Percentage" (ADP) for Participants
who are Highly Compensated Employees for each Plan Year and the ADP
for Participants who are Non-Highly Compensated Employees for the same
Plan Year must satisfy one of the following tests:
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(a) The ADP for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the ADP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by 1.25; or
(b) The ADP for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the ADP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by 2.0, provided
that the ADP for Participants who are Highly Compensated
Employees does not exceed the ADP for Participants who are
Non-Highly Compensated Employees by more than two percentage
points.
(3) SPECIAL RULES. The following special rules
apply:
(a) The ADP for any Participant who is a
Highly Compensated Employee for the Plan Year and who is
eligible to have Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if
treated as Elective Deferrals for purposes of the ADP test)
allocated to his accounts under two or more cash or deferred
arrangements described in section 401(k) of the Code (CODAs),
that are maintained by the Employer, shall be determined as if
such Elective Deferrals (and, if applicable, such Qualified
Nonelective Contributions or Qualified Matching Contributions,
or both) were made under a single CODA. If a Highly
Compensated Employee participates in two or more CODAs that
have different Plan Years, all CODAs ending with or within the
same calendar year shall be treated as a single CODA.
Notwithstanding the foregoing, certain CODAs shall be treated
as separate CODAs if mandatorily disaggregated pursuant to
regulations under section 401(k) of the Code.
(b) In the event that this Plan
satisfies the requirements of section 401(k), 401(a)(4), or
410(b) of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements
of such sections of the Code only if aggregated with this
Plan, then this Section shall be applied by determining the
ADP of Employees as if all such plans were a single plan. For
Plan Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy section 401(k) of the Code only
if they have the same Plan Year.
(c) For purposes of determining the ADP
of a Participant who is a five-percent owner or one of the ten
most highly-paid Highly Compensated Employees, the Elective
Deferrals (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if treated as
Elective Deferrals for purposes of the ADP test) and
"Applicable Compensation" of such a Participant shall include
the Elective Deferrals (and, if applicable, Qualified
Nonelective Contributions and Qualified Matching
Contributions, or both) and "Applicable Compensation" for the
Plan Year of Family Members of such Participant. Family
Members, with respect to such Highly Compensated Employees,
shall be disregarded as separate Employees in determining the
ADP both for Participants who are Non-Highly Compensated
Employees and for Participants who are Highly Compensated
Employees.
(d) For purposes of determining the ADP
test, Elective Deferrals, Qualified Nonelective Contributions
and Qualified Matching Contributions must be made before the
last day of the 12-month period immediately following the Plan
Year to which the contributions relate.
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(e) The Employer shall maintain records
sufficient to demonstrate satisfaction of the ADP test and the
amount of Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, used in such test.
(f) The determination and treatment of
the ADP amounts of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
(4) DEFINITIONS. The following definitions apply:
(a) "ACTUAL DEFERRAL PERCENTAGE" shall
mean, for a specified group of Participants for a Plan Year,
the average of the ratios (calculated separately for each
Participant in such group) of (i) the amount of Employer
contributions actually paid over to the Trust on behalf of
such Participant for the Plan Year to (ii) the Participant's
"Applicable Compensation" for such Plan Year (whether or not
the Employee was a Participant for the entire Plan Year).
Employer contributions on behalf of any Participant shall
include any Elective Deferrals made pursuant to the
Participant's deferral election (including "Excess Elective
Deferrals" of Highly Compensated Employees), but excluding
"Excess Elective Deferrals of Non-Highly Compensated Employees
that arise solely from Elective Deferrals made under the plan
or plans of the Employer and excluding Elective Deferrals that
are taken into account in the "Contribution Percentage" test
(provided the ADP test is satisfied both with and without
exclusion of these Elective Deferrals) and, at the election of
the Employer, Qualified Nonelective Contributions and
Qualified Matching Contributions. For purposes of computing
"Actual Deferral Percentages", an Employee who would be a
Participant but for the failure to make Elective Deferrals
shall be treated as a Participant on whose behalf no Elective
Deferrals are made.
(b) "APPLICABLE COMPENSATION" shall have
the meaning set forth in Section 3.2(F)(3)(g).
(5) DISTRIBUTION OF "EXCESS ELECTIVE DEFERRALS".
(a) IN GENERAL. A Participant may
assign to this Plan any "Excess Elective Deferrals" made
during such Participant's taxable year by notifying the Plan
Administrator, in accordance with Section 3.4(B)(5)(c) of the
amount of the "Excess Elective Deferrals" to be assigned to
the Plan. A Participant is deemed to notify the Plan
Administrator of any "Excess Elective Deferrals" that arise by
taking into account only those Elective Deferrals made to this
Plan and any other plans of the Employer.
Notwithstanding any other provision of the
Plan, "Excess Elective Deferrals" plus any income and minus
any loss allocable thereto shall be distributed no later than
April 15 to any Participant to whose account "Excess Elective
Deferrals" were assigned for the preceding taxable year of
such Participant and who claims "Excess Elective Deferrals"
for such taxable year of the Participant.
(b) DEFINITION. For purposes of the
Plan, "EXCESS ELECTIVE DEFERRALS" shall mean those Elective
Deferrals that are includible in a Participant's gross income
under section 402(g) of the Code to the extent such
Participant's Elective Deferrals for a taxable year exceed the
dollar limitation under such Code section. "Excess Elective
Deferrals" shall be
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treated as "Annual Additions" (within the meaning of Section
3.8(D)(1)) under the Plan, unless such amounts are distributed
no later than the first April 15 following the close of the
Participant's taxable year.
(c) CLAIMS. The Participant's claim
shall be in writing; shall be submitted to the Plan
Administrator no later than March 1; shall specify the
Participant's "Excess Elective Deferral" for the preceding
taxable year of such Participant (which shall not exceed the
amount of the Participant's Elective Deferral under this Plan
for such taxable year); and shall be accompanied by the
Participant's written statement that if such amounts are not
distributed, such "Excess Elective Deferral", when added to
other Elective Deferrals exceeds the limit imposed on the
Participant by section 402(g) of the Code for the taxable year
of the Participant in which the Elective Deferral occurred.
(d) DETERMINATION OF INCOME OR LOSS.
"Excess Elective Deferrals" shall be adjusted for income or
loss. The income or loss allocable to "Excess Elective
Deferrals" is the income or loss allocable to the
Participant's Elective Deferrals for the year multiplied by a
fraction, the numerator of which is such Participant's "Excess
Elective Deferrals" for the year and the denominator of which
is the Participant's account balance attributable to Elective
Deferrals without regard to any income or loss occurring
during such taxable year. Income or loss allocable to the
period between the end of the taxable year of the Participant
and the date of the distribution shall be disregarded in
determining income or loss.
(6) DISTRIBUTION OF "EXCESS CONTRIBUTIONS".
(a) IN GENERAL. Notwithstanding any other
provision of the Plan, "Excess Contributions", plus any income
and minus any loss allocable thereto, shall be distributed no
later than the last day of each Plan Year beginning after
December 31, 1987, to Participants to whose accounts such
"Excess Contributions" were allocated for the preceding Plan
Year. If such "Excess Contributions" are distributed more
than two and one-half months after the last day of the Plan
Year in which such "Excess Contributions" arose, a ten percent
excise tax will be imposed on the Employer maintaining the
plan with respect to such "Excess Contributions". Such
distributions shall be made to Highly Compensated Employees on
the basis of the respective portions of the "Excess
Contributions" attributable to each of such Employees.
"Excess Contributions" of Participants who are subject to the
Family Member aggregation rules of section 414(q)(6) of the
Code shall be allocated among the Family Members in proportion
to the Elective Deferrals (and amounts treated as Elective
Deferrals) of each Family Member that is combined to determine
the combined ADP. "Excess Contributions" shall be treated as
"Annual Additions" (within the meaning of Section 3.8(D)(1))
under the Plan.
(b) DETERMINATION OF INCOME OR LOSS. "Excess
Contributions" shall be adjusted for any income or loss. The
income or loss allocable to "Excess Contributions" is the
income or loss allocable to the Participant's Elective
Deferral account (and, if applicable, the Qualified
Nonelective Contribution account or the Qualified Matching
Contributions account or both) for the Plan Year multiplied by
a fraction, the numerator of which is such Participant's
"Excess Contributions" for the Plan Year and the denominator
of which is the Participant's account balance attributable to
Elective Deferrals (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if any of such
contributions are included in the ADP test) without regard to
any income or loss occurring during such Plan Year. Income or
loss
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allocable to the period between the end of the Plan Year and
the date of the distribution shall be disregarded in
determining income or loss.
(c) ACCOUNTING FOR "EXCESS CONTRIBUTIONS".
"Excess Contributions" shall be distributed from the
Participant's Elective Deferral account and Qualified Matching
Contribution account (if applicable) in proportion to the
Participant's Elective Deferrals and Qualified Matching
Contributions (to the extent used in the ADP test) for the
Plan Year. "Excess Contributions" shall be distributed from
the Participant's Qualified Nonelective Contribution account
only to the extent that such "Excess Contributions" exceed the
balance in the Participant's Elective Deferral account and
Qualified Matching Contribution account.
(d) DEFINITION. "EXCESS CONTRIBUTION" shall
mean, with respect to any Plan Year, the excess of:
(i) The aggregate amount of
Employer contributions actually taken into account in
computing the ADP of Highly Compensated Employees for
such Plan Year, over
(ii) The maximum amount of such
contributions permitted by the ADP test (determined
by reducing contributions made on behalf of Highly
Compensated Employees in order of the ratios used in
determining the ADP of Highly Compensated Employees,
beginning with the highest of such ratios).
(e) REDUCTION FOR "EXCESS ELECTIVE
DEFERRALS" DISTRIBUTED. The "Excess Contributions" which
would otherwise be distributed to the Participant shall be
reduced, in accordance with regulations, by the amount of
"Excess Elective Deferrals" distributed to the Participant.
(C) VESTING AND ACCOUNTS. The interest of each
Participant in his Accrued Benefit derived from such Participant's Elective
Deferral Contributions and the earnings thereon shall be nonforfeitable at
all times. Separate accounts for Elective Deferral Contributions shall be
maintained for each Participant. Each account shall be credited with the
applicable contributions and earnings thereon.
(D) MANNER OF MAKING ELECTIVE DEFERRAL CONTRIBUTION. The
Employer shall contribute the Elective Deferral Contributions to the Plan
within the earlier of (1) 30 days following the pay period to which such
Elective Deferral Contributions relate, or (2) 30 days following the end of
the Plan Year for which such Elective Deferral Contributions are being made.
(E) RESPONSIBILITY OF TRUSTEE. The Trustee shall be
accountable for Elective Deferral Contributions received by it, but shall
have no duty to determine that the Elective Deferral Contributions received
are of the correct amount or are correctly allocated by the Administrative
Committee to the Participant on whose behalf such Elective Deferral
Contributions were made.
3.5 MATCHING CONTRIBUTIONS. The rules relating to Matching
Contributions are as follows:
(A) AMOUNT. If the Adoption Agreement provides for
Matching Contributions, the Employer shall make a Matching Contribution on
behalf of each Participant who has elected to make Elective Deferral
Contributions or Participant Contributions to the Plan in the amounts set
forth in the Adoption
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Agreement. The amount of the Matching Contribution shall be the amount
selected by the Employer in the Adoption Agreement to match such Elective
Deferral Contributions and/or Participant Contributions. A Matching
Contribution for a Participant shall be allocated to his Matching Account
pursuant to Section 5.1(E). The Employer may also make Qualified Matching
Contributions to the extent permitted by the applicable Adoption Agreement.
(B) TIME. Matching Contributions, for any Plan year,
shall be paid to the Trustee no later than the due date (including
extensions of time) for filing the Employer's Federal income tax return for
the Taxable Year which ends with or within such Plan Year.
(C) RESPONSIBILITY OF TRUSTEE. The Trustee shall be
accountable for Matching Contributions received by it, but shall have no
duty to determine that the Matching Contributions are of the correct amount
or are correctly allocated by the Administrative Committee to the
Participant on whose behalf such Matching Contributions were made.
(D) LIMITATIONS. All Matching Contributions are subject
to the requirements of Sections 3.2(F) and 3.2(G).
(E) VESTING AND ACCOUNTS. Matching Contributions shall
be vested in accordance with Section A.3.5(F) of the Adoption Agreement. In
any event, Matching Contributions shall be fully vested at Normal Retirement
Age, upon the complete or partial termination of the Plan, or upon the
complete discontinuance of Employer contributions. Qualified Matching
Contributions shall be vested when made.
Forfeitures of Matching Contributions, other than "Excess
Aggregate Contributions" (within the meaning of Section 3.2(G)) shall be
made in accordance with Sections 5.5 and 7.6(C) and Section A.7.6(C) of the
Adoption Agreement.
Separate accounts for Matching Contributions shall be
maintained for each Participant. Each account shall be credited with the
applicable contributions and earnings thereon.
Notwithstanding the foregoing, Matching Contributions
(including Qualified Matching Contributions) shall be forfeited if the
contributions to which they relate are "Excess Deferrals", "Excess
Contributions", or "Excess Aggregate Contributions". [SEE TREAS. REG. Section
1.401(A)(4)-11(G)(6) EXAMPLE 8]
3.6 CONTRIBUTIONS HELD IN TRUST. The Trustee covenants and agrees
that it holds, and will hold, all sums (including any Employer Contributions,
any Elective Deferral Contributions, any Matching Contributions, any
Participant Contributions, any Qualified Matching Contributions, any Qualified
Nonelective Contributions and, if applicable, prior Qualified Voluntary
Employee Contributions) which, from time to time, have been, or may be, paid to
it as Trustee hereunder, in trust, subject to the provisions of the Plan, for
the purposes and upon the terms, conditions and powers set forth in this Plan
and Trust Agreement.
3.7 RETURN OF EMPLOYER CONTRIBUTIONS. The rules relating to the
return of Employer Contributions are as follows:
(A) EXCLUSIVE BENEFIT RULE AND EXCEPTIONS THERETO. The
Trust Fund shall be held by the Trustee for the exclusive purpose of
providing benefits to Participants in the Plan and their Beneficiaries and
defraying reasonable expenses of administering the Plan. No part of the
Trust Fund shall at any time inure to the benefit of the Employer; provided,
however, that Employer Contributions and/or Elective Deferral
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Contributions and/or Matching Contributions to the Trust Fund shall be
refunded to the Employer, to the extent such refunds do not, in themselves,
deprive the Plan of its qualified status, under the following circumstances
and subject to the following limitations:
(1) MISTAKE OF FACT. In the case of Employer
Contributions and/or Elective Deferral Contributions and/or Matching
Contributions which are made, in whole or in part, by reason of a
mistake of fact (as for example, incorrect information as to the
eligibility or Compensation of a Participant, or a mathematical
error), so much of such Employer Contributions and/or Elective
Deferral Contributions and/or Matching Contributions as is
attributable to the mistake of fact shall be returned to the Employer
on demand, upon presentation to the Trustee of evidence of the mistake
of fact and calculations as to the impact of such mistake. Demand and
repayment must be effected within one year after the date of payment
of the Employer Contributions and/or Elective Deferral Contributions
and/or Matching Contributions to which the mistake applies.
(2) DISALLOWANCE OF DEDUCTION. In the event the
deduction of the contribution made by the Employer is disallowed under
section 404 of the Code, such contribution (to the extent disallowed)
shall be returned to the Employer within one year of the disallowance
of the deduction.
(3) INITIAL DISQUALIFICATION. If any Employer
and/or Elective Deferral Contributions and/or Matching Contributions
to the Plan are conditioned on initial qualification of the Plan under
section 401 of the Code and if the Plan receives an adverse
determination with respect to its initial qualification, any such
Employer Contributions and/or Elective Deferral Contributions and/or
Matching Contributions shall be returned to such Employer within one
year after such adverse determination but only if the application for
determination is made by the time prescribed by law for filing the
Employer's Federal income tax return for the Taxable Year in which
such Plan was adopted or such later date as the Secretary of the
Treasury shall provide.
(B) REFUND TO BE DEDUCTED AS INVESTMENT LOSS WITH CERTAIN
EXCEPTIONS. In the event that any refund is paid to the Employer hereunder,
such refund shall be made without interest and shall be deducted from the
Employer Accounts and/or Elective Deferral Accounts and/or Matching Accounts
of the Participants as an investment loss except to the extent that the
amount of the refund can be attributed to one or more specific Participants
(as in the case of certain mistakes of fact and disallowances of
Compensation resulting in reduction of deductible Employer Contributions) in
which case the amount of the refund attributable to each such Participant's
Employer Account and/or Elective Deferral Account and/or Matching Account
shall be deducted directly from such Employer Account and/or Elective
Deferral Account and/or Matching Account.
(C) LIMITATIONS ON REFUNDS. Notwithstanding any other
provisions of this Section 3.7, no refund shall be made to the Employer:
(1) To the extent such refund is specifically
chargeable to the Employer Account(s) and/or Elective Deferral
Account(s) and/or Matching Account(s) of any Participant(s) in excess
of 100 percent of the amount in such Account(s);
(2) If the amount otherwise subject to refund
hereunder has been distributed to Participants and/or their
Beneficiaries (in which case the Employer shall have a claim directly
against the distributees to the extent of the refund to which it is
entitled);
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(3) To the extent the amount is not in excess of
the amount which would have been contributed had no mistake of fact or
mistake in determining the deduction occurred (in which case the
amount subject to refund shall be limited to the excess of (a) the
amount of the Employer Contribution and/or Elective Deferral
Contribution and/or Matching Contribution over (b) the amount that the
Employer would have contributed, had there not occurred a mistake of
fact or a mistake in determining the amount of the deduction);
(4) Of earnings attributable to the excess
Employer Contribution and/or Elective Deferral Contribution and/or
Matching Contribution;
(5) To the extent there are losses attributable
to the amount subject to refund (in which case the losses shall reduce
the amount to be returned); and
(6) To the extent the amount subject to refund
would cause the balance of the Employer Account and/or Elective
Deferral Account and/or Matching Account of any Participant to be
reduced to less than the balance which would have been in such
Employer Account and/or Elective Deferral Account and/or Matching
Account had the amount subject to refund not been contributed (in
which case the amount to be refunded to the Employer shall be limited
so as to avoid such reduction).
(D) FURTHER LIMITATIONS ON REFUNDS. All refunds under
this Section 3.7 shall be limited in amount, circumstance and timing to the
provisions of section 403(c) of ERISA, and no such refund shall be made if,
solely on account of such refund, the Plan would cease to be a qualified
plan under section 401(a) of the Code or to meet the requirements of section
401(k) of the Code.
3.8 LIMITATIONS ON ALLOCATIONS. The limitations relating to
allocations under the Plan are as follows:
(A) LIMITATION APPLICABLE WHERE NO OTHER EMPLOYEE PENSION
BENEFIT PLAN OR WELFARE BENEFIT FUND OR INDIVIDUAL MEDICAL BENEFIT ACCOUNT
MAINTAINED.
(1) BASIC LIMITATION. If the Participant does
not participate in, and has never participated in, any other Employee
Pension Benefit Plan maintained by the "Employer" (as defined in
Section 3.8(D)(5)) or Welfare Benefit Fund maintained by the
"Employer" or individual medical benefit account (as defined in
section 415(l)(2) of the Code) maintained by the "Employer" and which
provides an "Annual Addition" (as defined in Section 3.8(D)(1)) by the
"Employer", the amount of the "Annual Additions" which may be
allocated under this Plan to such Participant's accounts during any
Limitation Year shall not exceed the lesser of the "Maximum
Permissible Amount" (as defined in Section 3.8(D)(8)) or any other
limitation contained in the Plan. If the Employer contribution that
would otherwise be contributed or allocated to the Participant's
account would cause the "Annual Additions" for the Limitation Year to
exceed the "Maximum Permissible Amount", the amount contributed or
allocated shall be reduced so that the "Annual Additions" for the
Limitation Year will equal the "Maximum Permissible Amount".
(2) ESTIMATION OF LIMITATION COMPENSATION. Prior to
determining the Participant's actual Limitation Compensation for the
Limitation Year, the Employer may determine the "Maximum Permissible
Amount" for a Participant on the basis of a reasonable estimation of
the Participant's Limitation Compensation for the Limitation Year,
uniformly determined for Participants similarly situated.
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<PAGE> 48
(3) DETERMINATION OF ACTUAL LIMITATION COMPENSATION.
As soon as is administratively feasible after the end of the
Limitation Year, the "Maximum Permissible Amount" for the Limitation
Year shall be determined on the basis of the Participant's actual
Limitation Compensation for the Limitation Year.
(4) DISPOSITION OF "EXCESS AMOUNTS". If,
pursuant to Section 3.8(A)(3), or as a result of the allocation of
forfeitures or under other limited facts and circumstances
satisfactory to the Commissioner of Internal Revenue there is an
"Excess Amount" (as defined in Section 3.8(D)(6)) with respect to a
Participant for a Limitation Year, such "Excess Amount" shall be
disposed of as follows:
(a) First, any Participant
Contributions, to the extent their return would reduce the
"Excess Amount", shall be paid to the Participant as soon as
is administratively feasible. The Administrative Committee
shall certify to the Trustee the amount of any such reduction
to be returned to any Participant and the name and address of
the Participant.
(b) Second, if, after the application of
Section 3.8(A)(4)(a), an "Excess Amount" still exists, and the
Participant is covered by the Plan at the end of a Limitation
Year, the "Excess Amount"in the Participant's account shall be
used to reduce Employer contributions (including any
allocation of forfeitures), for such Participant in the next
Limitation Year (and for each succeeding Limitation Year as
necessary).
(c) If, after the application of Section
3.8(A)(4)(a) an "Excess Amount" still exists, and the
Participant is not covered by the Plan at the end of a
Limitation Year, the "Excess Amount" shall be held unallocated
in a suspense account. The suspense account shall be applied
in the next Limitation Year (and succeeding Limitation Years,
as necessary) to reduce Employer contributions for all
remaining Participants.
(d) If a suspense account is in existence at
any time during a Limitation Year pursuant to this Section
3.8(A)(4), it shall not participate in the allocation of the
Trust's investment gains and losses. If a suspense account is
in existence at any time during a particular Limitation Year,
all amounts in the suspense account must be allocated and
reallocated to Participants' accounts before any "Employer"
contributions or any Employee contributions may be made to the
Plan for that Limitation Year. "Excess Amounts" may not be
distributed to Participants or former Participants. In the
event the Plan of an adopting "Employer" is terminated and any
portion of the "Excess Amount" cannot be allocated to
Participants under this Section 3.8(A)(4), such portion of
such "Excess Amount" shall revert to such adopting "Employer".
(B) MULTI-PLAN LIMITATIONS FOR ADDITIONAL REGIONAL
PROTOTYPE DEFINED CONTRIBUTION PLANS AND/OR WELFARE BENEFIT FUNDS AND/OR
INDIVIDUAL MEDICAL BENEFIT ACCOUNTS.
(1) LIMITATION. This Section 3.8(B) applies, if,
in addition to this Plan, the Participant is covered under another
qualified "Regional Prototype Plan" which is a Defined Contribution
Plan maintained by the "Employer" and/or a Welfare Benefit Fund
maintained by the "Employer" and/or an individual medical benefit
account (as defined in section 415(l)(2) of the Code) maintained by
the "Employer" which provides an "Annual Addition", during any
Limitation Year. The "Annual Additions" which may be credited under
this Plan to a Participant's account for any such Limitation Year
shall not exceed the lesser of:
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(a) The "Maximum Permissible Amount"
reduced by the sum of any "Annual Additions" credited to such
Participant's accounts under such other Defined Contribution
Plan or Plans and under such other Welfare Benefit Fund or
Funds and under such individual medical benefit account or
accounts for the same Limitation Year; or
(b) Any other limitation contained in
this Plan.
If the "Annual Additions" with respect to the
Participant under other Defined Contribution Plans and Welfare Benefit
Funds maintained by the Employer are less than the "Maximum
Permissible Amount" and the Employer contribution that would otherwise
be contributed or allocated to the Participant's account under this
Plan would cause the "Annual Additions" for the Limitation year to
exceed this limitation, the amount contributed or allocated shall be
reduced so that the "Annual Additions" under all such plans and funds
for the Limitation Year will equal the "Maximum Permissible Amount".
If the "Annual Additions" with respect to the Participant under such
other Defined Contribution Plans and Welfare Benefit Funds in the
aggregate are equal to or greater than the "Maximum Permissible
Amount", no amount shall be contributed or allocated to the
Participant's account under this Plan for the Limitation Year.
(2) ESTIMATION OF LIMITATION COMPENSATION. Prior
to determining the Participant's actual Limitation Compensation for
the Limitation Year, the Employer may determine the "Maximum
Permissible Amount" for a Participant in the manner described in
Section 3.8(A)(2).
(3) DETERMINATION OF ACTUAL LIMITATION
COMPENSATION. As soon as is administratively feasible after the end
of the Limitation Year, the "Maximum Permissible Amount" for the
Limitation Year shall be determined on the basis of the Participant's
actual Limitation Compensation for the Limitation Year.
(4) ORDER OF DETERMINING "EXCESS AMOUNTS". If
pursuant to Section 3.8(B)(3) or as a result of the allocation of
forfeitures, a Participant's "Annual Additions" under this Plan and
such other plans would result in an "Excess Amount" for a Limitation
Year, the "Excess Amount" shall be deemed to consist of the "Annual
Additions" last allocated, except that "Annual Additions" attributable
to a Welfare Benefit Fund or to an individual medical benefit account
shall be deemed to have been allocated first regardless of the actual
allocation date.
(5) SIMULTANEOUS ALLOCATION OF "EXCESS AMOUNTS".
If an "Excess Amount" was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another
plan, the "Excess Amount" attributed to this Plan shall be the product
of:
(a) The total "Excess Amount" allocated
as of such date; times
(b) The ratio of (i) the "Annual
Additions" allocated to the Participant for the Limitation
Year as of such date under this Plan, to (ii) the total
"Annual Additions" allocated to the Participant for the
Limitation Year as of such date under this and all the other
qualified "Regional Prototype Plans" maintained by the
"Employer" which are Defined Contribution Plans.
(6) DISPOSITION OF "EXCESS AMOUNTS". Any "Excess
Amounts" attributed to this Plan shall be disposed of in accordance
with Section 3.8(A)(4).
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<PAGE> 50
(7) LIMITATION WHERE PARTICIPANT COVERED BY
NON-REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN. If the Participant
is covered under another qualified Defined Contribution Plan
maintained by the "Employer" which is not a "Regional Prototype Plan"
(as defined in Section 3.8(D)(10)), "Annual Additions" which may be
credited to the Participant's account under this Plan for any
Limitation Year shall be limited in accordance with Sections 3.8(B)(1)
through 3.8(B)(6) as though the other plan were a "Regional Prototype
Plan" unless the "Employer" provides other limitations in Section
A.3.8.(B) of the Adoption Agreement.
(C) MULTI-PLAN LIMITATIONS FOR ADDITIONAL PLAN WHICH IS A
DEFINED BENEFIT PLAN.
(1) LIMITATION. If, in addition to this Plan,
the "Employer" maintains or has maintained another plan which is a
Defined Benefit Plan covering any Participant in this Plan, the sum
of the Participant's "Defined Benefit Plan Fraction" and "Defined
Contribution Plan Fraction" shall not exceed 1.0 in any Limitation
Year. The "Annual Additions" which may be credited to the
Participant's accounts under this Plan for any Limitation Year shall
be limited as elected in Section A.3.8(C) of the Adoption Agreement.
(2) ELECTION OF PLAN LIMITATION. If Section
A.3.8(C)(1) of the Adoption Agreement is checked, the "Annual
Additions" which may be credited to a Participant's accounts shall be
reduced to the extent necessary so that they shall not exceed the
limitations in Sections 3.8(A) and 3.8(B) and, in addition, shall be
reduced to the extent necessary to prevent the decimal equivalent of
the sum of the "Defined Benefit Plan Fraction" (as defined in Section
3.8(D)(2)) and of the "Defined Contribution Plan Fraction" (as defined
in Section 3.8(D)(4)) for any Limitation Year beginning after December
31, 1982, with respect to such Participant, from exceeding 1.0.
(3) ORDER OF "ANNUAL ADDITIONS" REDUCTIONS. If,
as a result of Section 3.8(C)(2), the amount of the "Annual
Additions" which may be allocated to the accounts of any Participant
under this Plan is reduced for any Limitation Year, such reduction
shall be made as follows:
(a) The Participant Contribution portion
of such "Annual Additions" of such Participant for such
Limitation Year shall be reduced; and
(b) If the "Annual Additions" allocable
to such Participant Contributions are required to be reduced
to zero, then any Matching Contributions and Employer
Contributions (in that order) on behalf of such Participant
for such Limitation Year shall be reduced; and
(c) If the "Annual Additions" allocable
to Participant Contributions, Matching Contributions and
Employer Contributions are required to be reduced to zero,
then the Elective Deferral Contributions on behalf of such
Participant for such Limitation Year shall be reduced.
(4) TREATMENT OF "ANNUAL ADDITIONS" REDUCTIONS.
If as a result of Section 3.8(C)(2), the amount of the "Annual
Additions" which may be allocated under this Plan to any Participant's
accounts for any Limitation Year is reduced, such reduction shall be
treated as follows:
(a) The amount of such reduction
consisting of Participant Contributions shall be paid to the
Participant as soon as is administratively feasible; and
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(b) The amount of such reduction
consisting of Employer Contributions, Matching Contributions
and Elective Deferral Contributions shall be treated as an
"Excess Amount" and disposed of in accordance with Section
3.8(A)(4).
(D) DEFINITIONS. For purposes of this Article III, the
following terms shall be defined as follows:
(1) "ANNUAL ADDITIONS" shall mean, with respect
to any Participant, the amounts allocated to such Participant's
accounts during the Limitation Year that constitute:
(a) "Employer" contributions;
(b) Employee contributions;
(c) Forfeitures;
(d) Amounts allocated, after March 31,
1984, to an individual medical benefit account, as defined in
section 415(l)(2) of the Code, which is part of a pension or
annuity plan maintained by the "Employer";
(e) Amounts derived from contributions
paid or accrued after December 31, 1985, in taxable years
ending after such date, which are attributable to
post-retirement medical benefits, allocated to the separate
account of a key employee, as defined in section 419A(d)(3) of
the Code, under a Welfare Benefit Fund, maintained by the
"Employer"; and
(f) Any "Excess Amount" applied under
Sections 3.8(A) or 3.8(B) or 3.8(C) (if applicable), in the
Limitation Year to reduce "Employer" contributions for such
Limitation Year.
(2) "DEFINED BENEFIT PLAN FRACTION" shall mean a
fraction, the numerator of which is the sum of the Participant's
"Projected Annual Benefits" (as defined in Section 3.8(D)(9)) under
all the Defined Benefit Plans (whether or not terminated) maintained
by the "Employer", and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the Limitation Year
under sections 415(b) and (d) of the Code or 140 percent of the
Participant's "Highest Average Compensation" (as defined in Section
3.8(D)(7)), including any adjustments under section 415(b) of the
Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning
after December 31, 1986, in one or more Defined Benefit Plans
maintained by the "Employer" which were in existence on May 6, 1986,
the denominator of this fraction shall not be less than 125 percent of
the sum of the annual benefits under such Plans which the Participant
had accrued as of the close of the last Limitation Year beginning
before January 1, 1987, disregarding any changes in the terms and
conditions of the Defined Benefit Plan after May 5, 1986. The
preceding sentence applies only if the Defined Benefit Plans
individually and in the aggregate satisfied the requirements of
section 415 of the Code for all Limitation Years beginning before
January 1, 1987.
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(3) "DEFINED CONTRIBUTION DOLLAR LIMITATION"
shall mean $30,000 or, if greater, one-fourth of the defined benefit
dollar limitation set forth in section 415(b)(1) of the Code as in
effect for the Limitation Year.
(4) "DEFINED CONTRIBUTION PLAN FRACTION" shall
mean a fraction, the numerator of which is the sum of the "Annual
Additions" to the Participant's account under all the Defined
Contribution Plans (whether or not terminated) maintained by the
"Employer" for the current and all prior Limitation Years (including
the "Annual Additions" attributable to the Participant's nondeductible
employee contributions to all Defined Benefit Plans, whether or not
terminated, maintained by the "Employer", and the "Annual Additions"
attributable to all Welfare Benefit Funds, and individual medical
benefit accounts (as defined in section 415(l)(2) of the Code)
maintained by the "Employer"), and the denominator of which is the sum
of the maximum aggregate amounts for the current and all prior
Limitation Years of service with the "Employer" (regardless of whether
a Defined Contribution Plan was maintained by the "Employer"). The
maximum aggregate amount in any Limitation Year is the lesser of 125
percent of the dollar limitation determined under sections 415(b) and
415(d) of the Code in effect under section 415(c)(1)(A) of the Code or
35 percent of the Participant's Limitation Compensation for such
Limitation Year.
If the Employee was a Participant as of the end of the first day of
the first Limitation Year beginning after December 31, 1986, in one or
more Defined Contribution Plans maintained by the "Employer" which
were in existence on May 6, 1986, the numerator of this fraction shall
be adjusted if the sum of this fraction and the "Defined Benefit Plan
Fraction" (as defined in Section 3.8(D)(2)) would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount equal
to the product of (a) the excess of the sum of the fractions over 1.0
times (b) the denominator of this fraction, shall be permanently
subtracted from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as of the end
of the last Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the section 415 limitation applicable to
the first Limitation Year beginning on or after January 1, 1987.
The "Annual Addition" for any Limitation Year
beginning before January 1, 1987, shall not be recomputed to treat all
Employee contributions as "Annual Additions".
(5) "EMPLOYER" shall mean the Employer that
adopts the Plan, and all members of a controlled group of corporations
(as defined in section 414(b) of the Code as modified by section
415(h) of the Code), all commonly controlled trades or businesses (as
defined in section 414(c) of the Code as modified by section 415(h) of
the Code) or affiliated service groups (as defined in section 414(m)
of the Code) of which the adopting Employer is a part, and any other
entity required to be aggregated with the Employer pursuant to
Treasury regulations under section 414(o) of the Code.
(6) "EXCESS AMOUNT" shall mean the excess of the
Participant's "Annual Additions" for the Limitation Year over the
"Maximum Permissible Amount", less loading and other administrative
charges allocable to such excess.
(7) "HIGHEST AVERAGE COMPENSATION" shall mean the
average compensation for the three consecutive Accrual Computation
Periods with the "Employer" that produces the highest average.
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(8) "MAXIMUM PERMISSIBLE AMOUNT" shall mean the
maximum "Annual Addition" that may be contributed or allocated to a
Participant's account under the Plan for any Limitation Year which
maximum is the lesser of:
(a) The "Defined Contribution Dollar
Limitation" (as defined in Section 3.8(D)(3)); or
(b) 25 percent of the Participant's
Limitation Compensation for the Limitation Year.
If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different Computation
Period, the "Maximum Permissible Amount" shall not exceed the "Defined
Contribution Dollar Limitation" multiplied by the following fraction:
NUMBER OF MONTHS IN THE SHORT LIMITATION YEAR
---------------------------------------------
12
(9) "PROJECTED ANNUAL BENEFIT" shall mean the
annual retirement benefit (adjusted to an actuarially equivalent
straight life annuity if such benefit is expressed in a form other
than a straight life annuity or qualified joint and survivor annuity)
to which the Participant would be entitled under the terms of the plan
assuming:
(a) The Participant will continue
employment until normal retirement age under the plan (or
current age, if later), and
(b) The Participant's compensation for
the current Limitation Year and all other relevant factors
used to determine benefits under the plan will remain constant
for all future Limitation Years.
(10) "REGIONAL PROTOTYPE PLAN" shall mean a plan
the form of which is the subject of a favorable notification letter
from the Internal Revenue Service.
(E) SPECIAL RULE. The compensation limitation referred
to in Section 3.8(D)(8)(b) shall not apply to any contribution for medical
benefits (within the meaning of section 401(h) or section 419A(f)(2) of the
Code) which is otherwise treated as an "Annual Addition" under section
415(l)(1) or section 419A(d)(2) of the Code.
3.9 ROLLOVER CONTRIBUTIONS. The rules relating to Rollover
Contributions are as follows:
(A) GENERAL. If permitted by the Adoption Agreement, any
Participant may, with the approval of the Administrative Committee, make a
Rollover Contribution. The Trustee shall credit the amount of any Rollover
Contribution to the Participant's Rollover Account as of the date the
Rollover Contribution is made. A Rollover Contribution shall be fully
vested on the date of contribution. The limitations of Section 3.8 shall
not apply to Rollover Contributions. All Rollover Contributions shall be in
cash and/or other property acceptable to the Trustee. If permitted by the
Adoption Agreement, Employees other than Participants may be permitted to
make Rollover Contributions to the Plan.
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(B) TRUSTEE-TO-TRUSTEE TRANSFERS OF ROLLOVER CONTRIBUTIONS TO
PLAN. Effective January 1, 1993, if the Adoption Agreement provides for
Rollover Contributions and, if the Participant or other Employee eligible to
make a Rollover Contribution to the Plan (1) elects to have such Rollover
Contribution paid directly to the Plan, and (2) specifies the Plan as the
plan to which such Rollover Contribution is to be paid (in such form and at
such time as the Administrative Committee may prescribe), such Rollover
Contribution shall be made in the form of a direct trustee-to-trustee
transfer as described in section 401(a)(31) of the Code, as in effect on and
after January 1, 1993.
(C) ELIGIBLE ROLLOVER DISTRIBUTIONS FROM PLAN. This
Section 3.9(C) applies to distributions made on or after January 1, 1993.
(1) ELECTION OF DIRECT ROLLOVER. Notwithstanding
any provision of the Plan to the contrary that would otherwise limit a
"Distributee's" election under this Section 3.9(C), a "Distributee"
may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an "Eligible Rollover
Distribution" that is equal to at least $500 paid directly to an
"Eligible Retirement Plan" specified by the "Distributee" in a "Direct
Rollover".
(2) DEFINITIONS.
(a) "ELIGIBLE ROLLOVER DISTRIBUTION".
An "Eligible Rollover Distribution" is any distribution of all
or any portion of the balance to the credit of the
"Distributee", except that an "Eligible Rollover Distribution"
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
"Distributee" or the joint lives (or joint life expectancies)
of the "Distributee" and the "Distributee's" designated
beneficiary, or for a specified period of ten years or more;
any distribution to the extent such distribution is required
under section 401(a)(9) of the Code; the portion of any
distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); and any
other distribution(s) that is reasonably expected to total
less than $200 during a year.
(b) "ELIGIBLE RETIREMENT PLAN". An
"Eligible Retirement Plan" is an individual retirement account
described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a
qualified plan described in section 401(a) of the Code, that
accepts the "Distributee's" "Eligible Rollover Distribution".
However, in the case of an "Eligible Rollover Distribution" to
the surviving spouse, an "Eligible Retirement Plan" is an
individual retirement account or individual retirement
annuity.
(c) "DISTRIBUTEE". A "Distributee"
includes an employee or former employee. In addition, the
employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is
the alternate payee under a Qualified Domestic Relations
Order, as defined in section 414(p) of the Code, are
"Distributees" with regard to the interest of the spouse or
former spouse.
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(d) "DIRECT ROLLOVER". A "Direct
Rollover" is a payment by the Plan to the "Eligible Retirement
Plan" specified by the "Distributee".
3.10 TRANSFERS OF ACCOUNTS FROM AND TO OTHER QUALIFIED PLANS. The
rules relating to transfers of accounts are as follows:
(A) TRANSFER OF ACCOUNTS FROM OTHER QUALIFIED PLANS.
(1) GENERAL RULES. If permitted by the Adoption
Agreement, Participants may have the assets in their accounts in other
plans transferred to this Plan provided:
(a) The other plan is a plan which
formerly covered the Participant and is qualified under
section 401(a) of the Code but is not a Defined Benefit Plan
or a money purchase pension plan (including a target benefit
plan) or a plan which provided for distribution or should have
provided for distribution in the form of qualified joint and
survivor annuities or a direct or indirect transferee from any
such plan unless the Plan adopted hereunder by the Employer is
a money purchase plan;
(b) The Administrative Committee
approves such transfer;
(c) The Trustee accepts such transfer;
and
(d) The transferred assets consist
solely of cash and/or other property acceptable to the
Trustee.
The Trustee shall credit the fair market value of such transferred
assets to the Transfer Account of the Participant on whose behalf such
assets were transferred as of the date of the transfer. The interest
of a Participant in his Transfer Account shall be fully vested on the
date of the transfer. The limitations of Section 3.8 shall not apply
to such transfers. If permitted by the Adoption Agreement, Employees
other than Participants may be permitted to make direct transfers to
the Plan.
(2) LIMITATIONS APPLICABLE TO TRANSFERS FROM
PLANS COVERING CERTAIN KEY EMPLOYEES AND FIVE-PERCENT OWNERS. In the
event assets are transferred from a qualified plan covering Key
Employees in a Top-Heavy Plan, or five-percent owners (within the
meaning of section 416(i)(1) of the Code) of their former employer,
the following restrictions apply:
(a) Separate Transfer Accounts must be
maintained for the assets transferred by each of the former
Key Employees or five-percent owners;
(b) The former five-percent owners or
the former Key Employees (if they were five-percent owners of
their former employer) may, subject to the terms of the Plan,
receive benefits from such separate Transfer Accounts before
they attain age 59 1/2 or become disabled, but subject to any
penalties provided by the Code for such distributions; and
(c) The former five-percent owners or
the former Key Employees (if they were five-percent owners of
their former employer) must commence receiving benefits from
such separate Transfer Accounts not later than the April 1 of
the calendar year following the calendar year in which they
attain age 70 1/2.
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(B) TRANSFERS OF ACCOUNTS TO OTHER QUALIFIED PLANS. Upon
the request of a Participant who has terminated his services with the
Employer or whose coverage under this Plan has terminated, but only with the
approval of the Administrative Committee, the Trustee shall transfer all
amounts held in the Plan for the account of such Participant to another plan
or plans (including another qualified plan of the Employer) provided such
other plan or plans meet the requirements of section 401(a) of the Code and
such other plan or plans are maintained by the employer of such Participant
(or the Employer) and any required governmental notifications have been made
and further provided that any request is accompanied by an acceptance letter
from the trustee of the transferee plan or plans. Neither the Trustee nor
the Administrative Committee shall have any further liability under this
Plan with respect to amounts so transferred.
3.11 TOP-HEAVY PROVISIONS. If the Plan is or becomes top-heavy in
any Plan Year beginning after December 31, 1983, the provisions of this Section
3.11 shall supersede any conflicting provisions in the Plan or in the Adoption
Agreement. The following provisions shall be effective with respect to any
adopting Employer in any Plan Year in which the Plan, with respect to such
adopting Employer, is determined to be a Top-Heavy Plan.
(A) MINIMUM ALLOCATION.
(1) GENERAL. Except as otherwise provided in
Section 3.11(A)(4), the Employer contributions and forfeitures
allocated for any Plan Year in which the Plan is a Top-Heavy Plan on
behalf of any Participant who is not a Key Employee shall not be less
than the lesser of three percent of such Participant's "Compensation"
(as defined in Section 3.11(A)(3)) for such Plan Year or, in the case
where the Employer has no Defined Benefit Plan which designates this
Plan to satisfy section 401 of the Code, the largest percentage of
Employer contributions and forfeitures, as a percentage of the Key
Employee's "Compensation", as limited by section 401(a)(17) of the
Code, allocated on behalf of any Key Employee for that Plan Year. The
minimum allocation shall be determined without regard to any Social
Security contribution. This minimum allocation shall be made even
though, under other Plan provisions, the Participant would not
otherwise be entitled to receive an allocation, or would have received
a lesser allocation in the Plan Year because:
(a) The Participant failed to complete 1,000
Hours of Service (or any equivalent provided in the Plan);
(b) The Participant failed to make mandatory
employee contributions to the Plan; or
(c) The Participant's "Compensation" was less
than a stated amount.
(2) NONFORFEITABILITY OF MINIMUM ALLOCATION. The
minimum allocation required (to the extent required to be
nonforfeitable under section 416(b) of the Code) may not be forfeited
under section 411(a)(3)(B) or 411(a)(3)(D) of the Code.
(3) DEFINITION OF "COMPENSATION". For purposes
of computing the minimum allocation, "Compensation" shall mean
Limitation Compensation, as defined in Section A.1.47 of the Adoption
Agreement as limited by section 401(a)(17) of the Code.
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(4) EXCEPTIONS.
(a) LAST DAY OF PLAN YEAR RULE. The
provisions in Section 3.11(A)(1) shall not apply to any Participant who
was not employed by the Employer on the last day of the Plan Year.
(b) MINIMUM ALLOCATION OR BENEFIT
PROVIDED UNDER OTHER PLAN. The provisions in Section
3.11(A)(1) shall not apply to any Participant to the extent
the Participant is covered under any other Employee Pension
Benefit Plan(s) of the Employer and the Employer has provided
in Section A.3.11(A)(2) of the Adoption Agreement that the
minimum allocation or benefit requirements applicable to
Top-Heavy Plans shall be met in the other Employee Pension
Benefit Plan(s). [NOTE: THIS PROVISION MAY CAUSE THE PLAN TO
FAIL TO SATISFY THE UNIFORMITY REQUIREMENT OF TREAS. REG.
Section 1.401(A)(4)-2(B)(2)(II) FOR PLANS USING A
DESIGN-BASED SAFE HARBOR, EVEN THOUGH ALL OTHER REQUIREMENTS
OF THE SAFE HARBOR ARE MET.]
(5) ELECTIVE DEFERRALS AND MATCHING
CONTRIBUTIONS. Neither Elective Deferrals nor Matching Contributions
may be taken into account for the purpose of satisfying the minimum
top-heavy contribution requirement under Section 3.11(A)(1).
(B) VESTING. For any Plan Year in which this Plan is a
Top-Heavy Plan, one of the minimum vesting schedules as elected by the
Employer in the Adoption Agreement shall automatically apply to the Plan.
The minimum vesting schedule applies to all benefits within the meaning of
section 411(a)(7) of the Code except those attributable to Employee
contributions, including benefits accrued before the effective date of
section 416 of the Code and benefits accrued before the Plan became a
Top-Heavy Plan. Further, no decrease in a Participant's nonforfeitable
percentage may occur in the event the Plan's status as a Top-Heavy Plan
changes for any Plan Year. However, this Section 3.11(B) does not apply to
the account balances of any Employee who does not have an Hour of Service
after the Plan has initially become a Top-Heavy Plan and such Employee's
account balance attributable to Employer contributions and forfeitures shall
be determined without regard to this Section 3.11(B).
Notwithstanding the above, in the event the vesting schedule
selected under Section 7.6 provides for more rapid vesting than the vesting
schedule selected under this Section 3.11(B), the vesting schedule selected
under this Section 3.11(B) shall be superseded by the vesting schedule under
Section 7.6 but only to the extent more rapid vesting is provided in such
schedule.
The Participant shall at all times have a nonforfeitable right
to all of his Accrued Benefit under the Plan attributable to Elective
Deferral Contributions, Participant Contributions and Qualified Voluntary
Employee Contributions.
ARTICLE IV
ACCOUNTS
4.1 SEPARATE ACCOUNTS. The Administrative Committee shall
maintain or cause to be maintained, for each Participant, in accordance with
the provisions of this Section 4.1, a separate Employer Account and, if
Matching Contributions are permitted in accordance with Section 3.5, a separate
Matching Account, and if
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Elective Deferral Contributions are permitted in accordance with Section 3.4, a
separate Elective Deferral Account, and if Participant Contributions are
permitted in accordance with Section 3.2, a separate Participant Account, and,
if Rollover Contributions are made on behalf of a Participant, a separate
Rollover Account, and, if direct transfers are made to the Plan on behalf of a
Participant pursuant to Section 3.10, a separate Transfer Account, and, if
Qualified Voluntary Employee Contributions have been permitted in accordance
with Section 3.3, a separate QVEC Account, to which Employer, Matching,
Elective Deferral, Participant and Rollover Contributions and direct transfers
and Qualified Voluntary Employee Contributions, respectively, shall be
credited. The Administrative Committee shall also maintain or cause to be
maintained, for each such Participant, in accordance with the provisions of
this Section 4.1, a record of the value of the Participant's Employer,
Matching, Elective Deferral, Participant, Rollover, Transfer and QVEC Accounts,
which shall represent the interest of such Participant in the assets of the
accounts maintained by the Trustee for his benefit. Separate accounts shall
also be maintained, in accordance with Section 3.1(B)(3)(b) for any Qualified
Matching Contributions and/or Qualified Nonelective Contributions made to the
Plan on behalf of any Participant.
ARTICLE V
ALLOCATION OF CONTRIBUTIONS, EARNINGS AND FORFEITURES
5.1 ALLOCATIONS OF CONTRIBUTIONS. The rules relating to
allocations of contributions are as follows:
(A) EMPLOYER CONTRIBUTIONS. The Administrative Committee
shall allocate the Employer Contribution for each Plan Year for which an
Employer Contribution is made among the Employer Accounts of each
Participant entitled to receive an allocation, in accordance with the terms
of the Adoption Agreement. Each such allocation shall be effective as of
the last day of the Plan Year, except as otherwise specified in the Plan or
Adoption Agreement.
(B) PARTICIPANT CONTRIBUTIONS. The Trustee, upon
instructions from the Administrative Committee, shall, as of the date
received from the Employer, allocate any amounts contributed by a
Participant, in accordance with Section 3.2, to the Participant Account of
such Participant.
(C) QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS. No
Qualified Voluntary Employee Contributions are permitted after December 31,
1986.
(D) ELECTIVE DEFERRAL CONTRIBUTIONS. The Trustee, upon
instructions from the Administrative Committee, shall, as of the date
received from the Employer, allocate any Elective Deferral Contributions
made on behalf of any Participant in accordance with Section 3.4, to the
Elective Deferral Account of such Participant.
(E) MATCHING CONTRIBUTIONS. The Trustee, upon
instructions from the Administrative Committee, shall, as of the date
received from the Employer, allocate any Matching Contributions made on
behalf of any Participant, in accordance with Section 3.5 and the Adoption
Agreement, to the Matching Account of such Participant.
(F) ROLLOVER CONTRIBUTIONS. The Trustee, upon
instructions from the Administrative Committee, shall as of the date
received from the Employer or as of the date received in a
trustee-to-trustee transfer under Section 3.9(B), allocate any amounts
contributed by a Participant or transferred to the Trustee
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on his behalf under Section 3.9(B), in accordance with Section 3.9, to the
Rollover Account of such Participant.
(G) DIRECT TRANSFERS. The Trustee shall, as of the date
received from another qualified plan, pursuant to instructions of the
Administrative Committee, allocate any amounts transferred on behalf of a
Participant pursuant to Section 3.10, to the Transfer Account of such
Participant.
(H) QUALIFIED MATCHING AND QUALIFIED NONELECTIVE
CONTRIBUTIONS. The Trustee, upon instructions from the Administrative
Committee, shall, as of the date received from the Employer, allocate any
Qualified Matching and/or Qualified Nonelective Contribution made on behalf
of any Participant, to the separate account or accounts of such Participant
in accordance with Section 3.1(B)(3)(b).
5.2 ADVICE TO TRUSTEE RE ALLOCATIONS OF CONTRIBUTIONS AND DIRECT
TRANSFERS. The Administrative Committee shall, at the time contributions or
direct transfers are transmitted to the Trustee, deliver to the Trustee a
schedule showing the amounts allocated to the Employer, the Matching, the
Elective Deferral, the Participant, the Rollover, the Transfer and the QVEC
Accounts and the Qualified Matching Contribution account and the Qualified
Nonelective Contribution account of each Participant and, if Section 6.1(B) is
applicable to this Plan, indicating the manner in which the Participant has
directed that such contributions or direct transfers be invested.
5.3 VALUATIONS. The Trustee, as of each Valuation Date, shall
cause a valuation to be made of the assets of the Trust Fund and of each
Employer, Matching, Elective Deferral, Participant, Rollover, Transfer and QVEC
Account and of each Qualified Matching Contribution account and Qualified
Nonelective Contribution account in such Fund at their current fair market
value. In each such valuation, the Trustee shall credit all income and profits
realized since the preceding Valuation Date in accordance with Section 5.4 and
shall deduct all losses, costs, charges and expenses of administering the Trust
Fund since the preceding Valuation Date.
The Trustee shall furnish the Administrative Committee with a report
of each such valuation of the Trust Fund.
5.4 ALLOCATION OF INCREASES AND DECREASES. As of each Valuation
Date, in determining the valuation of each Employer, Matching, Elective
Deferral, Participant, Rollover, Transfer and QVEC Account and of each
Qualified Matching Contribution account and Qualified Nonelective Contribution
account under Section 5.3, upon receipt of the Trustee's report, the
Administrative Committee shall allocate the increase or decrease in the fair
market value of the assets of the Trust Fund, after reduction for any
forfeitures under Section 7.6, and any interim Employer, Matching, Elective
Deferral, Participant, Rollover and Qualified Voluntary Employee Contributions
and direct transfers and Qualified Matching and Qualified Nonelective
Contributions to the Employer, Matching, Elective Deferral, Participant,
Rollover and QVEC Accounts and Transfer Account and Qualified Matching
Contribution and Qualified Nonelective Contribution accounts of each
Participant in the proportion that the amount in the Employer, Matching,
Elective Deferral, Participant, Rollover and QVEC Accounts and Transfer Account
and Qualified Matching Contribution and Qualified Nonelective Contribution
accounts of each Participant bears respectively to the total amount in the
Employer, Matching, Elective Deferral, Participant, Rollover and QVEC Accounts
and Transfer Accounts and Qualified Matching Contribution and Qualified
Nonelective Contribution accounts of all Participants, all as determined on the
first day or last day (as specified in the Adoption Agreement) of the period in
which the Valuation Date occurs (except that the last day of the period shall
be used for the initial allocation for any Employer). At the discretion of the
Administrative Committee, in allocating increases and decreases, the
Administrative Committee may take into account on a uniform and
nondiscriminatory basis contributions and forfeitures allocated during the
period in which the Valuation Date occurs. For purposes of this Section 5.4,
in the event the Adoption Agreement provides for
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Participant directed investments pursuant to Section 6.1(B), each Account (and
each other account) subject to such Participant directed investments shall be
treated as a separate Trust Fund.
5.5 FORFEITURES. All amounts forfeited by separated Participants
of an adopting Employer in accordance with Section 7.6 shall be debited to the
Employer and/or Matching Accounts of the respective Participants employed by
such adopting Employer who are subject to such forfeitures. Subject to Section
3.8 and, except as otherwise provided in the Adoption Agreement, forfeitures
shall be aggregated with Employer, and/or Matching Contributions for the Plan
Year and shall be allocated to the Accounts of the remaining Participants
employed by such adopting Employer in the same manner as is provided for the
allocation of Employer, and/or Matching Contributions under Section 5.1. Such
allocation shall be effected as of the date specified in the Adoption
Agreement. Notwithstanding the foregoing, the forfeited amounts may first be
used to restore a rehired Participant's non-vested account that was forfeited,
as provided in Section 7.6(C).
ARTICLE VI
INVESTMENT OF ACCOUNTS
6.1 INVESTMENT OF ACCOUNTS. The Employer shall indicate in the
Adoption Agreement whether the Trustee, the Participant (or Beneficiary, if
applicable) and/or an Investment Manager shall have the power to direct
investment of Employer, Matching, Elective Deferral, Participant, Rollover,
Transfer and/or QVEC Accounts and/or of any other account (e.g., Qualified
Matching Contribution account and Qualified Nonelective Contribution account)
under the Plan. To the extent the Participant (or Beneficiary, if applicable)
does not have the power to direct the investment of his accounts under the
Plan, such Participant (or Beneficiary, if applicable) shall have a ratable
interest in all assets of the Trust.
(A) INVESTMENT BY TRUSTEE AND/OR INVESTMENT MANAGER. If
the Trustee or an Investment Manager is selected to direct investment of
Employer and/or Matching and/or Elective Deferral and/or Participant and/or
Rollover and/or Transfer and/or QVEC Accounts and/or Qualified Matching
Contribution account and/or Qualified Nonelective Contribution account
and/or other accounts, the Trustee, subject to the requirements set forth in
Article X, or, if an Investment Manager has been selected to direct
investments, the Trustee, subject to the directions of the Investment
Manager and subject to the requirements set forth in Articles X and XII,
shall have full discretion and authority to invest and reinvest the
principal and income of that portion of the Trust Fund committed to it for
investment in any form of property not prohibited by law (without
restriction to investments authorized by State law for fiduciaries).
Consistent with this authority, but not by way of limitation, the Trustee is
hereby specifically empowered with respect to that portion of the Trust Fund
committed to it:
(1) To invest any part or all of the assets in
any common stocks, bonds, insurance contracts, mortgages, notes or
other property of any kind, real or personal. All such investments
shall be diversified as provided by law, unless it is clearly prudent
not to do so;
(2) To invest any part or all of the assets in
any common, collective, pooled or group trust fund meeting the
requirements of Rev. Rul. 81-100, 1981-1 CB 326 and operated by a bank
or similar financial institution (even if such bank or other
institution serves as Trustee) supervised by the United States or any
State, provided such investments are available only to pension and
profit-sharing trusts which meet the requirements of section 401(a)
and related Code sections. So long as any portion
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of the Trust Fund is so invested, the instrument establishing such
common, collective, pooled or group trust fund shall constitute an
integral part of this Plan and Trust Agreement;
(3) To invest all or part of the assets in
deposits which bear a reasonable interest rate, including certificates
of deposit, in any bank, savings or similar financial institution
(even if such bank or other institution serves as Trustee) supervised
by the United States or any State;
(4) To hold cash uninvested for a reasonable
period of time and to deposit such sums in an account of any banking,
savings, or similar financial institution (even if such bank or other
institution serves as Trustee) supervised by the United States or any
State;
(5) To manage, purchase, grant options to
purchase, dispose of, abandon, improve, repair, insure, lease for any
future or present term or otherwise deal with all property, real or
personal, on such terms and conditions as the Trustee shall decide,
without liability on the purchasers to see to the application of the
purchase money or to the propriety of any such disposition;
(6) To borrow money or assume indebtedness, for
the purposes of the Plan, upon such terms as the Trustee deems
advisable. All or part of the assets may be pledged as security for
such loans or mortgages and no person lending to the Trustee need see
to the application of money lent or the propriety of borrowing.
Notwithstanding anything in this Section 6.1(A)(6) to the contrary, in
the event the Trustee borrows against the loan values of Insurance
Contracts purchased under the terms of the Plan, the amounts so
borrowed must be borrowed on a pro rata basis under each Insurance
Contract held by the Trustee;
(7) To extend mortgages or to invest in loans to
a Participant in accordance with, and as provided by, Section 7.11;
(8) To join in or oppose the reorganization,
recapitalization, consolidation, sale or merger of corporations or
properties, including those in which it is interested as Trustee, upon
such terms as deemed appropriate;
(9) To hold investments in nominee or bearer
form, provided the requirements of section 403(a) of ERISA are not
violated by so registering and so holding such investments;
(10) To give proxies;
(11) To provide benefits by annuity contracts
issued by an Insurer, if so instructed by the Administrative
Committee;
(12) To deduct from and charge against the Trust
Fund any taxes paid by it, which may be imposed upon the Trust Fund or
the income thereof, or which the Trustee is required to pay with
respect to the interest of any person therein;
(13) To receive and withdraw from the Trust Fund
reasonable compensation for the Trustee's services (unless the Trustee
is a full-time employee of the Employer in which case no additional
compensation shall be paid to the Trustee) and expenses hereunder,
including the compensation of an Investment Manager and legal fees,
and charge the Trust Fund, upon approval by the Administrative
Committee, for the compensation and expenses of any independent
accountant or actuary who may be
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employed from time to time by the Trustee, Employer or Administrative
Committee in connection with this Plan and Trust Agreement;
(14) To invest Trust assets allocable to Employer
contributions in Qualifying Employer Securities but only to the extent
the Plan and Adoption Agreement so provide and only if such Employer
contributions are not subject to Participant directed investment and,
if the Plan, as adopted by the Employer, is a money purchase plan,
only if immediately after the acquisition of such Qualifying Employer
Securities, the aggregate fair market value of such Qualifying
Employer Securities does not exceed ten percent of the fair market
value of Plan assets. In no event shall Trust assets be invested in
employer real property. In no event shall Employer contributions
subject to Participant directed investment or Participant, Matching,
Qualified Matching, Elective Deferral, Rollover or Qualified Voluntary
Employee Contributions or direct transfers be invested in Qualifying
Employer Securities unless such investment is in compliance with
applicable Federal and state securities laws and, if the Plan, as
adopted by the Employer, is a money purchase plan, is in compliance
with the ten percent limit described above;
(15) If the Trustee is a bank, to invest any part
or all of the assets in a common trust fund of said Trustee bank
provided such common trust fund is described in section 584 of the
Code; and
(16) If a bank, to accept employment and
thereafter act as agent for the Employer or Administrative Committee
to perform multiple or ancillary services for the Plan, its
Participants and Beneficiaries and to receive and withdraw from the
Trust Fund reasonable compensation therefor. Nothing done by the
Trustee as agent shall enlarge or increase in any manner the
responsibilities or liabilities of the Trustee hereunder which shall
be governed solely by the terms of the Plan and by applicable law.
(B) INVESTMENT BY PARTICIPANT OR BENEFICIARY. If the
Participant or Beneficiary (if applicable) is selected to direct investment
of his Employer and/or Matching and/or Elective Deferral and/or Participant
and/or Rollover and/or Transfer and/or QVEC Accounts and/or Qualified
Matching Contribution accounts and/or Qualified Nonelective Contribution
accounts and/or other accounts, the investment of all sums in the Employer
and/or Matching and/or Elective Deferral and/or Participant and/or Rollover
and/or Transfer and/or QVEC Accounts and/or Qualified Matching Contribution
accounts and/or Qualified Nonelective Contribution accounts and/or other
accounts of any Participant or Beneficiary (if applicable) shall be
directed, subject to any limitations on investments indicated in the
Adoption Agreement, by such Plan Participant or Beneficiary (if applicable),
as provided in Section 6.1(B)(1) below:
(1) Participant or Beneficiary investment
instructions shall be made in writing on the Appropriate Form or
otherwise as determined by the Administrative Committee. Such
instructions, whether in writing or as otherwise determined by the
Administrative Committee, shall be given to the Administrative
Committee or its agent who, in turn, shall notify the Trustee of the
instructions contained therein. The Trustee may, in his or its
discretion, require written confirmation of such instructions from the
Administrative Committee. In any case, the Participant or Beneficiary
shall be given the opportunity to obtain written confirmation from the
Administrative Committee or its agent of the Participant's or
Beneficiary's investment instructions.
(2) No Fiduciary, including, but not limited to,
the Administrative Committee and the Trustee, shall be liable for any
loss or by reason of any breach which results from the Participant's
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or Beneficiary's exercise of control as provided in this Section
6.1(B). It is the intent that any Plan subject to this Section 6.1(B)
shall constitute a plan described in section 404(c) of ERISA and 29
CFR Section 2550.404c-1.
(3) Any sums for which no adequate Participant or
Beneficiary investment instructions have been received by the Trustee,
in accordance with this Section 6.1(B), shall be deposited in an
interest bearing passbook account of any banking, savings, or similar
financial institution supervised by the United States or any State
until such Participant or Beneficiary investment instructions have
been received.
(4) Notwithstanding any other provision in the
Plan to the contrary, the Participant or Beneficiary may not direct
the investment of his Employer and/or Matching and/or Elective
Deferral and/or Participant and/or Rollover and/or Transfer and/or
QVEC Accounts and/or Qualified Matching Contribution and/or Qualified
Nonelective Contribution accounts and/or other accounts in:
(a) Qualifying Employer Securities
unless such investment is in compliance with applicable
Federal and state securities laws and, if the Plan, as adopted
by the Employer, is a money purchase plan, is in compliance
with the ten percent limit described above;
(b) "Collectibles"; "collectibles" include
any work of art, rug, antique, gem, stamp, coin, alcoholic
beverage, or any other item of tangible personal property
specified by the Secretary of the Treasury pursuant to section
408(m) of the Code;
(c) Any investment which would result in
a prohibited transaction described in section 406 of ERISA or
section 4975 of the Code; or
(d) Any investment which would generate
income that would be taxable to the Plan.
6.2 INSURANCE CONTRACTS. The rules relating to Insurance
Contracts are as follows:
(A) INVESTMENT IN INSURANCE CONTRACTS. The Trustee or
the Investment Manager, if appropriate, if the Trustee or an Investment
Manager has been selected to direct investment of Employer and/or Matching
Accounts and/or Participant Accounts and/or Elective Deferral Accounts
and/or Rollover Accounts and/or Qualified Matching Contribution accounts
and/or Qualified Nonelective Contribution accounts under the Adoption
Agreement, may direct that Employer and/or Participant and/or Elective
Deferral and/or Rollover and/or Matching Contributions and/or Qualified
Matching Contributions and/or Qualified Nonelective Contributions made on
behalf of Participants be used to pay premiums on Insurance Contracts. If
the Participant or Beneficiary has been selected to direct investment of his
Employer and/or Matching Accounts and/or Participant Accounts and/or
Elective Deferral Accounts and/or Rollover Accounts and/or Qualified
Matching Contribution accounts and/or Qualified Nonelective Contribution
accounts under the Adoption Agreement, the Participant or Beneficiary (if
applicable) may direct, on the Appropriate Form furnished by, and returned
to, the Administrative Committee, that Employer and/or Matching and/or
Participant and/or Elective Deferral and/or Rollover Contributions and/or
Qualified Matching Contributions and/or Qualified Nonelective Contributions
made on his behalf be used to pay premiums on Insurance Contracts. Any
death benefit payable under any non-transferable annuity or endowment
policies thereunder shall not exceed 100 times the anticipated monthly
annuity to be provided thereby. Moreover, the portion of any Employer,
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Elective Deferral and/or Matching and/or Qualified Matching and/or Qualified
Nonelective Contributions, if used to purchase:
(1) Ordinary life insurance, shall not exceed
one-half of such Employer, Elective Deferral, Matching, Qualified
Matching and Qualified Nonelective Contributions;
(2) Term or universal life insurance, shall not
exceed one-quarter of such Employer, Elective Deferral, Matching,
Qualified Matching and Qualified Nonelective Contributions; or
(3) Both ordinary life and term or universal life
insurance, shall not exceed, after adding the term insurance premium
to one-half of the ordinary life insurance premium, one-quarter of
such Employer, Elective Deferral, Matching, Qualified Matching and
Qualified Nonelective Contributions.
The Trustee shall purchase only such Insurance Contracts from
an Insurer as shall conform with the requirements of the Plan. In the event
of any conflict between the provisions of the Plan and the terms of any
Insurance Contract issued thereunder, the Plan provisions shall control.
All Insurance Contracts other than annuity policies shall
provide settlement options for conversion into annuity policies, either
directly or through conversion into cash and thereupon purchase of annuity
policies, in accordance with the terms of the Plan. When benefits become
payable, the Trustee shall direct the Insurer to convert such policies to
cash or distribute them, in accordance with the provisions of the Plan, to a
Participant. All Employer, Participant, Elective Deferral, Rollover,
Matching, Qualified Matching and Qualified Nonelective Contributions applied
to purchase Insurance Contracts shall be credited to the Participant's
Employer, Participant, Elective Deferral, Rollover, Matching, Qualified
Matching Contribution and Qualified Nonelective Contribution accounts and
shall be held by the Trustee until distributed in accordance with the terms
of the Plan. No direct transfers may be used to purchase any type of life
insurance.
(B) INSURANCE CONTRACTS TO BE HELD AND OWNED BY TRUSTEE.
The Trustee shall apply for, hold and own each Insurance Contract purchased
pursuant to the Plan. The Trustee shall exercise any right contained in the
Insurance Contract. The Insurance Contracts shall provide that the proceeds
shall be payable to the Trustee. The Trustee, however, shall be required to
pay over all proceeds of the Insurance Contract(s) to the Participant's
designated Beneficiary in accordance with the distribution provisions of the
Plan. A Participant's Spouse shall be the designated Beneficiary of the
proceeds in all circumstances unless a qualified election has been made in
accordance with Section 7.2(B). Under no circumstances shall the Trust
retain any part of the proceeds. If, upon the Disability, retirement or
termination of employment of the Participant, or upon the termination of the
Plan, if earlier, the Insurance Contract is not converted into cash, it
shall, subject to the terms of the Plan, be delivered to the Participant
covered thereunder.
6.3 VOTING AND OTHER ACTIONS. The rules pertaining to voting of
securities and other related rules are as follows:
(A) TRUSTEE AND/OR INVESTMENT MANAGER DIRECTED
INVESTMENTS. If the Trustee and/or an Investment Manager is selected to
direct investment of Employer and/or Matching and/or Elective Deferral
and/or Participant and/or Rollover and/or Transfer and/or QVEC Accounts
and/or Qualified Matching Contribution and/or Qualified Nonelective
Contribution accounts and/or other accounts under the Adoption Agreement,
the Trustee shall have, with respect to the accounts committed to it for
investment, all of the rights of an individual owner, including the power to
vote stock held in such accounts, to give proxies, to participate
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in any voting trusts, mergers, consolidations or liquidations and to receive
or sell stock subscriptions or conversion rights. Moreover, the Trustee may
hold any securities in its or its nominee's name, or in another form as is
deemed appropriate. This may be done with or without disclosing the trust
relationship.
(B) PARTICIPANT OR BENEFICIARY DIRECTED INVESTMENTS. If
the Participant or Beneficiary is selected to direct investment of his
Employer and/or Matching and/or Elective Deferral and/or Participant and/or
Rollover and/or Transfer and/or QVEC Accounts and/or Qualified Matching
Contribution and/or Qualified Nonelective Contribution accounts and/or other
accounts under the Adoption Agreement, the Participant or Beneficiary shall
be accorded all rights and powers described in Section 6.3(A) above with
respect to such accounts.
ARTICLE VII
BENEFITS AND DISTRIBUTIONS
7.1 BENEFIT DETERMINATION. The rules pertaining to benefit
determinations and certain other related matters are as follows:
(A) AMOUNT OF BENEFITS. The amount of any benefits
payable under this Article VII shall be determined as of the Valuation Date
coincident with, or if the Valuation Date does not coincide with the benefit
commencement date, the Valuation Date immediately preceding the benefit
commencement date. Except as otherwise provided in Section 7.9, all amounts
then credited to such Participant's Employer, Matching, Elective Deferral,
Participant, Rollover and/or QVEC Accounts and/or Transfer Account and/or
Qualified Matching Contribution and/or Qualified Nonelective Contribution
accounts and/or other account, including any Employer, Matching, Elective
Deferral, Participant, Rollover, QVEC, Qualified Matching Contribution and
Qualified Nonelective Contribution and other Employer contribution and
direct transfer not yet paid by the Employer to the Trustee but due the
Participant, shall be paid to the Participant in accordance with the
provisions of this Article VII.
(B) MANNER OF DISTRIBUTION.
(1) PROFIT-SHARING OR PROFIT-SHARING 401(K) PLAN.
Except as otherwise provided in this Article VII, if the Plan, as
adopted by the Employer, is a profit-sharing or profit-sharing 401(k)
plan, benefits shall be paid in one lump sum to the Participant unless
the Participant elects, no later than 30 days prior to the Valuation
Date immediately preceding the benefit commencement date, to receive
his benefits in equal or substantially equal monthly, quarterly, semi-
annual or annual installment payments over a period certain specified
by the Participant in such election, but in no event may such period
(a) extend beyond the life expectancy of the Participant or the joint
life expectancies of the Participant and his Beneficiary, provided
such Beneficiary is an individual or (b) violate the requirements of
Section 7.13. If a Participant's Accrued Benefit is to be paid in
installments, the Administrative Committee, in its sole discretion,
may direct the Trustee to segregate such Accrued Benefit from other
Trust assets and place it in a separate account. Such separate
account shall, until final payment to the Participant is made, be
invested in one or more accounts in one or more Federally insured
banks or saving institutions or a similar interest bearing account
allowing periodic withdrawals without penalty, as determined by the
Trustee, with all interest earned on such investment(s) credited to
such separate account and all disbursements charged thereto. Interest
earned during any period shall be paid with the next scheduled
installment payment. The installment election shall not be available
to any Participant whose Accrued
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Benefit is not more than $3,500. In such case the Participant shall
only be entitled to receive a lump sum payment of his Accrued Benefit.
(2) MONEY PURCHASE PLAN. Except as otherwise
provided in this Article VII, if the Plan, as adopted by the Employer
is a money purchase plan, benefits shall be paid in accordance with
the provisions of Section 7.14.
(C) ELECTIONS. An election under Section 7.1(B)(1) shall
be made on the Appropriate Form which the Administrative Committee shall
furnish to the Participant before the Valuation Date immediately preceding
the benefit commencement date. Any such election may, subject to the
approval of the Administrative Committee, be revoked and a new election made
at any time prior to the benefit commencement date. Any election under
Section 7.1(B)(2) shall be made in accordance with Section 7.14.
7.2 DESIGNATION OF BENEFICIARY AND ELECTION WITH RESPECT TO DEATH
BENEFIT. This Section 7.2 shall apply if the Plan, as adopted by the Employer
is a profit-sharing or profit-sharing 401(k) Plan. This Section 7.2 shall
apply if the Plan, as adopted by the Employer, is a money purchase plan only to
the extent not otherwise provided in Section 7.14.
(A) DESIGNATION OF BENEFICIARY. Effective August 23,
1984, in the event a Participant has a Surviving Spouse at his death, such
Surviving Spouse shall be the Participant's Beneficiary, unless the
Participant's Spouse has previously consented during the election period
provided in Section 7.2(C), in a manner conforming to a qualified election,
as described in Section 7.2(B), to the payment of the Participant's Accrued
Benefit (reduced by any security interest held by the Plan by reason of any
loans outstanding to such Participant) to a Participant-designated
Beneficiary other than the Surviving Spouse, except as otherwise provided in
the next succeeding sentence. In the event the Participant has no Surviving
Spouse at his death (or in the case of the Participant's death prior to
August 23, 1984, even if the Participant had a Surviving Spouse), the
Beneficiary shall be the Beneficiary designated by the Participant or, in
the event no Beneficiary has been designated or survives the Participant,
the Beneficiary shall be determined in accordance with Section 7.8(B). Such
Beneficiary (other than a Surviving Spouse, effective August 23, 1984) must
be designated on the Appropriate Form furnished by the Administrative
Committee, executed by the Participant and returned to the Administrative
Committee. Any such designation of Beneficiary may include contingent or
successive Beneficiaries, and need not designate individuals. Except as
otherwise provided with respect to a Surviving Spouse, a Participant may, at
any time, change his designation of Beneficiary by completing a new
designation form, but a designation of Beneficiary shall remain in effect
until such new form is received by the Administrative Committee.
(B) QUALIFIED ELECTION. For the consent by a Spouse to
payment of a Participant's Accrued Benefit (reduced by any security interest
held by the Plan by reason of any loans outstanding to such Participant) to
a Beneficiary other than the Spouse upon the Participant's death to be
valid, such consent must be made in writing on the Appropriate Form filed
with the Administrative Committee during the election period provided in
Section 7.2(C) and must be witnessed by a member of the Administrative
Committee as Plan representative or a notary public. Notwithstanding this
consent requirement, if the Participant establishes to the satisfaction of
such Plan representative that such written consent may not be obtained
because there is no Spouse or the Spouse cannot be located, the Spouse will
be deemed to have consented to the payment of the Participant's Accrued
Benefit (reduced by any security interest held by the Plan by reason of any
loans outstanding to such Participant) to a Beneficiary other than the
Spouse. Any consent necessary under this provision shall be valid only with
respect to the Spouse who signs the consent, or in the event of a deemed
consent, with respect to the Spouse who is deemed to have so consented. Any
spousal consent must
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acknowledge the specific non-spouse Beneficiary or contingent Beneficiary,
including any class of Beneficiaries or contingent Beneficiaries and if a
Beneficiary, contingent Beneficiary, or class of Beneficiaries or contingent
Beneficiaries is changed, the Spouse must consent to such change in the
manner provided above. Additionally, a revocation of a prior consent may be
made by a Participant without the consent of the Spouse at any time before
the commencement of benefits. The number of revocations or consents shall
not be limited. This Section 7.2(B) is effective August 23, 1984.
(C) ELECTION PERIOD. The election period for purposes of
the consent of the Spouse provided for in Section 7.2(B) shall be the period
which begins on the first day of the Plan Year in which the Participant
commences to participate in the Plan and ends on the date of the
Participant's death. This Section 7.2(C) is effective August 23, 1984.
7.3 NORMAL RETIREMENT. A Participant shall be fully vested in his
Accrued Benefit when he reaches his Normal Retirement Age. A Participant may
retire when he reaches his Normal Retirement Date. If he then retires, payment
of his Accrued Benefit shall be made or shall commence, unless otherwise
elected pursuant to Section 7.9(B), within 60 days following the Valuation Date
coincident with, or if the Valuation Date does not coincide with the date he
retires, the Valuation Date next succeeding, the date he retires. Payment
shall be made in one lump sum if the value of such Participant's Accrued
Benefit does not exceed (and, at the time of any prior distribution did not
exceed) $3,500 and otherwise in any of the methods described in Section 7.1(B)
except as otherwise provided in Section 7.14.
7.4 EARLY RETIREMENT. A Participant shall be fully vested in his
Accrued Benefit on his Early Retirement Date, if the Adoption Agreement
provides for an Early Retirement Date. A Participant may retire on his Early
Retirement Date, if the Adoption Agreement provides for an Early Retirement
Date. If he then retires, payment of his Accrued Benefit shall be made or
shall commence, within 60 days following the Valuation Date coincident with, or
if the Valuation Date does not coincide with the date he retires, the Valuation
Date next succeeding, the date he retires, if the value of the Participant's
Vested Accrued Benefit does not exceed (and, at the time of any prior
distribution did not exceed) $3,500, but otherwise only if the Participant so
requests in writing and if Section 7.14 applies, the Participant's spouse
consents thereto in accordance with Section 7.14 on the Appropriate Form. If
payment of a Participant's Accrued Benefit does not commence under the
preceding sentence, payment of such Participant's Accrued Benefit shall
commence within sixty days following the date the Participant would have
attained his Normal Retirement Date had he remained in the employ of the
Employer, unless the Participant requests earlier distribution, in writing on
the Appropriate Form, and if Section 7.14 applies, the Participant's spouse
consents thereto in accordance with Section 7.14, or unless otherwise elected
pursuant to Section 7.9(B). Any requests for payment under this Section 7.4
shall be made within the 90-day period preceding the date payment is to
commence. Payment shall be made in one lump sum if the value of such
Participant's Vested Accrued Benefit does not exceed (and, at the time of any
prior distributions did not exceed) $3,500 and otherwise in any of the methods
described in Section 7.1(B) except as otherwise provided in Section 7.14.
7.5 PARTICIPATION AFTER NORMAL RETIREMENT DATE. If a Participant
does not retire when he reaches his Normal Retirement Date, but continues
thereafter in the service of the Employer, he shall continue to participate in
the Plan until he actually retires. The Accrued Benefit of a Participant who
retires on, or after, his Normal Retirement Date shall continue to be fully
vested and shall be made or shall commence, unless otherwise elected pursuant
to Section 7.9(B), within 60 days following the Valuation Date coincident with,
or if the Valuation Date does not coincide with the date he retires, the
Valuation Date next succeeding, the date he actually retires. Payment shall be
made in one lump sum if the value of such Participant's Vested Accrued Benefit
does not exceed (and at the time of any prior distribution did not exceed)
$3,500 and otherwise in any
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of the methods described in Section 7.1(B) except as otherwise provided in
Section 7.14. In no event, however, shall payment commence later than the date
specified in Section 7.9(C). In the event such date is earlier than the
Valuation Date specified in the third preceding sentence, the amount to be
distributed shall be determined as of the Valuation Date immediately preceding
the date of the required distribution.
7.6 SEPARATION FROM SERVICE. The rules pertaining to benefit
determinations and certain other related matters upon separation from service
for any reason other than death, Disability or retirement are as follows:
(A) PAYMENT OF VESTED ACCRUED BENEFIT. If a Participant
separates from service for any reason other than death, Disability or
retirement on his Early Retirement Date (if the Adoption Agreement provides
for an Early Retirement Date) before he reaches his Normal Retirement Date,
his Vested Accrued Benefit shall be paid to him at such time as the Adoption
Agreement provides. When distribution is made, payment shall be made in one
lump sum if the value of such Participant's Vested Accrued Benefit does not
exceed (and at the time of any prior distribution did not exceed)$3,500 and
otherwise in any of the methods described in Section 7.1(B) except as
otherwise provided in Section 7.14.
(B) DETERMINATION OF VESTED ACCRUED BENEFIT.
(1) ELECTIVE DEFERRAL, PARTICIPANT, ROLLOVER,
TRANSFER AND QVEC ACCOUNTS. The portion of such Participant's Accrued
Benefit consisting of his interest in his Elective Deferral,
Participant, Rollover, Transfer, Qualified Matching Contribution,
Qualified Nonelective Contribution and QVEC Accounts shall at all
times be fully vested.
(2) EMPLOYER AND MATCHING ACCOUNTS. The portion
of such Participant's Accrued Benefit consisting of his interest in
his Employer and Matching Accounts shall vest in accordance with the
vesting schedule selected by the Employer in the Adoption Agreement.
(C) FORFEITURES.
(1) TIME OF FORFEITURES.
(a) NORMAL RULE.
(i) Unless the Adoption Agreement
provides otherwise, any portion of the Participant's
Employer and/or Matching Account which is not vested
in accordance with Section 7.6(B)(2) at the time of
his separation from service with the Employer shall
be forfeited and reallocated to the Employer and/or
Matching Accounts of the remaining Participants in
accordance with Section 5.5 as of the last day of the
Plan Year coinciding with, or if the last day of the
Plan Year does not so coincide, the last day of the
Plan Year next following, the date the Participant
incurs five consecutive One-Year Breaks In Service.
(ii) If a distribution is made to
a Participant at a time when such Participant has a
nonforfeitable right to less than 100 percent of his
Employer and/or Matching Account and, at the time of
such distribution, the Participant has not incurred
five consecutive One-Year Breaks In Service, the
Trustee shall retain the nonvested portion of the
Participant's Employer and/or Matching Account in his
Employer and/or
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Matching Account. Such Employer and/or Matching
Account may be invested in a Federally insured
savings account or invested as otherwise provided by
the Plan, as determined by the Administrative
Committee. In such case, the Participant's vested
interest in the Employer and/or Matching Account at
any relevant time shall not be less than an amount
("X") determined by the formula: X = P(AB + (RxD)) -
(RxD), where "P" is the vested percentage at the
relevant time; "AB" is the account balance (i.e., the
amount in the Employer and/or Matching Account) at
the relevant time; "D" is the amount of the payment;
"R" is the ratio of the account balance at the
relevant time to the account balance after payment;
and the relevant time is the time at which, under the
Plan, the Participant's vested interest in the amount
in the Employer and/or Matching Account cannot
increase.
(iii) If the Participant returns
to the service of the Employer before incurring five
consecutive One-Year Breaks In Service, the
Participant shall continue to vest in the amount in
his Employer and/or Matching Account in accordance
with the provisions set forth above.
(iv) If the Participant incurs
five consecutive One-Year Breaks In Service, the
amount in the Participant's Employer and/or Matching
Account, as determined under Section
7.6(C)(1)(a)(ii), shall be forfeited under Section
7.6(C)(1)(a) and shall be reallocated to the Employer
and/or Matching Accounts of the remaining
Participants in accordance with Section 5.5. Such
reallocation shall be effected on the last day of the
Plan Year coincident with, or if the last day of the
Plan Year does not so coincide, the last day of the
Plan Year next following, the date the Participant
incurs five consecutive One-Year Breaks In Service.
(b) SPECIAL RULE.
(i) PROFIT-SHARING OR
PROFIT-SHARING 401(K) PLAN. This Section
7.6(C)(1)(b)(i) applies to the Plan if the Plan, as
adopted by the Employer, is a profit-sharing or
profit-sharing 401(k) plan. If the Adoption
Agreement so provides, if a Participant separates
from the service of the Employer, and the value of
the Participant's Vested Accrued Benefit derived from
Employer and Employee contributions does not exceed
(or at the time of any prior distribution did not
exceed) $3,500 and Section A.7.6(A)(2) of the
Adoption Agreement is checked, the Participant shall
receive a distribution of the value of his entire
Vested Accrued Benefit (and if his entire Vested
Accrued Benefit is $-0-, he shall be deemed to have
received, as a cash-out of his Vested Accrued Benefit
under the Plan, such $0) at the time provided in the
Adoption Agreement and the nonvested portion of his
Accrued Benefit shall be forfeited at the time of
such distribution; if the value of the Participant's
Vested Accrued Benefit derived from Employer
contributions exceeds (or at the time of any prior
distribution exceeded) $3,500 and if Section
A.7.6(A)(1)(b) of the Adoption Agreement is checked
and if the Participant separates from the service of
the Employer, and elects to receive no less than the
entire value of the Participant's Vested Accrued
Benefit derived from Employer contributions,
distribution shall be made at the time provided in
the Adoption Agreement and the nonvested portion
shall be treated as a forfeiture at the time of
distribution to the Participant of his Vested Accrued
Benefit; if the Participant elects to have
distributed less than his entire Vested Accrued
Benefit derived from Employer
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contributions, the part of the nonvested portion that
will be treated as a forfeiture is the total
nonvested portion multiplied by a fraction, the
numerator of which is the amount of the distribution
attributable to Employer contributions and the
denominator of which is the total value of his Vested
Accrued Benefit derived from Employer contributions.
To the extent the nonvested portion is not or cannot
be forfeited at the time of a Participant's
separation from service because of the rules set
forth in this Section 7.6(C)(1)(b)(i), the rules of
Section 7.6(C) (1)(a) shall apply. If a Participant
receives a distribution pursuant to this Section
7.6(C)(1)(b)(i) (except as otherwise provided in the
immediately preceding sentence) and resumes
employment covered under the Plan, the Participant's
Accrued Benefit derived from Employer contributions
shall be restored to the amount on the date of
distribution if the Participant repays to the Plan
the full amount of the distribution attributable to
Employer contributions on or before the earlier of
the fifth anniversary of the Participant's resumption
of covered employment or the date the Participant
incurs five consecutive One-Year Breaks In Service.
If an Employee is deemed to receive a distribution
pursuant to this Section, and the Employee resumes
employment covered under this Plan before the earlier
of the fifth anniversary of the Participant's
resumption of covered employment or the date the
Participant incurs five consecutive One-Year Breaks
In Service, upon the reemployment of such Employee,
the Employer-derived account balance of the Employee
shall be restored to the amount on the date of such
deemed distribution. Forfeitures under this Section
7.6(C)(1)(b)(i) shall be reallocated to the Employer
contribution accounts of the remaining Participants
in accordance with Section 5.5 or, if the Adoption
Agreement so provides, used to reduce Employer
contributions. Such reallocation (or, if applicable,
reduction in Employer contributions) shall be
effected no earlier that the first Valuation Date
coincident with or next following the date of the
forfeiture and no later than the last day of the Plan
Year, in which occurred the date of the forfeiture
under this Section 7.6(C)(1)(b) (i). A Participant's
Vested Accrued Benefit shall not, for purposes of the
cash out provisions, include accumulated deductible
employee contributions within the meaning of section
72(o)(5)(B) of the Code for Plan Years beginning
prior to January 1, 1989.
(ii) MONEY PURCHASE PLAN. This
Section 7.6(C)(1)(b)(ii) applies to the Plan if the
Plan, as adopted by the Employer, is a money purchase
plan. If the Adoption Agreement so provides, if a
Participant separates from the service of the
Employer, and the value of the Participant's Vested
Accrued Benefit derived from Employer and Employee
contributions does not exceed (or at the time of any
prior distribution did not exceed) $3,500 and Section
A.7.6(A)(2) of the Adoption Agreement is checked, the
Participant shall receive a distribution of the value
of the entire Vested Accrued Benefit (and if his
entire Vested Accrued Benefit is $-0-, he shall be
deemed to have received, as a cash-out of his Vested
Accrued Benefit under the Plan, such $0) at the time
provided in the Adoption Agreement and the nonvested
portion of his Accrued Benefit shall be forfeited at
the time of such distribution. If the value of a
Participant's Vested Accrued Benefit derived from
Employer and Employee contributions exceeds (or at
the time of any prior distribution exceeded) $3,500,
and the Vested Accrued Benefit is immediately
distributable, the Participant and the Participant's
Spouse (or where either the Participant or the Spouse
has died, the survivor) must consent to any
distribution of such Vested Accrued Benefit. The
consent of the Participant and the Participant's
Spouse shall be obtained in writing
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within the 90-day period ending on the annuity
starting date. The annuity starting date is the
first day of the first period for which an amount is
paid as an annuity or any other form. The Plan
Administrator shall notify the Participant and the
Participant's Spouse of the right to defer any
distribution until the Participant's Vested Accrued
Benefit is no longer immediately distributable. Such
notification shall include a general description of
the material features, and an explanation of the
relative values of, the optional forms of benefit
available under the Plan in a manner that would
satisfy the notice requirements of section 417(a)(3)
of the Code and shall be provided no less than 30
days and no more than 90 days prior to the annuity
starting date.
Notwithstanding the foregoing, only the
Participant need consent to the commencement of a
distribution in the form of a "Qualified Joint and
Survivor Annuity" (within the meaning of Section
7.14(D)(4)) while the account balance is immediately
distributable. (Furthermore, if payment in the form
of a "Qualified Joint and Survivor Annuity" is not
required with respect to the Participant pursuant to
Section 7.14, only the Participant need consent to
the distribution of an account balance that is
immediately distributable.) Neither the consent of
the Participant nor the Participant's Spouse shall be
required to the extent that a distribution is
required to satisfy section 401(a)(9) of the Code or
section 415 of the Code.
An Accrued Benefit is immediately
distributable if any part of the Accrued Benefit
could be distributed to the Participant (or surviving
Spouse) before the Participant attains or would have
attained if not deceased) the later of Normal
Retirement Age or age 62.
For purposes of determining the
applicability of the foregoing consent requirements
to distributions made before the first day of the
first Plan Year beginning after December 31, 1988,
the Participant's Vested Accrued Benefit shall not
include amounts attributable to accumulated
deductible employee contributions within the meaning
of section 72(o)(5)(B) of the Code. If the value of
the Participant's Vested Accrued Benefit derived from
Employer and Employee contributions exceeds (or at
the time of any prior distribution exceeded) $3,500
and if Section A.7.6(A)(1)(b) of the Adoption
Agreement is checked and if the Participant separates
from the service of the Employer and elects, with the
consent of his Spouse as provided above, to receive
no less than the entire value of the Participant's
Vested Accrued Benefit derived from Employer and
Employee contributions, distribution shall be made at
the time provided in the Adoption Agreement and the
nonvested portion shall be treated as a forfeiture at
the time of distribution to the Participant of his
Vested Accrued Benefit; if the Participant elects,
with the consent of his Spouse as provided above, to
have distributed less than his entire Vested Accrued
Benefit derived from Employer contributions, the part
of the nonvested portion that will be treated as a
forfeiture is the total nonvested portion multiplied
by a fraction, the numerator of which is the amount
of the distribution attributable to Employer
contributions and the denominator of which is the
total value of his Vested Accrued Benefit derived
from Employer contributions. To the extent the
nonvested portion is not or cannot be forfeited at
the time of a Participant's termination of service
because of the rules set forth in this Section
7.6(C)(1)(b)(ii), the rules of Section 7.6(C)(1)(a)
shall apply. If a Participant receives a
distribution pursuant to this Section 7.6(C)(1)
(b)(ii) (except as otherwise provided in the
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immediately preceding sentence) and resumes
employment covered under the Plan, the Participant's
Accrued Benefit derived from Employer contributions
shall be restored to the amount on the date of
distribution if the Participant repays to the Plan
the full amount of the distribution attributable to
Employer contributions on or before the earlier of
the fifth anniversary of the Participant's resumption
of covered employment or the date the Participant
incurs five consecutive One-Year Breaks In Service.
If an Employee is deemed to receive a distribution
pursuant to this Section, and the Employee resumes
employment covered under this Plan before the earlier
of the fifth anniversary of the Participant's
resumption of covered employment or the date the
Employee incurs five consecutive One-Year Breaks In
Service, upon the reemployment of such Employee, the
Employer-derived account balance of the Employee
shall be restored to the amount on the date of such
deemed distribution. Forfeitures under this Section
7.6(C)(1) (b)(ii) shall be reallocated to the
Employer contribution accounts of the remaining
Participants in accordance with Section 5.5 or, if
the Adoption Agreement so provides, used to reduce
Employer contributions. Such reallocation (or, if
applicable, reduction in Employer contributions)
shall be effected no earlier that the first Valuation
Date coincident with or next following the date of
the forfeiture and no later than the last day of the
Plan Year , in which occurred the date of the
forfeiture under this Section 7.6(C)(1)(b)(ii).
(D) TERMINATION OF PLAN. If, upon termination of this
Plan, the Plan does not offer an annuity option (purchased from a
commercial provider), and if the Employer or any entity within the same
controlled group as the Employer does not maintain another Defined
Contribution Plan (other than an employee stock ownership plan described in
section 4975(e)(7) of the Code), the Participant's Vested Accrued Benefit
shall, without the Participant's consent, be distributed to the Participant.
However, if any entity within the same controlled group as the Employer
maintains another Defined Contribution Plan (other than an employee stock
ownership plan as defined in section 4975(e)(7) of the Code) then the
Participant's Vested Accrued Benefit shall be transferred, without the
Participant's consent, to the other plan if the Participant does not consent
to an immediate distribution.
(E) NO DIVESTMENT FOR CAUSE. There shall be no divestment of
a Participant's Vested Accrued Benefit under the Plan for cause.
7.7 DISABILITY. If, before reaching his Normal Retirement Date, a
Participant in the service of the Employer becomes subject to Disability as
established by competent medical proof satisfactory to the Administrative
Committee, such Participant shall then retire, and his Accrued Benefit shall be
fully vested and shall be paid to him, within 60 days following the Valuation
Date coincident with, or if the Valuation Date does not coincide with the date
of determination of Disability, the Valuation Date next succeeding, the date of
determination of Disability, by the Administrative Committee of his Disability,
if the value of such Accrued Benefit does not exceed (and at the time of any
prior distribution did not exceed) $3,500, but otherwise only if the
Participant so requests, and if Section 7.14 is applicable, with the consent of
the Participant's Spouse as provided in Section 7.14 in writing on the
Appropriate Form. If payment of a Participant's Accrued Benefit does not
commence under the preceding sentence, payment of such Participant's Accrued
Benefit shall commence within sixty days following the date the Participant
would have attained his Normal Retirement Date had he remained in the employ of
the Employer, unless the Participant requests, in writing on the Appropriate
Form, earlier distribution or unless otherwise elected pursuant to Section
7.9(B). Any requests for payment under this Section 7.7 shall be made within
the 90-day period preceding the date payment is to commence. Payment shall be
made in one lump sum if the value of such Participant's Accrued Benefit does
not exceed (and
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at the time of any prior distribution did not exceed) $3,500 and otherwise in
any of the methods described in Section 7.1(B), except as otherwise provided in
Section 7.14.
7.8 DEATH. This Section shall only apply to the extent Section
7.14 does not provide otherwise.
(A) AMOUNT AND DISTRIBUTION OF BENEFIT. If a Participant
dies while in the service of the Employer, his Accrued Benefit (reduced by
any security interest held by the Plan by reason of any loans outstanding to
such Participant) shall be fully vested and distribution thereof to the
Beneficiary or Beneficiaries provided under Section 7.2(A) shall be made or
commence no later than 60 days following the Valuation Date coincident with,
or if the Valuation Date does not coincide with the date of Death, the
Valuation Date immediately following, the date of death. If a Participant
dies before complete distribution to him of the Vested Accrued Benefit to
which he is entitled under Sections 7.3, 7.4, 7.5, 7.6 or 7.7, the
distribution of the remainder of such Vested Accrued Benefit (reduced by any
security interest held by the Plan by reason of any loans outstanding to
such Participant) to the Beneficiary or Beneficiaries provided under Section
7.2(A) shall be made or commence no later than 60 days following the
Valuation Date coincident with, or if the Valuation Date does not coincide
with the date of death, the Valuation Date immediately following, the date
of death.
(B) RECIPIENT OF BENEFIT WHERE NO BENEFICIARY DESIGNATED.
In the case of a Participant who is married on the date of his death and who
has not designated a Beneficiary, such Vested Accrued Benefit (reduced by
any security interest held by the Plan by reason of any loans outstanding to
such Participant) shall be distributed to such Participant's Surviving
Spouse. If no Beneficiary is designated or survives the Participant and if
the Participant has no Surviving Spouse, then such Vested Accrued Benefit
(reduced by any security interest held by the Plan by reason of any loans
outstanding to such Participant) shall be distributed to the Participant's
estate.
(C) MANNER OF DISTRIBUTION. Subject to Section 7.9(C),
any distributions under this Section 7.8 shall be made in a lump sum or in
installments as elected by the Participant in accordance with the terms of
Sections 7.1 and 7.2. In the absence of such a Participant election,
distributions shall be made in a lump sum to the Participant's Beneficiary,
as provided in Section 7.2(A).
7.9 COMMENCEMENT OF PAYMENTS; DEFERRAL OF PAYMENTS; MINIMUM
DISTRIBUTION REQUIREMENTS. The rules relating to commencement of payments,
deferral of payments and minimum distribution requirements are as follows:
(A) DATE PAYMENT TO COMMENCE. Payment under this Plan shall
commence no later than 60 days after the close of the Plan Year in which
occurs the latest of the following:
(1) The Participant's attainment of Normal
Retirement Age;
(2) The tenth anniversary of the date the
Participant commenced participation in the Plan; or
(3) The Participant's separation from service
with the Employer.
Notwithstanding the immediately preceding paragraph, if the
amount of payment required to otherwise commence on a date determined under
this Section 7.9(A) or under any other Section of the Plan cannot be
ascertained by such date or if the Administrative Committee is unable to
locate the Participant or Beneficiary after making reasonable efforts to do
so, a payment retroactive to such date may be made no later
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than 60 days after the later of (a) the earliest date on which the amount of
such payment can be ascertained under the Plan or (b) the earliest date on
which the Participant or Beneficiary is located.
Notwithstanding the foregoing, the failure of a Participant
and, if spousal consent is required, his Spouse to consent to a distribution
while a benefit is immediately distributable, shall be deemed to be an
election to defer commencement of payment of any benefit sufficient to
satisfy this Section.
(B) DEFERRAL OF PAYMENTS. If the Adoption Agreement so
provides, a Participant may irrevocably elect, subject to Section 7.9(C),
the deferral of the payment of benefits under Sections 7.3, 7.4, 7.5, and
7.7, by filing with the Administrative Committee, the Appropriate Form
signed by such Participant, describing the benefit and the date on which
payment of such benefit shall commence. Such Appropriate Form shall be
filed with the Administrative Committee no later than 30 days prior to such
Participant's separation from service with the Employer under Sections 7.3,
7.4, 7.5 or 7.7. No such election may be made if the exercise of such
election will cause the violation of the requirements of Section 7.13 or
Section 7.14. Moreover, no such election may defer payment of benefits
beyond the date specified in Section 7.9(C).
(C) MINIMUM DISTRIBUTION REQUIREMENTS.
(1) GENERAL RULES.
(a) Subject to Section 7.14 relating to
joint and survivor annuity requirements, the requirements of
this Section 7.9(C) shall apply to any distribution of a
Participant's interest and shall take precedence over any
inconsistent provisions of this Plan. Unless otherwise
specified, the provisions of this Section 7.9(C) apply to
calendar years beginning after December 31, 1984.
(b) All distributions required under
this Section 7.9(C) shall be determined and made in accordance
with the proposed Treasury regulations under section 401(a)(9)
of the Code, including the minimum distribution incidental
benefit requirement of Prop. Treas. Reg. Section
1.401(a)(9)-2.
(2) REQUIRED BEGINNING DATE. The entire interest
of a Participant must be distributed or begin to be distributed no
later than the Participant's "Required Beginning Date".
(3) LIMITS ON DISTRIBUTION PERIODS. As of the
first "Distribution Calendar Year", distributions, if not made in a
single sum, may only be made over one of the following periods (or a
combination thereof):
(a) The life of the Participant,
(b) The life of the Participant and a
"Designated Beneficiary",
(c) A period certain not extending
beyond the "Life Expectancy" of the Participant, or
(d) A period certain not extending
beyond the "Joint and Last Survivor Expectancy" of the
Participant and a "Designated Beneficiary".
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(4) DETERMINATION OF AMOUNT TO BE DISTRIBUTED
EACH YEAR. If the Participant's interest is to be distributed in
other than a single sum, the following minimum distribution rules
shall apply on or after the "Required Beginning Date":
(a) INDIVIDUAL ACCOUNT.
(i) If a "Participant's Benefit" is
to be distributed over (AA) a period not extending
beyond the "Life Expectancy" of the Participant or
the "Joint Life and Last Survivor Expectancy" of the
Participant and the Participant's "Designated
Beneficiary" or (BB) a period not extending beyond
the "Life Expectancy" of the "Designated
Beneficiary", the amount required to be distributed
for each calendar year, beginning with distributions
for the first "Distribution Calendar Year", must at
least equal the quotient obtained by dividing the
"Participant's Benefit" by the "Applicable Life
Expectancy".
(ii) For calendar years beginning
before January 1, 1989, if the Participant's Spouse
is not the "Designated Beneficiary", the method of
distribution selected must assure that at least 50
percent of the present value of the amount available
for distribution is paid within the "Life Expectancy"
of the Participant.
(iii) For calendar years beginning
after December 31, 1988, the amount to be distributed
each year, beginning with distributions for the first
"Distribution Calendar Year" shall not be less than
the quotient obtained by dividing the "Participant's
Benefit" by the lesser of (AA) the "Applicable Life
Expectancy" or (BB) if the Participant's Spouse is
not the "Designated Beneficiary", the applicable
divisor determined from the table set forth in Q&A-4
of Prop. Treas. Reg. Section 1.401(a)(9)-2.
Distributions after the death of the Participant
shall be distributed using the "Applicable Life
Expectancy" in Section 7.9(C)(4)(a)(i) above as the
relevant divisor without regard to Prop. Treas. Reg.
Section 1.401(a)(9)-2.
(iv) The minimum distribution
required for the Participant's first "Distribution
Calendar Year" must be made on or before the
Participant's "Required Beginning Date". The minimum
distribution for other calendar years, including the
minimum distribution for the "Distribution Calendar
Year" in which the Employee's "Required Beginning
Date" occurs, must be made on or before December 31
of that "Distribution Calendar Year".
(b) OTHER FORMS.
(i) If the "Participant's Benefit"
is distributed in the form of an annuity purchased
from an Insurer, distributions thereunder shall be
made in accordance with the requirements of section
401(a)(9) of the Code and the proposed Treasury
regulations thereunder.
(5) DEATH DISTRIBUTION PROVISIONS.
(a) DISTRIBUTION BEGINNING BEFORE DEATH.
If the Participant dies after distribution of his interest has
begun, the remaining portion of such interest shall continue
to be
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distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
(b) DISTRIBUTION BEGINNING AFTER DEATH.
If the Participant dies before distribution of his interest
begins, distribution of the Participant's entire interest
shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death
except to the extent that an election is made to receive
distributions in accordance with (i) or (ii) below:
(i) If any portion of the
Participant's interest is payable to a "Designated
Beneficiary", distributions may be made over the life
or over a period certain not greater than the "Life
Expectancy" of the "Designated Beneficiary"
commencing on or before December 31 of the calendar
year immediately following the calendar year in which
the Participant died;
(ii) If the "Designated
Beneficiary" is the Participant's Surviving Spouse,
the date distributions are required to begin in
accordance with (i) above shall not be earlier than
the later of (AA) December 31 of the calendar year
immediately following the calendar year in which the
Participant died and (BB) December 31 of the calendar
year in which the Participant would have attained age
70 1/2.
If the Participant has not made an election pursuant to this
Section 7.9(C)(5)(b) by the time of his death, the
Participant's "Designated Beneficiary" must elect the method
of distribution no later than the earlier of (AA) December 31
of the calendar year in which distributions would be required
to begin under this Section, or (BB) December 31 of the
calendar year which contains the fifth anniversary of the date
of death of the Participant. If the Participant has no
"Designated Beneficiary", or if the "Designated Beneficiary"
does not elect a method of distribution, distribution of the
Participant's entire interest must be completed by December 31
of the calendar year containing the fifth anniversary of the
Participant's death.
(c) DEATH OF SURVIVING SPOUSE PRIOR TO
BENEFIT COMMENCEMENT. For purposes of Section 7.9(C)(5)(b)
above, if the Surviving Spouse dies after the Participant, but
before payments to such Spouse begin, the provisions of
Section 7.9(C)(5)(b), with the exception of Section
7.9(C)(5)(b)(ii), shall be applied as if the Surviving Spouse
were the Participant.
(d) TREATMENT OF AMOUNTS PAID TO
CHILDREN. For purposes of this Section 7.9(C)(5), any amount
paid to a child of the Participant will be treated as if it
had been paid to the Surviving Spouse if the amount becomes
payable when the child reaches the age of majority.
(e) DEEMED BENEFIT COMMENCEMENT. For
the purposes of this Section 7.9(C)(5), distribution of a
Participant's interest is considered to begin on the
Participant's "Required Beginning Date" (or, if Section
7.9(C)(5)(c) above is applicable, the date distribution is
required to begin to the Surviving Spouse pursuant to Section
7.9(C)(5)(b) above). If distribution in the form of an
annuity irrevocably commences to the Participant before the
"Required Beginning Date", the date distribution is considered
to begin is the date distribution actually commences.
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(6) DEFINITIONS. For purposes of this Section
7.9(C), the following definitions apply:
(a) "APPLICABLE LIFE EXPECTANCY" shall
mean the "Life Expectancy" (or "Joint and Last Survivor
Expectancy") calculated using the attained age of the
Participant (or "Designated Beneficiary") as of the
Participant's (or "Designated Beneficiary's") birthday in the
applicable calendar year reduced by one for each calendar year
which has elapsed since the date "Life Expectancy" was first
calculated. If "Life Expectancy" is being recalculated, the
"Applicable Life Expectancy" shall be the "Life Expectancy" as
so recalculated. The applicable calendar year shall be the
first "Distribution Calendar Year", and if "Life Expectancy"
is being recalculated, such succeeding calendar year.
(b) "DESIGNATED BENEFICIARY" shall mean
the individual who is designated as the Beneficiary under the
Plan in accordance with section 401(a)(9) of the Code and the
Treasury regulations thereunder.
(c) "DISTRIBUTION CALENDAR YEAR" shall
mean a calendar year for which a minimum distribution is
required. For distributions beginning before the
Participant's death, the first "Distribution Calendar Year" is
the calendar year immediately preceding the calendar year
which contains the Participant's "Required Beginning Date".
For distributions beginning after the Participant's death, the
first "Distribution Calendar Year" is the calendar year in
which distributions are required to begin pursuant to Section
7.9(C)(5) above.
(d) "LIFE EXPECTANCY" shall mean the
life expectancy and "Joint and Last Survivor Expectancy" as
computed by use of the expected return multiples in Tables V
and VI of Treas. Reg. Section 1.72-9. Unless otherwise
elected by the Participant (or Spouse, in the case of
distributions described in Section 7.9(C)(5)(b)(ii) above) by
the time distributions are required to begin, "Life
Expectancies" shall be recalculated annually. Such election
shall be irrevocable as to the Participant (or Spouse) and
shall apply to all subsequent years. The "Life Expectancy" of
a nonspouse Beneficiary may not be recalculated.
(e) "PARTICIPANT'S BENEFIT" shall mean
the account balance as of the last Valuation Date in the
calendar year immediately preceding the "Distribution Calendar
Year" ("Valuation Calendar Year") increased by the amount of
any contributions or forfeitures allocated to the account
balance as of dates in the "Valuation Calendar Year" after the
Valuation Date and decreased by distributions made in the
"Valuation Calendar Year" after the Valuation Date. For
purposes of this Section 7.9(C)(6)(e), if any portion of the
minimum distribution for the first "Distribution Calendar
Year" is made in the second "Distribution Calendar Year" on or
before the "Required Beginning Date", the amount of the
minimum distribution made in the second "Distribution Calendar
Year" shall be treated as if it had been made in the
immediately preceding "Distribution Calendar Year".
(f) "REQUIRED BEGINNING DATE" shall
mean, with respect to any Participant, except as provided
below, the first day of April of the calendar year following
the calendar year in which the Participant attains age 70 1/2.
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Notwithstanding the foregoing the "Required
Beginning Date" of a Participant who attains age 70 1/2 before
January 1, 1988, shall be determined in accordance with (i) or
(ii) below:
(i) NON-FIVE-PERCENT OWNERS. The
"Required Beginning Date" of a Participant who is not
a five-percent owner is the first day of April of the
calendar year following the calendar year in which
the later of retirement or attainment of age 70 1/2
occurs.
(ii) FIVE-PERCENT OWNERS. The
"Required Beginning Date" of a Participant who is a
five-percent owner during any year beginning after
December 31, 1979, is the first day of April
following the later of:
(AA) The calendar year in which the
Participant attains age 70 1/2, or
(BB) The earlier of the calendar year
with or within which ends the Plan Year in
which the Participant becomes a five-percent
owner, or the calendar year in which the
Participant retires.
The "Required Beginning Date" of a Participant who is
not a five-percent owner who attains age 70 1/2
during 1988 and who has not retired as of January 1,
1989, is April 1, 1990.
A Participant is treated as a
five-percent owner for purposes of this Section if
such Participant is a five-percent owner as defined
in section 416(i) of the Code (determined in
accordance with section 416 but without regard to
whether the Plan is a Top-Heavy Plan) at any time
during the Plan Year ending with or within the
calendar year in which such owner attains age 66 1/2
or any subsequent Plan Year.
Once distributions have begun to a
five-percent owner under this Section, they must
continue to be distributed, even if the Participant
ceases to be a five-percent owner in a subsequent
year.
(7) TRANSITIONAL RULE.
(a) Notwithstanding the other
requirements of this Section 7.9(C) and subject to the
requirements of Section 7.14 relating to joint and survivor
annuity requirements, distribution on behalf of any Employee,
including a five-percent owner, may be made in accordance with
all of the following requirements (regardless of when such
distribution commences):
(i) The distribution by the Plan is
one which would not have disqualified such Plan under
section 401(a)(9) of the Code as in effect prior to
amendment by the Deficit Reduction Act of 1984.
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(ii) The distribution is in
accordance with a method of distribution designated
by the Employee whose interest in the Plan is being
distributed or, if the Employee is deceased, by a
Beneficiary of such Employee.
(iii) Such designation was in
writing, was signed by the Employee or the
Beneficiary, and was made before January 1, 1984.
(iv) The Employee had accrued a
benefit under the Plan as of December 31, 1983.
(v) The method of distribution
designated by the Employee or the Beneficiary
specifies the time at which distribution will
commence, the period over which distributions will be
made, and in the case of any distribution upon the
Employee's death, the Beneficiaries of the Employee
listed in order of priority.
(b) A distribution upon death will not
be covered by this transitional rule unless the information in
the designation contains the required information described
above with respect to the distributions to be made upon the
death of the Employee.
(c) For any distribution which commences
before January 1, 1984, but continues after December 31, 1983,
the Employee, or the Beneficiary, to whom such distribution is
being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the
method of distribution was specified in writing and the
distribution satisfies the requirements in Sections
7.9(C)(7)(a)(i) and (v).
(d) If a designation is revoked, any
subsequent distribution must satisfy the requirements of
section 401(a)(9) of the Code and the proposed Treasury
regulations thereunder. If a designation is revoked
subsequent to the date distributions are required to begin,
the Trust must distribute, by the end of the calendar year
following the calendar year in which the revocation occurs,
the total amount not yet distributed which would have been
required to have been distributed to satisfy section 401(a)(9)
of the Code and the proposed Treasury regulations thereunder,
but for the election under section 242(b)(2) of the Tax Equity
and Fiscal Responsibility Act of 1982. For calendar years
beginning after December 31, 1988, such distributions must
meet the minimum distribution incidental benefit requirements
in Prop. Treas. Reg. Section 1.401(a)(9)-2. Any changes in
the designation will be considered to be a revocation of the
designation. However, the mere substitution or addition of
another Beneficiary (one not named in the designation) under
the designation will not be considered to be a revocation of
the designation, so long as such substitution or addition does
not alter the period over which distributions are to be made
under the designation, directly or indirectly (for example, by
altering the relevant measuring life). In the case in which
an amount is transferred or rolled over from one plan to
another plan, the rules in Q&A J-2 and Q&A J-3 of Prop. Treas.
Reg. Section 1.401(a)(9)-1 shall apply.
7.10 WITHDRAWALS DURING EMPLOYMENT. This Section 7.10, other than
Section 7.10(B), shall apply to the Plan only if the Plan, as adopted by the
Employer, is a profit-sharing or profit-sharing 401(k) plan. Moreover,
withdrawals by a Participant of his Vested Accrued Benefit while such
Participant is employed by the Employer shall be permitted only if the
applicable Adoption Agreement so provides and then only in accordance with the
following rules:
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(A) PARTICIPANT ACCOUNTS. A Participant may elect to
withdraw, as of any Valuation Date in the Plan Year, but not more frequently
than once each Plan Year, any portion or all of the amount then credited to
the Participant's Participant Account (other than the portion attributable
to required Participant Contributions and to Participant Contributions which
are matched by the Employer). Such withdrawal election shall be made at
least 30 days prior to the effective date of the withdrawal on the
Appropriate Form furnished by the Administrative Committee for such purpose.
(B) QVEC ACCOUNTS. Subject to the joint and survivor
annuity requirements of Section 7.14 (if applicable), a Participant may
elect, subject to Section 7.12, to withdraw, as of any Valuation Date in the
Plan Year, but not more frequently than once each Plan Year, any portion or
all of the amount then credited to the Participant's QVEC Account. Such
withdrawal election shall be made at least 30 days prior to the effective
date of the withdrawal on the Appropriate Form furnished by the
Administrative Committee for such purposes.
(C) ROLLOVER ACCOUNTS. A Participant may elect to
withdraw, as of any Valuation Date in the Plan Year, but not more frequently
than once each Plan Year, any portion or all of the amount then credited to
the Participant's Rollover Account. Such withdrawal election shall be made
at least 30 days prior to the effective date of the withdrawal on the
Appropriate Form furnished by the Administrative Committee for such purpose.
(D) OTHER ACCOUNTS.
(1) AFTER ATTAINMENT OF AGE 59 1/2. A
Participant who is age 59 1/2 or older may elect to withdraw, as of
any Valuation Date in the Plan Year, but not more frequently than once
each Plan Year, any portion or all of such Participant's Vested
Accrued Benefit. Such withdrawal election shall be made at least 30
days prior to the effective date of the withdrawal on the Appropriate
Form furnished by the Administrative Committee for such purpose.
(2) BEFORE ATTAINMENT OF AGE 59 1/2. Except as
provided in Section 7.10(D)(3), Section 7.10(D)(4) or Section
7.10(D)(5), no withdrawals of such Participant's Accrued Benefit shall
be permitted while such Participant is employed by the Employer if the
Participant has not attained age 59 1/2.
(3) HARDSHIP WITHDRAWALS. A Participant who
incurs a hardship may elect to withdraw, as of any Valuation Date in
the Plan Year, but not more frequently than once each Plan Year, any
portion or all of the amount then credited to the Participant's
Elective Deferral Account which is attributable to Elective Deferral
Contributions (and of income allocable thereto credited to such
Elective Deferral Account as of the end of the last Plan Year ending
before July 1, 1989), any portion or all of the vested amount then
credited to the Participant's Employer Account, any portion or all of
the vested amount then credited to the Participant's Matching Account
and any portion or all of the Participant's Participant, Rollover and
Transfer Accounts, but a Participant may not elect to withdraw by
reason of hardship, any amount attributable to Qualified Nonelective
Contributions or Qualified Matching Contributions. For purposes of
this Section 7.10(D)(3), the Administrative Committee shall determine
that a hardship has occurred only if the distribution both is made on
account of an immediate and heavy financial need of the Participant
and is necessary to satisfy such financial need in accordance with the
following standards:
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(i) IMMEDIATE AND HEAVY FINANCIAL NEED.
(AA) IN GENERAL. The determination of
whether a Participant has an immediate and heavy
financial need is to be made on the basis of all
relevant facts and circumstances. A determination of
an immediate and heavy financial need will generally
be made by the Administrative Committee if the
inability to satisfy the financial need would have a
severe adverse effect upon the health, livelihood or
well-being of a Participant or of a member of the
Participant's immediate family. A financial need
shall not fail to qualify as immediate and heavy
merely because such need was reasonably foreseeable
or voluntarily incurred by the Participant.
(BB) DEEMED IMMEDIATE AND HEAVY
FINANCIAL NEED. A distribution will be deemed to be
made on account of an immediate and heavy financial
need of the Participant if the distribution is on
account of:
(AAA) Expenses incurred or necessary
for medical care described in section 213(d)
of the Code of the Participant, the
Participant's Spouse, or any dependents of
the Participant (as defined in section 152 of
the Code);
(BBB) Purchase (excluding mortgage
payments) of a principal residence for the
Participant;
(CCC) Payment of tuition and related
educational fees for the next 12 months of
post-secondary education for the Participant,
his Spouse, children, or dependents; or
(DDD) The need to prevent the eviction
of the Participant from his principal
residence or foreclosure on the mortgage of
the Participant's principal residence.
(ii) DISTRIBUTION NECESSARY TO SATISFY
FINANCIAL NEED.
(AA) IN GENERAL. A distribution will
be considered as necessary to satisfy an immediate
and heavy financial need of a Participant only if:
(AAA) The Participant has obtained all
distributions, other than hardship
distributions, and all nontaxable loans under
all plans maintained by the Employer;
(BBB) All plans (within the meaning of
Treas. Reg. Section 1.401(k)-
1(d)(2)(iv)(B)(4)) maintained by the Employer
provide that the Participant's Elective
Deferrals (and Employee Contributions) will
be suspended for 12 months after the receipt
of the hardship distribution;
(CCC) The distribution is not in
excess of the amount of an immediate and
heavy financial need (including amounts
necessary to pay any
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federal, state or local income taxes or
penalties reasonably anticipated to result
from the distribution); and
(DDD) All plans maintained by the
Employer provide that the Participant may not
make Elective Deferrals for the Participant's
taxable year immediately following the
taxable year of the hardship distribution in
excess of the applicable limit under section
402(g) of the Code for such taxable year less
the amount of such Participant's Elective
Deferrals for the taxable year of the
hardship distribution.
Such withdrawal election shall be made at least 30 days prior to the
effective date of the withdrawal on the Appropriate Form furnished by
the Administrative Committee for such purpose.
(4) OTHER LIMITATIONS ON DISTRIBUTIONS.
(i) GENERAL RULES. Notwithstanding any
other provision in the Plan, no Elective Deferral, Qualified
Nonelective Contribution or Qualified Matching Contribution
and income allocated to each shall be distributable earlier
than upon one of the following events:
(AA) The Participant's retirement,
death, disability or separation from service;
(BB) The termination of the Plan
without the maintenance or establishment of another
Defined Contribution Plan (other than an employee
stock ownership plan as defined in section 4975(e) of
the Code or section 409 of the Code) or a simplified
employee pension plan as defined in section 408(k) of
the Code;
(CC) The date of the sale or other
disposition by a corporate Employer to an unrelated
corporation of substantially all of the assets
(within the meaning of section 409(d)(2) of the Code)
used by such Employer in a trade or business of such
Employer with respect to a Participant who continues
employment with the corporation acquiring such
assets. The sale of 85 percent of the assets used in
a trade or business will be deemed a sale of
"substantially all" the assets used in such trade or
business;
(DD) The date of the sale or other
disposition by a corporate Employer of such
Employer's interest in a subsidiary (within the
meaning of section 409(d)(3) of the Code) to an
unrelated entity. This Section 7.10(D)(4)(i)(DD)
applies only to a Participant who continues
employment with such subsidiary;
(EE) The Participant's attainment of
age 59 1/2; or
(FF) In the case of distributions of
Elective Deferrals (and of income allocable thereto
credited to a Participant's account as of December
31, 1988) but not of amounts treated as Elective
Deferrals (and of income allocable thereto), the
Participant's hardship.
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(ii) OTHER RULES.
(AA) ESTABLISHMENT OF PLANS. For
purposes of Section 7.10(D)(4)(i)(BB), the
establishment of a plan means the existence at the
time the plan (including this Plan) with the cash or
deferred arrangement is terminated or the
establishment within the period ending 12 months
after distribution of all assets from the arrangement
of any other Defined Contribution Plan (other than an
employee stock ownership plan as defined in section
4975(e)(7) of the Code) maintained by the Employer.
A plan maintained by an unrelated employer (i.e., an
employer other than the employer maintaining the
terminating plan and other than an employer related
at the time of plan termination to the employer
maintaining the terminating plan within the meaning
of section 414(b), (c), (m), and (o) of the Code)
will be treated as the establishment of a plan only
if, as of the date of termination, the Employer knows
or has reason to know that such unrelated employer
will become related to the Employer.
(BB) LIMITATIONS APPLY AFTER TRANSFER.
The limitations of Section 7.10(D)(4) continue to
apply to amounts attributable to Elective Deferrals,
Qualified Nonelective Contributions and Qualified
Matching Contributions and income allocated to each
even if such amounts are transferred to another
qualified plan of any employer.
(CC) OTHER BENEFITS NOT CONTINGENT
UPON ELECTIVE DEFERRALS. For Plan Years beginning
after December 31, 1988, no other Employer benefit
may be conditioned (other than Matching or Qualified
Matching Contributions) (directly or indirectly)
within the meaning of section 401(k) of the Code and
the Treasury regulations issued thereunder upon the
Employee's electing to make or not to make Elective
Deferrals under the arrangement.
(DD) LUMP SUM DISTRIBUTION REQUIRED.
An event shall not be treated as described in Section
7.10((D)(4)(i)(BB), (CC) or (DD) with respect to any
Participant unless, with respect to distributions
after March 31, 1988, the Participant receives a lump
sum distribution within the meaning of section
401(k)(10)(B)(ii) of the Code by reason of the event.
(EE) TRANSFEROR CORPORATION MUST
MAINTAIN PLAN. An event shall not be treated as
described in Section 7.10(D)(4)(i)(CC) or (DD) unless
the transferor corporation continues to maintain the
plan after the disposition.
(FF) SUSPENSION OF ELECTIVE DEFERRALS
AND EMPLOYEE CONTRIBUTIONS. A Participant's Elective
Deferrals and Employee Contributions shall be
suspended for a period of 12 months following the
receipt of a hardship distribution. Moreover, the
Participant shall not make Elective Deferrals for his
taxable year immediately following the taxable year
of the distribution in excess of the applicable limit
under section 402(g) of the Code for such taxable
year less the amount of such Participant's Elective
Deferrals for the taxable year of the distribution.
(GG) CONSENT REQUIREMENTS. All
distributions that may be made pursuant to one or
more of the foregoing distributable events in Section
7.10(D)(4)(i)
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are subject to the spousal and Participant consent
requirements (if applicable) contained in sections
401(a)(11) and 417 of the Code.
(5) OTHER IN-SERVICE WITHDRAWALS BEFORE AGE 59-1/2.
If the Adoption Agreement so provides, a Participant may withdraw
during employment, prior to attaining age 59 1/2, his Vested Accrued
Benefit attributable to Employer Contributions, Participant
Contributions and Matching Contributions but not to Qualified
Nonelective Contributions or Qualified Matching Contributions or the
income allocable thereto after such Participant completes five or more
Years of Service for Benefit Accrual.
(6) DETERMINATION OF VESTED INTEREST IN CASE OF
CERTAIN WITHDRAWALS. No forfeitures shall occur solely as a result of
an Employee's withdrawal of Employee Contributions. In the event a
Participant makes a withdrawal under the Plan and his interest in the
Plan is not fully vested, such Participant's vested interest in the
portion of his Accrued Benefit remaining in the Plan shall be
determined in accordance with the rules of Section 7.6(C)(1)(a)(ii).
(7) DISTRIBUTIONS UPON PLAN TERMINATION. Subject to
Section 7.10(D)(4), the balances of Participants' Accounts shall be
distributed to Participants or their Beneficiaries as soon as
administratively feasible after the termination of the Plan.
(8) DISTRIBUTIONS UPON SALE OF ASSETS. Subject to
Section 7.10(D)(4), the balances of Participants' Accounts shall be
distributed to Participants as soon as administratively feasible after
the disposition, to an entity that is not a related entity, of
substantially all of the assets (within the meaning of section
409(d)(2) of the Code) used by the Employer in the trade or business
in which the Participant is employed, but only if the Participant
continues employment with the corporation acquiring such assets.
(9) DISTRIBUTION UPON SALE OF SUBSIDIARY. Subject
to Section 7.10(D)(4), the balances of Participants' Accounts shall be
distributed as soon as administratively feasible after the
disposition, to an entity that is not a related entity, of an
incorporated Employer's interest in a subsidiary (within the meaning
of section 409(d)(3) of the Code) to Participants who continue
employment with such subsidiary.
7.11 LOANS. The rules relating to loans are as follows:
(A) LIMITATIONS. If the Adoption Agreement so provides,
upon the filing of an application with the Administrative Committee by a
Participant or Beneficiary but only if the Beneficiary is a "party in
interest" with respect to the Plan (within the meaning of section 3(14) of
ERISA) on the Appropriate Form, the Administrative Committee shall, within
90 days from the date of receipt of such application, direct the Trustee to
make a loan or loans to such Participant or Beneficiary, provided such loan
or loans:
(1) Are available to all such Participants and
Beneficiaries on a reasonably equivalent basis;
(2) Are not made available to Highly Compensated
Employees and their Beneficiaries, in an amount greater than the
amount made available to other Employees and their Beneficiaries;
(3) Bear a reasonable rate of interest within the
meaning of 29 CFR Section 2550.408b-1;
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(4) Are adequately secured within the meaning to
29 CFR Section 2550.408b-1;
(5) Do not exceed (when added to the outstanding
balance of all other loans to the Participant or Beneficiary) the
lesser of:
(a) $50,000 (reduced by the excess (if any)
of (i) the highest outstanding balance of loans from the Plan
during the one-year period ending on the day before the date
on which such loan was made, over (ii) the outstanding balance
of loans from the Plan on the date on which such loan was
made), or
(b) One-half of the present value of the
Participant's Vested Accrued Benefit under the Plan (but, if
the Adoption Agreement so provides, not less than the lesser
of (i) $10,000 or (ii) the Participant's Vested Accrued
Benefit);
(6) Are repayable, except as otherwise provided
in Section 7.11(D), by their terms within five years from the date of
the loans;
(7) Shall not be made to any Owner-Employee or
shareholder-employee (for purposes of this requirement, a
shareholder-employee means an employee or officer of an electing small
business (Subchapter S) corporation who owns (or is considered as
owning within the meaning of section 318(a)(1) of the Code) on any day
during the taxable year of that corporation more than five percent of
the outstanding stock of the corporation);
(8) Require amortization (of both principal and
interest) in level payments made not less frequently than quarterly
over the term of the loan;
(9) If Section 7.14 is applicable and if the
Participant's Vested Accrued Benefit is to be used as security for
part or all of the loan and only in such cases, shall not be made
unless the Participant obtains the consent of his Spouse, if any, to
the use of the Participant's Vested Accrued Benefit as security for
the loan; such spousal consent shall be obtained no earlier than the
beginning of the 90-day period that ends on the date on which the loan
is to be so secured; such consent must be in writing, must acknowledge
the effect of the loan, and must be witnessed by a Plan representative
or notary public; such consent shall thereafter be binding with
respect to the consenting Spouse or any subsequent Spouse with respect
to that loan; a new consent shall be required if the Vested Accrued
Benefit is used for renegotiation, extension, renewal, or other
revision of the loan; and
(10) Comply with any other limitations on loans
specified in the Adoption Agreement.
In the event of default, if the security for the loan
is the Participant's Vested Accrued Benefit, foreclosure on the note and
attachment of security shall not occur until a distributable event occurs in
the Plan.
For purposes of this Section 7.11, the rules of section 414(b), (c),
(m) and (o) of the Code shall apply and all plans of the Employer (determined
after the application of section 414(b), (c), (m) and (o) of the Code) shall be
treated as one plan.
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An assignment or pledge of any portion of the Participant's interest
in the Plan and a loan, pledge, or assignment with respect to any Insurance
Contract purchased by the Plan, shall be treated as a loan under this Section
7.11.
If a valid spousal consent is required and has been obtained in
accordance with Section 7.11(A)(9) then, notwithstanding any other provision of
this Plan, the portion of the Participant's Vested Accrued Benefit used as a
security interest held by the Plan by reason of a loan outstanding to the
Participant shall be taken into account for purposes of determining the amount
of the Accrued Benefit payable at the time of death or distribution, but only
if the reduction is used as repayment of the loan. If less than 100 percent of
the Participant's Vested Accrued Benefit (determined without regard to the
preceding sentence) is payable to the Surviving Spouse, then the Accrued
Benefit shall be adjusted by first reducing the Vested Accrued Benefit by the
amount of the security used as repayment of the loan, and then determining the
benefit payable to the Surviving Spouse.
The Administrative Committee, provided the above requirements are met,
shall grant such request within 90 days following such request. In such event
the Administrative Committee shall be responsible for complying with any legal
requirements affecting said loan, such as Federal Reserve regulations.
(B) INTEREST. All such loans shall bear a reasonable
rate of interest, which shall, in accordance with 29 CFR Section
2550.408b-1, provide the Plan with a return commensurate with the interest
rates charged by persons engaged in the business of lending money for loans
which would be made in similar circumstances. Such rate of interest shall
be determined in accordance with the provisions of the Adoption Agreement.
Every loan applicant shall receive a clear statement of the charges involved
in each loan transaction. This statement shall include the dollar amount
and the annual interest rate of the finance charge.
(C) REPAYMENT-COLLECTION. Any such loan or loans shall
be repaid by the Participant or Beneficiary within the period certain
requested by the Participant or Beneficiary but not to exceed, except in the
case of loans subject to Section 7.11(D), a period of five years from the
date the loan or loans are made and such loan or loans shall by their terms
require repayment within such period. The loan or loans shall be evidenced
by a promissory note, shall be secured by payroll deduction if the
Participant is in the active service of the Employer and by such collateral
as shall be specified in the Adoption Agreement. If the Participant's
Vested Accrued Benefit is specified in the Adoption Agreement as collateral
for a loan, no more than 50 percent of the present value of such Vested
Accrued Benefit may be so used. In the event the Participant or Beneficiary
does not repay the loan within the period certain, the Trustee shall,
subject to the spousal consent requirements of Section 7.11(A)(9) (if
applicable), deduct the total amount of such loan or loans or any portion
thereof, if the collateral for the loan is the Participant's Vested Accrued
Benefit, from that portion (if any) of the Vested Accrued Benefit which
serves as collateral for the loan but only when a distributable event occurs
under the Plan and, if collateral other than the Participant's Vested
Accrued Benefit secures such loan, from such other collateral at the time of
the default. In the event the amount of any such payment, distribution or
collateral is insufficient to repay the remaining balance on the loan or
loans including interest, the Participant or Beneficiary shall be liable
for, and continue to make, payments on any balance still due from such
Participant or Beneficiary. Subject to the terms of the Plan, the
Participant or Beneficiary shall repay the loan or loans by payroll
deduction or in installments in such manner as shall comply with Section
7.11(A).
(D) EXCEPTION FOR HOME LOANS. Section 7.11(A)(6) shall
not apply to any loan used to acquire any dwelling unit which within a
reasonable time is to be used (determined at the time the loan is made) as
the principal residence of the Participant.
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(E) LOANS - INDIVIDUAL INVESTMENTS. Except as provided
in this paragraph, loans shall be treated as general investments of the
Trust Fund. However, if the Adoption Agreement provides for Participant
directed investments pursuant to Section 6.1(B) or if the Adoption Agreement
provides that loans are to be treated as investments of the Participant's or
Beneficiary's accounts only, until a loan to a Participant or Beneficiary is
repaid, the outstanding balance of the loan shall be treated as an
investment by such Participant or Beneficiary for his accounts only and the
interest paid by such Participant or Beneficiary shall be credited to the
accounts, as applicable, of such Participant or Beneficiary. Such
Participant's or Beneficiary's accounts shall not share in any other
earnings of the Plan with respect to the amount of the loan. The amount of
each repayment shall be invested in accordance with the regular investment
provisions selected by the Employer in the Adoption Agreement applicable to
such Employer.
7.12 QVEC WITHDRAWALS. Except in the case of the Participant's
death or disability (as defined in section 72(m)(7) of the Code) or attainment
of age 59 1/2, before distributing an amount from a Participant's QVEC Account,
the Employer shall receive from such Participant a declaration of the
Participant's intention as to the disposition of the amount distributed. The
Participant shall execute such forms as the Employer may require with respect
to the Participant's liability for Federal income tax which may result from the
distribution of amounts from such Participant's QVEC Account.
7.13 INCIDENTAL BENEFIT RULE. This provision is contained in
Section 7.9(C)(1)(b).
7.14 JOINT AND SURVIVOR ANNUITY REQUIREMENTS. This Section 7.14
shall apply only if the Plan, as adopted by the Employer, is a money purchase
plan.
(A) APPLICATION. The provisions of this Section 7.14
shall apply to any Participant in the Plan if the Plan, as adopted by the
Employer, is a money purchase plan and the Participant is one who is
credited with at least one Hour of Service with the Employer on or after
August 23, 1984, and such other Participants as provided in Section 7.14(G).
(B) QUALIFIED JOINT AND SURVIVOR ANNUITY. Unless an
optional form of benefit under Section 7.14(H) is selected pursuant to a
"Qualified Election" within the 90-day period ending on the "Annuity
Starting Date", a married Participant's "Vested Account Balance" shall be
paid in the form of a "Qualified Joint and Survivor Annuity" and an
unmarried Participant's "Vested Account Balance" will be paid in the form of
a life annuity. The Participant may elect to have such annuity distributed
upon attainment of the "Earliest Retirement Age" under the Plan.
(C) QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Unless an
optional form of benefit under Section 7.14(H) has been selected within the
"Election Period" pursuant to a "Qualified Election", if a Participant dies
before the "Annuity Starting Date" then the Participant's "Vested Account
Balance" shall be applied toward the purchase of an annuity for the life of
the Surviving Spouse. The Surviving Spouse may elect to have such annuity
distributed within a reasonable period after the Participant's death.
(D) DEFINITIONS.
(1) "ELECTION PERIOD" shall mean the period which
begins on the first day of the Plan Year in which the Participant
attains age 35 and ends on the date of the Participant's death. If a
Participant separates from service prior to the first day of the Plan
Year in which age 35 is attained, with respect to the account balance
as of the date of separation, the "Election Period" shall begin on the
date of separation.
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A Participant who will not yet attain age 35 as of
the end of any current Plan Year may make a special qualified election
("Pre-age 35 Waiver") to waive the qualified preretirement survivor
annuity for the period beginning on the date of such election and
ending on the first day of the Plan Year in which the Participant will
attain age 35. Such election shall not be valid unless the
Participant receives a written explanation of the qualified
preretirement survivor annuity in such terms as are comparable to the
explanation required under Section 7.14(E)(1). Qualified
preretirement survivor annuity coverage will be automatically
reinstated as of the first day of the Plan Year in which the
Participant attains age 35. Any new waiver on or after such date
shall be subject to the full requirements of this Section.
(2) "EARLIEST RETIREMENT AGE" shall mean the
earliest date on which, under the plan, the Participant could elect to
receive retirement benefits.
(3) "QUALIFIED ELECTION" shall mean a waiver of a
"Qualified Joint and Survivor Annuity" or a qualified preretirement
survivor annuity. Any waiver of a "Qualified Joint and Survivor
Annuity" or a qualified preretirement survivor annuity shall not be
effective unless: (a) the Participant's Spouse consents in writing to
the election; (b) the election designates a specific Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries,
which may not be changed without spousal consent (or the Spouse
expressly permits designations by the Participant without any further
spousal consent); (c) the Spouses's consent acknowledges the effect of
the election; and (d) the Spouse's consent is witnessed by a Plan
representative or notary public. Additionally, a Participant's waiver
of the "Qualified Joint and Survivor Annuity" shall not be effective
unless the election designates a form of benefit payment which may not
be changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal consent).
If it is established to the satisfaction of a Plan representative that
there is no Spouse or that the Spouse cannot be located, a waiver will
be deemed a "Qualified Election".
Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be obtained) shall
be effective only with respect to such Spouse. A consent that permits
designations by the Participant without any requirement of further
consent by such Spouse must acknowledge that the Spouse has the right
to limit consent to a specific Beneficiary, and a specific form of
benefit where applicable, and that the Spouse voluntarily elects to
relinquish either or both of such rights. A revocation of a prior
waiver may be made by a Participant without the consent of the Spouse
at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this
provision shall be valid unless the Participant has received notice as
provided in Section 7.14(E) below.
(4) "QUALIFIED JOINT AND SURVIVOR ANNUITY" shall
mean an immediate annuity for the life of the Participant with a
survivor annuity for the life of the Spouse which is not less than 50
percent and not more than 100 percent of the amount of the annuity
which is payable during the joint lives of the Participant and the
Spouse and which is the amount of benefit which can be purchased with
the Participant's "Vested Account Balance". The percentage of the
survivor annuity under the Plan shall be 50 percent.
(5) "ANNUITY STARTING DATE" shall mean the first
day of the first period for which an amount is paid as an annuity or
any other form.
(6) "VESTED ACCOUNT BALANCE" shall mean the
aggregate value of the Participant's vested account balances derived
from Employer and Employee contributions (including rollovers and
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direct transfers), whether vested before or upon death, including the
proceeds of insurance contracts, if any, on the Participant's life.
The provisions of this Section 7.14 shall apply to a Participant who
is vested in amounts attributable to Employer contributions, Employee
contributions (or both) at the time of death or distribution.
(E) NOTICE REQUIREMENTS.
(1) In the case of a "Qualified Joint and
Survivor Annuity", the Plan Administrator shall no less than 30 days
and no more than 90 days prior to the "Annuity Starting Date" provide
to each Participant a written explanation of: (a) the terms and
conditions of a "Qualified Joint and Survivor Annuity"; (b) the
Participant's right to make and the effect of an election to waive the
"Qualified Joint and Survivor Annuity" form of benefit; (c) the rights
of a Participant's Spouse; and (d) the right to make, and the effect
of, a revocation of a previous election to waive the "Qualified Joint
and Survivor Annuity".
(2) In the case of a qualified preretirement
survivor annuity as described in Section 7.14(C), the Plan
Administrator shall provide each Participant within the applicable
period for such Participant a written explanation of the qualified
preretirement survivor annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the
requirements of Section 7.14(E)(1) applicable to a "Qualified Joint
and Survivor Annuity".
The applicable period for a Participant is whichever of the following
periods ends last: (a) the period beginning with the first day of the
Plan Year in which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age 35; (b) a reasonable period ending after the
individual becomes a Participant; (c) a reasonable period ending after
Section 7.14(C) ceases to apply to the Participant; (d) a reasonable
period ending after this Section 7.14 first applies to the
Participant. Notwithstanding the foregoing, notice must be provided
within a reasonable period ending after separation from service in the
case of a Participant who separates from service before attaining age
35.
For purposes of applying the preceding paragraph, a reasonable period
ending after the enumerated events described in (b), (c) and (d) is
the end of the two-year period beginning one year prior to the date
the applicable event occurs, and ending one year after that date. In
the case of a Participant who separates from service before the Plan
Year in which age 35 is attained, notice shall be provided within the
two-year period beginning one year prior to separation and ending one
year after separation. If such a Participant thereafter returns to
employment with the Employer, the applicable period for such
Participant shall be redetermined.
(3) Notwithstanding the other requirements of
this Section 7.14(E), the respective notices prescribed by this
Section need not be given to a Participant if (a) the plan "fully
subsidizes" the costs of a "Qualified Joint and Survivor Annuity" or
qualified preretirement survivor annuity, and (b) the plan does not
allow the Participant to waive the "Qualified Joint and Survivor
Annuity" or qualified preretirement survivor annuity and does not
allow a married Participant to designate a nonspouse Beneficiary. For
purposes of this Section 7.14(E)(3), a plan fully subsidizes the costs
of a benefit if no increase in cost, or decrease in benefits to the
Participant may result from the Participant's failure to elect another
benefit.
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(F) SAFE HARBOR RULES.
(1) This Section 7.14(F) shall apply to a
Participant in a profit-sharing plan, and to any distribution made on
or after the first day of the first Plan Year beginning after December
31, 1988, from or under a separate account attributable solely to
accumulated deductible employee contributions, as defined in section
72(o)(5)(B) of the Code, and maintained on behalf of a participant in
a money purchase pension plan (including a target benefit plan), if
the following conditions are satisfied:
(a) The Participant does not or cannot
elect payments in the form of a life annuity; and
(b) On the death of a Participant, the
Participant's "Vested Account Balance" will be paid to the
Participant's Surviving Spouse, but if there is no Surviving
Spouse, or if the Surviving Spouse has consented in a manner
conforming to a "Qualified Election", then to the
Participant's "Designated Beneficiary". The Surviving Spouse
may elect to have distribution of the "Vested Account Balance"
commence within the 90-day period following the date of the
Participant's death. The "Vested Account Balance" shall be
adjusted for gains or losses occurring after the Participant's
death in accordance with the provisions of the Plan governing
the adjustment of account balances for other types of
distributions. This Section 7.14(F) shall not be operative
with respect to a Participant in a profit-sharing plan if the
plan is a direct or indirect transferee of a Defined Benefit
Plan, money purchase plan, a target benefit plan, stock bonus,
or profit-sharing plan which is subject to the survivor
annuity requirements of section 401(a)(11) and section 417 of
the Code (other than, effective January 1, 1993,
trustee-to-trustee transfers described in Section 3.9(B)). If
this Section 7.14(F) is operative, then the provisions of this
Section 7.14, other than Section 7.14(G), shall be
inoperative.
(2) The Participant may waive the spousal death
benefit described in this Section 7.14(F) at any time provided that no
such waiver shall be effective unless it satisfies the conditions of
Section 7.14(D)(3) (other than the notification requirement referred
to therein) that would apply to the Participant's waiver of the
qualified preretirement survivor annuity.
(3) For purposes of this Section 7.14(F), "Vested
Account Balance" shall mean, in the case of a money purchase pension
plan or a target benefit plan, the Participant's separate account
balance attributable solely to accumulated deductible employee
contributions within the meaning of section 72(o)(5)(B) of the Code.
In the case of a profit-sharing plan, "Vested Account Balance" shall
have the same meaning as provided in Section 7.14(D)(6).
(G) TRANSITIONAL RULES.
(1) Any living Participant not receiving benefits
on August 23, 1984, who would otherwise not receive the benefits
prescribed by the previous provisions of this Section 7.14 must be
given the opportunity to elect to have the prior provisions of this
Section 7.14 apply if such Participant is credited with at least one
Hour of Service under this Plan or a predecessor plan in a Plan Year
beginning on or after January 1, 1976, and such Participant had at
least ten Years of Service for Vesting when he separated from service.
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(2) Any living Participant not receiving benefits
on August 23, 1984, who was credited with at least one Hour of Service
under this Plan or a predecessor plan on or after September 2, 1974,
and who is not otherwise credited with any service in a Plan Year
beginning on or after January 1, 1976, must be given the opportunity
to have his or her benefits paid in accordance with Section
7.14(G)(4).
(3) The respective opportunities to elect (as
described in Sections 7.14(G)(1) and (2) above) must be afforded to
the appropriate Participants during the period commencing on August
23, 1984, and ending on the date benefits would otherwise commence to
said Participants.
(4) Any Participant who has elected pursuant to
Section 7.14(G)(2) and any Participant who does not elect under
Section 7.14(G)(1) or who meets the requirements of Section 7.14(G)(1)
except that such Participant does not have at least ten Years of
Service for Vesting when he separates from service, shall have his
benefits distributed in accordance with all of the following
requirements if benefits would have been payable in the form of a life
annuity:
(a) AUTOMATIC JOINT AND SURVIVOR
ANNUITY. If benefits in the form of a life annuity become
payable to a married Participant who:
(1) Begins to receive payments
under the Plan on or after Normal Retirement Age; or
(2) Dies on or after Normal
Retirement Age while still working for the Employer;
or
(3) Begins to receive payments on
or after the "Qualified Early Retirement Age"; or
(4) Separates from service on or
after attaining Normal Retirement Age (or the
"Qualified Early Retirement Age") and after
satisfying the eligibility requirements for the
payment of benefits under the plan and thereafter
dies before beginning to receive such benefits;
then such benefits shall be received under this Plan in the
form of a "Qualified Joint and Survivor Annuity", unless the
Participant has elected otherwise during the election period.
The election period must begin at least six months before the
Participant attains "Qualified Early Retirement Age" and end
not more than 90 days before the commencement of benefits.
Any election hereunder shall be in writing and may be changed
by the Participant at any time.
(b) ELECTION OF EARLY SURVIVOR ANNUITY.
A Participant who is employed after attaining the "Qualified
Early Retirement Age" shall be given the opportunity to elect,
during the election period, to have a survivor annuity payable
on death. If the Participant elects the survivor annuity,
payments under such annuity must not be less than the payments
which would have been made to the Spouse under the "Qualified
Joint and Survivor Annuity" if the Participant had retired on
the day before his death. Any election under this provision
shall be in writing and may be changed by the Participant at
any time. The election period begins on the later of (1) the
90th day before the Participant attains the "Qualified Early
Retirement Age",
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or (2) the date on which participation begins, and ends on the
date the Participant terminates employment.
(c) DEFINITIONS. For purposes of this
Section 7.14(G)(4):
(1) "QUALIFIED EARLY RETIREMENT
AGE" is the latest of:
(i) The earliest date,
under the Plan, on which the Participant may
elect to receive retirement benefits,
(ii) The first day of the
120th month beginning before the Participant
reaches Normal Retirement Age, or
(iii) The date the
Participant begins participation.
(2) "QUALIFIED JOINT AND SURVIVOR
ANNUITY" is an annuity for the life of the
Participant with a survivor annuity for the life of
the Spouse as described in Section 7.14(D)(4).
(H) OPTIONAL FORMS OF BENEFIT. The only optional forms
of benefit under the Plan are the forms of benefit provided under Section
7.1(B).
7.15 WAIVER OF 30-DAY NOTICE REQUIREMENTS FOR CERTAIN
DISTRIBUTIONS. If a distribution is one to which sections 401(a)(11) and 417
of the Code do not apply, such distribution may commence less than 30 days
after the notice required under Treas. Reg. Section 1.411(a)-11(c) is given,
provided that:
(A) The Plan Administrator clearly informs the
Participant that the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution option);
and
(B) The Participant, after receiving the notice,
affirmatively elects a distribution.
ARTICLE VIII
NONALIENATION OF BENEFITS
8.1 BENEFITS NOT ALIENABLE. The right of any Participant or
Beneficiary to any benefit payment under the Plan shall not be subject to
attachment, execution, garnishment, any voluntary or involuntary alienation or
assignment or to any other legal or equitable process. The preceding sentence
shall also apply to the creation, assignment, or recognition of a right to any
benefit payable with respect to a Participant pursuant to a domestic relations
order, unless such order is determined to be a Qualified Domestic Relations
Order or any domestic relations order entered before January 1, 1985.
8.2 SPECIAL PROVISION WITH RESPECT TO QUALIFIED DOMESTIC RELATIONS
ORDERS. If the Adoption Agreement so provides and if the Qualified Domestic
Relations Order so provides:
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(A) Plan assets allocated to an alternate payee shall be
placed in a separate account established for such alternate payee and such
alternate payee shall be entitled, with respect to such separate account, to
all the rights including but not limited to, the investment direction
rights, if any, of a Participant under the Plan; and
(B) Distribution of the vested amount in such separate
account shall be made to such alternate payee at such time as the Qualified
Domestic Relations Order provides, even if such date precedes the date on
which a Participant is entitled to payment under the Plan, but such
distribution shall only be made in one lump sum payment if made prior to the
date the Participant would otherwise be first entitled to receive payment.
ARTICLE IX
THE ADMINISTRATIVE COMMITTEE
9.1 STRUCTURE. The Employer shall appoint an Administrative
Committee consisting of one or more persons to administer the Plan. The member
or the members of the Administrative Committee, if in the full-time employ of
the Employer, shall serve without additional compensation and at the pleasure
of the Employer. The Employer may, in its sole discretion, discharge or remove
any member from the Administrative Committee at any time. Any member may
resign by delivering his written resignation to the Employer and such
resignation shall become effective at delivery or at any later date specified
therein. In the event of the death, discharge, resignation or removal of any
member of the Administrative Committee, the Employer may appoint a successor.
The Employer shall notify the Trustee of the appointment of the member or
members of the Administrative Committee and of any successor member or members
thereto.
9.2 ADMINISTRATIVE COMMITTEE ACTION. On all matters within the
jurisdiction of the Administrative Committee the decision of a majority of the
members of the Administrative Committee shall govern and control. The
Administrative Committee may take action either at a meeting or in writing
without a meeting, provided that in the latter instance all members of the
Administrative Committee shall have been advised of the action contemplated and
that the written instrument evidencing the action shall be signed by a majority
of the members. If there is more than one member, the Employer shall appoint a
chairman. If there is more than one member, the Administrative Committee may
appoint, either from among its members or otherwise, a secretary who shall keep
a record of all meetings and actions taken by the Administrative Committee.
Either the Chairman or any member of the Administrative Committee designated by
the Chairman shall execute any certificate, instrument or other written
direction on behalf of the Administrative Committee.
9.3 RESPONSIBILITIES. The Administrative Committee shall have
sole responsibility and discretion for administration of the Plan, and shall
supervise and control the operation of the Plan in accordance with its terms.
The Administrative Committee shall have the responsibility, the discretion, the
power and the authority to do all things necessary to accomplish that purpose,
including, but not limited to, the responsibility, discretion, power and
authority to do the following:
(A) To construe and interpret the terms and provisions of
the Plan including, but not limited to, disputed or doubtful terms;
(B) To adopt such rules and regulations under the Plan as
it may consider desirable for the administration of the Plan;
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(C) To determine all questions of eligibility for
participation under the Plan;
(D) To determine all questions concerning the amount,
time and manner of payment of benefits under the Plan;
(E) To prescribe procedures to be followed by Employees,
Participants, and Beneficiaries under the Plan;
(F) To prepare and distribute appropriate information
concerning the Plan;
(G) To issue directions to the Trustee concerning all
benefits which are to be paid from the Trust pursuant to the Plan;
(H) To bring suit in a court of competent jurisdiction,
or to take any other action necessary to ascertain the proper actions to be
taken in the event that a reasonable interpretation of applicable law
precludes the Administrative Committee from satisfying its requirements
under this Plan or the Trust;
(I) To establish a funding policy and method to carry out
the Plan objectives in light of the short- and long-run financial needs of
the Plan and to communicate such policy and method to the Trustee;
(J) To keep such records, make such reports (including,
but not limited to, reports to Participants and the Internal Revenue Service
concerning Qualified Voluntary Employee Contributions, as may be required by
Treasury regulations) and do such other acts as it deems appropriate in
order to comply with ERISA and government regulations thereunder; and
(K) To do such other acts as may be necessary and/or
desirable in order to administer the Plan.
To the maximum extent permitted by law, the Administrative Committee's
determinations on all such matters shall be final and binding upon the
Employer, Participants, other employees, Beneficiaries and all other
parties.
9.4 CONTRACTING FOR SERVICE. The Administrative Committee may
contract for legal, accounting, clerical and other services necessary to carry
out its responsibilities under the Plan.
9.5 EXPENSES OF ADMINISTRATIVE COMMITTEE. Unless paid by the
Employer, any expenses incurred in administering the Plan, including but not
limited to, expenses incurred by the Administrative Committee and Trustee's
fees, shall be deducted from the Accounts to which such expenses relate or
proportionately from all Accounts, if such expenses do not relate to any
specific Accounts.
ARTICLE X
CLAIMS PROCEDURE
10.1 CLAIMS FOR BENEFITS. All claims for benefits under the Plan
shall be made in writing and shall be signed by the applicant. Claims shall be
submitted to a representative designated by the Administrative Committee and
hereinafter referred to as the "Claims Coordinator".
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Each claim hereunder shall be acted on and approved or
disapproved by the Claims Coordinator within 60 days following the receipt by
the Claims Coordinator of the information necessary to process the claim.
In the event the Claims Coordinator denies a claim for
benefits, in whole or in part, the Claims Coordinator shall notify the
applicant in writing of the denial of the claim and notify such applicant of
his right to a review of the Claims Coordinator's decision by the
Administrative Committee. Such notice by the Claims Coordinator shall also set
forth, in a manner calculated to be understood by the applicant, the specific
reason for such denial, the specific Plan provisions on which the denial is
based, a description of any additional material or information necessary to
perfect the claim, with an explanation of why such material or information is
necessary, and an explanation of the Plan's claim review procedure as set forth
in this Article X.
If no action is taken by the Claims Coordinator on an
applicant's claim within 60 days after receipt by the Claim Coordinator, such
application shall be deemed to be denied for purposes of the following appeals
procedure.
10.2 APPEALS PROCEDURE. Any applicant whose claim for benefits is
denied in whole or in part (such applicant being hereinafter referred to as the
"Claimant") may appeal from such denial to the Administrative Committee for a
review of the decision by the entire Administrative Committee. Such appeal
must be made within six months after the Claimant has received written notice
of the denial as provided above in Section 10.1. An appeal must be submitted
in writing within such period and must:
(A) Request a review by the entire Administrative
Committee of the claim for benefits under the Plan;
(B) Set forth all of the grounds upon which the
Claimant's request for review is based and any facts in support thereof; and
(C) Set forth any issues or comments which the Claimant
deems pertinent to the appeal.
The Administrative Committee shall regularly review appeals by
Claimants. The Administrative Committee shall act upon each appeal within 60
days after receipt thereof unless special circumstances require an extension of
the time for processing the Claimant's request for review. If such an
extension of time for processing is required, written notice of the extension
shall be forwarded to the Claimant prior to the commencement of the extension.
In no event shall such extension exceed a period of 120 days after the request
for review is received by the Administrative Committee.
The Administrative Committee shall make a full and fair review
of each appeal and any written materials submitted by the Claimant and/or the
Employer in connection therewith. The Administrative Committee may require the
Claimant and/or the Employer to submit such additional facts, documents or
other evidence as the Administrative Committee in its discretion deems
necessary or advisable in making its review. The Claimant shall be given the
opportunity to review pertinent documents or materials upon submission of a
written request to the Administrative Committee, provided the Administrative
Committee finds the requested documents or materials are pertinent to the
appeal.
On the basis of its review, the Administrative Committee shall
make an independent determination of the Claimant's eligibility for benefits
under the Plan. The decision of the Administrative Committee on any claim for
benefits shall be final and conclusive upon all parties thereto.
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In the event the Administrative Committee denies an appeal, in
whole or in part, the Administrative Committee shall give written notice of the
decision to the Claimant, which notice shall set forth, in a manner calculated
to be understood by the Claimant, the specific reasons for such denial and
which shall make specific reference to the pertinent Plan provisions on which
the Administrative Committee's decision was based.
It is intended that the claims procedure of this Plan be
administered in accordance with the claims procedure regulations of the
Department of Labor set forth in 29 CFR Section 2560.503-1.
ARTICLE XI
THE TRUSTEE
11.1 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust
herein expressed, and agrees to carry out the provisions hereof on its part to
be performed.
11.2 RESIGNATION OF TRUSTEE. Any Trustee may resign his duties
hereunder by delivering a written resignation to the Employer. Such
resignation shall take effect on the date provided therein, but not before the
sixtieth day after delivery thereof unless, prior to such sixtieth day, a
successor Trustee shall have been appointed and shall have accepted such
appointment, or unless the Employer shall otherwise consent to such earlier
resignation. If, within 60 days after notice of resignation shall have been
given under the provisions of this Section 11.2, a successor Trustee shall not
have been appointed by the Employer, the resigning Trustee or the Employer, as
appropriate, may apply to any court of competent jurisdiction for the
appointment of a successor Trustee.
11.3 REMOVAL OF TRUSTEE. Any Trustee may be removed by the
Employer at any time, upon notice to the Trustee. Such removal shall be
effected by delivering to the Trustee a notice from the Employer removing the
Trustee, and may include notification to the Trustee of the appointment of a
successor Trustee in the manner hereinafter set forth in Section 11.5. Such
notice of removal shall be effective on the date specified therein, but not
before the actual date of such notice.
11.4 APPOINTMENT OF SUCCESSOR TRUSTEE UPON OCCURRENCE OF CERTAIN
EVENTS. In the event of the death or resignation of a Trustee or the inability
of a Trustee to serve as such after the Employer or any successor thereto shall
have gone out of business or ceased to exist, or been dissolved, a successor
Trustee shall be appointed by election of a majority of the Participants under
the Plan who were Employees of the Employer at the time the Employer or
successor thereto went out of business or ceased to exist, or was dissolved, as
the case may be. Such successor Trustee shall have the same powers as are
granted to successor Trustees under Section 11.5.
11.5 SUCCESSOR TRUSTEE. In the event of the death, resignation or
removal of a Trustee or Trustees hereunder, one or more successor Trustees
shall be appointed by the Employer, and such successor Trustee, upon accepting
such appointment by an instrument in writing delivered to the Employer, shall
become vested with the same powers, duties, privileges and immunities as if it
had originally been named in this Plan as Trustee.
11.6 MEETINGS AND ACTIONS OF TRUSTEE. In the event there is more
than one Trustee, the Trustee shall hold meetings upon such notice (which may
be waived), at such place or places and at such times as it may from
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time to time determine and shall act by majority vote of all the Trustees. Any
one or more Trustees designated by a majority vote of all the Trustees may
execute any certificate, instrument or other written document on behalf of all
the Trustees.
11.7 COMPENSATION. No fee or compensation shall be paid to the
Trustee for its services as such if such Trustee is an Employee of, or is
otherwise compensated by, the Employer and, if not, such Trustee shall receive
such reasonable compensation as may be agreed to by the Employer and such
Trustee.
11.8 TRUSTEE'S LIABILITY. In the exercise of its powers and the
performance of its duties as Trustee under the Plan, the Trustee shall act
solely in the interest of the Participants and their Beneficiaries and in
accordance with the provisions of Article XIV. The Trustee, however, shall not
be liable for any mistake in judgment or other action taken in good faith, or
for loss unless resulting from a breach of any of the responsibilities,
obligations or duties imposed upon the Trustee by the Plan or by Title I of
ERISA.
11.9 GENERAL POWERS. Subject to the provisions and limitations
herein expressly set forth, the Trustee shall have the duty and authority to do
and perform any and all acts and things which, in its judgment, shall be
necessary and/or reasonable to carry out the purposes of the Plan and Trust.
No enumeration of specific powers herein made shall be construed as a
limitation upon the foregoing general powers.
11.10 PAYMENTS TO TRUSTEE. All Participant, Matching, Elective
Deferral, Employer, Rollover, Qualified Matching, Qualified Nonelective, and
Qualified Voluntary Employee Contributions and direct transfers shall be paid
to the Trustee as provided in Article III. The Trustee shall be responsible
only for such funds as shall be accepted and received by it from the Employer.
The Trustee shall not be responsible for the collection of any contributions to
the Plan, or for the acceptance of any contribution in property other than cash
except as otherwise provided under Sections 3.9 and 3.10.
11.11 INVESTMENT OF TRUST FUND. Except to the extent that any Trust
assets have been committed by the Employer to the management of an Investment
Manager and subject to the Participant's right to direct the investment of his
Employer and/or Matching and/or Elective Deferral and/or Participant and/or
Rollover and/or Transfer and/or QVEC Accounts and/or Qualified Matching
Contribution and/or Qualified Nonelective Contribution accounts and subject to
the requirements of Article XIV, the Trustee shall invest and reinvest the
principal and income of the Employer, Matching, Elective Deferral, Participant,
Rollover, Transfer, and QVEC Accounts and Qualified Matching Contribution and
Qualified Nonelective Contribution accounts as provided in Article VI. No part
of the Trust Fund shall be invested in Employer real property. Except to the
extent provided in the Adoption Agreement, no part of the Trust Fund shall be
invested in Employer Securities. Notwithstanding the preceding sentence, no
portion of Participant, Matching, Elective Deferral, Rollover, Qualified
Matching, Qualified Nonelective, or Qualified Voluntary Employee Contributions
or direct transfers shall be invested in Employer Securities (unless in
compliance with applicable Federal and state securities laws); moreover, no
portion of Employer Contributions shall be invested in Employer Securities if
such Employer Contributions are subject to the investment direction of the
Participants (unless in compliance with Federal and state securities laws). In
any event, investment in Employer Securities shall be limited to investment in
Qualifying Employer Securities. Notwithstanding the above, in no event may the
Plan, if it is a money purchase plan with respect to the adopting Employer,
invest in Qualifying Employer Securities in excess of the ten percent limit
described in Section 6.1(A)(14) above.
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11.12 ACCOUNTS, REPORTS AND GOVERNMENTAL FILINGS. Rules relating to
certain accounting and reporting requirements are as follows:
(A) ACCOUNTS AND REPORTS. The Trustee shall keep
accounts and detailed records of all receipts, investments, disbursements
and other transactions required to be performed hereunder. The Trustee
shall prepare a written report reflecting the receipts, disbursements and
other transactions effected by it during the Plan Year (or period ending
with its resignation or removal) and the fair market value of the assets in
each Participant's Employer, Matching, Elective Deferral, Participant,
Rollover, Transfer, and QVEC Accounts and Qualified Matching Contribution
and Qualified Nonelective Contribution accounts as of the Valuation Date in
accordance with Section 5.3. Such report shall be filed with the
Administrative Committee within 60 days following such Valuation Date (or
following the Trustee's resignation or removal pursuant to Section 11.2 or
11.3). The Trustee shall not be obligated to take any action on any
individual account except upon the written instructions forwarded by the
Administrative Committee and shall have no obligation to inquire into the
propriety of any such written instructions and shall be fully protected in
acting in accordance with such written instructions.
(B) GOVERNMENTAL FILINGS BY TRUSTEE. The Trustee shall
keep such records, make such reports and file such returns and other
information as may be required of the Trustee with respect to the Trust
under the Code, ERISA and the regulations issued or forms adopted
thereunder. The Trustee shall make such of its records as may pertain
solely to a particular Participant available to such Participant, upon
request, for examination by such Participant.
(C) GOVERNMENTAL FILINGS BY ADMINISTRATIVE COMMITTEE.
The Administrative Committee shall be solely responsible for the filing of
any reports or information required, with respect to the Plan, under the
Code, ERISA or any other Federal or State law and regulations issued or
forms adopted thereunder.
11.13 INFORMATION TO TRUSTEE. The Administrative Committee shall
furnish to the Trustee any information required by the Plan. The Trustee shall
be fully protected in relying upon such information.
11.14 BENEFIT PAYMENTS. The Trustee shall make or, in the case of
Insurance Contracts, cause to be made all benefit payments under the Plan upon
written instructions of the Administrative Committee. The Trustee shall not be
liable for following proper Administrative Committee directions which are in
accordance with the terms of the Plan.
11.15 TRUST ASSETS. The Trust Fund shall consist of all amounts
contributed by, or on behalf of, Participants under the Plan, and the earnings
and appreciation thereon, less depreciation and payments made by the Trustee
under the Plan.
11.16 PARTICIPANTS EXCLUSIVELY TO BENEFIT. Except as provided in
Section 3.7, Trust Fund assets shall be held by the Trustee for the exclusive
purpose of providing benefits to Participants under the Plan and their
Beneficiaries and defraying reasonable expenses of administering the Plan.
11.17 EMPLOYMENT OF COUNSEL, AGENTS, ETC. The Trustee, upon notice
to the Administrative Committee, may employ such counsel, accountants and
agents and such clerical and other help as it may deem necessary in carrying
out the Trust, and pay the fees, charges and cost of the same from the Trust
Fund as an expense of the Plan, unless the Employer shall pay the same.
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11.18 COMPROMISE OF CLAIMS. The Trustee, upon notice to the
Administrative Committee, may compromise, arbitrate, or settle any suit or
legal proceeding, claim, debt, damage or undertaking due or owing from, or to,
the Trust Fund.
11.19 SUITS. The Trustee is authorized, upon notice to the
Administrative Committee, to sue or to defend any suit or legal proceedings by
or against the Trust. In the case of any suit or proceeding regarding this
Plan and Trust Agreement, to which the Trustee may be a party, said Trustee
shall have a lien upon the Trust Fund for any and all costs, attorneys' fees
(whether such attorneys shall be regularly retained or specifically employed by
the said Trustee), and for other expenses which it may incur or become liable
for on account thereof, or on account of any other legal expense incurred in
the administration of this Trust, and it shall be entitled to reimburse itself
for any of said expenses out of the Trust Fund.
11.20 EXECUTION OF DOCUMENTS. The Trustee shall have the power to
make, execute, acknowledge and deliver any and all documents, agreements,
insurance policies, annuity contracts and, without limitation by the foregoing,
any and all other instruments that may be necessary or appropriate to carry out
the powers herein granted.
11.21 NO DISCRIMINATION. The Trustee shall not take any action
which would result in benefiting one Participant or group of Participants at
the expense of another, or in discrimination as between Participants similarly
situated, or by the application of different rules to substantially similar
sets of facts.
11.22 DECISION OF TRUSTEE. The decision of the Trustee in matters
within its jurisdiction shall be final, binding and conclusive upon the
Administrative Committee and upon each Employee, Participant, Beneficiary and
every other person or party interested or concerned.
11.23 FUNDING POLICY. From time to time the Administrative
Committee shall communicate to the Trustee in writing the current funding
policy and methods that have been established, pursuant to Section 9.3(I) by
the Administrative Committee to carry out the objectives of the Plan.
ARTICLE XII
THE INSURER
12.1 INSURER'S LIABILITY. The Insurer shall not be deemed to be a
party to this Plan, nor shall it be responsible for the validity of this Plan,
or for the completion and/or submission of any returns or reports required to
be filed by the Trustee, the Employer or the Administrative Committee under the
provisions of the Code or ERISA. The Insurer shall, however, furnish to the
Trustee, upon request of the Trustee, such information as it may require with
respect to the Insurance Contracts to enable the Trustee to complete the annual
or more frequent valuation of Plan assets required by Section 5.3 and to file
such reports as may be required by ERISA and the Code.
12.2 INFORMATION TO INSURER. The Trustee shall furnish to the
Insurer such information as may be required by the Insurer to maintain
Insurance Contracts hereunder. The Insurer shall be fully protected in relying
upon such information.
12.3 BENEFIT PAYMENTS. The Insurer shall make all benefit payments
by it under the Plan only upon written instructions of the Trustee. The
Insurer shall not be liable for following such written instructions.
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12.4 ANNUITIES MUST BE NONTRANSFERABLE. Any annuity contract
distributed herefrom must be nontransferable.
12.5 CONFLICTS. The terms of any annuity contract purchased and
distributed by the Plan to a Participant or Spouse shall comply with the
requirements of this Plan.
12.6 DISTRIBUTION OF INSURANCE CONTRACTS. Subject to Section 7.14,
relating to joint and survivor annuity requirements, the Insurance Contracts on
a Participant's life shall be converted to cash or an annuity or distributed to
the Participant upon commencement of benefits.
12.7 CONFLICT WITH INSURANCE CONTRACTS. The Trustee shall apply
for and shall be the owner of any Insurance Contract purchased under the terms
of this Plan. The Insurance Contract(s) must provide that proceeds will be
payable to the Trustee; however, the Trustee shall be required to pay over all
proceeds of the Insurance Contract(s) to the Participant's designated
Beneficiary in accordance with the distribution provisions of this Plan. The
Spouse of a married Participant and otherwise the Participant's Beneficiary
shall be the designated Beneficiary of the proceeds in all circumstances unless
the Plan, as adopted by the Employer, is a money purchase plan and a qualified
election has been made in accordance with Section 7.14 relating to joint and
survivor annuity requirements, if applicable. Under no circumstances shall the
Trust retain any part of the proceeds. In the event of any conflict between
the terms of this Plan and the terms of any Insurance Contract purchased
hereunder, the Plan provisions shall control.
12.8 DIVIDENDS OR CREDITS. Any dividends or credits earned on
Insurance Contracts shall be allocated to the Participant's account derived
from Employer contributions for whose benefit the Insurance Contract is held.
ARTICLE XIII
THE INVESTMENT MANAGER
13.1 APPOINTMENT. The Employer may appoint one or more Investment
Managers, which shall serve at the pleasure of the Employer, to manage, control
and invest any or all of the assets held by the Trustee in the Trust. Any
Investment Manager, so appointed, shall signify in writing to the Employer that
it accepts the appointment and acknowledges its status as a Fiduciary.
13.2 RESPONSIBILITY. Subject only to the funding procedures
established by the Administrative Committee, such Investment Manager shall have
full responsibility, power and authority to manage and invest the assets held
by the Trustee in the Trust committed to it.
13.3 ACT IN INTEREST OF PARTICIPANTS. In carrying out its
responsibilities, the Investment Manager shall act solely in the interest of
the Participants and their Beneficiaries and in accordance with the provisions
of Article XIV.
13.4 DIRECTIONS FROM INVESTMENT MANAGER. Whenever the Trustee must
or may act upon the direction or approval of the Investment Manager, the
Trustee may act upon a written communication or oral communication followed by
a written communication signed by the representative of the Investment Manager,
as previously agreed upon in writing by the Trustee and the Investment Manager.
Until otherwise notified in
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writing by the proper officers of the Investment Manager, the Trustee shall be
fully protected in relying upon the last such direction or directions received
by it from the Investment Manager.
ARTICLE XIV
FIDUCIARY RESPONSIBILITY
14.1 FIDUCIARY DUTIES. A Fiduciary, as defined in Section 1.37,
shall discharge its duties with respect to the Plan and Trust in the interest
of the Participants and their Beneficiaries:
(A) For the exclusive purpose of:
(1) Providing benefits to Participants and their
Beneficiaries; and
(2) Defraying reasonable expenses of
administering the Plan and Trust;
(B) With the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man acting in like capacity
and familiar with such matters would use in the conduct of an enterprise of
a like character and with like aims;
(C) Except for any Trust assets committed to investment
by a Participant, by diversifying the investments of the Plan and Trust so
as to minimize the risk of large losses, unless under the circumstances it
is clearly prudent not to do so; and
(D) In accordance with the documents and instruments
governing the Plan and Trust insofar as they are consistent with the
provisions of ERISA.
14.2 ALLOCATION OF RESPONSIBILITY. Authority and responsibility
for management of the Plan and Trust shall be allocated among the following
persons:
(A) The Employer shall have sole responsibility for the
appointment and removal of the Administrative Committee described in Article
IX, of the Trustee described in Article XI and of any Investment Manager
described in Article XIII. To the extent that it is carrying out this
responsibility, the Employer shall be a "named Fiduciary" of the Plan;
(B) The Administrative Committee shall have sole
responsibility for the administration of the Plan, as set forth in Article
IX. To the extent that it is carrying out this responsibility, the
Administrative Committee shall be a "named Fiduciary" of the Plan;
(C) The Trustee shall have sole responsibility for the
management and control of the Trust assets, except to the extent such assets
have been committed to investment by a Participant or by any Investment
Manager. To the extent it is carrying out this responsibility, the Trustee
shall be a "named Fiduciary" of the Plan;
(D) Any Investment Manager appointed under Article XIII
to manage and invest Trust assets shall have sole responsibility for the
investment and management of Trust assets held by the Trustee in the Trust
which have been committed to such Investment Manager, subject only to the
funding procedures
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established by the Administrative Committee. To the extent it is carrying
out this responsibility, an Investment Manager shall be a Fiduciary of the
Plan; and
(E) The Participants shall have sole responsibility for
the investment of the assets in their Employer, Matching, Elective Deferral,
Participant, Rollover, Transfer and/or QVEC Accounts and/or Qualified
Matching Contribution and/or Qualified Nonelective Contribution accounts in
the event the Employer indicates in the Adoption Agreement applicable to
such Employer that the Participants have the power to direct investment of
Employer, Matching, Elective Deferral, Participant, Rollover, Transfer
and/or QVEC Accounts and/or Qualified Matching Contribution and/or Qualified
Nonelective Contribution accounts.
14.3 EXCLUSIVE RESPONSIBILITY. It is the purpose of this Plan and
Trust Agreement to allocate to each of the Fiduciaries identified in Section
14.2 exclusive responsibility for prudent execution of the functions assigned
to him (or to the entity of which he is a member) and no responsibility for
execution of functions assigned to others. Whenever one such Fiduciary is
required by the Plan and Trust Agreement to follow the directions of another
such Fiduciary, the two Fiduciaries shall not be deemed to have been assigned a
shared responsibility, but the Fiduciary giving the directions shall have sole
responsibility for the functions assigned to him, including issuing such
directions, and the Fiduciary receiving the directions shall have sole
responsibility for the functions assigned to him, including following such
directions insofar as they are, on their face, proper under this Plan and Trust
Agreement and under applicable law.
14.4 TRANSFER OR MAINTENANCE OF INDICIA OF OWNERSHIP OF PLAN ASSETS
OUTSIDE UNITED STATES PROHIBITED. Except as authorized by the Secretary of
Labor by regulation, no Fiduciary shall maintain the indicia of ownership of
any assets of the Plan or Trust outside the jurisdiction of the district courts
of the United States.
14.5 LIABILITY OF FIDUCIARY FOR BREACH OF CO-FIDUCIARY. A
Fiduciary with respect to the Plan or Trust shall not be liable for a breach of
Fiduciary responsibility of another Fiduciary with respect to the Plan or Trust
except under the following circumstances:
(A) He or it participates knowingly in, or knowingly
undertakes to conceal, an act or omission of such other Fiduciary, knowing
such act or omission is a breach;
(B) By his or its failure to properly discharge his or
its own Fiduciary responsibilities, he or it has enabled such other
Fiduciary to commit a breach; or
(C) He or it has knowledge of a breach by such other
Fiduciary, unless he or it makes reasonable efforts under the circumstances
to remedy the breach.
14.6 PROHIBITED TRANSACTIONS. The rules relating to prohibited
transactions are as follows:
(A) Unless otherwise exempted by the Secretary of Labor,
a Fiduciary with respect to the Plan or Trust shall not cause the Plan or
Trust to engage in a transaction if he or it knows, or should know, that
such transaction constitutes a direct or indirect:
(1) Sale or exchange, or leasing, of any property
between the Plan or Trust and a party in interest or a disqualified
person;
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(2) Lending of money or other extension of credit
between the Plan or Trust and a party in interest or a disqualified
person;
(3) Furnishing of goods, services, or facilities
between the Plan or Trust and a party in interest or a disqualified
person; or
(4) Transfer to, or use by or for the benefit of,
a party in interest or a disqualified person, of any assets of the
Plan or Trust.
(B) Unless otherwise exempted by the Secretary of Labor,
a Fiduciary with respect to the Plan or Trust shall not:
(1) Deal with the assets of the Plan or Trust in
his or its own interest or for his or its own account;
(2) In his or its individual or any other
capacity, act in any transaction involving the Plan or Trust on behalf
of a party (or represent a party) whose interests are adverse to the
interests of the Plan or Trust or the interests of the Participants or
their Beneficiaries; or
(3) Receive any consideration for his or its own
personal account from any party dealing with the Plan or Trust in
connection with a transaction involving the assets of the Plan or
Trust.
(C) Notwithstanding anything to the contrary set forth in
this Section 14.6, a Fiduciary shall be entitled to:
(1) Receive any benefit to which the Fiduciary
may be entitled as a Participant or Beneficiary in the Plan or Trust,
so long as the benefit is computed and paid on a basis which is
consistent with the terms of the Plan and Trust as applied to all
Participants and their Beneficiaries;
(2) Receive any reasonable compensation for
services rendered, except that no person so serving who already
receives full-time pay from the Employer and/or Controlled Group
member, from an employee organization whose employees are Participants
in the Plan, or from an association of employers whose employees are
Participants in the Plan, shall receive compensation from the Plan or
Trust, except for reimbursement of expenses properly and actually
incurred;
(3) Receive reimbursement of expenses properly
and actually incurred in the performance of his or its duties with the
Plan and Trust;
(4) Serve as a Fiduciary in addition to being an
officer, employee, agent, or other representative of a party in
interest or disqualified person;
(5) Make loans to a party in interest or a
disqualified person who is a Participant or Beneficiary of the Plan
under Section 7.11, provided such loans are made in accordance with
the specific provisions of Section 7.11; and
(6) To the extent the Plan and applicable
Adoption Agreement so provide, acquire or sell Qualifying Employer
Securities if:
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(a) Such acquisition or sale is for
adequate consideration (as such term is defined in section
3(18) of ERISA); and
(b) No commission is charged with
respect to such acquisition or sale.
(D) For purposes of this Article XIV, the words "party in
interest" or "disqualified person" mean:
(1) Any Fiduciary, counsel or employee of the
Plan or Trust;
(2) A person providing services to the Plan or
Trust;
(3) The Employer;
(4) An employee organization any of whose members
are covered by the Plan;
(5) An owner, direct or indirect, of 50 percent
or more of:
(a) The combined voting power of all
classes of stock entitled to vote or the total value of shares
of all classes of stock of a corporation,
(b) The capital interest or the profits
interest of a partnership, or
(c) The beneficial interest of a trust
or unincorporated enterprise,
which is an employer or employee organization described in Section
14.6(D)(3) or (4);
(6) A spouse, ancestor, lineal descendant, or
spouse of a lineal descendant of any individual described in Section
14.6(D)(1), (2), (3) or (5);
(7) A corporation, partnership, or trust or
estate of which (or in which) 50 percent or more of:
(a) The combined voting power of all
classes of stock entitled to vote or the total value of shares
of all classes of stock of such corporation,
(b) The capital interest or profits
interest of such partnership, or
(c) The beneficial interest of such
trust or estate,
is owned directly or indirectly, or held by, persons described in
Section 14.6(D)(1), (2), (3), (4) or (5);
(8) An employee, officer, director (or an
individual having powers or responsibilities similar to those of
officers or directors), or a ten percent or more shareholder, directly
or indirectly, of a person described in Section 14.6(D)(2), (3), (4),
(5) or (7), or of the Plan or Trust; or
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(9) A ten percent or more (directly or indirectly
in capital or profits) partner or joint venturer of a person described
in Section 14.6(D)(2), (3), (4), (5) or (7).
ARTICLE XV
PLAN AMENDMENT
15.1 AMENDMENT. The rules relating to the amendment of the Plan
and Trust Agreement are as follows:
(A) SPONSORING ORGANIZATION'S POWER TO AMEND. The
Sponsoring Organization may amend any part of the Plan at any time with
respect to all Adopting Employers. Such amendment shall be applicable to
all Employers that have adopted the Plan and each such Employer shall be
deemed to have adopted such amendment as of the date of the notification
letter from the Internal Revenue Service which relates to such amendment.
This provision shall be interpreted in accordance with section 6.01(1) of
Rev. Proc. 89-13. The Sponsoring Organization shall notify each Adopting
Employer of any such amendment.
(B) AMENDMENT BY ADOPTING EMPLOYER. The Employer may (1)
change the choice of options in the Adoption Agreement, (2) add overriding
language in the Adoption Agreement when such language is necessary to
satisfy section 415 or section 416 of the Code because of the required
aggregation of multiple plans, and (3) add certain model amendments
published by the Internal Revenue Service which specifically provide that
their adoption will not cause the Plan to be treated as individually
designed. An Employer that amends the Plan for any other reason, including
a waiver of the minimum funding requirement under section 412(d) of the
Code, will no longer participate in the DRINKER BIDDLE & REATH REGIONAL
PROTOTYPE DEFINED CONTRIBUTION PLAN and will be considered to have an
individually designed plan.
(C) REV. PROC. 92-41 - DEEMED AMENDMENT OF ADOPTING
EMPLOYERS' PLANS. The changes made by this amendment and restatement of the
Plan and Trust Agreement, pursuant to Rev. Proc. 92-41, shall be deemed
adopted by each Adopting Employer on the date the notification letter is
issued by the District Office of the Internal Revenue Service with respect
to this amendment and restatement without further action on the part of the
Adopting Employer. However, each such Adopting Employer must send a notice
not earlier that six days, if by mail (nine days if by posting or in person)
and not more than 20 days, if by mail (23 days if by posting or in person)
from the date of the Internal Revenue Service notification letter to all
interested parties in accordance with Part II of Rev. Proc. 92-6 informing
such interested parties that the Plan and Trust Agreement have been amended.
The Adopting Employer may also change its Adoption Agreement with respect to
the amendments described in section 5.05 of Rev. Proc. 92-41 without
resubmission of such Adopting Employer's Plan to the Internal Revenue
Service. Any other changes made by the Adopting Employer will require
resubmission of such Adopting Employer's Plan to the Internal Revenue
Service for a determination as to the continuing qualification under section
401(a) of the Code of the Adopting Employer's Plan as thus amended.
15.2 LIMITATIONS UPON AMENDMENT. Notwithstanding the above, no
amendment shall be made which shall cause or permit:
(A) Any part of the assets of the Trust under the Plan to
be diverted to purposes other than for the exclusive benefit of Participants
or their Beneficiaries;
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(B) Any part of such assets to revert to, or become the
property of, the Employer;
(C) Any Participant or his Beneficiary to be deprived of
any benefit to which he was entitled under the Plan by reason of
contributions made by the Employer or Participant prior to such amendment,
unless such amendment is necessary either to conform the Plan to, or satisfy
the conditions of, any law, governmental regulation or ruling, or to permit
the Plan to meet the requirements of the Code, or ERISA;
(D) The account balance of a Participant to be decreased
or, effective for Plan amendments made after July 30, 1984, an optional form
of distribution to be restricted or eliminated with respect to any benefits
accrued prior to such amendment; notwithstanding the preceding clause, a
Participant's account balance may be reduced to the extent permitted under
section 412(c)(8) of the Code; for purposes of this provision, a Plan
amendment which has the effect of decreasing a Participant's account balance
or eliminating an optional form of benefit, with respect to benefits
attributable to service before the amendment, shall be treated as reducing
an accrued benefit;
(E) Any responsibilities of the Trustee under this Plan
and Trust Agreement to be increased without its prior written consent;
(F) In the event the vesting schedule of the Plan is
amended in the case of an Employee who is a Participant on (1) the date the
amendment is adopted, or (2) the date the amendment is effective, if later,
the nonforfeitable percentage (determined as of the date specified in (1) or
(2)) of such Employee's right to his Accrued Benefit derived from Employer
contributions to be less than his percentage computed under the Plan without
regard to such amendment; or
(G) The computation of a Participant's nonforfeitable
right to his Accrued Benefit derived from Employer contributions to be
affected by the amendment of the Plan's vesting schedule or to be directly
or indirectly affected by any other Plan amendment or by a deemed amendment
resulting from an automatic change to or from a top-heavy vesting schedule
unless a Participant with three or more Years of Service for Vesting is
permitted to elect, within 60 days after the latest of (1) the date the
amendment is adopted, (2) the date the amendment becomes effective, or (3)
the date written notification of such amendment is issued to the Participant
by an Employer or by the Administrative Committee, to have his
nonforfeitable percentage computed under the Plan without regard to such
amendment, provided, however, that no election shall be given to any
Participant whose nonforfeitable percentage under the Plan as amended cannot
at any time be less than such percentage determined without regard to such
amendment. For Participants who do not have at least one Hour of Service in
any Plan Year beginning after December 31, 1988, the preceding sentence
shall be applied by substituting "five Years of Service for Vesting" for
"three Years of Service for Vesting" where such language appears.
15.3 RIGHTS OF TRUSTEE UPON AMENDMENT. No amendment may be made to
the Plan and Trust Agreement which affects the rights, duties or
responsibilities of the Trustee without its prior written consent. A certified
copy of any amendment shall be delivered to the Trustee by the Employer.
15.4 SIGNIFICANT REDUCTION IN RATE OF FUTURE BENEFIT ACCRUALS.
This Section 15.4 shall only apply if the Plan, as adopted by the Employer, is
a money purchase plan. In such event the Plan may not be amended so as to
provide for a significant reduction in the rate of future benefit accruals,
unless, after adoption of the Plan amendment and not less than 15 days before
the effective date of the Plan amendment, the Administrative Committee, as Plan
administrator, provides a written notice, setting forth the Plan amendment and
its effective date, to:
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(A) Each Participant in the Plan;
(B) Each Beneficiary who is an alternate payee (within
the meaning of section 206(d)(3)(K) of ERISA) under an applicable Qualified
Domestic Relations Order; and
(C) Each employee organization representing Participants
in the Plan, except that such notice shall instead be provided to a person
designated in writing to receive such notice on behalf of any person
referred to in Section 15.4(A), (B) or (C).
This Section 15.4 is to be administered in accordance with the provisions of
section 204(h) of ERISA. This provision also applies upon termination of the
Plan.
ARTICLE XVI
PLAN TERMINATION
16.1 RIGHT TO DISCONTINUE CONTRIBUTIONS AND/OR TO TERMINATE PLAN
AND TRUST. The Employer has established the Plan with the intention and
expectation that from year to year it will be able to make its contributions as
herein provided. However, the Employer realizes that circumstances not now
foreseen or circumstances beyond its control may make it either impossible or
inadvisable to continue to make its contributions as herein provided. In such
event, the Employer shall have the power, subject to Section 15.4 in the case
the Plan is a money purchase plan, to discontinue contributions to the Plan and
Trust or to terminate the Plan and/or Trust by an appropriate resolution or, in
the case of non-corporate Employers, by other action, which shall specify the
date of termination. A certified copy of such resolution or other action shall
be delivered to the Administrative Committee and the Trustee.
16.2 TERMINATION OF PLAN ON HAPPENING OF CERTAIN EVENTS. The Plan
herein shall automatically terminate upon the happening of any of the following
events:
(A) Discontinuance or liquidation of the Employer's
business; or
(B) The merger or consolidation of the Employer with any
other corporation or business organization, or the sale or transfer by the
Employer of substantially all of its assets to any corporation or business
organization, if the successor corporation or business organization shall
fail to adopt this Plan within 90 days from the effective date of such
consolidation, merger or sale or transfer of assets. If such successor
corporation or business organization shall adopt this Plan, within 90 days
from the effective date of such consolidation, merger or sale or transfer of
assets, such successor corporation or business organization shall be deemed
to succeed to the position of the Employer under this Plan.
16.3 CONTINUANCE OF TRUST AFTER COMPLETE DISCONTINUANCE OF
CONTRIBUTIONS TO PLAN. Upon complete discontinuance of contributions to the
Plan, the rights of affected Employees under the Plan and Trust shall become
fully vested and nonforfeitable, notwithstanding any other provisions of the
Plan, but in all other respects the Plan and Trust shall continue in effect,
and be administered in accordance with the provisions of the Plan and Trust
Agreement.
16.4 DISTRIBUTION OF TRUST ASSETS. Upon termination or partial
termination of the Plan, notwithstanding any other provisions of the Plan, the
rights under the Plan and Trust of the affected Employees
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or, in the case of a partial termination, of the affected Employees in the
terminated portion of the Plan, shall become vested and nonforfeitable. The
Trustee, at the direction of the Administrative Committee, shall make payment
of such amounts in accordance with Section 7.1, no later than the time
prescribed for the commencement of such payments provided in Section 7.9. Upon
final termination of the Trust, at such time as shall be determined by the
Employer after notification to the Administrative Committee, the Administrative
Committee shall direct the Trustee to liquidate the assets held in Employer,
Matching, Elective Deferral, Participant, Rollover, Transfer and QVEC Accounts
and Qualified Matching Contribution and Qualified Nonelective Contribution
accounts and, after payment of all expenses and proportional adjustment of each
Employer, Matching, Elective Deferral, Participant, Rollover, Transfer and QVEC
Account and Qualified Matching Contribution and Qualified Nonelective
Contribution account to reflect income or losses to the date of termination, to
distribute, subject to the requirements of Section 7.14, if applicable, the
balance of each Participant's Accrued Benefit to each Participant, retired
Participant, or, if appropriate, to the Participant's Beneficiary.
16.5 DISTRIBUTEES WHOSE WHEREABOUTS ARE UNKNOWN. In the case of
any distributee described herein at the time of distribution upon termination
of the Plan or Trust whose whereabouts are unknown, the Administrative
Committee shall notify such individual at the last known address by certified
mail with return receipt requested advising such individual of the right to
such a benefit. If the distributee cannot be located in this manner, the
Trustee shall establish a custodial account for such individual's benefit in a
Federally insured bank, savings and loan association or credit union in which
the individual's account balance shall be deposited. Upon the distribution of
all Plan assets, the Trustee shall be discharged from all obligations under the
Plan and Trust and no Participant or Beneficiary shall have any further rights
or claims thereunder.
ARTICLE XVII
SUCCESSOR EMPLOYER AND MERGER
OR CONSOLIDATION OF PLAN
17.1 SUCCESSOR TO EMPLOYER UNDER PLAN AND TRUST. Subject to the
limitations described in Section 17.2, this Plan and Trust may be adopted by
any successor corporation or other business organization upon the merger or
consolidation of the Employer with such corporation or other business
organization, or upon the sale by the Employer of substantially all its assets
to such corporation or business organization, if such successor corporation or
other business organization:
(A) Adopts this Plan and Trust effective upon the date of
such merger, consolidation or sale of assets, and
(B) Agrees to continue and maintain this Plan and Trust.
Upon the adoption of the Plan and Trust Agreement by the
successor, such successor shall have all the powers, duties and
responsibilities of the Employer under the Plan and Trust Agreement.
17.2 MERGER OR CONSOLIDATION. In the event of any merger or
consolidation of the Plan with, or transfer, in whole or in part, of the assets
and liabilities of the Trust to another trust held under any other plan of
deferred compensation maintained or to be established for the benefit of all or
some of the Participants of this Plan, the assets of the Trust applicable to
such Participants shall be transferred to the other trust only if:
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(A) Each Participant would (if either this Plan or the
other plan then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to, or greater than, the benefit he
would have been entitled to receive immediately before the merger,
consolidation or transfer (if this Plan had then terminated); and
(B) Resolutions of the Board of Directors or other
governing entity of the Employer under this Plan, and of any new or
successor employer of the affected Participants, shall authorize such
transfer of assets; and, in the case of the new or successor employer of the
affected Participants, its resolutions shall include an assumption of
liabilities with respect to such Participant's inclusion in the new
employer's plan; and
(C) Such other plan and trust are qualified under
sections 401(a) and 501(a) of the Code.
ARTICLE XVIII
MISCELLANEOUS
18.1 NO RIGHT TO EMPLOYMENT. Participation in the Plan shall not
be deemed to be consideration for, or an inducement to, or a condition of the
employment of any Employee. Nothing contained in this Plan shall be deemed to
give any Participant the right to be retained in the employment of the
Employer, nor shall any Participant, retired Participant, deceased Participant,
disabled Participant, or terminated Participant have any right to any payment,
except as such payment may be provided under the terms of the Plan and then
only to the extent that assets are available under the Plan.
18.2 GENDER AND NUMBER. Whenever any words are used herein in any
specific gender, they shall be construed as though they were also used in any
other applicable gender. The singular form, whenever used herein, shall mean
or include the plural form where applicable.
18.3 BONDING. Except as provided in section 412 of ERISA with
respect to certain banks and other financial institutions, every Fiduciary of
the Plan and every person who handles funds or other property of the Plan shall
be bonded as provided in such section 412. The amount of such bond shall be
fixed at the beginning of each Plan Year and shall not be less than ten percent
of the amount of funds handled. In no case shall the bond be less than $l,000
nor more than $500,000, except as otherwise prescribed by the Secretary of
Labor, after due notice and opportunity for hearing to all interested parties.
18.4 AGENT FOR SERVICE OF LEGAL PROCESS. The name and address of
the person designated for the service of legal process with respect to the Plan
shall be indicated in the Adoption Agreement.
18.5 HEADINGS. The headings are for reference only. In the event
of a conflict between a heading and the content of an Article or Section, the
content of the Article or Section shall control.
18.6 UNCLAIMED BENEFITS. Except as otherwise provided in Section
16.5, any benefits payable to a Participant or Beneficiary which are not
claimed for a period of five years from the date of entitlement as determined
by the Administrative Committee and following a diligent effort to locate such
Participant or Beneficiary and with the approval of the Administrative
Committee, shall be forfeited and applied in accordance with the terms of
Section 5.5; provided, however, that such forfeited benefits shall be
reinstated if a claim for such forfeited benefits is made by the Participant or
Beneficiary.
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18.7 REPORTS FURNISHED TO PARTICIPANTS. The Administrative
Committee shall furnish to each Participant, and to each Beneficiary receiving
benefits under the Plan, within the time limits specified in the Code and
ERISA, each of the following:
(A) A Summary Plan Description and periodic revisions;
(B) Notification of amendments to the Plan;
(C) A Summary Annual Report which summarizes the Annual
Report filed with the Department of Labor;
(D) An annual status report of his Plan Accounts;
(E) A notice regarding a qualifying rollover
distribution, as prescribed in section 402(f) of the Code; and
(F) Any other reports, documents or information required
by the Code, ERISA or the regulations thereunder.
18.8 REPORTS AVAILABLE TO PARTICIPANT AND BENEFICIARIES. The
Administrative Committee shall make copies of the following documents available
at the principal office of the Employer and at such other locations as may be
required by ERISA for examination by any Participant or Beneficiary:
(A) The Plan and Trust Agreement;
(B) The Summary Plan Description;
(C) The latest Annual Report; and
(D) Any other documents required by the Code, ERISA or
the regulations thereunder.
18.9 REPORTS UPON REQUEST. The Administrative Committee shall
furnish to any Participant or Beneficiary who so requests in writing, once
during any twelve-month period, a statement indicating, on the basis of the
latest available information:
(A) The total benefits accrued; and
(B) The nonforfeitable benefits, if any, which have
accrued, or the earliest date on which benefits will become nonforfeitable.
The Administrative Committee shall also furnish to any Participant or
Beneficiary who so requests in writing, at a reasonable charge as prescribed by
regulation of the Secretary of Labor, any document referred to in Section 18.8.
18.10 CONTROLLED GROUP EMPLOYEES. Except as otherwise provided in
Section 3.8(F), all employees of all corporations, trades or businesses which
are members of a Controlled Group shall be treated as employed by a single
employer.
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18.11 CONSTRUCTION. Construction and administration of this Plan
and Trust Agreement shall be governed by ERISA and other applicable Federal law
and, to the extent not governed by Federal law, by the law of the State in
which the Trustee, if a corporate Trustee, maintains its principal place of
business or, if there is no corporate Trustee, by the law of the State in which
the Employer maintains its principal place of business.
18.12 INSURANCE AND INDEMNIFICATION FOR LIABILITY. The rules
relating to the insurance and indemnification for liability are as follows:
(A) INSURANCE. The Employer may, in its discretion,
obtain, pay for, and keep current a policy or policies of insurance,
insuring members of the Administrative Committee, the Trustee (if an
employee) and other employees to whom any Fiduciary responsibility with
respect to administration of the Plan and/or investment of Plan assets has
been delegated against any and all liabilities, costs and expenses incurred
by such persons as a result of any act, or omission to act, in connection
with the performance of their duties, responsibilities and obligations under
the Plan and any applicable Federal or state law.
(B) INDEMNITY. If the Employer does not obtain, pay for,
and keep current the type of insurance policy or policies referred to in
Section 18.12(A) above, or if such insurance is provided but any of the
members of the Administrative Committee, the Trustee (if an employee) or
other employees referred to in Section 18.12(A) above incur any costs or
expenses which are not covered under such policies, then, in either event,
the Employer shall, to the extent permitted by law, indemnify and hold
harmless such parties against any and all costs, expenses and liabilities
incurred by such parties in performing their duties and responsibilities
under this Plan, provided such party or parties were acting in good faith
within what was reasonably believed to have been in the best interests of
the Plan and its Participants.
18.13 NO RETENTION OF INTEREST IN TRUST FUND. Neither the Employer
nor the Trustee guarantees the Trust Fund from losses or from decline in value.
Except as provided in Section 3.7, the Employer does not retain any beneficial
or reversionary interest in any contributions to the Trust Fund or in any of
the assets, profits, earnings or increment thereof, and all Employer
obligations in any respect, except the supplying of information to the Trustee,
as herein provided, shall cease upon the payment of contributions to the
Trustee. The Employer shall not be in any way responsible for the acts of the
Trustee.
18.14 TERMINATION OF PLAN AND TRUST UNDER RULE AGAINST PERPETUITIES.
Except as may be limited by the law of the State governing the administration
of the Trust Fund, in no event shall the Plan and Trust hereby created continue
beyond the last to survive of those persons born before the Effective Date of
this Plan and Trust who shall die while Participants or Former Participants
hereunder, and 21 years thereafter. This Plan and the Trust hereby created
shall be deemed to have been terminated on the day before the lapse of this
ultimate term determined under this Section 18.14.
Notwithstanding the above, this Section 18.14 shall be inapplicable if
ERISA requires otherwise or if, under the law of the State governing the
administration of the Trust Fund, the Rule against Perpetuities is not
applicable to said Trust Fund.
18.15 NOTICE TO INTERESTED PARTIES. Prior to submitting this Plan
to the Internal Revenue Service for a determination that it qualifies under
section 401 of the Code, the Employer shall provide written notice to all
interested parties, in accordance with section 7476 of the Code, and the
regulations thereunder, that such a submission will be made.
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18.16 EFFECTIVE DATE OF ADOPTION OF PLAN AND TRUST AGREEMENT. The
effective date of adoption of the Plan and Trust Agreement by an adopting
Employer shall be indicated in Section A.1.20 of the Adoption Agreement
applicable to such Employer.
18.17 RESTATEMENT OF EXISTING PLAN. If the adoption of the Plan and
Trust Agreement is as a restatement of an Employer's Prior Plan and trust
agreement, the Employer shall so indicate in the Adoption Agreement applicable
to such Employer. If the Prior Plan provided for participation and/or vesting
standards which were different from those provided in this Plan, as adopted by
the Employer, and the standards, as adopted by the Employer, in this Plan are
to be given prospective application only, the Employer shall so indicate in the
Adoption Agreement applicable to such Employer. If the Prior Plan contained
terms which the adopting Employer desires to make applicable to this Plan, the
provisions of the Prior Plan shall be inserted in the Adoption Agreement
applicable to such adopting Employer. Moreover, any necessary and/or desirable
transitional rules shall be inserted in the Adoption Agreement applicable to
such adopting Employer.
18.18 INDIVIDUAL PROVISIONS. Any provisions applicable to the
adopting Employer only and not otherwise provided for in the Plan and Adoption
Agreement shall be inserted in the Adoption Agreement applicable to such
adopting Employer.
18.19 FAILURE OF QUALIFICATION. If the Plan, as adopted by the
Employer, fails to attain or retain qualification, such Plan shall no longer
participate in the DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED
CONTRIBUTION PLAN and shall be considered an individually designed plan.
18.20 WAIVER OF MINIMUM FUNDING STANDARDS. Any Employer adopting
this Plan as a money purchase plan that amends this Plan because of a waiver of
the minimum funding standards under section 412(d) of the Code shall be
considered to have an individually designed plan and such plan may no longer
participate in the DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED
CONTRIBUTION PLAN.
ARTICLE XIX
ADOPTION OF PLAN BY AFFILIATED EMPLOYERS
19.1 ADOPTION OF PLAN AND TRUST. If the Adoption Agreement so
provides, the terms of this Plan, as adopted by the adopting Employer indicated
in the applicable Adoption Agreement, may be adopted by any Affiliated
Employer of the adopting Employer provided:
(A) The Board of Directors or other governing entity of
the adopting Employer consents to such adoption;
(B) The Board of Directors or other governing entity of
the adopting Affiliated Employer adopts this Plan by appropriate action;
(C) The adopting Affiliated Employer executes the
Adoption Agreement; and
(D) The adopting Affiliated Employer executes such other
documents as may be required to make such adopting Affiliated Employer a
party to the Plan and Trust as an Employer (except as provided below).
-104-
<PAGE> 113
An adopting Affiliated Employer that adopts the Plan and Trust
Agreement is thereafter an Employer with respect to its employees for purposes
of the Plan and Trust Agreement except that such adopting Affiliated Employer
delegates to the adopting Employer the power to amend, after the adopting
Affiliated Employer's initial adoption of the Adoption Agreement, the Adoption
Agreement with respect to such adopting Affiliated Employer and the power to
terminate the Plan and Trust Agreement as set forth in Section 19.6.
19.2 WITHDRAWAL FROM PLAN. Subject to the requirements of Article
XVII, any adopting Affiliated Employer may, at any time, withdraw from the Plan
upon giving the Board of Directors or other governing entity of the adopting
Employer, the Administrative Committee and the Trustee at least 30 days notice
in writing of its intention to withdraw. Upon the withdrawal of an adopting
Affiliated Employer pursuant to this Section 19.2, the Trustee shall segregate
a portion of the assets in the Trust as set forth below, the value of which
shall equal the total amount credited to the accounts of Participants employed
by the withdrawing adopting Affiliated Employer. Subject to the requirements
of Article XVII, the determination of which assets are to be so segregated
shall be made by the Trustee in its sole discretion as set forth below.
The Administrative Committee may, at any time, direct the Trustee to
segregate from the Trust such part thereof as the Administrative Committee
shall determine to be held for the benefit of the employees of an adopting
Affiliated Employer, and shall give a copy of such directions to the adopting
Employer and each adopting Affiliated Employer. Such directions shall specify
the assets of the Trust to be segregated. Unless the adopting Employer or any
adopting Affiliated Employer files with the Trustee a written protest within 30
days after delivery of such directions to the Trustee, such directions shall
conclusively establish that the assets specified therein represent the part of
the Trust held for the benefit of the Employees of the adopting Employer and of
each adopting Affiliated Employer.
After the expiration of such 30 day period, and after settlement of
any such protest, the Trustee shall follow the Administrative Committee's
directions, including any modification thereof adopted in settlement of any
protest. Any part of the Trust segregated pursuant to such directions shall
thereafter be held in a separate trust identical in terms to the Trust hereby
established or maintained, except that, with respect to such separate trust,
this Plan and Trust Agreement shall be construed as if such adopting Affiliated
Employer were the adopting Employer and all powers and authority conferred
upon the adopting Employer or its Board or other governing entity and the
Administrative Committee shall devolve upon such adopting Affiliated Employer
or its Board of Directors or other governing entity. At any time thereafter,
such adopting Affiliated Employer and the Trustee may (but they shall not be
required to) enter into a separate agreement stating the terms of such separate
plan and trust agreement which may be the DRINKER BIDDLE & REATH REGIONAL
PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT. If the DRINKER BIDDLE
& REATH REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT is not
so adopted, the plan and trust agreement with respect to the withdrawing
adopting Affiliated Employer shall be considered an individually designed plan.
19.3 EXCLUSIVE PURPOSE OF TRUST. Neither the segregation and
transfer of the Trust assets upon the withdrawal of an adopting Affiliated
Employer nor the execution of a new plan and trust agreement by such
withdrawing adopting Affiliated Employer shall operate to permit any part of
the Trust to be used for, or diverted to, purposes other than for the
exclusive benefit of the Participants or their Beneficiaries.
19.4 APPLICATION OF WITHDRAWAL PROVISIONS. The withdrawal
provisions contained in Section 19.2 and Section 19.3 shall be applicable only
if the withdrawing adopting Affiliated Employer continues to cover its
Participants and eligible Employees in another plan and trust qualified under
sections 401 and 501 of the Code. Otherwise, the termination provisions of the
Plan and Trust Agreement shall apply.
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<PAGE> 114
19.5 SINGLE PLAN. Notwithstanding any other provision set forth
herein, the Plan, as adopted pursuant to this Article XIX by the adopting
Employer and each adopting Affiliated Employer, shall constitute a single plan,
as such term is defined in Treas. Reg. Section 1.414(1)-1(b)(1), as to the
adopting Employer and each adopting Affiliated Employer.
19.6 ADOPTING EMPLOYER APPOINTED AGENT OF ADOPTING AFFILIATED
EMPLOYERS. Each adopting Affiliated Employer appoints the Board of Directors or
other governing entity of the adopting Employer as its agent to exercise on
its behalf all of the power and authority conferred upon the adopting Employer
by this Plan and Trust Agreement, including, without limitation, the power to
amend this Plan and Trust Agreement as set forth in Article XV and the power to
terminate this Plan and/or the Trust Agreement as set forth in Article XVI.
The authority of the Board of Directors or other governing entity of the
adopting Employer to act as agent of any adopting Affiliated Employer shall
terminate only if the part of the Plan's assets held for the benefit of the
employees of such adopting Affiliated Employer shall be segregated in a
separate trust as provided in Section 19.2 and such adopting Affiliated
Employer thereupon withdraws from the Plan in accordance with Section 19.2.
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<PAGE> 115
PART II
[ MUNICIPAL FUND FOR TEMPORARY INVESTMENT]
----------------------------------------
NAME OF ADOPTING EMPLOYER
DEFINED CONTRIBUTION PLAN
(PROFIT-SHARING OR PROFIT-SHARING 401(K))
REGIONAL PROTOTYPE PLAN NUMBER 001
ADOPTION AGREEMENT
DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT
[ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN ]
--------------------------------------------
NAME OF PLAN
(REV. 06/94)
(C) DRINKER BIDDLE & REATH 1995
<PAGE> 116
<TABLE>
<S> <C>
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
31 HOPKINS PLAZA
BALTIMORE, MD 21201-0000
Employer Identification Number:
Date: JAN 04, 1993 23-1423089
File Folder Number:
DRINKER BIDDLE & REATH 521006125
PHILADELPHIA NATIONAL BANK BLDG Person to Contact:
C/O HOMER L ELLIOTT ESQUIRE G.N. Wallace
DRINKER BIDDLE & REATH Contact Telephone Number:
1345 CHESTNUT STREET PH NAT BK BLDG (410) 962-2973
PHILADELPHIA, PA 19107-3496 Plan Name:
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN
Plan Number: 001
Letter Serial Number:
D8520005
</TABLE>
Dear Applicant:
The amendment to the form of the plan identified above is acceptable
under section 401(a) or 403(a) of the Internal Revenue Code. This letter
relates only to the amendment to the form of the plan. It is not a
determination of any other amendment or of the form of the plan as a whole, or
on the effect of other federal or local statutes.
You must furnish a copy of this letter and the enclosed publication to
each employer who adopts this plan. You must also send a copy of this letter,
a copy of the approved form of the plan, and any approved amendments and
related documents to each key District Director of the Internal Revenue Service
in whose jurisdiction there are adopting employers.
The acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). To adopt the form of the plan, the employer should apply for a
determination letter by filing an application with the key District Director of
the Internal Revenue Service on Form 5307, Application for Determination for
Adopters of Master or Prototype, Regional Prototype or Volume Submitter Plans.
For purposes of sections 15.02 and 15.03 of Rev. Proc. 89-13, 1989-1
C.B. 801, your application was received before March 31, 1991.
Please advise those adopting the plan to contact you if they have any
questions about the operation of the plan.
We have sent a copy of this letter to your representative as indicated
in your Power of Attorney.
If you have any questions on our processing of this case, please call
the above telephone number. If you write, please provide your telephone number
and the most convenient time for us to call in case we need more information.
Whether you call or write, please refer to the Letter Serial Number and File
Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record.
Sincerely yours,
/s/ H.J. Hightower
District Director
Enclosure(s)
Publication 1488 Letter 2026/DO/CG)
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<PAGE> 117
Department of the Treasury Internal Revenue Service
PUBLICATION 1488
(Rev. February 1991)
FAVORABLE NOTIFICATION LETTER
INTRODUCTION
This publication is issued in conjunction with a favorable notification letter.
It explains the significance of your letter, points out some features that may
affect the qualified status of the plan, and provides information on the
reporting requirements for the plan.
An employee retirement plan qualified under Internal Revenue Code
section 401(a) or 403(a) (qualified plan) is entitled to favorable tax
treatment. For example, contributions made in accordance with the plan
document are generally currently deductible. Participants will not include
these contributions into income until the time they receive a distribution from
the plan, at which time special income averaging rates for lump sum
distributions may serve to reduce the tax liability. In some cases, taxation
may be further deferred by rollover to another qualified plan or individual
retirement arrangement. See Publication 575, Pension and Annuity Income
(Including Simplified General Rule), for further details. Finally, plan
earnings may accumulate free of tax.
Employee retirement plans that fail to satisfy the requirements under
section 401(a) or 403(a) are not entitled to this favorable tax treatment.
Therefore, many employers desire advance assurance that the terms of their
plans satisfy the qualification requirements. The Service provides such
advance assurance for regional prototype plans by issuing favorable
notification letters. However, in some cases, a determination letter is also
required for reliance.
SIGNIFICANCE OF A FAVORABLE NOTIFICATION LETTER
Notification letters are issued by the Service to sponsors of regional
prototype plans. Plan sponsors then make the plan available to employers who
may adopt the plans for the benefit of their employees.
The significance of a favorable notification letter differs for
standardized plans and nonstandardized plans. A standardized plan can be
identified by the number 2, 5, or 7 appearing in the second position of the
letter serial number (the number following the alpha character which appears in
the upper right portion of the letter). A nonstandardized plan may be
identified by the number 3, 6, or 8 appearing in the second position.
STANDARDIZED PLANS. A standardized plan is designed to be automatically
acceptable under any fact pattern, except as indicated below. Therefore, there
is no need to request a determination letter for such plans, provided the
employer does not amend the plan and chooses only those options in the adoption
agreement that were approved by the Service. Although a determination letter
is not requested, the employer must still inform interested parties of the
establishment or amendment of the plan. However, a determination letter is
required for advance assurance that the provisions of the plan satisfy the
qualification requirements if the employer maintains or has maintained another
qualified plan. The Employer is not considered to have maintained another plan
merely because the plan was previously not a standardized plan. Under certain
circumstances, employers who have adopted standardized defined benefit plans
may wish to request a determination letter that their plans prior benefit
structure satisfies the requirements of Internal Revenue Code section
401(a)(26).
Paired plans are standardized plans that are designed to work
together. A paired plan may be recognized by the phrase "other than a
specified paired plan" appearing in the fifth or sixth paragraph of the
notification letter. If the employer maintains and has maintained only paired
plans, a determination letter is not needed.
NONSTANDARDIZED PLANS. It is possible that the unique fact patterns applicable
to a specific employer may cause a nonstandardized plan to fail qualification.
Therefore, to obtain advance assurance that the plan is qualified, the plan
must be submitted for a determination letter. A determination letter is
similar to an insurance policy that will, in many cases, protect the employer
and plan beneficiaries from adverse tax consequences if the plan is later found
to be nonqualified in the absence of a change in law, provided the plan is
being operated in good faith in accordance with plan provisions. This advance
assurance is a service provided by the Internal Revenue Service, and is not
required for qualification. Form 5307, Application for Determination for
Adopters of Master or Prototype Regional Prototype or Volume Submitter Plans,
is used to request a determination letter, along with Form 5302, Employee
Census, Form 8717 (explained later), a copy of the adoption agreement, a copy
of the notification letter, a certification from the plan sponsor that the plan
has not been withdrawn and is still in effect, and a copy of any separate trust
or custodial account document.
USER FEE. There is a charge for requesting a determination letter, but the
charge is significantly reduced for regional prototype plans. Please complete
and attach Form 8717, User Fee for Employee Plan Determination Letter Request,
to Form 5307 when requesting a determination letter.
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<PAGE> 118
LAW CHANGES AFFECTING THE PLAN. Plans must be amended to retain their
qualified status if any plan provision fails qualification requirements because
of changes in the law becoming effective subsequent to the issuance of the
notification letter. If the plan is not amended, the plan will become
nonqualified without specific notice from the Service. This will occur even if
the employer has received a favorable determination letter in addition to the
notification letter. The employer and plan participants may be subject to
adverse tax consequences if the plan is nonqualified.
The first character of the serial number assigned to the plan
indicates the latest law change for which the plan had been amended. For
example, the letter "D" indicates the plan was amended for the Tax Reform Act
of 1986, which generally became effective for plan years after the 1988 plan
year.
A notification letter will not be applicable after a change in
qualification requirements unless the plan sponsor requests a new notification
letter within 12 months after the change. The plan sponsor must provide those
employers for whom the employer is continuing to sponsor the plan with a copy
of the amendments and the new notification letter within 60 days of the receipt
of the new letter. If a change requires modification of the adoption
agreement, employers must execute the new agreement by the later of 6 months
after issuance of the new notification letter, or the end of the period
specified in Internal Revenue Code section 401(b).
If the application for a notification letter was submitted to the
Service within certain time frames, the plan generally need not be amended
again unless required to do so by legislation. The application was submitted
to the Service within these time frames, if the following paragraph appears in
the notification letter: "For purposes of sections 15.02 and 15.03 of Rev.
Proc. 89-13, 1989-1 C.B. 801, your application was received timely".
REQUIRED NOTIFICATIONS TO ADOPTING EMPLOYERS. The plan sponsor must provide
adopting employers with annual notifications indicating whether the sponsor
intends to continue to sponsor the plan, and whether amendments have been made
to the plan. The plan sponsor must also notify employers within 60 days if the
plan sponsor discontinues its sponsoring of the plan.
REQUIRED NOTIFICATIONS TO THE INTERNAL REVENUE SERVICE. On each anniversary of
the date of issuance of the notification letter, the plan sponsor must advise
the Service whether the sponsor has made any changes to the plan, and whether
the plan is still being made available for adoption by employers. The plan
sponsor must also provide a listing of adopting employers, and a statement that
the plan sponsor has provided employers with the notification described in the
above paragraph.
REPORTING REQUIREMENTS. Most plan administrators or employers who maintain an
employee benefit plan must file an annual return/report with the Internal
Revenue Service. The following forms should be used for this purpose:
FORM 5500EZ - generally for a "One-Participant Plan," which is a plan that
covers only: (1) an individual, or an individual or his or her spouse who
wholly owns a business, whether incorporated or not, or (2) partner(s) in a
partnership or the partner(s) and their spouse(s). If Form 5500EZ cannot be
used, the one-participant plan should use 5500-C or 5500-R, whichever applies.
NOTE: Keogh (H.R. 10) plans are required to file an annual return even if the
only participants are owner-employees. The term "owner-employee" includes a
partner who owns more than 10% interest in either the capital or the profits of
the partnership. This applies to both defined contribution and defined benefit
plans.
FILING EXCEPTION FOR PLANS THAT HAVE NO MORE THAN $100,000 IN ASSETS. An
annual return is not required to be filed for one participant plans having less
than $100,000 in assets that otherwise qualify for filing Form 5500EZ.
FORM 5500 - for a pension benefit plan with 100 or more participants at the
beginning of the plan year.
FORM 5500-C - for a pension benefit plan with more than one but fewer than 100
participants at the beginning of the plan year.
FORM 5500-R - for a pension benefit plan with more than one but fewer than 100
participants at the start of the plan year for which 5500-C is not filed.
NOTE: For 1989 and subsequent years Form 5500-R is part of the Form 5500C/R
package. Filing only the first two pages of the Form 5500C/R package
constitutes the filing of a Form 5500-R.
WHEN TO FILE. Forms 5500 and 5500EZ must be filed annually. Form 5500-C must
be filed for (i) the initial plan year, (ii) the year a final return/report
would be filed, and (iii) at three-year intervals. Form 5500-R must be filed
in the years when Form 5500-C is not filed (See Note above). However, 5500-C
will be accepted in place of 5500-R.
DISCLOSURE. The Internal Revenue Service will process the returns and provide
the Department of Labor and the Pension Benefit Guarantee Corporation with the
necessary information and copies of the returns on microfilm for disclosure
purposes.
A-4
<PAGE> 119
PART II
[MUNICIPAL FUND FOR TEMPORARY INVESTMENT]
DEFINED CONTRIBUTION PLAN
(PROFIT-SHARING OR PROFIT-SHARING 401(K))
REGIONAL PROTOTYPE PLAN NUMBER 001
ADOPTION AGREEMENT
DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT
NOTES TO ADOPTING EMPLOYERS AND TO ADOPTING AFFILIATED EMPLOYERS:
THIS ADOPTION AGREEMENT MAY ONLY BE USED WITH THE DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN.
FAILURE TO PROPERLY FILL OUT THIS ADOPTION AGREEMENT MAY RESULT IN THE
DISQUALIFICATION OF THE PLAN AS ADOPTED BY THE EMPLOYER.
A CASH OR DEFERRED ARRANGEMENT MAY NOT BE ADOPTED BY A TAX EXEMPT OR
GOVERNMENTAL ORGANIZATION WITH THE EXCEPTION OF CERTAIN PRE-EXISTING PLANS.
DRINKER BIDDLE & REATH, THE SPONSORING ORGANIZATION OF THIS PLAN, WILL INFORM
THE ADOPTING EMPLOYER AND/OR ADOPTING AFFILIATED EMPLOYER OF ANY AMENDMENTS
MADE TO THE PLAN OR OF THE DISCONTINUANCE OR ABANDONMENT OF THE PLAN.
DRINKER BIDDLE & REATH IS THE SPONSORING ORGANIZATION OF THIS PLAN. ITS
ADDRESS IS PHILADELPHIA NATIONAL BANK BUILDING, 1345 CHESTNUT STREET,
PHILADELPHIA, PA 19107-3496 AND ITS TELEPHONE NUMBER IS (215) 988-2855.
(FILL IN BLANKS AND INDICATE SELECTION WHERE REQUIRED)
The undersigned Employer hereby (check applicable box)
[ ] adopts
[ X ] adopts, as an amendment to a predecessor
plan and trust agreement of the Employer,
the DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND
TRUST AGREEMENT, consisting of Part I, the Plan and Trust Agreement, and Part
II, this Adoption Agreement. The Plan and Trust Agreement, as so adopted,
shall be known as the [FUND OFFICE RETIREMENT PROFIT-SHARING PLAN AND TRUST
AGREEMENT] (the "Plan"), a DEFINED CONTRIBUTION PLAN (PROFIT-SHARING OR PROFIT-
SHARING 401(K)) AND TRUST AGREEMENT. The Employer and Trustee, by signing this
Adoption Agreement, mutually agree and consent to the terms of the Plan and
Trust, consisting of Part I, the Plan and Trust Agreement, and Part II, this
Adoption Agreement.
(C) DRINKER BIDDLE & REATH 1995
A-5
<PAGE> 120
NAME OF ADOPTING EMPLOYER: [MUNICIPAL FUND FOR TEMPORARY INVESTMENT]
ADDRESS OF ADOPTING EMPLOYER:[BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809 ]
ADOPTING EMPLOYER'S EMPLOYER IDENTIFICATION NUMBER: [ 6742 ]
ADOPTING EMPLOYER'S BUSINESS CODE NUMBER: [ 51-0241021 ]
TYPE OF ENTITY (check one): [ ] Corporation [ ] S Corporation
[ ] Sole Proprietor [ ] Partnership [ ] Church
[ ] Tax Exempt Organization [ ] Governmental Organization
[ ] Professional Corporation
[ X ] Other (Specify): [ BUSINESS TRUST ]
PLACE OF INCORPORATION OR OTHER ORGANIZATION (SPECIFY): [
PENNSYLVANIA ]
DATE OF INCORPORATION OR DATE BUSINESS BEGAN: [ 1979 ]
ADMINISTRATIVE COMMITTEE EMPLOYER IDENTIFICATION NUMBER: [23-2118138]
PLAN NAME: [ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN ]
PLAN IDENTIFICATION NUMBER: [ 001 (333 FOR FORM 5500C/R) ]
TRUST NAME: [ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN TRUST ]
TRUST EMPLOYER IDENTIFICATION NUMBER (IF ANY): [ 23-2487197 ]
REGIONAL PROTOTYPE (PROFIT-SHARING (401(K)) PLAN NOTIFICATION
LETTER NUMBER: D8520005 (PN:001 JANUARY 4, 1993)
FROZEN PLAN: If the Employer has discontinued all further contributions
to the Plan, check here [ ]. The Employer and the Trustee shall,
however, continue to maintain the Plan and Trust in accordance with the
requirements of the Internal Revenue Code and the Treasury regulations
thereunder.
TYPE PLAN: The Plan, as adopted under this Adoption Agreement, is a
(check one):
[ X ] (A) Profit-Sharing Plan.
[ ] (B) Profit-Sharing 401(k) Plan.
A.1.1 ACCRUAL COMPUTATION PERIOD. The Accrual Computation Period is the
(check one):
[ X ] (A) Plan Year
[ ] (B) (A consecutive 12-month period ending with or within the
Plan Year.) Enter the day and the month this period begins:
[ ](day) [ ](month). For Employees whose
date of hire is less than 12 months before the end of the
12-month period designated, Compensation will be determined
over the Plan Year.
A.1.4 ADMINISTRATIVE COMMITTEE. The name(s) and address(es) of the
member(s) of the Administrative Committee are:
A-6
<PAGE> 121
[(A) EDWARD H. ROACH
----------------------------------------------------------------------
BELLEVUE PARK CORPORATE CENTER
----------------------------------------------------------------------
400 BELLEVUE PARKWAY, SUITE 100
----------------------------------------------------------------------
WILMINGTON, DE 19809
----------------------------------------------------------------------
(B)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(C)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
]
A.1.10 COMPENSATION. Compensation shall be determined over the Accrual
Computation Period elected in Section A.1.1.
(A) Compensation shall (check one):
[ X ] (1) Include [ ] (2) Not include
Employer contributions made pursuant to a salary reduction agreement which
are not includible in the gross income of the Employee under sections 125,
402(e)(3), 402(h)(1)(B) or 403(b) of the Code.
(B) Compensation shall exclude (specify): [
N/A .]
(Note that this exclusion applies only to the manner of determining
contributions to the Plan and for no other purpose; if not applicable,
insert letters N/A in blanks).
A.1.12 CONTROLLED GROUP.
(A) Is the adopting Employer a member of a Controlled Group
(check one)?
[ ] (1) Yes [ X ] (2) No
(B) If Section A.1.12(A)(1) is checked, is the adopting Employer
a member of an affiliated service group (check one)?
[ ] (1) Yes [ ] (2) No [ X ] (3) N/A
If Section A.1.12(A)(1) is checked, list the name and address of each
member in the following blanks (and if Section A.1.12(B)(1) is also
checked, indicate whether the member is an affiliated service group
member): [ N/A
]
(If Section A.1.12(A)(2) is checked, the letters N/A should be inserted in
these blanks)
A.1.17 CONTRIBUTIONS ON BEHALF OF DISABLED PARTICIPANTS. The Employer
(check one):
[ ] (A) Will [ X ] (B) Will not
make contributions on behalf of disabled Participants on the basis of the
compensation each such Participant would have received for the Limitation
Year if the Participant had been paid at the rate of compensation paid
immediately before becoming permanently and totally disabled.
Such imputed compensation for the disabled Participant may be taken into
account only if the Participant is not a Highly Compensated Employee, and
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<PAGE> 122
contributions made on behalf of such Participant shall be nonforfeitable when
made.
A.1.18 EARLY RETIREMENT DATE.
(A) Shall the Plan provide for an Early Retirement Date (check
one)?
[ ] (1) Yes [ X ] (2) No
If Section A.1.18(A)(1) is checked, complete the following:
(B) Early Retirement Date shall mean the (check one):
[ ] (1) Last day of the Plan Year
[ ] (2) Last day of the month (must coincide with a Valuation
Date)
[ ] (3) [ ] (fill in date) (must coincide with a
Valuation Date)
in which the Participant attains age [ ] (not later than age 64) and
completes [ ] Years of Service for Benefit Accrual with the Employer.
A.1.19 EARNED INCOME. This Section shall apply only if the Plan, as
adopted by the adopting Employer, covers Self-Employed Persons.
A.1.20 EFFECTIVE DATE. If the adoption of this Plan and Trust Agreement
constitutes the adoption of a new plan and trust agreement, check (A) and fill
in blank. If the adoption of this Plan and Trust Agreement constitutes the
restatement of an existing plan and trust agreement (including a prior version
of this Plan and Trust Agreement), check (B) and fill in blanks.
[ ] (A) NEW PLAN. The Effective Date of the Plan and Trust
Agreement is [ ].
[ X ] (B) RESTATED PLAN. The original effective date of the
predecessor plan and trust agreement was [SEPTEMBER 18, 1981].
Except as otherwise specifically provided herein, the Effective
Date of the Plan and Trust Agreement, as restated herein, is
[DECEMBER 1, 1989].
A.1.24 ELIGIBILITY COMPUTATION PERIOD. If Section A.1.33(A)(4) is
checked or if the elapsed time method is checked under Section A.2.2(B)(2),
check here [ ] and do NOT complete the remainder of this Section A.1.24.
Otherwise, the Eligibility Computation Period shall be calculated as follows:
(A) COMPUTATION PERIOD. The Eligibility Computation Period
shall be calculated pursuant to (check (1) or (2)):
[ X ] (1) NORMAL RULE. The Eligibility Computation Period(s)
shall be determined under Section 1.24(A) of the Plan.
[ ] (2) ALTERNATE RULE. The Eligibility Computation Period(s)
shall be determined under Section 1.24(B) of the Plan.
(B) HOURS OF SERVICE REQUIRED. The number of Hours of Service
which must be completed in order to meet the Eligibility Computation Period
requirements of the Plan is [ 1 ] (fill in blank but not to exceed 1,000
Hours of Service).
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A.1.27 EMPLOYEE PENSION BENEFIT PLAN. Does the Employer or any member
of its Controlled Group maintain or has the Employer or any member of its
Controlled Group maintained any other Employee Pension Benefit Plan (check
one)?
[ X ] (A) Yes [ ] (B) No
If Section A.1.27(A) is checked, list such Employee Pension Benefit Plan(s)
in the following lines: [CHESTNUT STREET EXCHANGE FUND RETIREMENT
PROFIT-SHARING PLAN; INDEPENDENCE SQUARE INCOME SECURITIES, INC. RETIREMENT
PROFIT-SHARING PLAN; TEMPORARY INVESTMENT FUND, INC. RETIREMENT
PROFIT-SHARING PLAN; AND TRUST FOR SHORT TERM FEDERAL SECURITIES RETIREMENT
PROFIT-SHARING PLAN. ALL OF THE FOREGOING PLANS WERE MERGED INTO THIS PLAN
EFFECTIVE DECEMBER 1, 1987. ]
(If Section A.1.27(B) is checked, the letters N/A should be inserted in these
blanks).
A.1.33 ENTRY DATE. Entry Date shall mean (check (A) or (B)):
[ X ] (A) REGULAR METHOD.
[ ] (1) The first day of the Plan Year (this option cannot be
used unless the maximum age and service requirements are
reduced by 1/2 year (i.e., age 20 1/2 or less must be
selected in Section A.2.2(B)(1)(a)(ii) and the service
requirement in Section A.2.2(B)(1)(a) (i) must be reduced
by 1/2 year), coincident with, or, if the first day of the
Plan Year does not so coincide, the first day of the Plan
Year next following, the date on which an Employee meets
the eligibility requirements of Article II of the Plan.
[ ] (2) The first day of the Plan Year or the date six months
after the first day of the Plan Year (whichever date is
earlier), coincident with, or if such dates do not so
coincide, the first day of the Plan Year or the date six
months after the first day of the Plan Year (whichever date
is earlier) next following, the date on which an Employee
meets the eligibility requirements of Article II of the
Plan.
[ ] (3) The first day of the month coincident with, or if the
first day of the month does not so coincide, the first day
of the month next following, the date on which an Employee
meets the eligibility requirements of Article II of the
Plan.
[ ] (4) The Employee's date of hire.
[ X ] (5) The date on which the eligibility requirements of
Article II of the Plan are met.
[ ] (6) The first day of the quarter (in the Plan Year)
coincident with, or if the first day of the quarter does
not so coincide, the first day of the quarter (in the Plan
Year) next following, the date on which an Employee meets
the eligibility requirements of Article II of the Plan.
[ ] (7) The first day of the Plan Year in which an Employee
meets the eligibility requirements of Article II of the
Plan.
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[ ] (B) ELAPSED TIME METHOD. The Employee's first day of
employment or reemployment in accordance with the rules of
Section 1.55(B) of the Plan.
A.1.35 EXCESS COMPENSATION. Excess Compensation shall mean Compensation
in excess of (check applicable block):
[ ] (A) Taxable Wage Base.
[ ] (B) [$ ] (if (B) is checked, insert dollar amount not to
exceed the Taxable Wage Base).
[ X ] (C) N/A (The Plan is not integrated with Social Security).
A.1.38 HIGHLY COMPENSATED EMPLOYEE.
(A) CALENDAR YEAR ELECTION. Does the Employer desire to make the
calendar year election provided in Section 1.38 of the Plan for purposes of
determining the look-back year calculation (check one)?
[ ] (1) Yes [ X ] (2) No
IF THIS ELECTION IS MADE, SUCH ELECTION MUST APPLY TO ALL PLANS, ENTITIES AND
ARRANGEMENTS OF THE EMPLOYER.
(B) SIMPLIFIED DEFINITION. If the Employer maintains significant
business activities (and employs Employees) in at least two significantly
separate geographic areas, the Employer may elect the simplified definition
of Highly Compensated Employee in Section 1.38 of the Plan. Does the
Employer desire to make this election (check one):
[ ] (1) Yes [ X ] (2) No [ ] (3) N/A
A.1.44 INVESTMENT MANAGER. The name and address of the Investment
Manager are: [ N/A
]
(If no Investment Manager has been appointed by the Employer, the letters N/A
should be inserted in these blanks).
A.1.46 LEASED EMPLOYEES. Does the Employer have any Leased Employees
(check one)?
[ ] (A) Yes [ X ] (B) No
If Section A.1.46(A) is checked, complete Section A.2.3(H) below.
A.1.47 LIMITATION COMPENSATION. Limitation Compensation shall mean all
of each Participant's (check one):
[ X ] (A) Wages, Tips and Other Compensation as Reported on Form
W-2.
[ ] (B) Code Section 3401(a) Wages.
[ ] (C) Code Section 415 Safe-Harbor Compensation.
A.1.48 LIMITATION YEAR. The Limitation Year is the (check applicable
block):
[ ] (A) Calendar year.
[ X ] (B) Twelve-consecutive month period ending (insert month and
day) [ NOVEMBER 30 ].
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A.1.53 NORMAL RETIREMENT AGE. Normal Retirement Age shall mean (check
one):
[ X ] (A) Age [ 65 ] (fill in blank but not earlier than age 62 and
not later than age 65).
[ ] (B) The later of age [ ] fill in blank but not earlier than
age 62 and not later than age 65) or the [ ] (fill in blank
but not to exceed 5th) anniversary of the first day of the
first Plan Year in which the Participant commenced
participation in the Plan.
A.1.55 ONE-YEAR BREAK IN SERVICE. A One-Year Break In Service shall be
determined by the following method (check one):
[ X ] (A) REGULAR METHOD. If this method is selected, a One-Year
Break In Service shall occur in any Computation Period in which
the Employee completes not more than [ 100] (fill in blank, but
not to exceed 500) Hours of Service.
[ ] (B) ELAPSED TIME METHOD.
A.1.56 OWNER-EMPLOYEES OR SHAREHOLDER-EMPLOYEES.
(A) Does the Plan cover any Owner-Employees, as defined in
Section 1.56 of the Plan (check one)?
[ ] (1) Yes [ ] (2) No
[ X ] (3) N/A (This Plan does not cover any Self-Employed
Persons)
If Section A.1.56(A)(1) is checked, see Section 2.4 of the Plan.
(B) Does the Plan cover any shareholder-employees, as defined in
Section 7.11(A)(7) of the Plan (check one)?
[ ] (1) Yes [ ] (2) No
[ X ] (3) N/A (The Employer is not an electing S corporation)
If Section A.1.56(B)(1) is checked, see Section 7.11(A)(7) of the Plan.
A.1.63 PLAN SPONSOR. The name(s) and address(es) of the Plan Sponsor(s)
are: [ MUNICIPAL FUND FOR TEMPORARY INVESTMENT
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809 ]
A.1.64 PLAN YEAR. The Plan Year shall be the Computation Period ending
(insert month and day) [ NOVEMBER 30 ].
A.1.72 QUALIFYING EMPLOYER SECURITIES. If this Adoption Agreement
provides for investments in Qualifying Employer Securities, the Employer may
restrict the types of Employer Securities so qualifying by indicating the
restrictions in the following blanks: [ NO RESTRICTIONS
]
(If investment in Qualifying Employer Securities is not restricted to type,
insert in the blanks the words "No Restrictions"; if investment in Qualifying
Employer Securities is not permitted, insert the letters N/A in the blanks).
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A.1.78 SELF-EMPLOYED PERSONS. Does the Plan cover Self-Employed Persons
(check one)?
[ ] (A) Yes [ X ] (B) No
A.1.79 SERVICE.
(A) If not otherwise required by the Plan, shall service with
predecessor employer(s) (to the extent specified in Section A.1.79 (B) and
(C)) be treated as Service with the Employer (check one)?
[ ] (1) Yes [ ] (2) No
[ X ] (3) N/A (No predecessor employer)
(B) If Section A.1.79(A)(1) is checked, service with the
predecessor employer(s) specified in Section A.1.79 (C) shall be treated as
Service with the Employer for purposes of (check applicable blank(s)):
[ ] (1) Eligibility for Participation
[ ] (2) Vesting
[ X ] (3) N/A
(C) If Section A.1.79(A)(1) is checked, indicate the name of the
predecessor employer(s) in the following blanks: [ N/A ]
(If Section A.1.79(A)(2) or (3) is checked, insert the letters N/A in the
blanks).
(D) If Section A.18.17(A) is checked, and the Prior Plan
credited service under the elapsed time method, indicate the equivalency
(if any) which is to be used to credit service in the Computation Period in
which the amendment is effective, if the effective date of the amendment is
other than the first day of the Computation Period (check one):
[ ] Daily [ ] Monthly
[ ] Weekly [ X ] N/A
[ ] Semi-Monthly
A.1.83 TAXABLE YEAR. The Employer's Taxable Year is the year ending
(insert month and day) [ NOVEMBER 30 ].
A.1.85 TOP-HEAVY RATIO. For purposes of establishing present value to
compute the Top-Heavy Ratios of Section 1.85 of the Plan, any benefit shall be
discounted only for mortality and interest based on the following:
(A) INTEREST RATE (check one):
[ X ] (1) APPLICABLE INTEREST RATE (For purposes of this Section
A.1.85, "Applicable Interest Rate" shall mean the interest
rate or rates which would be used, as of the date
distribution commences under a Defined Benefit Plan, by the
Pension Benefit Guaranty Corporation for purposes of
determining the present value of a participant's benefits
under such Defined Benefit Plan if such Defined Benefit
Plan had terminated on the date distribution commences with
insufficient assets to provide benefits guaranteed by the
Pension Benefit Guaranty Corporation on that date. For
purposes of this
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provision, the "date distribution commences" shall mean the
Top-Heavy Valuation Date).
[ ] (2) OTHER (specify) [ ]%
(B) MORTALITY TABLE: [ 1984 UNISEX MORTALITY TABLE]
A.1.86 TOP-HEAVY VALUATION DATE. The Top-Heavy Valuation Date, for
purposes of calculating the Top-Heavy Ratios shall be (fill in blank) [ THE
LAST DAY ] of each Plan Year.
A.1.91 TRUSTEE(S). The name(s) and address(es) of the Trustee(s) are:
[(A) ROBERT R. FORTUNE
----------------------------------------------------------------------
BELLEVUE PARK CORPORATE CENTER
----------------------------------------------------------------------
400 BELLEVUE PARKWAY, SUITE 100
----------------------------------------------------------------------
WILMINGTON, DE 19809
----------------------------------------------------------------------
(B) EDWARD J. ROACH
----------------------------------------------------------------------
BELLEVUE PARK CORPORATE CENTER
----------------------------------------------------------------------
400 BELLEVUE PARKWAY, SUITE 100
----------------------------------------------------------------------
WILMINGTON, DE 19809
----------------------------------------------------------------------
(C)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
]
----------------------------------------------------------------------
A.1.93 VALUATION DATE. Valuation Date shall mean:
(A) For purposes of determining a Participant's Accrued Benefit
which is distributable in accordance with Article VII of the Plan (check
one):
[ ] (1) Last day of Plan Year.
[ X ] (2) Last day of Plan Year and [ THE LAST DAY OF EVERY
OTHER CALENDAR MONTH DURING THE PLAN YEAR
] (insert date(s)).
(B) For purposes of determining the fair market value of assets
in the Trust Fund and allocating the increase or decrease in the assets in
accordance with Sections 5.3 and 5.4 of the Plan (check one):
[ X ] (1) The date(s) specified in Section A.1.93(A).
[ ] (2) Last day of Plan Year and [
] (insert date(s)).
A.1.97 YEAR OF SERVICE FOR BENEFIT ACCRUAL.
(A) GENERAL. A Year of Service for Benefit Accrual shall be
determined by the following method (check one):
[ X ] (1) REGULAR METHOD. (This method must be selected if
Section A.1.55(A) is checked). In order for a Participant
to have a Year of Service for Benefit Accrual for any Plan
Year, the Participant must complete the number of Hours of
Service indicated (check either (a) and fill in blank or
(b)):
[ X ] (a) The number of Hours of Service which must be
completed with the Employer in order for a Participant
to have a Year of Service for Benefit Accrual is [ 200
] (fill in blank but not to exceed 1,000 Hours of
Service).
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<PAGE> 128
[ ] (b) The number of Hours of Service which must be
completed with the Employer in order for a Participant
to have a Year of Service for Benefit Accrual for a
Plan Year is 501 if the Participant is not an active
Employee on the last day of the Plan Year; if the
Participant is an active Employee on the last day of
the Plan Year, only one Hour of Service with the
Employer must be completed in order for the Participant
to have a Year of Service for Benefit Accrual for such
Plan Year.
NOTE: UNDER PROPOSED TREAS. REG. Sections 1.410(B) AND
1.401(A)(26), IT MAY BE NECESSARY TO PROVIDE THAT NO MORE THAN 501
HOURS OF SERVICE ARE REQUIRED FOR A YEAR OF SERVICE FOR BENEFIT
ACCRUAL FOR ANY PARTICIPANT WHO HAS TERMINATED EMPLOYMENT AND IS
NOT AN ACTIVE EMPLOYEE ON THE LAST DAY OF THE PLAN YEAR AND THAT NO
MORE THAN ONE HOUR OF SERVICE IS REQUIRED FOR A YEAR OF SERVICE FOR
BENEFIT ACCRUAL FOR ANY PARTICIPANT WHO IS AN ACTIVE EMPLOYEE ON
THE LAST DAY OF THE PLAN YEAR. (PROPOSED TREAS. REG. Section
Section 1.410(B)-3(C) AND 1.401(A)(26)-3(B)(8)).
[ ] (2) ELAPSED TIME METHOD. (This method must be selected if
Section A.1.55(B) is checked).
(B) ELECTIVE DEFERRAL CONTRIBUTIONS. If Elective Deferral
Contributions are provided for under Section A.3.4 of the Adoption
Agreement, the number of Hours of Service which a Participant must complete
in a Year of Service for Benefit Accrual is [ N/A] (fill in blank but not
to exceed 1,000 Hours of Service unless Section A.1.97(A)(2) is checked, in
which case insert letters "ET" and the elapsed time rules apply; if there
are no Elective Deferral Contributions, insert letters "N/A") in order for
the Participant to have Elective Deferral Contributions made on his behalf
under the Plan.
(C) MATCHING CONTRIBUTIONS. If Matching Contributions by the
Employer are provided for under Section A.3.5 of the Adoption Agreement,
the number of Hours of Service which a Participant must complete in a Year
of Service for Benefit Accrual is [ N/A ] (fill in blank (if there are
no Matching Contributions, insert letters "N/A") but not to exceed 1,000
Hours of Service unless Section A.1.97(A)(2) is checked, in which case
insert letters "ET" and the elapsed time rules apply) in order for the
Employer to match Participant Contributions or Elective Deferral
Contributions of such Participant under Section A.3.5 of the Adoption
Agreement.
Except as provided in Sections A.1.97(B) and A.1.97(C), a Year of Service
for Benefit Accrual shall be determined under Section A.1.97(A).
A.1.98 YEAR OF SERVICE FOR ELIGIBILITY. The number of Hours of Service
which must be completed in order for an Employee to have a Year of Service for
Eligibility is [ 1 ] (fill in blank, but not to exceed 1,000 Hours of
Service; insert letters N/A if Section A.1.33(A)(4) is checked or if the
elapsed time method is selected under Section A.2.2.(B)(2).
A.1.99 YEAR OF SERVICE FOR VESTING. A Year of Service for Vesting shall
be determined by the following method (check one):
[ X ] (A) REGULAR METHOD. (This method must be selected if Section
A.1.55(A) is checked). The number of Hours of Service which
must be completed in order for a Participant to have a Year of
Service for Vesting is [ 200 ] (fill in blank but not to
exceed 1,000 Hours of Service).
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<PAGE> 129
[ ] (B) ELAPSED TIME METHOD. (This method must be selected if
Section A.1.55(B) is checked).
[ ] (C) N/A (Plan provides 100% immediate vesting).
A.2.2 ELIGIBILITY REQUIREMENTS.
(A) ELIGIBLE CLASSES OF EMPLOYEES:
(1) Except as provided in (2) below, the following Employees
are or shall be eligible to participate in the Plan (check
one):
[ X ] (a) All Employees
[ ] (b) Salaried Employees only (as defined in Section
1.77 of the Plan)
[ ] (c) Hourly Employees only (as defined in Section 1.40
of the Plan)
[ ] (d) All Employees except (specify class or classes of
Employees to be excluded): [
]
(2) The following Employees shall not be eligible to
participate in the Plan (check block(s) if such Employees are
to be excluded):
[ X ] (a) Union Employees (as defined in Section 1.92 of the
Plan)
[ X ] (b) Non-Resident Aliens (as defined in Section 1.52 of
the Plan)
(B) LENGTH OF SERVICE; MINIMUM AGE: Participation in the Plan
shall be determined under either the regular method or the elapsed time
method (check (1) or (2)):
[ X ] (1) REGULAR METHOD. If the regular method is selected,
check (a) or (b):
[ ] (a) SERVICE AND AGE REQUIREMENT. In order to
participate in the Plan, an Employee shall meet the
following requirements (complete blanks):
(i) SERVICE.
(AA) ELECTIVE DEFERRAL CONTRIBUTIONS. An Employee
shall have completed [ ] Year of Service for
Eligibility (not more than one Year of Service for
Eligibility) to be eligible to make Elective Deferral
Contributions.
(BB) MATCHING CONTRIBUTIONS. An Employee shall have
completed [ ] Year(s) of Service for Eligibility
(not more than two Years of Service for Eligibility)
to be eligible for Matching Contributions.
(CC) EMPLOYER CONTRIBUTIONS AND ALL OTHER PURPOSES.
An Employee shall have completed [ ] Year(s) of
Service
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<PAGE> 130
for Eligibility (not more than two Years of Service
for Eligibility) for Employer Contributions and for
all other purposes of the Plan.
Note that in Section A.2.2(B)(1)(a)(i)(BB) and (CC) not
more than one Year of Service for Eligibility may be
selected, if the option under Section A.7.6(B)(1)(a) is
not elected nor more than two Years of Service for
Eligibility if the option under Section A.7.6(B)(1)(a) is
elected. For purposes of this Section A.2.2(B)(1)(a)(i),
Service includes service with a predecessor employer if
the Employer adopting the Plan is maintaining the plan of
a predecessor employer. Such Service also includes
predecessor service to the extent required by the
Secretary of the Treasury or his delegate.
Service for purposes of eligibility also includes service
with a predecessor employer if such service is not
otherwise required to be included under Sections 1.79 and
2.2 of the Plan to the extent provided in Section A.1.79.
(ii) AGE. An Employee shall have attained [ ]
years of age (not more than age 21).
[ X ] (b) NO SERVICE OR AGE REQUIREMENT. The Plan shall
cover Employees in eligible classes effective on the
first Entry Date coinciding with, or next following,
their date of hire.
[ ] (2) ELAPSED TIME METHOD. The Employee shall be eligible
to participate in the Plan on his first day of employment
or reemployment in accordance with the rules of Section
1.55(B) of the Plan.
A.2.3 ADDITIONAL RULES.
(A)-(F) RESERVED.
(G) ALLOCATIONS TO PARTICIPANTS. Except as otherwise provided
below, a Participant shall share in Employer contributions in any Plan Year
if the Participant completes a Year of Service for Benefit Accrual during
such Plan Year. Notwithstanding any other provision of the Plan or this
Adoption Agreement, any Participant making Elective Deferral or Participant
Contributions to the Plan for any Plan Year shall be entitled to such
Elective Deferral or Participant Contributions.
(1) EMPLOYER CONTRIBUTIONS. This provision shall only apply
if Section A.1.97(A)(1) is checked and then only to the
extent permitted by Section 3.11 of the Plan.
(a) SEPARATION FROM SERVICE FOR REASONS OTHER THAN
DISABILITY, DEATH OR RETIREMENT.
(i) Shall Participants who separate from the service
of the Employer (for reasons other than Disability,
death or retirement) before the end of the Plan Year
even if they have completed a Year of Service for
Benefit Accrual share in Employer
A-16
<PAGE> 131
contributions for such Plan Year (check one)?
[ X ] (AA) Yes [ ] (BB) No
[ ] (CC) N/A (Section A.1.97(A)(2) checked)
NOTE THAT SECTION A.2.3(G)(1)(A)(I)(AA) MUST BE CHECKED IF SECTION
A.1.97(A)(1)(B) IS CHECKED.
(ii) If Section A.2.3(G)(1)(a)(i)(AA) is checked,
shall such Participant share in Employer contributions
for such Plan Year if such Participant has not
completed a Year of Service for Benefit Accrual (check
one)?
[ X ] (AA) Yes [ ] (BB) No
[ ] (CC) N/A (Section A.2.3 (G)(1) (a)(i)(AA) not
checked)
(b) DISABILITY, DEATH OR RETIREMENT.
(i) Shall Participants who separate from the service
of the Employer because of Disability, death or
retirement before the end of the Plan Year even if they
have completed a Year of Service for Benefit Accrual
share in Employer contributions for such Plan Year
(check one)?
[ X ] (AA) Yes [ ] (BB) No
[ ] (CC) N/A (Section A.1.97(A)(2) checked)
NOTE THAT SECTION A.2.3(G)(1)(B)(I)(AA) MUST BE CHECKED IF SECTION
A.1.97(A)(1)(B) IS CHECKED.
(ii) If Section A.2.3(G)(1)(b)(i)(AA) is checked,
shall such Participant share in Employer contributions
for such Plan Year if such Participant has not
completed a Year of Service for Benefit Accrual (check
one)?
[ X ] (AA) Yes [ ] (BB) No
[ ] (CC) N/A (Section A.2.3(G)(1)(b) (i)(AA) not
checked)
(2) MATCHING CONTRIBUTIONS. This provision shall only apply
if Section A.1.97(A)(1) is checked.
(a) SEPARATION FROM SERVICE FOR REASONS OTHER THAN
DISABILITY, DEATH OR RETIREMENT.
(i) Shall Participants who separate from the service of
the Employer (for reasons other than Disability, death
or retirement) before the end of the (check one) [ ]
(aa) month [ ] (bb) quarter [ ] (cc) Plan Year for
which the Matching Contribution is being made even if
they have completed a Year of Service for
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<PAGE> 132
Benefit Accrual share in Matching Contributions for
such period (check one)?
[ ] (AA) Yes [ ] (BB) No
[ X ] (CC) N/A (No Matching Contributions or Section
A.1.97(A)(2) checked)
NOTE THAT SECTION A.2.3(G)(2)(A)(I)(AA) MUST BE CHECKED IF SECTION
A.1.97 (A)(1)(B) IS CHECKED.
(ii) If Section A.2.3(G)(2)(a)(i) (AA) is checked,
shall such Participant share in Matching Contributions
for such (check one) [ ] (aa) month [ ] (bb)
quarter [ ] (cc) Plan Year if such Participant has
not completed a Year of Service for Benefit Accrual
(check one)?
[ ] (AA) Yes [ ] (BB) No
[ X ] (CC) N/A (Section A.2.3(G)(2)(a)(i) (AA) not
checked)
(b) DISABILITY, DEATH OR RETIREMENT.
(i) Shall Participants who separate from the service
of the Employer because of Disability, death or
retirement before the end of the (check one) [ ] (aa)
month [ ] (bb) quarter [ ] (cc) Plan Year for which
the Matching Contribution is being made even if they
have completed a Year of Service for Benefit Accrual
share in Matching Contributions for such period (check
one)?
[ ] (AA) Yes [ ] (BB) No
[ X ] (CC) N/A (no Matching Contributions or Section
A.1.97(A)(2) checked)
NOTE THAT SECTION A.2.3(G)(2)(B)(I)(AA) MUST BE CHECKED IF SECTION
A.1.97(A)(1)(B) IS CHECKED.
(ii) If Section A.2.3(G)(2)(b) (i)(AA) is checked,
shall such Participant share in Matching Contributions
for such (check one) [ ] (aa) month [ ] (bb)
quarter [ ] (cc) Plan Year if such Participant has
not completed a Year of Service for Benefit Accrual
(check one):
[ ] (AA) Yes [ ] (BB) No
[ X ] (CC) N/A (Section A.2.3(G)(2)(b)(i)(AA) not
checked.
(H) LEASED EMPLOYEES. Shall Leased Employees be eligible to
participate in the Plan (check applicable block)?
[ ] (1) Yes [ ] (2) No [ X ] (3) N/A
If Section A.2.3(H)(1) is checked, describe Leased Employees to be covered by
the Plan and conditions and other limitations on such coverage in the
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<PAGE> 133
following lines: [ N/A ]
(If not applicable, insert letters N/A in these blanks)
A.2.4 PLANS COVERING OWNER-EMPLOYEES. Section 2.4 of the Plan does not
apply unless Section A.1.56(A) is checked.
A.3.1 EMPLOYER CONTRIBUTIONS.
(A) EMPLOYER CONTRIBUTIONS.
(1) GENERAL. Shall the Employer, in its sole discretion, be
permitted to make Employer Contributions to the Plan (check
one)?
[ X ] (a) Yes [ ] (b) No
If Section A.3.1(A)(1)(a) is checked, such Employer
Contributions shall be allocated under Section A.5.1(A).
(2) PROFIT REQUIREMENTS. Shall Profits be required for
Employer Contributions to the Plan (check one)?
[ ] (a) Yes [ X ] (b) No
(B) QUALIFIED NONELECTIVE CONTRIBUTIONS.
(1) ELECTION. May the Employer be permitted to make, in its
sole discretion, Qualified Nonelective Contributions to the
Plan (check one)?
[ ] (a) Yes [ ] (b) No
[ X ] (c) N/A (No Elective Deferral or Participant
Contributions)
(2) AMOUNT. If the Employer does make such contributions to
the Plan, then the amount of such contributions for each Plan
Year shall be (check one):
[ ] (a) [ ] percent (not to exceed 15 percent) of the
Compensation of all Participants eligible to share in
the allocation.
[ ] (b) [ ] percent of the Profits, but in no event more
than [$ ] for any Plan Year.
[ ] (c) An amount determined by the Employer.
[ X ] (d) N/A (Qualified Nonelective contributions not
permitted).
(3) PARTICIPANTS ELIGIBLE FOR ALLOCATION. Allocation of
Qualified Nonelective Contributions shall be made to the
accounts of (check one):
[ ] (a) All Participants
[ ] (b) Only Participants who are Non-Highly Compensated
Employees
[ ] (c) Only Participants who are Non-Highly Compensated
Employees and who are (specify group to which
allocations are to be made) [
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]
[ X ] (d) N/A (Qualified Nonelective Contributions not
permitted)
(4) MANNER OF ALLOCATION. Allocation of Qualified
Nonelective Contributions shall be made (check one):
[ ] (a) In the ratio which each affected Participant's
Compensation for the Plan Year bears to the total
Compensation of all affected Participants for such Plan
Year.
[ ] (b) In the ratio which each affected Participant's
Compensation not in excess of [$ ] for the Plan
Year bears to the total Compensation of all affected
Participants not in excess of [$ ] for such Plan
Year.
[ X ] (c) N/A (Qualified Nonelective Contributions not
permitted).
(C) QUALIFIED MATCHING CONTRIBUTIONS.
(1) ELECTION. May the Employer be permitted to make
Qualified Matching Contributions to the Plan?
[ ] (a) Yes [ ] (b) No
[ X ] (c) N/A (No Elective Deferrals or Participant
Contributions)
(2) ALLOCATION. The Employer shall, in its sole discretion,
make Qualified Matching Contributions to the Plan on behalf
of (check one):
[ ] (a) All Participants
[ ] (b) All Participants who are Non-Highly Compensated
Employees
[ ] (c) All Participants who are Non-Highly Compensated
Employees and who are (specify group to which
allocations are to be made)
[
]
[ X ] (d) N/A (No Qualified Matching Contributions)
If Section A.3.1(C)(2)(a), (b) or (c) is checked, the
allocation shall be made to applicable Participants who make
(check (i) and/or (ii) or (iii)):
[ ] (i) Elective Deferral Contributions
[ ] (ii) Participant Contributions
[ X ] (iii) N/A (No Qualified Matching Contributions)
(3) AMOUNT. The Employer shall contribute and allocate to
each Participant's Qualified Matching
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Contribution account an amount determined as follows (check
applicable block(s)):
[ ] (a) ELECTIVE DEFERRAL CONTRIBUTIONS. The Employer
shall contribute an amount equal to (check one):
[ ] (i) [ ] percent of the Participant's Elective
Deferral Contributions; or
[ ] (ii) that percent of the Participant's Elective
Deferral Contributions, as determined by the
Employer, in its sole discretion, for the Plan
Year.
[ ] (b) PARTICIPANT CONTRIBUTIONS. The Employer shall
contribute an amount equal to (check one):
[ ] (i) [ ] percent of the Participant's
Participant Contributions; or
[ ] (ii) that percent of the Participant's
Participant Contributions, as determined by the
Employer, in its sole discretion, for the Plan
Year.
[ X ] (c) N/A (No Qualified Matching Contributions).
The Employer shall not match amounts provided above in excess of [$ N/A],
or in excess of [N/A] percent of the Participant's Compensation (if
there are no limitations or if this provision is not otherwise
applicable, insert letters N/A in blank(s)).
A.3.2 PARTICIPANT CONTRIBUTIONS.
(A) PERMISSIBILITY. Participant Contributions shall (check (1),
(2) or (3)):
[ X ] (1) Not be permitted under the Plan (NOTE: THIS BLOCK
MUST BE CHECKED UNLESS THE PLAN HAS A CODA AS INDICATED BY
CHECKING SECTION A.3.4(A)(2)).
[ ] (2) Be permitted (but not required) in the amounts
provided by Section 3.2 of the Plan but subject to the
limitations of Section 3.8 of the Plan.
[ ] (3) Be required in order for an Employee to participate in
the Plan. Such Participant Contributions shall be made by
payroll deduction and shall equal no less than [ ]
percent but shall not exceed [ ] percent (not to exceed 6
percent) of the Participant's Compensation for the Plan
Year. The Employee shall enter into an agreement with the
Employer providing for Participant Contributions in any
amount from [ ] percent to [ ] percent (not to exceed 6
percent) of the Participant's Compensation for the Plan
Year. In addition, the Employee may, but is not required
to, make voluntary Participant Contributions in the amounts
provided
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for in Section 3.2 of the Plan subject to the limitations
of Section 3.8 of the Plan.
(B) PAYROLL DEDUCTION. Participant Contributions by payroll
deduction (check (1), (2) or (3)):
[ ] (1) Shall not be permitted.
[ ] (2) Shall be permitted.
[ X ] (3) Are N/A (No Participant Contributions).
A.3.4 ELECTIVE DEFERRAL CONTRIBUTIONS.
(A) ELECTION. Elective Deferral Contributions shall (check (1)
or (2)):
[ X ] (1) Not be permitted under the Plan.
[ ] (2) Be permitted in accordance with the provisions of
Section 3.4 of the Plan.
If Section A.3.4(A)(2) is checked, a salary reduction agreement must be
completed and filed by the Participant with the Administrative Committee
prior to the date the Elective Deferral Contributions are made.
(B) ELECTION CHANGES. If Section A.3.4(A)(2) is checked, the
Participant shall be permitted to enter into a new salary reduction agreement
(check one):
[ ] (1) Monthly [ ] (2) Quarterly
[ ] (3) Semi-Annually [ ] (4) Annually
[ ] (5) Other (Specify): [ ]
[ X ] (6) N/A
A salary reduction agreement shall remain in effect until revoked or changed.
(C) REVOCATION OF ELECTION. A Participant shall be permitted to
revoke his salary reduction agreement (check one):
[ ] (1) Only as permitted under Section A.3.4(B).
[ ] (2) Upon 15 days' written notice to the Administrative
Committee on the Appropriate Form.
[ X ] (3) N/A.
(D) INCLUSION OF QUALIFIED MATCHING AND QUALIFIED NONELECTIVE
CONTRIBUTIONS. Qualified Matching Contributions and Qualified Nonelective
Contributions may be taken into account as Elective Deferral Contributions
for purposes of calculating the "Actual Deferral Percentages." In
determining Elective Deferral Contributions for the purpose of the ADP test,
the Employer shall include, under the Plan or any other plan of the Employer
as provided by Treasury regulations under the Code, (check one):
[ ] (1) Qualified Matching Contributions.
[ ] (2) Qualified Nonelective Contributions.
[ X ] (3) N/A (Elective Deferral Contributions are not permitted
or Employer does not desire to make this election or no
Qualified Matching or Qualified Nonelective Contributions
are permitted).
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(E) QUALIFIED MATCHING CONTRIBUTIONS - AMOUNT. The amount of
Qualified Matching Contributions made under Sections 3.1 of the Plan and
A.3.1 of this Adoption Agreement and taken into account as Elective Deferral
Contributions for purposes of calculating the "Actual Deferral Percentages,"
subject to such other requirements as may be prescribed by the Secretary of
the Treasury, shall be (check one):
[ ] (1) All such Qualified Matching Contributions.
[ ] (2) Such Qualified Matching Contributions that are needed
to meet the "Actual Deferral Percentage" test stated in
Section 3.4(B)(2) of the Plan.
[ X ] (3) N/A (Elective Deferral Contributions not permitted
and/or Qualified Matching Contributions not permitted).
(F) QUALIFIED NONELECTIVE CONTRIBUTIONS - AMOUNT. The amount of
Qualified Nonelective Contributions made under Sections 3.1 of the Plan and
A.3.1 of this Adoption Agreement and taken into account as Elective Deferral
Contributions for purposes of calculating the "Actual Deferral Percentages,"
subject to such other requirements as may be prescribed by the Secretary of
the Treasury, shall be (check one):
[ ] (1) All such Qualified Nonelective Contributions.
[ ] (2) Such Qualified Nonelective Contributions that are
needed to meet the Actual Deferral Percentage test stated
in Section 3.4(B)(2) of the Plan.
[ X ] (3) N/A (Elective Deferral Contributions and/or Qualified
Nonelective Contributions not permitted).
A.3.5 MATCHING CONTRIBUTIONS.
(A) ELECTION. Matching Contributions by the Employer (check
(1), (2) or (3)):
[ ] (1) Shall not be permitted under the Plan.
[ ] (2) Shall be permitted in accordance with the provisions
of Section 3.5 of the Plan and Section A.3.5(B) of the
Adoption Agreement.
[ X ] (3) Are N/A (No Elective Deferral or Participant
Contributions).
If Section A.3.5(A)(2) is checked, the Employer may, in its sole
discretion, match, in accordance with Section A.3.5(B), the Elective
Deferral Contributions of a Participant made pursuant to Section A.3.4 or
Participant Contributions made pursuant to Section A.3.2.
(B) ALLOCATION OF MATCHING CONTRIBUTIONS.
(1) AMOUNT. If Section A.3.5(A)(2) is checked, Matching
Contributions for the Plan Year shall be allocated to the
Matching Account of each Participant, on whose behalf
Elective Deferral Contributions for the Plan Year are being
made, in an amount equal to (check one):
[ ] (a) [ ] (insert percentage) percent of the (check
applicable block): (i) [ ] Elective Deferral
Contribution; (ii)[ ]
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Participant Contribution made on behalf of each
Participant for such Plan Year; or
[ ] (b) that percent of the (check applicable block): (i)
[ ] Elective Deferral Contribution; (ii) [ ]
Participant Contribution made on behalf of each
Participant for such Plan Year as determined by the
Employer, in its sole discretion, for such Plan Year.
[ X ] (c) N/A (No Matching Contributions).
In no event shall such Matching Contribution exceed the
lesser of (aaa) (insert percentage) [ ] percent of such
Participant's Compensation for such Plan Year or (bbb)
(insert amount, if any, of dollar limitation)
[$ ].
(2) ALLOCATION DATE. Shall Matching Contributions be
allocated effective as of a date or dates other than the last
day of the Plan Year (check one)?
[ ] (a) Yes [ ] (b) No [ X ](c) N/A
(aaa) If Section A.3.5(B)(2)(a) is checked, list the
date(s) (month and day) in each Plan Year as of which
Matching Contributions shall be allocated:
[
].
(bbb) If Section A.3.5(B)(2)(a) is checked, a
Participant who is employed as of a date specified for
the allocation of Matching Contributions and on whose
behalf Elective Deferral Contributions or Participant
Contributions are being made shall receive an
allocation of Matching Contributions as of such date
regardless of the number of Hours of Service credited
to the Participant for purposes of a Year of Service
for Benefit Accrual as of such date, notwithstanding
anything in the Plan to the contrary.
(C) VESTING. Matching Contributions shall be vested in
accordance with the following schedule (check one):
[ ] (1) Nonforfeitable when made.
[ ] (2) The Plan's general vesting schedule, other than that
for Elective Deferral Contributions.
[ ] (3) [The sponsor may add elections for one or more of the
vesting schedules that comply with section 411(a)(2) of the
Code:
[
].
[ X ] (4) N/A (No Matching Contributions).
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(D) "AVERAGE CONTRIBUTION PERCENTAGE" COMPUTATIONS.
(1) In computing the "Average Contribution Percentage" with
respect to Participant Contributions and Matching
Contributions, the Employer shall take into account, under
this Plan or any other plan of the Employer, as provided by
Treasury regulations, and include as "Contribution Percentage
Amounts" (check applicable block or blocks):
[ ] (a) Elective Deferral Contributions.
[ ] (b) Qualified Nonelective Contributions.
[ X ] (c) N/A (There are no Participant or Matching
Contributions, or Employer does not desire to make this
election).
(2) The amount of Qualified Nonelective Contributions that
are made under Section 3.1 of the Plan and Section A.3.1 and
taken into account as "Contribution Percentage Amounts" for
purposes of calculating the "Average Contribution
Percentage," subject to such other requirements as may be
prescribed by the Secretary of the Treasury, shall be (check
one):
[ ] (a) All such Qualified Nonelective Contributions.
[ ] (b) Such Qualified Nonelective Contributions that are
needed to meet the "Average Contribution Percentage"
test stated in Section 3.2 of the Plan.
[ X ] (c) N/A (No Participant or Matching Contributions or
Employer does not desire to make this election).
(3) The amount of Elective Deferral Contributions made under
Section 3.4 of the Plan and Section A.3.4 and taken into
account as "Contribution Percentage Amounts" for purposes of
calculating the "Average Contribution Percentage", subject to
such other requirements as may be prescribed by the Secretary
of the Treasury, shall be:
[ ] (a) All such Elective Deferral Contributions.
[ ] (b) Such Elective Deferral Contributions that are
needed to meet the "Average Contribution Percentage"
test stated in Section 3.2 of the Plan.
[ X ] (c) N/A (There are no Elective Deferral Contributions
under the Plan or Employer did not make election under
Section A.3.5(D)(1)).
(4) To the extent forfeitable, forfeitures of "Excess
Aggregate Contributions" shall be:
[ ] (a) Applied to reduce Employer contributions.
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<PAGE> 140
[ ] (b) Allocated, after all other forfeitures under the
Plan, to each Participant's Matching Account in the
ratio which each Participant's Compensation for the
Plan Year bears to the total Compensation of all
Participants for such Plan Year. Such forfeitures
shall not be allocated to the account of any Highly
Compensated Employee.
[ X ] (c) N/A (No Matching Contributions).
A.3.8 LIMITATIONS ON ALLOCATIONS.
(A) GENERAL RULES. If the Employer maintains or ever maintained
another qualified plan (other than a paired defined contribution regional
prototype plan) in which any Participant in this Plan is (or was) a
participant or could become a participant, the Employer must complete this
Section A.3.8. The Employer must also complete this Section A.3.8 if it
maintains a Welfare Benefit Fund or an individual medical benefit account, as
defined in section 415(l)(2) of the Code, under which amounts are treated as
"Annual Additions" with respect to any Participant in this Plan. Does the
Employer maintain or has the Employer maintained any such plan(s) (check
one):
[ ] (1) Yes [ X ] (2) No
If Section A.3.8(A)(1) is checked, complete Section A.3.8(B) and/or (C).
(B) MAINTENANCE OF OTHER DEFINED CONTRIBUTION PLAN. If the
Participant is covered under another qualified Defined Contribution Plan
maintained by the Employer, other than a regional prototype plan (check
applicable provisions as necessary):
[ ] (1) The provisions of Section 3.8(B) of the Plan shall
apply as if the other plan were a regional prototype
plan.
[ X ] (2) Provide the method under which the plans will limit
the total "Annual Additions" to the "Maximum Permissible
Amount", and will properly reduce any "Excess Amounts",
in a manner that precludes Employer discretion: [CERTAIN
OF THE PARTICIPATING EMPLOYERS HAVE MAINTAINED OTHER
QUALIFIED DEFINED CONTRIBUTION PLANS. ALL SUCH PLANS
WERE MERGED INTO THIS PLAN EFFECTIVE DECEMBER 1, 1987.
TO THE EXTENT REQUIRED, ALL ADJUSTMENTS SHALL BE MADE
UNDER THIS PLAN.].
[ ] (3) N/A (No other qualified Defined Contribution Plan
(other than a regional prototype plan), Defined Benefit
Plan, Welfare Benefit Fund or individual medical benefit
account maintained).
(C) MAINTENANCE OF A DEFINED BENEFIT PLAN. If a Participant is or
has ever been a participant in a Defined Benefit Plan maintained by the
Employer, check either (1) or (2) and complete as necessary:
[ ] (1) The limitations set forth in Section 3.8(C)(2) through
(4) of the Plan shall apply.
[ ] (2) Provide the method under which the Plan will satisfy
the 1.0 limitation of section 415(e) of the Code (such
language must preclude employer discretion; see Treas. Reg.
Section 1.415-1 for guidance) in the following blanks:
[
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<PAGE> 141
].
IF ADDITIONAL SPACE IS REQUIRED THE EMPLOYER IS TO INSERT APPLICABLE
LIMITATIONS IN AN ATTACHMENT TO THIS ADOPTION AGREEMENT. SUCH
ATTACHMENT SHALL BE ADDED TO, AND MADE A PART OF, THIS ADOPTION
AGREEMENT.
A.3.9 ROLLOVERS.
(A) PARTICIPANT ROLLOVERS. May Participants be permitted to make
Rollover Contributions to the Plan (check one)?
[ X ] (1) Yes [ ] (2) No
(B) NON-PARTICIPANT ROLLOVERS. May Employees other than
Participants be permitted to make Rollover Contributions to the Plan (check
one)?
[ ] (1) Yes [ X ] (2) No
A.3.10 TRANSFERS.
(A) PARTICIPANT DIRECT TRANSFERS. May Participants be permitted
to have direct transfers made on their behalf to the Plan (check one)?
[ X ] (1) Yes [ ] (2) No
(B) NON-PARTICIPANT DIRECT TRANSFERS. May Employees other than
Participants be permitted to have direct transfers made on their behalf to
the Plan (check one)?
[ ] (1) Yes [ X ] (2) No
(C) TRANSFERS OF ACCOUNTS. Are assets being transferred to this
Plan from a qualified plan covering Key Employees in a Top-Heavy Plan or
five-percent owners (within the meaning of section 416(i)(1) of the Code)
(check one)?
[ ] (1) Yes [ X ] (2) No
If such assets are transferred, the restrictions of Section 3.10(B) of the
Plan apply.
A.3.11 TOP-HEAVY PROVISIONS.
(A) APPLICATION OF PROVISIONS AND ADJUSTMENTS.
(1) APPLICATION. Is the Plan a Top-Heavy Plan on the
Effective Date (check one):
[ ] (a) Yes [ X ] (b) No
[ ] (c) Uncertain (Note that if this box is checked and the
Plan is a Top-Heavy Plan, the Top-Heavy Plan provisions
as set forth herein shall apply)
(2) ADJUSTMENTS. If the Employer maintains more than one
plan in a Permissive or Required Aggregation Group, set forth
here any adjustments to be made for Employer contributions or
benefits attributable to Employer contributions under such
other plan(s) in determining the amount of contributions to
be made under the Top-Heavy
A-27
<PAGE> 142
provisions of this Plan (if not applicable, insert letters
N/A)): [ N/A
]
(B) VESTING. The nonforfeitable interest of each Employee in
his account balance attributable to Employer contributions shall be
determined on the basis of the following (check either (1) or (2) and fill in
blank(s):
[ ] (1) 100% vesting after [ ] (not to exceed 3) Years of
Service for Vesting;
[ X ] (2) [ 10 ]% (no minimum) vesting after 1 Year of Service
for Vesting;
[ 25 ]% (not less than 20) vesting after 2 Years of
Service for Vesting;
[ 50 ]% (not less than 40) vesting after 3 Years of
Service for Vesting;
[ 75 ]% (not less than 60) vesting after 4 Years of
Service for Vesting;
[ 100 ]% (not less than 80) vesting after 5 Years of
Service for Vesting;
100% vesting after 6 Years of Service for Vesting.
If the vesting schedule under the Plan shifts in or out of the above
schedule for any Plan Year because of the Plan's top-heavy status, such
shift is an amendment to the vesting schedule and the election in Section
15.2(G) of the Plan applies.
A.5.1 ALLOCATIONS. If Section A.3.1(A)(1)(a) is checked, complete the
following:
(A) ALLOCATION OF EMPLOYER CONTRIBUTIONS.
(1) METHOD. Shall Employer Contributions (if any) to the
Employer Accounts of Participants be integrated with Social
Security contributions, subject to the overall permitted
disparity limits set forth below (check (a) if integrated,
(b) if not integrated)?
[ ] (a) Yes
The annual Employer Contribution shall not exceed the
limitations set forth in Section A.5.1(A)(2). In any Plan
Year in which there are Employer Contributions, such Employer
Contributions shall, subject to the Top-Heavy Plan
provisions, be allocated to each Participant's Employer
Account as follows:
(i) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN
YEARS IN WHICH PLAN IS A TOP-HEAVY PLAN. If the Plan
is a Top-Heavy Plan for the Plan Year, the Employer
Contribution for such Plan Year shall be allocated to
each Participant's Employer Account as follows:
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<PAGE> 143
(aa) "BASE CONTRIBUTION PERCENTAGE". First, (check
either (aaa) or (bbb))(percent in either (aaa) or
(bbb) must not be less than the "Minimum Top-Heavy
Rate"):
[ ] (aaa) [ ] (insert percent), or
[ ] (bbb) that percent determined by the
Employer for the Plan Year
of the Participant's "Base Compensation" for such
Plan Year shall be allocated to the Employer Account
of such Participant;
(bb) "EXCESS CONTRIBUTION PERCENTAGE". Second,
(check either (aaa) or (bbb))(percent in either
(aaa) or (bbb) must not be less than the "Minimum
Top-Heavy Rate" and must not exceed the "Maximum
Excess Allowance"):
[ ] (aaa)[ ] (insert percent) percent, or
[ ] (bbb) that percent determined by the
Employer for the Plan Year
of the Participant's Excess Compensation for such
Plan Year shall be allocated to the Employer Account
of such Participant (for purposes of this allocation,
forfeitures allocated to a Participant in the Plan
Year shall be treated as Employer Contributions);
however, in the case of any Participant who has
exceeded the cumulative permitted disparity limit
described below, the Employer shall contribute for
such Participant an amount equal to the "Excess
Contribution Percentage" multiplied by the
Participant's total Compensation for the Plan Year;
and
(cc) "ADDITIONAL CONTRIBUTION PERCENTAGE". Lastly,
any excess over (aa) and (bb) shall be allocated to
each Participant's Employer Account in the same ratio
as his Compensation for such Plan Year bears to the
Compensation of all Participants for such Plan Year.
(ii) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN
YEARS IN WHICH PLAN IS NOT A TOP-HEAVY PLAN. The
Employer Contribution for the Plan Year, if the Plan is
not a Top-Heavy Plan for the Plan Year, shall be
allocated as follows:
(aa) "BASE CONTRIBUTION PERCENTAGE". First, (check
either (aaa) or (bbb)):
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<PAGE> 144
[ ] (aaa)[ ] (insert percent) percent, or
[ ] (bbb) that percent determined by the
Employer for the Plan Year
of the Participant's "Base Compensation" for such
Plan Year shall be allocated to the Employer Account
of such Participant;
(bb) "EXCESS CONTRIBUTION PERCENTAGE". Second,
(check either (aaa) or (bbb))(percent in either (aaa)
or (bbb) must not exceed the "Maximum Excess
Allowance"):
[ ] (aaa)[ ] (insert percent) percent, or
[ ] (bbb) that percent determined by the
Employer for the Plan Year
of the Participant's Excess Compensation for such
Plan Year shall be allocated to the Employer Account
of such Participant (for purposes of this allocation,
forfeitures allocated to a Participant in the Plan
Year shall be treated as Employer Contributions);
however, in the case of any Participant who has
exceeded the cumulative permitted disparity limit
described below, the Employer shall contribute for
such Participant an amount equal to the "Excess
Contribution Percentage" multiplied by the
Participant's total Compensation for the Plan Year;
and
(cc) "ADDITIONAL CONTRIBUTION PERCENTAGE". Lastly,
any excess over (aa) and (bb) shall be allocated to
each Participant's Employer Account in the same ratio
as his Compensation for such Plan Year bears to the
Compensation of all Participants for such Plan Year.
With respect to any Employee who is a Participant in the Plan for
only a portion of the Plan Year for which the Employer Contribution
is made, the allocation to such Employee of the Employer
Contribution (other than the Top-Heavy portion, if the Plan is a
Top-Heavy Plan), shall be (check one):
[ ] (AA) Based only upon the amount of "Base
Compensation", Excess Compensation and/or
Compensation earned by such Employee and all
other Employees during the portion of the Plan
Year in which they are or were Plan Participants.
[ ] (BB) Based upon the amount of "Base
Compensation", Excess Compensation and/or
Compensation earned by such Employee and all
other Employees during the entire Plan Year.
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NOTE THAT THIS PLAN MAY NOT PROVIDE FOR PERMITTED DISPARITY IF THE EMPLOYER
MAINTAINS ANY OTHER PLAN THAT PROVIDES FOR PERMITTED DISPARITY AND BENEFITS
ANY OF THE SAME PARTICIPANTS.
[ X ] (b) No
The annual Employer Contributions (if any) shall be determined by
the Employer for each Plan Year but shall not exceed the
limitations of Section A.5.1(A)(2). In any Plan Year in which
there are Employer Contributions, such Employer Contributions
shall, subject to the Top-Heavy Plan provisions, be allocated to
such Participant's Employer Account as follows:
(i) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN
YEARS IN WHICH PLAN IS A TOP-HEAVY PLAN. If the Plan
is a Top-Heavy Plan for the Plan Year, the Employer
Contribution for such Plan Year shall be first
allocated to each Participant's Employer Account in the
same ratio as his Compensation for such Plan Year bears
to the Compensation of all Participants for such Plan
Year, in an amount which is not less than the "Minimum
Top-Heavy Rate". The balance of the Employer
Contribution for such Plan Year shall be allocated to
each Participant's Employer Account as follows (check
one):
[ ] (aa) In the same ratio as his Compensation for
such Plan Year bears to the Compensation of all
Participants for such Plan Year.
[ X ] (bb) In the same ratio as his Compensation for
the portion of the Plan Year in which he was a
Participant bears to the Compensation of all
Participants for the portion of the Plan Year
in which they were Participants.
(ii) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN
YEARS IN WHICH PLAN IS NOT A TOP-HEAVY PLAN. The
Employer Contribution for the Plan Year, if the Plan is
not a Top-Heavy Plan for the Plan Year, shall be
allocated to each Participant's Employer Account as
follows (check one):
[ ] (aa) In the same ratio as his Compensation for
such Plan Year bears to the Compensation of all
Participants for such Plan Year.
[ X ] (bb) In the same ratio as his Compensation for
the portion of the Plan Year in which he was a
Participant bears to the Compensation of all
Participants for the portion of the Plan Year
in which they were Participants.
[ ] (c) N/A (Section A.3.1(A)(1)(b) checked)
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<PAGE> 146
(2) LIMITATIONS ON EMPLOYER CONTRIBUTIONS. The following
limitations on Employer Contributions apply:
(a) DEDUCTION LIMITATIONS. The annual Employer,
Matching, and Elective Deferral Contributions and any
other Employer contribution shall, in the aggregate, not
exceed the greater of:
(i) the Employer's "Primary Limitation" (as defined
below) for the Taxable Year which ends with or within
the Plan Year for which the Employer, Matching, and/or
Elective Deferral Contribution and/or other Employer
contribution is being made: or
(ii) the Employer's "Secondary Limitation" (as defined
below) for the Taxable Year which ends with or within
the Plan Year for which the Employer, Matching, and/or
Elective Deferral Contribution and/or other Employer
contribution is being made.
(b) CODE SECTION 415 LIMITATION. The allocation of the
Employer contributions for the Plan Year shall be further
limited by Section 3.8 of the Plan (Limitations on
Allocations).
(c) OVERALL PERMITTED DISPARITY LIMITS.
(i) ANNUAL OVERALL PERMITTED DISPARITY LIMIT.
Notwithstanding the preceding paragraphs, for any Plan
Year this Plan "Benefits" any Participant who
"Benefits" under another qualified plan or simplified
employee pension, as defined in section 408(k) of the
Code, maintained by the Employer that provides for
permitted disparity (or imputes disparity), Employer
contributions and forfeitures shall be allocated to the
account of every Participant otherwise eligible to
receive an allocation in the ratio that such
Participant's total Compensation bears to the total
Compensation of all Participants.
(ii) CUMULATIVE PERMITTED DISPARITY LIMIT. Effective
for Plan Years beginning on or after January 1, 1995,
the cumulative permitted disparity limit for a
Participant is 35 total cumulative permitted disparity
years. Total cumulative permitted years means the
number of years credited to the Participant for
allocation or accrual purposes under this Plan, any
other qualified plan or simplified employee pension
plan (whether or not terminated) ever maintained by the
Employer. For purposes of determining the
Participant's cumulative permitted disparity limit, all
years ending in the same calendar year are treated as
the same year. If the Participant has not "Benefitted"
under a defined benefit or target benefit plan for
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any year beginning on or after January 1, 1994, the
Participant has no cumulative disparity limit.
(3) DEFINITIONS. For purposes of this Section A.5.1(A), the
following definitions apply:
(a) "BASE CONTRIBUTION PERCENTAGE" means, for any Plan
Year, the percentage of Compensation contributed under
the Plan with respect to that portion of each
Participant's Compensation up to the "Integration Level"
(i.e., with respect to such Participant's "Base
Compensation") specified in the Plan for such Plan Year.
(b) "BASE COMPENSATION" means, for any Plan Year,
Compensation up to the "Integration Level" for such Plan
Year.
(c) "BENEFIT" OR" BENEFITING" means, with respect to a
Participant, that such Participant is treated as
benefiting under the Plan for any Plan Year during which
the Participant received or is deemed to receive an
allocation in accordance with Treas. Reg. Section
1.410(b)-3(a).
(d) "EXCESS CONTRIBUTION PERCENTAGE" means, for any Plan
Year, the percentage of Compensation which is contributed
under the Plan with respect to that portion of each
Participant's Compensation in excess of the "Integration
Level" (i.e., with respect to such Participant's Excess
Compensation) specified in the Plan for such Plan Year.
(e) "INTEGRATION LEVEL" means the amount of Compensation
specified in the Plan at or below which the rate of
contributions (expressed as a percentage of such
Compensation) provided under the Plan is less than the
rate of contributions (expressed as a percentage of
Compensation) provided under the Plan with respect to
Compensation above such level. The "Integration Level"
for any Plan Year may in no event exceed the Taxable Wage
Base as in effect on the first day of such Plan Year.
(f) "MAXIMUM EXCESS ALLOWANCE" means, for any Plan Year
beginning before January 1, 1989, the "Base Contribution
Percentage" plus 5.7% and for any Plan Year beginning
after December 31, 1988, the percentage determined under
either (i) or (ii):
(i) If the "Integration Level" for such Plan Year is
equal to the Taxable Wage Base, in effect on the first
day of such Plan Year, or if the "Integration Level" is
a uniform dollar amount for all Participants which is
no greater than the greater of $10,000 or 1/5 of the
Taxable Wage Base in effect on the first day of such
Plan Year, then the "Maximum Excess
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<PAGE> 148
Allowance" for such Plan Year is the lesser of:
(aa) The "Base Contribution Percentage", or
(bb) The greater of (AA) 5.7% or (BB) the
percentage equal to the rate of tax under section
3111(a) of the Code (in effect on the first day of
the Plan Year) which is attributable to the old age
insurance portion of the Old Age, Survivors and
Disability Insurance provisions of the Social
Security Act.
(ii) If the "Integration Level" for such Plan Year is
greater than the greater of $10,000 or 1/5 of the
Taxable Wage Base in effect on the first day of such
Plan Year but less than the Taxable Wage Base in effect
on the first day of such Plan Year then the "Maximum
Excess Allowance" shall be determined as follows:
<TABLE>
<CAPTION>
IF THE "INTEGRATION LEVEL" THE "MAXIMUM EXCESS
----------------------------------
IS MORE THAN BUT NOT MORE THAN ALLOWANCE" IS
---------------------------------- ----------------------
<S> <C>
(1) X* 80% OF TAXABLE
WAGE BASE 4.3%
(2) 80% OF Y**
TAXABLE
WAGE BASE 5.4%
</TABLE>
* x=The greater of $10,000 or 1/5 of Taxable Wage Base
**y=Any amount more than 80% of Taxable Wage Base but
less than 100% of Taxable Wage Base.
(g) "MINIMUM TOP-HEAVY RATE" means a rate of at least
three percent (unless the total Employer contribution to
the Plan is less than three percent), or, in certain cases
where a Defined Benefit Plan is maintained, five percent
or seven and one-half percent (whichever is applicable)
of each Participant's Compensation for such Plan Year; if
the Plan is integrated with Social Security, the
"Base Contribution Percentage" plus the "Excess
Contribution Percentage" plus the "Additional Contribution
Percentage" (if any) must be no less than the "Minimum
Top-Heavy Rate" as set forth in the preceding clause.
(h) "PRIMARY LIMITATION" means 15 percent of the
Compensation otherwise paid or accrued by the Employer
during such Taxable Year to, or for, the Participants in
the Plan.
A-34
<PAGE> 149
(i) "SECONDARY LIMITATION" means the lesser of:
(i) 25 percent of the Participants' Compensation for
the Taxable Year which ends with or within the Plan
Year for which the Employer, Matching, and/or Elective
Deferral Contribution or other Employer contribution is
being made, or
(ii) Any excess of (aa) the aggregate of the "Primary
Limitations" for all Taxable Years beginning before
January 1, 1987, over (bb) the aggregate of the
deductions allowed or allowable (for Employer, Matching,
and Elective Deferral Contributions or other Employer
contributions paid or deemed paid to the Plan) under
section 404(a)(3)(A) of the Code for all Taxable Years
beginning before January 1, 1987, which excess is
available as a carryforward to the current Taxable Year
from such prior Taxable Year(s) under said section
404(a)(3)(A).
(B) OTHER ALLOCATIONS. Other contributions shall be allocated
in accordance with the Plan document.
A.5.4 ALLOCATION OF INCREASES AND DECREASES. Allocation of
increases or decreases in the fair market value of assets described in Section
5.4 of the Plan shall be made on the basis of the amounts in the Accounts under
the Plan (as adjusted under Section 5.4 of the Plan) as determined on (check
either (A) or (B)):
[ X ] (A) First day of the period in which the
Valuation Date occurs (except that the last day
of the period shall be used for the initial
allocation).
[ ] (B) Last day of the period in which the Valuation
Date occurs.
A.5.5 ALLOCATION OF FORFEITURES.
(A) Shall forfeitures be allocated in accordance
with Section 5.5 of the Plan (check one)?
[ X ] (1) Yes [ ] (2) No
[ ] (3) N/A (No forfeitures)
If Section A.5.5(A)(1) is checked, such allocation shall be effected as of
the last day of the (check one): [ ] (a) month [ ] (b) quarter [ X ]
(c) Plan Year in which the forfeiture occurs under Section 7.6(c) of the
Plan, in proportion to the Employer and/or Matching Contributions (as
applicable) allocated to the remaining Participants for the period for
which the allocation is effected.
(B) If Section A.5.5(A)(2) is checked,
forfeitures shall be allocated as follows (check applicable block):
[ ] (1) Matching Account forfeitures shall
be used to reduce Matching Contributions
for the Plan Year in which such
forfeitures occur but otherwise the
provisions of Section 5.5 of the Plan
shall apply.
A-35
<PAGE> 150
[ ] (2) All Matching and Employer Account
forfeitures shall be used to reduce
Matching and Employer Contributions for
the Plan Year in which such forfeitures
occur.
[ X ] (3) N/A (Forfeitures shall be allocated
under Section 5.5 of Plan or no
forfeitures).
A.6.1 INVESTMENT OF ACCOUNTS.
(A) INVESTMENT POWER. Investment of Trust
assets shall be directed as follows (check (1), (2) or (3)):
[ X ] (1) Subject to the terms of the Plan,
the Trustee shall, subject to any
limitations indicated below, have the
sole power and authority to direct
investment of Trust assets.
[ ] (2) Subject to the terms of the Plan,
the Investment Manager shall, subject to
any limitations indicated below, have the
sole power and authority to direct
investment of Trust assets held in (check
applicable block(s)):
[ ] Employer Accounts [ ] Matching
Accounts
[ ] Participant Accounts [ ] Elective
Deferral
Accounts
[ ] QVEC Accounts [ ] Rollover
Accounts
[ ] Transfer Accounts [ ] Other
Accounts
Subject to the terms of the Plan, the Trustee shall have
the sole power and authority to direct investment of Trust
assets not committed to the direction of the Investment
Manager.
[ ] (3) Subject to the terms of the Plan,
each Plan Participant or Beneficiary
shall, subject to any limitations
indicated below, have the sole power and
authority to direct investment of the
Trust assets held in (check applicable
block(s)):
[ ] Employer Accounts [ ] Matching
Accounts
[ ] Participant Accounts [ ] Elective
Deferral
Accounts
[ ] QVEC Accounts [ ] Rollover
Accounts
[ ] Transfer Accounts [ ] Other
Accounts
The investments which the Participant or Beneficiary may
select are any one or more of the following (specify
investment selections available):
[
]
Investment instructions shall be given by the Participant
or Beneficiary on the Appropriate Form to the
Administrative Committee not later than (fill in blank)
[ ] days before the Valuation Date preceding the
effective date of the investment direction. The
Administrative Committee shall deliver such instructions
to the Trustee. Such investment instructions shall be
effected by the Trustee not later than (fill in blank)
[ ] days following the Valuation Date coincident with or
next
A-36
<PAGE> 151
following the date on which the investment instructions
are delivered to the Administrative Committee.
Subject to the terms of the Plan, the Trustee shall have
the sole power and authority to direct investment of Trust
assets not committed to the direction of the Participant
or Beneficiary.
(B) LIMITATIONS. List any limitations on types
of investments and transitional investment rules (if none, write "none"): [
NONE
]
(C) QUALIFYING EMPLOYER SECURITIES. May Plan
assets be invested in Qualifying Employer Securities (check one)?
[ X ] (1) Yes [ ] (2) No
In no event may Employer, Participant, Elective Deferral, Matching,
Rollover or Qualified Voluntary Employee Contributions or other Employer
contributions or direct transfers or Employer, Participant, Elective
Deferral, Matching, Rollover, Transfer or QVEC Accounts or other accounts
be invested in Qualifying Employer Securities unless such investment is in
compliance with applicable Federal and state securities laws (including any
necessary filings under such Federal and state securities laws) and the
requirements of the Plan.
If such investment is in compliance with such laws (including any required
filings) and Plan requirements, the prohibition on investment of Plan
assets in Qualifying Employer Securities does not apply and up to [ 100 ]
(insert percentage; if not applicable, insert letters N/A in blank) percent
of Plan assets may be so invested.
If any such required filings have not been made, only Employer
Contributions and Employer Accounts not subject to Participant or
Beneficiary directed investment may be invested in Qualifying Employer
Securities. In such case, indicate the percentage of Employer
Contributions and Employer Accounts which may be invested in Qualifying
Employer Securities in the following blank: [ 100 ] percent (insert
percentage; if not applicable, insert letters N/A in blank).
A.7.6 SEPARATION FROM SERVICE.
(A) DISTRIBUTION OF ACCRUED BENEFITS UPON
SEPARATION FROM SERVICE.
(1) NORMAL RULES. Upon separation of a
Participant from the service of his
Employer under Section 7.6(A) of the
Plan, distribution of such Participant's
Vested Accrued Benefit shall be made
(check only one block (i.e., (a), (b) or
(c)):
[ ] (a) Upon the request of the
Participant in writing on the
Appropriate Form, within 60 days
following the last day of the
Plan Year in which such
Participant incurs five
consecutive One-Year Breaks In
Service but if distribution is
not so requested by the
Participant, distribution shall
be made on the date the
Participant would have attained
his Normal Retirement Age had he
remained in the employ of the
Employer;
[ X ] (b) Upon the request of the
Participant in writing on the
Appropriate Form, at any time
A-37
<PAGE> 152
following the first Valuation
Date coincident with or next
following the date such
Participant separates from the
service of the Employer;
however, if distribution is not
so requested by the Participant
earlier, distribution shall be
made no later than 60 days
following the date the
Participant would have attained
his Normal Retirement Age had he
remained in the employ of the
Employer; or
[ ] (c) Within 60 days following
the date the Participant would
have attained his Normal
Retirement Age had he remained
in the employ of the Employer.
Notwithstanding any other provision in the Plan or Adoption
Agreement, if the Plan provides for distribution on an Early
Retirement Date and if a separated Participant met the service but
not the age requirement for such Early Retirement Date on the date
of his separation from the service of his Employer, upon meeting
such age requirement after separation, such Participant, if he so
requests in writing on the Appropriate Form, shall commence
receiving his deferred Vested Accrued Benefit no later than the
date which would have been his Early Retirement Date had he
continued in the service of the Employer. If no such request is
made, distribution shall be made in accordance with Section
A.7.6(A)(1)(a), (b) or (c), as elected by the Employer in this
Adoption Agreement. All requests for payment under this Section
A.7.6(A) shall be made within the 90-day period preceding the date
payment is to commence.
(2) EXCEPTION. If a Participant
separates from the service of the
Employer and the value of the
Participant's Vested Accrued Benefit does
not exceed and at the time of any prior
distribution did not exceed $3,500, the
Participant shall automatically, whether
or not he requests distribution, receive,
in one lump sum, a distribution of his
entire Vested Accrued Benefit (and if the
Vested Accrued Benefit is $-0-, he shall
be deemed to have received such Vested
Accrued Benefit) within 60 days following
the first Valuation Date coincident with
or next following the date such
Participant separates from the service of
the Employer.
This provision shall only apply if this block is checked [ X ].
If the above block is not checked or if the value of the
Participant's Vested Accrued Benefit exceeds or at the time of a
prior distribution exceeded $3,500, the election made under
Section A.7.6(A)(1) shall apply to the distribution of the
Participant's Vested Accrued Benefit under the Plan.
(B) VESTING UPON SEPARATION FROM SERVICE.
(1) Except as otherwise provided in the
Plan and in Sections A.3.5 and A.3.11,
the interest of each Participant in his
Employer Account and Matching Account
shall vest as follows (check one and
complete applicable blanks):
[ ] (a) 100 percent vesting
immediately. (This alternative
must be chosen if a period of
more than one year has been
designated in Section
A.2.2(B)(1)(a)(i)).
A-38
<PAGE> 153
[ ] (b) [ ] percent for each
Year of Service for Vesting (not
less than 20 percent for each
Year of Service for Vesting, but
not more than 100 percent).
[ ] (c) Nothing for the first five
Years of Service for Vesting and
100 percent thereafter.
[ ] (d) Nothing for the first
[ ] Years of Service for
Vesting, then [ ] percent
for each Year of Service for
Vesting thereafter, but not more
than 100 percent. (Full vesting
must occur after five Years of
Service for Vesting).
[ ] (e) In accordance with the
following table:
<TABLE>
<CAPTION>
IF YEARS OF SERVICE
FOR VESTING THEN THE VESTED
EQUAL OR EXCEED - PERCENTAGE IS
<S> <C>
3..................................20
4..................................40
5..................................60
6..................................80
7 or more.........................100
</TABLE>
[ X ] (f) [Other. (This alternative,
if chosen, must provide a
percentage of vesting which is
not less than the percentage
that would be provided under
options (c) or (e) used
consistently) - Specify:
<TABLE>
<CAPTION>
[IF YEARS OF SERVICE
-------------------
FOR VESTING THEN THE VESTED
----------- -------------------
EQUAL OR EXCEED - PERCENTAGE IS
--------------- --- ---------------
<S> <C>
1..................................10
-------------------------------------
2..................................25
-------------------------------------
3..................................50
-------------------------------------
4..................................75
-------------------------------------
5 OR MORE.........................100
-------------------------------------
</TABLE>
(2) For purposes of Section A.7.6(B)(1)
above and for purposes of Section A.3.5
and Section 3.11(B) of the Plan, Years of
Service for Vesting attributable to the
following shall be disregarded (check
applicable blocks):
[ ] (a) Service prior to the
attainment of age 18, exclusive
of the year within which the
Employee attained age 18.
[ ] (b) Service during any period
for which the Employer did not
maintain this Plan or a
predecessor trust or plan.
[ ] (c) Service before January 1,
1971, unless the Employee has
had at least three years of
credited service after December
31, 1970, determined without
application of paragraphs (a),
(b), (d) and (e) hereof if
selected by the Employer.
A-39
<PAGE> 154
[ X ] (d) If an Employee is reemployed by the
Employer following a One-Year Break In
Service, service before such One-Year
Break In Service, if the Employee has not
completed a Year of Service for Vesting
after such One-Year Break In Service, for
the purpose of determining the vested
percentage in his Employer-derived Accrued
Benefit which accrues after such One-Year
Break In Service.
[ X ] (e) If an Employee is reemployed by the
Employer following five consecutive
One-Year Breaks In Service (check only (i)
or (ii) whichever is to apply):
[ ] (i) Service after such five
consecutive One-Year Breaks
In Service, for the purpose
of determining the vested
percentage in his
Employer-derived Accrued
Benefit which accrued before
such five consecutive
One-Year Breaks In Service
but both pre-Break and
post-Break service will count
for purposes of determining
the vested percentage in his
Employer-derived Accrued
Benefit which accrued after
such Break.
[ X ] (ii) Service after such five
consecutive One-Year Breaks
In Service, for the purpose
of determining the vested
percentage in his
Employer-derived Accrued
Benefit which accrued before
such five consecutive
One-Year Breaks In Service
and, if the Employee had no
vested interest in his
Employer-derived Accrued
Benefit prior to such
Break(s) and the number of
consecutive One-Year Breaks
In Service equals or exceeds
the aggregate Years of
Service for Vesting, service
before such five consecutive
One-Year Breaks In Service
for the purpose of
determining the vested
percentage in his
Employer-derived Accrued
Benefit which accrues after
such five consecutive
One-Year Breaks In Service.
To the extent required by the Plan, separate accounts
shall be maintained for the Participant's pre-Break and
post-Break Employer-derived account balances.
(3) Except as otherwise provided in Section 7.6(C)
of the Plan relating to benefits accruing before a
separation from service, if a Participant separates
from service and thereafter returns to employment
with the Employer without incurring five
consecutive One-Year Breaks In Service, he shall
continue to vest in his Accrued Benefit.
(4) In the event that an Employee who is not a
member of the eligible class of Employees becomes a
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<PAGE> 155
member of the eligible class, such
Employee shall, subject to any applicable
limitation set forth in this Section
A.7.6, receive credit, for vesting
purposes, for Service with the Employer
while such Employee was not a member of
the eligible class.
(5) Service, for purposes of Section
A.7.6(B)(1), includes service with a
predecessor employer if the Employer
adopting the Plan is maintaining the Plan
as a plan of a predecessor employer.
Service, for purposes of Section A.7.6(B)(1), also includes
service with a predecessor employer whose plan is not being
continued by the Employer to the extent provided in Section
A.1.79.
(C) FORFEITURES. If the provisions of Section
7.6(C)(1)(b) of the Plan are to apply, check this block [ X ];
otherwise the provisions of Section 7.6(C)(1)(a) of the Plan shall apply.
A.7.9 COMMENCEMENT OF PAYMENTS; DEFERRAL OF PAYMENTS; MINIMUM
DISTRIBUTION REQUIREMENTS.
(A) DATE PAYMENTS TO COMMENCE. This provision
is contained in the Plan.
(B) DEFERRAL OF PAYMENTS. Shall a Participant,
to the extent permitted by the Plan, be permitted to defer payment of
benefits under Sections 7.3, 7.4, 7.5 and 7.7 of the Plan (check one)?
[ X ] (1) Yes [ ] (2) No
(C) MINIMUM DISTRIBUTION REQUIREMENTS. This
provision is contained in the Plan.
A.7.10 WITHDRAWALS DURING EMPLOYMENT.
(A) WITHDRAWALS FROM PARTICIPANT ACCOUNTS.
Shall withdrawals of Participant Accounts (other than the portion of such
Participant Accounts attributable to required Participant Contributions and
to Participant Contributions which are matched by the Employer) be
permitted (check one)?
[ ] (1) Yes [ ] (2) No [ X ] (3) N/A
(B) WITHDRAWALS FROM QVEC ACCOUNTS. Shall
withdrawals of QVEC Accounts be permitted (check one)?
[ ] (1) Yes [ ] (2) No [ X ] (3) N/A
(C) WITHDRAWALS FROM ROLLOVER ACCOUNTS. Shall
withdrawals of Rollover Accounts be permitted (check one)?
[ ] (1) Yes [ X ] (2) No [ ] (3) N/A
(D) HARDSHIP AND POST - 59 1/2 WITHDRAWALS FROM
ELECTIVE DEFERRAL ACCOUNTS. Shall withdrawals of Elective Deferral
Accounts be permitted (if such withdrawals are to be permitted, check
either (1) or (2) or both) [ ] (1) on account of hardship [ ] (2) after
reaching age 59-1/2 (check one)?
[ ] (a) Yes [ ] (b) No [ X ] (c) N/A
(E) HARDSHIP AND POST - 59 1/2 WITHDRAWALS FROM
EMPLOYER, PARTICIPANT, ROLLOVER AND TRANSFER ACCOUNTS. Shall withdrawals
of Employer, Participant, Rollover and Transfer Accounts be permitted (if
such withdrawals
A-41
<PAGE> 156
are to be permitted, check either (1) or (2) or both) [ ] (1) on account
of hardship [ ] (2) after reaching age 59-1/2 (check one)?
[ ] (a) Yes [ X ] (b) No
(F) HARDSHIP AND POST - 59 1/2 WITHDRAWALS FROM
MATCHING ACCOUNTS. Shall hardship and post - age 59 1/2 withdrawals of
Matching Accounts be permitted (if such withdrawals are to be permitted,
check either (1) or (2) or both) [ ] (1) on account of hardship [ ] (2)
after reaching age 59-1/2 (check one)?
[ ] (a) Yes [ ] (b) No [ X ] (c) N/A
(G) OTHER PRE-59-1/2 IN-SERVICE WITHDRAWALS.
Shall withdrawals of a Participant's Vested Accrued Benefit attributable to
Participant Contributions, Employer Contributions, and Matching
Contributions after such Participant completes five Years of Service for
Benefit Accrual but before he attains age 59 1/2 be permitted (check one)?
[ ] (1) Yes [ X ] (2) No
WITHDRAWALS SHALL ONLY BE MADE IN ACCORDANCE WITH THE PROVISIONS OF SECTION
7.10 OF THE PLAN.
A.7.11 LOANS.
(A) Shall loans to Participants and
Beneficiaries if such Beneficiaries are parties-in-interest (as defined in
the Plan) be permitted (check one)?
[ X ] (1) Yes [ ] (2) No
NOTE: NO LOANS MAY BE MADE TO OWNER-EMPLOYEES OR TO
SHAREHOLDER EMPLOYEES (AS DEFINED IN SECTION 7.11(A)(7) OF THE PLAN).
(B) The interest rate shall be determined as
follows: [ THE INTEREST RATE SHALL EQUAL ONE PERCENTAGE POINT ABOVE THE PRIME
INTEREST RATE AS PUBLISHED IN THE WALL STREET JOURNAL ON THE FIRST BUSINESS DAY
OF THE WEEK IN WHICH THE LOAN IS MADE.
]
(C) Shall the exception to the 50% of Vested
Accrued Benefit limitation on loans not in excess of $10,000 apply?
[ ] (1) Yes [ X ] (2) No
[ ] (3) N/A (No loans permitted)
If the exception is to apply, note that only 50% of the Vested Accrued
Benefit may be used as security for the loan. Additional security
must be provided by the Participant or Beneficiary. Specify the type
of additional collateral which will be used to secure the remainder of
the loan: [ N/A
]
(D) Specify the types of collateral to be used
to secure loans under the Plan: [ ONE HALF OF THE PRESENT VALUE OF THE
PARTICIPANT'S OR BENEFICIARY'S VESTED ACCRUED BENEFIT UNDER THE PLAN.
]
(E) If Section A.7.11(A)(1) is checked, indicate
any additional limitations to be placed on loans (if none, so state; if not
applicable, insert letters N/A):[ LOANS FROM THE PLAN WILL BE PERMITTED
ONLY IN THE EVENT OF A PERSONAL EMERGENCY OR FINANCIAL HARDSHIP IN
ACCORDANCE WITH THE GUIDELINES SET FORTH IN SECTION 7.10(C)(3) OF THE PLAN.
]
A-42
<PAGE> 157
(F) Shall loans to a Participant be treated as
an investment by such Participant for his Accounts only (check one)?
[ X ] (1) Yes [ ] (2) No
[ ] (3) N/A (No loans permitted)
A.7.14 JOINT AND SURVIVOR ANNUITY. The provisions of Section
7.14 of the Plan shall not apply to the Plan, as adopted under this Adoption
Agreement.
A.8.2 SPECIAL PROVISION WITH RESPECT TO QUALIFIED DOMESTIC
RELATIONS ORDERS. Shall the special provision of Section 8.2 of the Plan with
respect to Qualified Domestic Relations Orders apply to the Plan as adopted by
the Employer (check one)?
[ X ] (A) Yes [ ] (B) No
A.15.1 AMENDMENT. THE CHANGES MADE BY THIS AMENDMENT AND
RESTATEMENT SHALL BE DEEMED ADOPTED BY EACH ADOPTING EMPLOYER ON THE DATE THE
NOTIFICATION LETTER IS ISSUED BY THE DISTRICT OFFICE OF THE INTERNAL REVENUE
SERVICE WITHOUT FURTHER ACTION ON THE PART OF THE ADOPTING EMPLOYER EXCEPT THAT
SUCH ADOPTING EMPLOYER MUST SEND A NOTICE TO INTERESTED PARTIES INFORMING SUCH
INTERESTED PARTIES THAT THE PLAN HAS BEEN AMENDED. SUCH NOTICE MUST BE GIVEN
IN ACCORDANCE WITH THE RULES OF SECTION 15.1(C) OF THE PLAN. SEE SECTION
15.1(C) OF THE PLAN FOR FURTHER INFORMATION.
A.18.4 AGENT FOR SERVICE OF LEGAL PROCESS. The name(s) and
address(es) of the agent(s) for service of legal process under the Plan are:
[ ADMINISTRATIVE COMMITTEE, FUND OFFICE RETIREMENT PROFIT-SHARING PLAN
C/O MUNICIPAL FUND FOR TEMPORARY INVESTMENT
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
A.18.17 RESTATEMENT.
(A) RESTATEMENT OF EXISTING PLAN. The Employer
may adopt the Plan as an amendment and restatement of any Prior Plan
(including a prior version of this Plan and Trust Agreement). Adoption
shall not require termination of the Prior Plan, except that amendment and
restatement of an existing Defined Benefit Plan into the Plan shall be
deemed to be a termination of such Prior Plan for the purposes of Title IV
of ERISA. Upon adoption of this Plan, the assets of the Prior Plan shall
be invested in accordance with the provisions of this Plan. Check if
applicable:
[ X ] This is an amendment and restatement of the [ FUND
OFFICE RETIREMENT PROFIT-SHARING ] PLAN, an existing
qualified [ PROFIT-SHARING ] plan, which was adopted effective
as of [ SEPTEMBER 18, 1981].
(B) LIMITATIONS APPLICABLE TO PLAN PROVISIONS.
Except as otherwise provided in Section 3.11 of the Plan, the participation
and/or vesting provisions of the Plan, as adopted by the Employer, shall
apply as follows (check applicable block or blocks; to the extent not
checked, the Plan shall apply in accordance with the terms set forth
herein):
[ ] (1) The participation provisions of this
Plan, as adopted by the Employer, shall
apply only to Employees hired on or after
the date the Plan is adopted by the
Employer. The participation provisions
of the Prior Plan shall otherwise apply.
[ ] (2) The vesting provisions of this Plan,
as adopted by the Employer, shall apply
only to Employees hired on or after the
date the Plan is adopted by the
A-43
<PAGE> 158
Employer. The vesting provisions of the
Prior Plan shall otherwise apply.
[ X ] (3) N/A.
(C) INCORPORATION OF APPLICABLE PRIOR PLAN
PROVISIONS AND TRANSITIONAL RULES. If the Employer checked A.18.17(A),
such Employer shall insert here any Prior Plan provisions and any
transitional rules which such Employer desires or is required to make
applicable to this Plan (if none, write the word "none"):
[ (1) MERGER OF PLANS. EFFECTIVE DECEMBER 1, 1987, THE CHESTNUT STREET
EXCHANGE FUND RETIREMENT PROFIT-SHARING PLAN, THE INDEPENDENCE SQUARE INCOME
SECURITIES, INC. RETIREMENT PROFIT-SHARING PLAN, THE TEMPORARY INVESTMENT FUND,
INC. RETIREMENT PROFIT-SHARING PLAN, AND THE TRUST FOR SHORT-TERM FEDERAL
SECURITIES RETIREMENT PROFIT-SHARING PLAN WERE MERGED INTO, AND THEIR ASSETS
TRANSFERRED INTO, THE PLAN.
(2) CHANGE IN ACCRUAL COMPUTATION PERIODS, LIMITATION YEARS, PLAN
YEARS AND VESTING COMPUTATION PERIODS. AS A RESULT OF THE MERGER AND TRANSFER
OF ASSETS, THE ACCRUAL COMPUTATION PERIODS, LIMITATION YEARS, PLAN YEARS AND
VESTING COMPUTATION PERIODS FOR THE CHESTNUT STREET EXCHANGE FUND, INDEPENDENCE
SQUARE INCOME SECURITIES, INC., TEMPORARY INVESTMENT FUND, INC., AND TRUST FOR
FEDERAL SECURITIES RETIREMENT PROFIT-SHARING PLANS HAVE BEEN CHANGED AS
FOLLOWS:
<TABLE>
<CAPTION>
PLAN OLD (UNDER OLD PLAN) NEW (UNDER THIS PLAN)
- --------------------------------------------------------------------------
<S> <C> <C>
CHESTNUT STREET EX-
- -------------------------------------------------------------------------
CHANGE FUND 1/1 TO 12/31 12/1 TO 11/30
- -------------------------------------------------------------------------
INDEPENDENCE SQUARE
- -------------------------------------------------------------------------
INCOME SECURITIES,
- -------------------------------------------------------------------------
INC. 1/1 TO 12/31 12/1 TO 11/30
- -------------------------------------------------------------------------
TEMPORARY INVESTMENT
- -------------------------------------------------------------------------
FUND, INC. 10/1 TO 9/30 12/1 TO 11/30
- -------------------------------------------------------------------------
TRUST FOR FEDERAL
- -------------------------------------------------------------------------
SECURITIES 11/1 TO 10/31 12/1 TO 11/30
- -------------------------------------------------------------------------
</TABLE>
THIS RESULTED IN THE FOLLOWING SHORT ACCRUAL COMPUTATION PERIODS,
LIMITATION YEARS, PLAN YEARS AND VESTING COMPUTATION PERIODS:
<TABLE>
<CAPTION>
PLAN SHORT PERIOD/YEAR
- -------------------------------------------------------------------------
<S> <C>
CHESTNUT STREET 1/1/87 TO 11/30/87
- -------------------------------------------------------------------------
INDEPENDENCE SQUARE INCOME SECURITIES, INC. 1/1/87 TO 11/30/87
- -------------------------------------------------------------------------
TEMPORARY INVESTMENT FUND, INC. 10/1/87 TO 11/30/87
- -------------------------------------------------------------------------
TRUST FOR FEDERAL SECURITIES 11/1/87 TO 11/30/87
- -------------------------------------------------------------------------
</TABLE>
(A) CHANGE IN VESTING COMPUTATION PERIODS. EACH PARTICIPANT IN THE
ABOVE LISTED PLANS RECEIVED VESTING CREDIT FOR TWO YEARS OF
SERVICE FOR VESTING PROVIDED SUCH PARTICIPANT COMPLETED 200 OR
MORE HOURS OF SERVICE IN BOTH THE OLD VESTING COMPUTATION PERIOD
AND THE NEW VESTING COMPUTATION PERIOD AS SET FORTH ABOVE.
(B) CHANGE IN ACCRUAL COMPUTATION PERIODS. ANY PARTICIPANT IN THE
ABOVE LISTED PLANS WHO COMPLETED 200 HOURS OF SERVICE MULTIPLIED
BY THE NUMBER OF MONTHS IN THE SHORT ACCRUAL COMPUTATION PERIOD
DIVIDED BY TWELVE RECEIVED HIS PROPORTIONATE SHARE OF EMPLOYER
CONTRIBUTIONS DURING THE SHORT ACCRUAL COMPUTATION PERIOD SET
FORTH ABOVE.
(C) CHANGE IN LIMITATION YEARS. FOR THE SHORT LIMITATION YEARS, THE
DOLLAR LIMITATIONS UNDER SECTION 415(C)(1)(A) OF THE CODE WERE
ADJUSTED AS PROVIDED UNDER TREAS. REG. Section 1.415-2(B)(4).
THE ABOVE CHANGES WERE MADE PURSUANT TO THE AUTOMATIC APPROVAL
PROVISIONS OF REV. PROC. 87-27, 1987-25 I.R.B. 41. ]
A-44
<PAGE> 159
A.18.18 INDIVIDUAL PROVISIONS. Any provisions applicable to the
adopting Employer only should be inserted here (if none, write the word
"none"):
[ (A) EMPLOYER AMENDMENT OF PLAN AND/OR TRUST. ANY EMPLOYER AMENDMENT OF
THE PLAN AND/OR TRUST PERMITTED BY SECTION 15.1 OF THE PLAN AND TRUST AGREEMENT
SHALL BE EFFECTED BY RESOLUTION OF THE EMPLOYER'S BOARD OF DIRECTORS ADOPTED AT
A DULY HELD MEETING OF SAID BOARD OR BY UNANIMOUS WRITTEN CONSENT OF SAID
BOARD, IF THE EMPLOYER IS INCORPORATED AND OTHERWISE BY APPROPRIATE WRITTEN
ACTION OF EMPLOYER'S OWNER OR OTHER GOVERNING ENTITY UNDER STATE LAW. A
CERTIFIED COPY OF SUCH RESOLUTIONS OR OTHER WRITTEN ACTION SHALL BE DELIVERED
TO THE ADMINISTRATIVE COMMITTEE AND THE TRUSTEE.
(B) TERMINATION OR PARTIAL TERMINATION OF PLAN AND/OR TRUST. TERMINATION
OR PARTIAL TERMINATION OF THE PLAN AND/OR TRUST UNDER ARTICLE XVI OF THE PLAN
AND TRUST AGREEMENT SHALL BE EFFECTED BY RESOLUTION OF THE EMPLOYER'S BOARD OF
DIRECTORS ADOPTED AT A DULY HELD MEETING OF SAID BOARD OR BY UNANIMOUS WRITTEN
CONSENT OF SAID BOARD, IF SUCH EMPLOYER IS INCORPORATED AND OTHERWISE BY
APPROPRIATE WRITTEN ACTION OF EMPLOYER'S OWNER OR OTHER GOVERNING ENTITY UNDER
STATE LAW. A CERTIFIED COPY OF SUCH RESOLUTIONS OR OTHER WRITTEN ACTION SHALL
BE DELIVERED TO THE ADMINISTRATIVE COMMITTEE AND THE TRUSTEE.
(C) ADOPTION OF PLAN BY OTHER EMPLOYERS.
(1) EFFECTIVE DATE. THIS SECTION A.18.18(C) SHALL BE EFFECTIVE AS OF
DECEMBER 1, 1989.
(2) ADOPTION OF PLAN AND TRUST. ANY OTHER EMPLOYER MAY ADOPT THE
TERMS OF THIS PLAN AS ADOPTED BY THE ADOPTING EMPLOYER, AND THEREBY BECOME
A "PARTICIPATING EMPLOYER," PROVIDED:
(A) THE BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY OF THE
ADOPTING EMPLOYER CONSENTS TO SUCH ADOPTION;
(B) THE BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY OF THE
ADOPTING PARTICIPATING EMPLOYER ADOPTS THIS PLAN BY APPROPRIATE
ACTION;
(C) THE ADOPTING PARTICIPATING EMPLOYER EXECUTES THE ADOPTION
AGREEMENT; AND
(D) THE ADOPTING PARTICIPATING EMPLOYER EXECUTES SUCH OTHER
DOCUMENTS AS MAY BE REQUIRED TO MAKE SUCH ADOPTING PARTICIPATING
EMPLOYER A PARTY TO THE PLAN AND TRUST AS A PARTICIPATING EMPLOYER
(EXCEPT AS PROVIDED BELOW).
A PARTICIPATING EMPLOYER WHICH ADOPTS THE PLAN AND TRUST AGREEMENT IS
THEREAFTER AN EMPLOYER WITH RESPECT TO ITS EMPLOYEES FOR PURPOSES OF THE
PLAN, THE TRUST AGREEMENT AND THIS ADOPTION AGREEMENT EXCEPT THAT SUCH
PARTICIPATING EMPLOYER DELEGATES TO THE ADOPTING EMPLOYER THE POWER TO
AMEND THE ADOPTION AGREEMENT ON ITS BEHALF AND ON BEHALF OF THE ADOPTING
EMPLOYER AND EACH OTHER PARTICIPATING EMPLOYER, PROVIDED SUCH AMENDMENT
DOES NOT MATERIALLY AFFECT THE SUBSTANCE OF THE PLAN WITH RESPECT TO THE
ADOPTING EMPLOYER OR ANY PARTICIPATING EMPLOYER OR MATERIALLY AFFECT THE
COSTS OF THE ADOPTING EMPLOYER OR ANY PARTICIPATING EMPLOYER. A
PARTICIPATING EMPLOYER RESERVES THE POWER TO WITHDRAW FROM THE PLAN, AS
PROVIDED IN SECTION A.18.18(C)(3), AND TO TERMINATE THE PLAN AND TRUST
AGREEMENT WITH RESPECT TO SUCH PARTICIPATING EMPLOYER, AS PROVIDED IN
SECTION A.18.18(5).
(3) WITHDRAWAL FROM PLAN. SUBJECT TO THE REQUIREMENTS OF ARTICLE
XVII, ANY PARTICIPATING EMPLOYER MAY, AT ANY TIME, WITHDRAW FROM THE PLAN
UPON GIVING THE BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY OF THE
ADOPTING EMPLOYER, THE ADMINISTRATIVE COMMITTEE AND THE TRUSTEE AT LEAST 30
DAYS NOTICE IN WRITING OF ITS INTENTION TO WITHDRAW. UPON THE WITHDRAWAL
OF A PARTICIPATING EMPLOYER PURSUANT TO THIS SECTION A.18.18(C)(3), THE
TRUSTEE SHALL SEGREGATE A PORTION OF THE ASSETS IN THE TRUST AS SET FORTH
BELOW, THE VALUE OF WHICH SHALL EQUAL THE TOTAL AMOUNT CREDITED TO THE
ACCOUNTS OF PARTICIPANTS EMPLOYED BY THE WITHDRAWING PARTICIPATING
EMPLOYER. SUBJECT TO THE REQUIREMENTS OF ARTICLE XVII, THE DETERMINATION
OF WHICH ASSETS ARE TO BE
A-45
<PAGE> 160
SO SEGREGATED SHALL BE MADE BY THE TRUSTEE IN ITS SOLE DISCRETION AS SET
FORTH BELOW.
THE ADMINISTRATIVE COMMITTEE MAY, AT ANY TIME, DIRECT THE TRUSTEE TO
SEGREGATE FROM THE TRUST SUCH PART THEREOF AS THE ADMINISTRATIVE COMMITTEE
SHALL DETERMINE TO BE HELD FOR THE BENEFIT OF THE EMPLOYEES OF A
PARTICIPATING EMPLOYER, AND SHALL GIVE A COPY OF SUCH DIRECTIONS TO THE
ADOPTING EMPLOYER AND EACH PARTICIPATING EMPLOYER. SUCH DIRECTIONS SHALL
SPECIFY THE ASSETS OF THE TRUST TO BE SEGREGATED. UNLESS THE ADOPTING
EMPLOYER OR ANY PARTICIPATING EMPLOYER FILES WITH THE TRUSTEE A WRITTEN
PROTEST WITHIN 30 DAYS AFTER DELIVERY OF SUCH DIRECTIONS TO THE TRUSTEE,
SUCH DIRECTIONS SHALL CONCLUSIVELY ESTABLISH THAT THE ASSETS SPECIFIED
THEREIN REPRESENT THE PART OF THE TRUST HELD FOR THE BENEFIT OF THE
EMPLOYEES OF THE ADOPTING EMPLOYER AND OF EACH PARTICIPATING EMPLOYER.
AFTER THE EXPIRATION OF SUCH 30 DAY PERIOD, AND AFTER SETTLEMENT OF
ANY SUCH PROTEST, THE TRUSTEE SHALL FOLLOW THE ADMINISTRATIVE COMMITTEE'S
DIRECTIONS, INCLUDING ANY MODIFICATION THEREOF ADOPTED IN SETTLEMENT OF ANY
PROTEST. ANY PART OF THE TRUST SEGREGATED PURSUANT TO SUCH DIRECTIONS
SHALL THEREAFTER BE HELD IN A SEPARATE TRUST IDENTICAL IN TERMS TO THE
TRUST HEREBY ESTABLISHED OR MAINTAINED, EXCEPT THAT, WITH RESPECT TO SUCH
SEPARATE TRUST, THIS PLAN AND TRUST AGREEMENT SHALL BE CONSTRUED AS IF SUCH
PARTICIPATING EMPLOYER WERE THE ADOPTING EMPLOYER AND ALL POWERS AND
AUTHORITY CONFERRED UPON THE ADOPTING EMPLOYER OR ITS BOARD OR OTHER
GOVERNING ENTITY AND THE ADMINISTRATIVE COMMITTEE SHALL DEVOLVE UPON SUCH
PARTICIPATING EMPLOYER OR ITS BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY.
AT ANY TIME THEREAFTER, SUCH PARTICIPATING EMPLOYER AND THE TRUSTEE MAY
(BUT THEY SHALL NOT BE REQUIRED TO) ENTER INTO A SEPARATE AGREEMENT STATING
THE TERMS OF SUCH SEPARATE PLAN AND TRUST AGREEMENT WHICH MAY BE THE
DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND
TRUST AGREEMENT. IF THE DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED
CONTRIBUTION PLAN AND TRUST AGREEMENT IS NOT SO ADOPTED, THE PLAN AND TRUST
AGREEMENT WITH RESPECT TO THE WITHDRAWING PARTICIPATING EMPLOYER SHALL BE
CONSIDERED AN INDIVIDUALLY DESIGNED PLAN.
(4) EXCLUSIVE PURPOSE OF TRUST. NEITHER THE SEGREGATION AND TRANSFER
OF THE TRUST ASSETS UPON THE WITHDRAWAL OF A PARTICIPATING EMPLOYER NOR THE
EXECUTION OF A NEW PLAN AND TRUST AGREEMENT BY SUCH WITHDRAWING
PARTICIPATING EMPLOYER SHALL OPERATE TO PERMIT ANY PART OF THE TRUST TO BE
USED FOR, OR DIVERTED TO, PURPOSES OTHER THAN FOR THE EXCLUSIVE BENEFIT OF
THE PARTICIPANTS OR THEIR BENEFICIARIES.
(5) APPLICATION OF WITHDRAWAL PROVISIONS. THE WITHDRAWAL PROVISIONS
CONTAINED IN SECTION A.18.18(C)(3) AND (4) SHALL BE APPLICABLE ONLY IF THE
WITHDRAWING PARTICIPATING EMPLOYER CONTINUES TO COVER ITS PARTICIPANTS AND
ELIGIBLE EMPLOYEES IN ANOTHER PLAN AND TRUST QUALIFIED UNDER SECTIONS 401
AND 501 OF THE CODE. OTHERWISE, THE TERMINATION PROVISIONS OF THE PLAN AND
TRUST AGREEMENT SHALL APPLY WITH RESPECT TO THE WITHDRAWING PARTICIPATING
EMPLOYER.
(6) SINGLE PLAN. NOTWITHSTANDING ANY OTHER PROVISION SET FORTH
HEREIN, THE PLAN, AS ADOPTED PURSUANT TO THIS SECTION A.18.18(C) BY THE
ADOPTING EMPLOYER AND EACH PARTICIPATING EMPLOYER, SHALL CONSTITUTE A
SINGLE PLAN, AS SUCH TERM IS DEFINED IN TREAS. REG. Section
1.414(1)-1(B)(1), AS TO THE ADOPTING EMPLOYER AND EACH PARTICIPATING
EMPLOYER.
(7) QUALIFYING EMPLOYER SECURITIES. FOR PURPOSES OF SECTIONS A.1.72
AND A.6.1(B), AND FOR ALL OTHER PURPOSES OF THE PLAN AND TRUST AGREEMENT,
THE STOCK OF ANY ADOPTING EMPLOYER AND ANY PARTICIPATING EMPLOYER SHALL BE
TREATED AS QUALIFYING EMPLOYER SECURITIES.
(8) ADOPTING EMPLOYER APPOINTED AGENT OF PARTICIPATING EMPLOYERS.
EACH PARTICIPATING EMPLOYER APPOINTS THE BOARD OF DIRECTORS OR OTHER
GOVERNING ENTITY OF THE ADOPTING EMPLOYER AS ITS AGENT TO EXERCISE ON ITS
BEHALF ALL OF THE ADMINISTRATIVE POWER AND AUTHORITY CONFERRED UPON THE
ADOPTING EMPLOYER BY THIS PLAN AND TRUST AGREEMENT, INCLUDING THE POWER TO
AMEND THE ADOPTION AGREEMENT ON ITS BEHALF AND ON BEHALF OF THE ADOPTING
EMPLOYER AND
A-46
<PAGE> 161
EACH OTHER PARTICIPATING EMPLOYER AS SET FORTH IN ARTICLE XV, PROVIDED SUCH
AMENDMENT DOES NOT MATERIALLY AFFECT THE SUBSTANCE OF THE PLAN WITH RESPECT
TO THE ADOPTING EMPLOYER OR ANY PARTICIPATING EMPLOYER OR MATERIALLY AFFECT
THE COST OF THE ADOPTING EMPLOYER OR ANY PARTICIPATING EMPLOYER. THE
AUTHORITY OF THE BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY OF THE
ADOPTING EMPLOYER TO ACT AS AGENT OF ANY PARTICIPATING EMPLOYER, IN
ACCORDANCE WITH SECTIONS A.18.18(C)(2) AND A.18.18(C)(8), SHALL TERMINATE
ONLY IF THE PART OF THE PLAN'S ASSETS HELD FOR THE BENEFIT OF THE EMPLOYEES
OF SUCH PARTICIPATING EMPLOYER SHALL BE SEGREGATED IN A SEPARATE TRUST AS
PROVIDED IN SECTION A.18.18(C)(3) AND SUCH PARTICIPATING EMPLOYER THEREUPON
WITHDRAWS FROM THE PLAN IN ACCORDANCE WITH SECTION A.18.18(C)(3). ANY
MATERIAL AMENDMENT (I.E., ANY AMENDMENT MATERIALLY AFFECTING THE SUBSTANCE
OF THE PLAN WITH RESPECT TO THE ADOPTING EMPLOYER OR ANY PARTICIPATING
EMPLOYER OR MATERIALLY AFFECTING THE COSTS OF THE ADOPTING EMPLOYER OR ANY
PARTICIPATING EMPLOYER CAN ONLY BE ADOPTED BY THE ADOPTING EMPLOYER AND ALL
PARTICIPATING EMPLOYERS. EACH PARTICIPATING EMPLOYER EXCLUSIVELY RESERVES
THE POWER TO TERMINATE THIS PLAN AND/OR THE TRUST AGREEMENT AS SET FORTH IN
ARTICLE XVI WITH RESPECT TO SUCH PARTICIPATING EMPLOYER. THE COMPLETE
TERMINATION OF THE PLAN CAN ONLY BE EFFECTED BY ACTION OF THE ADOPTING
EMPLOYER AND ALL PARTICIPATING EMPLOYERS.
(9) NAME OF ADOPTING EMPLOYER. THE MUNICIPAL FUND FOR TEMPORARY
INVESTMENT IS THE ADOPTING EMPLOYER.
(10) PARTICIPATING EMPLOYERS. THE NAMES AND PERTINENT DATA FOR THE
PARTICIPATING EMPLOYERS ARE AS FOLLOWS:
(A) CHESTNUT STREET EXCHANGE FUND:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0199471
TAXABLE YEAR: JANUARY 1 - DECEMBER 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: PARTNERSHIP
PLACE OF ORGANIZATION: CALIFORNIA
(B) INDEPENDENCE SQUARE INCOME SECURITIES, INC.:
ADDRESS: ONE ALDWYN CENTER
VILLANOVA, PA 19085
EMPLOYER IDENTIFICATION NUMBER:23-1861553
TAXABLE YEAR: JANUARY 1 - DECEMBER 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(C) TEMPORARY INVESTMENT FUND, INC.:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:52-0983343
A-47
<PAGE> 162
TAXABLE YEAR: OCTOBER 1 - SEPTEMBER 30
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(D) TRUST FOR FEDERAL SECURITIES:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:52-1036683
TAXABLE YEAR: NOVEMBER 1 - OCTOBER 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: BUSINESS TRUST
PLACE OF ORGANIZATION: PENNSYLVANIA
(E) MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0266273
TAXABLE YEAR: FEBRUARY 1 - JANUARY 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(F) MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0270312
TAXABLE YEAR: AUGUST 1 - JULY 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(G) PORTFOLIOS FOR DIVERSIFIED INVESTMENT:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0300345
TAXABLE YEAR: JULY 1 - JUNE 30
A-48
<PAGE> 163
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: BUSINESS TRUST
PLACE OF ORGANIZATION: MASSACHUSETTS
(H) THE PNC(R) FUND:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0318674
TAXABLE YEAR: OCTOBER 1 - SEPTEMBER 30
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: BUSINESS TRUST
PLACE OF ORGANIZATION: MASSACHUSETTS
(I) THE RBB FUND, INC.:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0312196
TAXABLE YEAR: SEPTEMBER 1 - AUGUST 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(J) PROVIDENT INSTITUTIONAL FUNDS, INC. (EFFECTIVE FEBRUARY
16, 1995):
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:41-1769812
TAXABLE YEAR: JANUARY 1 - DECEMBER 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND ]
A.19.1 ADOPTION OF PLAN AND TRUST BY AFFILIATED EMPLOYERS. Shall
Article XIX of the Plan apply (check one)?
[ ] (A) Yes [ ] (B) No
[ X ] (C) N/A (No Affiliated Employers adopting Plan)
A-49
<PAGE> 164
If Section A.19.1(A) is checked, fill in the following blanks:
Name of Adopting Employer: [ ]
Name(s), Address(es), Type of Entity and Tax Identification
Number(s) of Adopting Affiliated Employer(s):[
]
The adopting Employer and each adopting Affiliated Employer must adopt the Plan
and execute the Adoption Agreement upon the initial adoption by an adopting
Affiliated Employer of the Plan. Thereafter the adopting Affiliated Employer,
pursuant to Article XIX of the Plan, authorizes the adopting Employer to take
all further action including, but not limited to, the amendment and/or
termination of the Plan, on behalf of the adopting Affiliated Employer under
the Plan (unless such adopting Affiliated Employer withdraws from the Plan
pursuant to Article XIX of the Plan) and such adopting Affiliated Employer need
not be a party to this Adoption Agreement with respect to any such subsequent
action relating to the Plan and Trust Agreement and/or Adoption Agreement.
THE ADOPTING EMPLOYER OR ADOPTING AFFILIATED EMPLOYER MAY NOT RELY ON THE
NOTIFICATION LETTER ISSUED BY THE NATIONAL OR DISTRICT DIRECTOR OF THE INTERNAL
REVENUE SERVICE AS EVIDENCE THAT THE PLAN IS QUALIFIED UNDER SECTION 401 OF THE
INTERNAL REVENUE CODE. IN ORDER TO OBTAIN RELIANCE WITH RESPECT TO PLAN
QUALIFICATION, THE ADOPTING EMPLOYER AND/OR ADOPTING AFFILIATED EMPLOYER MUST
APPLY TO THE APPROPRIATE KEY DISTRICT OFFICE FOR A DETERMINATION LETTER.
Executed at [WILMINGTON ], [ DELAWARE ], on this the [ 28th ]
day of [ March ], 19[95].
<TABLE>
<S> <C>
ADOPTING EMPLOYER:
ATTEST: MUNICIPAL FUND FOR TEMPORARY
INVESTMENT
---------------------------------
[SEAL] NAME OF ADOPTING EMPLOYER
/s/ MORGAN R. JONES By: /s/ G. WILLING PEPPER
- ----------------------------------- ------------------------------
Morgan R. Jones, Secretary G. Willing Pepper, President
PARTICIPATING EMPLOYERS:
ATTEST: CHESTNUT STREET EXCHANGE FUND
---------------------------------
Name of Participating Employer
[SEAL]
/s/ MORGAN R. JONES By: /s/ ROBERT R. FORTUNE
- ----------------------------------- ---------------------------------
Morgan R. Jones, Secretary Robert R. Fortune, President
ATTEST: INDEPENDENCE SQUARE INCOME
SECURITIES, INC.
---------------------------------
[SEAL] Name of Participating Employer
/s/ GARY M. GARDNER By: /s/ ROBERT R. FORTUNE
- ----------------------------------- ---------------------------------
Gary M. Gardner, Secretary Robert R. Fortune, President
ATTEST: TEMPORARY INVESTMENT FUND, INC.
---------------------------------
Name of Participating Employer
[SEAL]
/s/ W. BRUCE McCONNEL By: /s/ G. WILLING PEPPER
- ---------------------------------- ---------------------------------
W. Bruce McConnel, III, Secretary G. Willing Pepper, President
</TABLE>
A-50
<PAGE> 165
<TABLE>
<S> <C>
ATTEST: TRUST FOR FEDERAL SECURITIES
---------------------------------
Name of Participating Employer
[SEAL]
/s/ W. BRUCE McCONNEL By: /s/ G. WILLING PEPPER
- ---------------------------------- ---------------------------------
W. Bruce McConnel, III, Secretary G. Willing Pepper, President
ATTEST: MUNICIPAL FUND FOR CALIFORNIA
INVESTORS, INC.
---------------------------------
[SEAL] Name of Participating Employer
/s/ MORGAN R. JONES By: /s/ G. WILLING PEPPER
- ---------------------------------- ----------------------------------
Morgan R. Jones, Secretary G. Willing Pepper, President
ATTEST: MUNICIPAL FUND FOR NEW YORK
INVESTORS, INC.
---------------------------------
[SEAL] Name of Participating Employer
/s/ MORGAN R. JONES By: /s/ EDWARD J. ROACH
- ---------------------------------- ---------------------------------
Morgan R. Jones, Secretary Edward J. Roach, Vice President
ATTEST: PORTFOLIOS FOR DIVERSIFIED
INVESTMENT
---------------------------------
[SEAL] Name of Participating Employer
/s/ W. BRUCE McCONNEL By: /s/ G. WILLING PEPPER
- --------------------------------- ---------------------------------
W. Bruce McConnel, III, Secretary G. Willing Pepper, President
ATTEST: THE PNC(R) FUND
-----------------------------------
Name of Participating Employer
[SEAL]
/s/ MORGAN R. JONES By: /s/ G. WILLING PEPPER
- --------------------------------- ---------------------------------
Morgan R. Jones, Secretary G. Willing Pepper, President
ATTEST: THE RBB FUND, INC.
---------------------------------
Name of Participating Employer
[SEAL]
/s/ MORGAN R. JONES By: /s/ EDWARD J. ROACH
- --------------------------------- ---------------------------------
Morgan R. Jones, Secretary Edward J. Roach, President
ATTEST: PROVIDENT INSTITUTIONAL FUNDS, INC.
-----------------------------------
[SEAL] Name of Participating Employer
/s/ W. BRUCE McCONNEL By: /s/ G. WILLING PEPPER
- --------------------------------- ---------------------------------
W. Bruce McConnel, III, Secretary G. Willing Pepper, President
</TABLE>
The undersigned hereby agree(s) to serve as the Trustee(s) under the Plan and
Trust Agreement.
<TABLE>
<S> <C>
EDWARD J. ROACH ROBERT R. FORTUNE
- --------------------------------- ---------------------------------
Name of Trustee Name of Trustee
/s/ ANTHONY M. SANTOMERO /s/ ROBERT R. FORTUNE
- --------------------------------- -----------------------------
Witness Signature
/s/ LINDA G. HAGAN /s/ EDWARD J. ROACH
- --------------------------------- -----------------------------
Witness Signature
</TABLE>
A-51
<PAGE> 1
EXHIBIT (8)(a)
CUSTODIAN AGREEMENT
THIS AGREEMENT is made as of October 4, 1989 by and between
THE PNC(R) FUND, a Massachusetts business trust (the "Fund"), and PROVIDENT
NATIONAL BANK, a national banking association ("Bank").
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Fund desires to retain Bank to serve as the
Fund's custodian and Bank is willing to serve as the Fund's custodian;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints Bank to act as
custodian of the securities, cash and other property belonging to each
investment portfolio (a "portfolio") of the Fund for the period and on the
terms set forth in this Agreement. Bank accepts such appointment and agrees to
furnish the services herein set forth in return for the compensation as
provided in Paragraph 21 of this Agreement. Bank agrees to comply with all
relevant provisions of the 1940 Act and applicable rules and regulations
thereunder. The Fund's shares, $.001 par value per share (the "Shares"), have
been classified into seven different classes, i.e., Classes A-1, B-1, C-1, D,
E, F and G. The Fund may from time to time issue additional classes of Shares
or classify and reclassify shares of each such class. Bank shall identify to
each such class property belonging to such class and in such reports,
confirmations and notices to the Fund called for under this Agreement shall
identify the class to which such report, confirmation or notice pertains.
2. Delivery of Documents. The Fund has furnished Bank
with copies, properly certified or authenticated, of each of the following:
(a) Resolutions of the Fund's Board of Trustees
authorizing the appointment of Bank as custodian of the portfolio securities,
cash and other property belonging to the Fund and approving this Agreement;
<PAGE> 2
(b) Appendix A identifying and containing the
signatures of the Fund's officers and/or other persons authorized to issue Oral
Instructions and to sign Written Instructions, as hereinafter defined, on
behalf of the Fund;
(c) The Fund's Declaration of Trust as filed with
the State Secretary of the Commonwealth of Massachusetts and the Boston City
Clerk on December 22, 1988;
(d) The Fund's Code of Regulations;
(e) The Investment Advisory Agreement between
Provident Institutional Management Corporation ("Adviser") and the Fund (the
"Advisory Agreement");
(f) The Sub-Advisory Agreements between Adviser
and Provident National Bank (relating to the Money Market and Government Money
Market Portfolios and the Total Return Portfolio), Adviser and The Central
Trust Company, N.A. (relating to the Tax-Free Money Market, Capital
Appreciation and Managed Income Portfolios) and Adviser and Provident Capital
Management, Inc. (relating to the International Portfolio);
(g) The Administration Agreement between The
Boston Company Advisors, Inc. and the Fund (the "Administration Agreement");
(h) The Administration and Accounting Services
Agreement between Provident Financial Processing Corporation ("PFPC") and the
Fund (collectively with the Administration Agreement, the "Administration
Agreements");
(i) The Distribution Agreement between TBC Funds
Distributor, Inc. and the Fund;
(j) The Transfer Agency Agreement between PFPC
(in its capacity as transfer agent, the "Transfer Agent") and the Fund (the
"Transfer Agency Agreement");
(k) The Fund's Notification of Registration on
Form N-8A under the 1940 Act as filed with the Securities and Exchange
Commission ("SEC") on December 23, 1988;
(l) The Fund's Registration Statement on Form
N-1A (the "Registration Statement") under the Securities Act of 1933 (the "1933
Act") and the 1940 Act, as filed with the SEC on December 23, 1988, and all
amendments thereto;
(m) The Fund's non-12b-1 Shareholder Services
Plan and the Fund's form of shareholder servicing agreement;
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(n) The Fund's 12b-1 Plan and the Fund's form of
dealer agreement and shareholder servicing agreement;
(o) The Fund's most recent Prospectuses and
Statements of Additional Information and all amendments and supplements thereto
(collectively, the "Prospectuses"); and
(p) Before any portfolio engages in any
transactions regulated by the Commodity Futures Trading Commission ("CFTC"), a
copy of either (i) a filed notice of eligibility to claim the exclusion from
the definition of "commodity pool operator" contained in Section 2(a)(1)(A) of
the Commodity Exchange Act ("CEA") that is provided in Rule 4.5 under the CEA,
together with all supplements as are required by the CFTC, or (ii) a letter
which has been granted the Fund by the CFTC which states that the Fund will not
be treated as a "pool" as defined in Section 4.10(d) of the CFTC's General
Regulations, or (iii) a letter which has been granted the Fund by the CFTC
which states that the CFTC will not take any enforcement action if the Fund
does not register as a "commodity pool operator."
The Fund will furnish Bank from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
3. Definitions.
(a) "Authorized Person." As used in this
Agreement, the term "Authorized Person" means any of the officers of the Fund
and any other person, whether or not any such person is an officer or employee
of the Fund, duly authorized by the Board of Trustees of the Fund to give Oral
and Written Instructions on behalf of the Fund and listed on the Certificate
annexed hereto as Appendix A or any amendment thereto as may be received by
Bank from time to time.
(b) "Book-Entry System." As used in this
Agreement, the term "Book-Entry System" means the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its
successor or successors and its nominee or nominees and any book-entry system
maintained by a clearing agency registered with the SEC under Section 17A of
the Securities Exchange Act of 1934 (the "1934 Act").
(c) "Oral Instructions." As used in this
Agreement, the term "Oral Instructions" means oral instructions actually
received by Bank from an Authorized Person or from a person reasonably believed
by Bank to be an Authorized Person. The Fund agrees to deliver to Bank, at the
time and in the manner
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specified in Paragraph 8(b) of this Agreement, Written Instructions confirming
Oral Instructions.
(d) "Property." The term "Property," as used in
this Agreement, means:
(i) any and all securities and other
property which the Fund may from time to time deposit, or cause to be
deposited, with Bank or which Bank may from time to time hold for the
Fund;
(ii) all income in respect of any of such
securities or other property;
(iii) all proceeds of the sale of any of
such securities or other property; and
(iv) all proceeds of the sale of securities
issued by the Fund, which are received by Bank from time to time from
or on behalf of the Fund.
(e) "Written Instructions." As used in this
Agreement, the term "Written Instructions" means written instructions delivered
by hand, mail, tested telegram, cable, telex or facsimile sending device, and
received by Bank and signed by an Authorized Person.
4. Delivery and Registration of the Property. The Fund
will deliver or cause to be delivered to Bank all securities and all moneys
owned by it, including cash received for the issuance of its Shares, at any
time during the period of this Agreement. Bank will not be responsible for
such securities and such moneys until actually received by it. All securities
delivered to Bank (other than in bearer form) shall be registered in the name
of the Fund or in the name of a nominee of the Fund or in the name of any
nominee of Bank (with or without indication of fiduciary status), or in the
name of any sub-custodian or any nominee of any such sub-custodian appointed
pursuant to Paragraph 6 hereof or shall be properly endorsed and in form for
transfer satisfactory to Bank.
5. Receipt and Disbursement of Money.
(a) Bank shall open and maintain a separate
custodial account or accounts in the name of each portfolio of the Fund,
subject only to draft or order by Bank acting pursuant to the terms of this
Agreement, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of such
portfolios. Bank shall make payments of cash to, or for the account of, each
portfolio of the Fund from such cash only (i) for the purchase of securities
for
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the Fund's portfolios as provided in Paragraph 13 hereof; (ii) upon receipt of
Written Instructions, for the payment of interest, dividends, taxes,
administration, accounting, distribution, advisory or management fees or
expenses which are to be borne by the Fund under the terms of this Agreement,
the Advisory Agreement, the Administration Agreements, the Transfer Agency
Agreement and the Distribution and Service Plan; (iii) upon receipt of Written
Instructions, for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Fund and held by or to be
delivered to Bank; (iv) to a sub-custodian pursuant to Paragraph 6 hereof; (v)
for the redemption of Shares; (vi) for payment of the amount of dividends
received in respect of securities sold short; or (vii) upon receipt of Written
Instructions, for other proper Fund purposes. No payment pursuant to (i) above
shall be made unless Bank has received a copy of the broker's or dealer's
confirmation or the payee's invoice, as appropriate.
(b) Bank is hereby authorized to endorse and
collect all checks, drafts, negotiable instruments or other orders for the
payment of money received as custodian for the account of the Fund.
6. Receipt of Securities.
(a) Except as provided by Paragraph 7 hereof,
Bank shall hold and physically segregate in separate accounts, identifiable at
all times from those of any other persons, firms, or corporations, all
securities and non-cash property received by it for the account of each
portfolio of the Fund. All such securities and non-cash property are to be
held or disposed of by Bank for each portfolio of the Fund pursuant to the
terms of this Agreement. In the absence of Written Instructions accompanied by
a certified resolution of the Fund's Board of Trustees authorizing the
transaction, Bank shall have no power or authority to withdraw, deliver,
assign, hypothecate, pledge or otherwise dispose of any such securities and
investments except in accordance with the express terms provided for in this
Agreement. In no case may any trustee, officer, employee or agent of the Fund
withdraw any securities. In connection with its duties under this Paragraph 6,
Bank may, at its own expense, enter into sub- custodian agreements with other
banks or trust companies for the receipt of certain securities and cash to be
held by Bank for the account of the Fund pursuant to this Agreement; provided
that each such bank or trust company has an aggregate capital, surplus and
undivided profits, as shown by its last published report, of not less than one
million dollars ($1,000,000) for a Bank subsidiary or affiliate, or of not less
than twenty million dollars ($20,000,000) if such bank or trust company is not
a Bank subsidiary or affiliate and that in either case such bank or trust
company agrees with Bank to comply with
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<PAGE> 6
all relevant provisions of the 1940 Act and applicable rules and regulations
thereunder. Bank shall remain responsible for the performance of all of its
duties under this Agreement and shall hold the Fund harmless from the acts and
omissions, under the standards of care provided for herein, of any bank or
trust company that it might choose pursuant to this Paragraph 6 except to the
extent that the Fund has entered into a separate sub-custody agreement with
respect to the custody of any foreign securities owned by the Fund.
(b) Where securities are transferred to an
account of the Fund established pursuant to Paragraph 7 hereof, Bank shall also
by book-entry or otherwise identify as belonging to the applicable portfolio of
Fund the quantity of securities in a fungible bulk of securities registered in
the name of Bank (or its nominee) or shown in Bank's account on the books of
the Book-Entry System. At least monthly and from time to time, Bank shall
furnish the Fund with a detailed statement of the Property held for each
portfolio of the Fund under this Agreement.
7. Use of Book-Entry System. The Fund shall deliver to
Bank certified resolutions of the Board of Trustees of the Fund approving,
authorizing and instructing Bank on a continuous and on-going basis until
instructed to the contrary by Oral or Written Instructions actually received by
Bank (a) to deposit in the Book-Entry System all securities belonging to each
portfolio of the Fund eligible for deposit therein and (b) to utilize the
Book-Entry System to the extent possible in connection with settlements of
purchases and sales of securities by each portfolio of the Fund, and deliveries
and returns of securities loaned, subject to repurchase agreements or used as
collateral in connection with borrowings. Without limiting the generality of
such use, it is agreed that the following provisions shall apply thereto:
(a) Securities and any cash of a portfolio of the
Fund deposited in the Book-Entry System will at all times be segregated from
any assets and cash controlled by Bank in other than a fiduciary or custodian
capacity but may be commingled with other assets held in such capacities. Bank
and its sub-custodian, if any, will pay out money only upon receipt of
securities and will deliver securities only upon the receipt of money.
(b) All books and records maintained by Bank
which relate to the Fund's participation in the Book- Entry System will at all
times during Bank's regular business hours be open to the inspection of the
Fund's duly authorized employees or agents, and the Fund will be furnished with
all information in respect of the services rendered to it as it may require.
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<PAGE> 7
(c) Bank will provide the Fund with copies of any
report obtained by Bank on the system of internal accounting control of the
Book-Entry System promptly after receipt of such a report by Bank. Bank will
also provide the Fund with such reports on its own system of internal control
as the Fund may reasonably request from time to time.
8. Instructions Consistent with Declaration of Trust and
Code of Regulations.
(a) Unless otherwise provided in this Agreement,
Bank shall act only upon Oral and Written Instructions. Although Bank may know
of the provisions of the Declaration of Trust and Code of Regulations
(collectively, the "Organization Documents") of the Fund, Bank may assume that
any Oral or Written Instructions received hereunder are not in any way
inconsistent with any provisions of the Organization Documents or any vote,
resolution or proceeding of the Fund's shareholders (the "Shareholders"), or of
the Board of Trustees, or of any committee thereof.
(b) Bank shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received by Bank pursuant to
this Agreement. The Fund agrees to forward to Bank Written Instructions
confirming Oral Instructions in such manner that the Written Instructions are
received by Bank by the close of business of the same day that such Oral
Instructions are given to Bank. The Fund agrees that the fact that such
confirming Written Instructions are not received by Bank shall in no way affect
the validity of the transactions or enforceability of the transactions
authorized by the Fund by giving Oral Instructions. The Fund agrees that Bank
shall incur no liability to the Fund in acting upon Oral Instructions given to
Bank hereunder concerning such transactions provided such instructions
reasonably appear to have been received from an Authorized Person.
9. Transactions Not Requiring Instructions. In the
absence of contrary Written Instructions, Bank is authorized to take the
following actions:
(a) Collection of Income and Other Payments.
Bank shall:
(i) collect and receive for the account of
each portfolio of the Fund, all income and other payments and
distributions, including (without limitation) stock dividends, rights,
bond coupons, option premiums and similar items, included or to be
included in the Property, and promptly advise the Fund of such receipt
and shall credit
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<PAGE> 8
such income, as collected, to the applicable portfolio's custodian
account;
(ii) endorse and deposit for collection, in
the name of the applicable portfolio of the Fund, checks, drafts,
negotiable instruments, or other orders for the payment of money on
the same day as received;
(iii) receive and hold for the account of
each portfolio of the Fund all securities received as a distribution
on the portfolio's securities as a result of a stock dividend, share
split-up or reorganization, recapitalization, readjustment or other
rearrangement or distribution of rights or similar securities issued
with respect to any securities belonging to the portfolio held by Bank
hereunder;
(iv) present for payment and collect the
amount payable upon all securities which may mature or be called,
redeemed, or retired, or otherwise become payable on the date such
securities become payable; and
(v) take any action which may be necessary
and proper in connection with the collection and receipt of such
income and other payments and the endorsement for collection of
checks, drafts, and other negotiable instruments as described in
Paragraph 24 of this Agreement.
(b) Miscellaneous Transactions. Bank is
authorized to deliver or cause to be delivered Property against payment or
other consideration or written receipt therefor in the following cases:
(i) for examination by a broker selling
for the account of a portfolio of the Fund in accordance with street
delivery custom;
(ii) for the exchange of interim receipts
or temporary securities for definitive securities; and
(iii) for transfer of securities into the
name of a portfolio of the Fund or Bank or nominee of either, or for
exchange of securities for a different number of bonds, certificates,
or other evidence, representing the same aggregate face amount or
number of units bearing the same interest rate, maturity date and call
provisions, if any; provided that, in any such case, the new
securities are to be delivered to Bank.
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<PAGE> 9
10. Transactions Requiring Instructions. Upon receipt of
Oral or Written Instructions and not otherwise, Bank, directly or through the
use of the Book-Entry System, shall:
(a) execute and deliver to such persons as may be
designated in such Oral or Written Instructions, proxies, consents,
authorizations, and any other instruments whereby the authority of the
Fund as owner of any securities on behalf of a portfolio may be
exercised;
(b) deliver any securities held for a portfolio
of the Fund against receipt of other securities or cash issued or paid
in connection with the liquidation, reorganization, refinancing,
tender offer, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) deliver any securities held for a portfolio
of the Fund 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 under the terms of this Agreement
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 a portfolio of the Fund and take such other steps as shall
be stated in said Oral or Written Instructions to be for the purpose
of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Fund;
(e) release securities belonging to a portfolio
of the Fund to any bank or trust company for the purpose of pledge or
hypothecation to secure any loan incurred by a portfolio of the Fund;
provided, however, that securities shall be released only upon payment
to Bank of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, subject to
proper prior authorization, further securities may be released for
that purpose; and repay such loan upon redelivery to it of the
securities pledged or hypothecated therefor and upon surrender of the
note or notes evidencing the loan;
(f) release and deliver securities owned by a
portfolio of the Fund in connection with any repurchase agreement
entered into on behalf of a portfolio of the Fund, but only on receipt
of payment therefor; and pay out moneys
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of a portfolio of the Fund in connection with such repurchase
agreements, but only upon the delivery of the securities; and
(g) otherwise transfer, exchange or deliver
securities in accordance with Oral or Written Instructions.
11. Segregated Accounts.
(a) Bank shall upon receipt of Written or Oral
Instructions establish and maintain a segregated account or accounts on its
records for and on behalf of each portfolio of the Fund, into which account or
accounts may be transferred cash and/or securities, including securities in the
Book-Entry System (i) for the purposes of compliance by the Fund with the
procedures required by a securities or option exchange, providing such
procedures comply with the 1940 Act and Release No. 10666 or any subsequent
release or releases of the SEC relating to the maintenance of segregated
accounts by registered investment companies, and (ii) for other proper
corporate purposes, but only, in the case of clause (ii), upon receipt of
Written Instructions.
(b) Bank may enter into separate custodial
agreements with various futures commission merchants ("FCMs") that the Fund
uses (each an "FCM Agreement"), pursuant to which the Fund's margin deposits in
any transactions involving futures contracts and options on futures contracts
will be held by Bank in accounts (each an "FCM Account") subject to the
disposition by the FCM involved in such contracts in accordance with the
customer contract between FCM and the Fund ("FCM Contract"), SEC rules
governing such segregated accounts, CFTC rules and the rules of the applicable
commodities exchange. Such FCM Agreements shall only be entered into upon
receipt of Written Instructions from the Fund which state that (i) a customer
agreement between the FCM and the Fund has been entered into; and (ii) the Fund
is in compliance with all the rules and regulations of the CFTC. Transfers of
initial margin shall be made into an FCM Account only upon Written
Instructions; transfers of premium and variation margin may be made into an FCM
Account pursuant to Oral Instructions. Transfers of funds from an FCM Account
to the FCM for which Bank holds such an account may only occur upon
certification by the FCM to Bank that pursuant to the FCM Agreement and the FCM
Contract, all conditions precedent to its right to give Bank such instruction
have been satisfied.
12. Dividends and Distributions. The Fund shall furnish
Bank with appropriate evidence of action by the Fund's Board of Trustees
declaring and authorizing the payment of any dividends and distributions. With
respect to each portfolio of the Fund, upon receipt by Bank of Written
Instructions with
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<PAGE> 11
respect to dividends and distributions declared by the Fund's Board of Trustees
and payable to Shareholders who have elected in the proper manner to receive
their distributions or dividends in cash, and in conformance with procedures
mutually agreed upon by Bank, the Fund, and the Transfer Agent, Bank shall pay
to the Transfer Agent, as agent for the Shareholders, an amount equal to the
amount indicated in said Written Instructions as payable by each portfolio of
the Fund to such Shareholders for distribution in cash by the Transfer Agent to
such Shareholders. In lieu of paying the Transfer Agent cash dividends and
distributions, Bank may arrange for the direct payment of cash dividends and
distributions to Shareholders by Bank in accordance with such procedures and
controls as are mutually agreed upon from time to time by and among the Fund,
Bank and the Transfer Agent.
In accordance with the applicable Prospectus, the Internal
Revenue Code and regulations promulgated thereunder, and with such procedures
and controls as are mutually agreed upon from time to time by and among the
Fund, Bank and the Transfer Agent, Bank shall arrange for the establishment of
IRA custodian accounts for such Shareholders holding Shares through IRA
accounts.
13. Purchases of Securities. Promptly after each
decision to purchase securities by the Adviser, the Fund, through the Adviser,
shall deliver to Bank Oral Instructions specifying with respect to each such
purchase: (a) the name of the issuer (including CUSIP number, if assigned) and
the title of the securities, (b) the number of shares or the principal amount
purchased and accrued interest, if any, (c) the date of purchase and date and
location of settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, (f) the name of the person from whom or the broker
through whom the purchase was made, and (g) the portfolio of the Fund to which
such purchase applies. Bank shall upon receipt of (a) securities purchased by
or for a portfolio of the Fund or (b) a copy of the broker's or dealer's
confirmation or the payee's invoice, as appropriate, pay out of the moneys held
for the account of such portfolio of the Fund the total amount payable to the
person from whom or the broker through whom the purchase was made, provided
that the same conforms to the total amount payable as set forth in such Oral
Instructions.
14. Sales of Securities. Promptly after each decision to
sell securities by the Adviser or exercise of an option written by the Fund,
the Fund, through the Adviser, shall deliver to Bank Oral Instructions,
specifying with respect to each such sale: (a) the name of the issuer
(including CUSIP number, if assigned) and the title of the security, (b) the
number of shares or principal amount sold, and accrued interest, if any, (c)
the date of sale and date and location of settlement, (d) the sale
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<PAGE> 12
price per unit, (e) the total amount payable to the Fund upon such sale, (f)
the name of the broker through whom or the person to whom the sale was made,
and (g) the portfolio of the Fund to which such sale applies. Bank shall
deliver the securities upon receipt of the total amount payable to the Fund
upon such sale in accordance with the customs prevailing among dealers in
securities.
15. Records. The books and records pertaining to the
Fund which are in the possession of Bank shall be the property of the Fund.
Such books and records shall be prepared and maintained as required by the 1940
Act and other applicable securities laws and regulations and shall, to the
extent practicable, be maintained separately for each portfolio of the Fund.
The Fund, or the Fund's authorized representatives, shall have access to such
books and records at all times during Bank's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and records shall be
provided by Bank to the Fund or the Fund's authorized representative at the
Fund's expense.
16. Reports.
(a) Bank shall furnish the Fund the following
reports:
(1) such periodic and special reports as
the Fund may reasonably request;
(2) a monthly statement summarizing all
transactions and entries for the account of each portfolio of
the Fund, listing the portfolio securities belonging to each
portfolio of the Fund with the adjusted average cost of each
issue and the market value at the end of such month, and
stating the cash account of each portfolio of the Fund
including disbursements;
(3) the reports to be furnished to the
Fund pursuant to Rule 17f-4; and
(4) such other information as may be
agreed upon from time to time between the Fund and Bank.
(b) Bank shall transmit promptly to the Fund any
proxy statement, proxy materials, notice of a call or conversion or similar
communications received by it as Custodian of the Property.
17. Cooperation with Accountants. Bank shall cooperate
with the Fund's independent public accountants and
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<PAGE> 13
shall take all reasonable action in the performance of its obligations under
this Agreement to assure that the necessary information is made available to
such accountants for the expression of their opinion, as such may be required
from time to time by the Fund.
18. Confidentiality. Bank agrees on behalf of itself and
its employees to treat confidentially all records and other information
relative to the Fund, any portfolio of the Fund and the Fund's prior, current,
or potential Shareholders, except, after prior notification to and approval in
writing by the Fund, which approval shall not be unreasonably withheld and may
not be withheld where Bank 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 Fund.
19. Right to Receive Advice.
(a) Advice of Fund. If Bank shall be in doubt as
to any action to be taken or omitted by it, it may request, and shall receive,
from the Fund directions or advice, including Oral or Written Instructions
where appropriate.
(b) Advice of Counsel. If Bank shall be in doubt
as to any question of law involved in any action to be taken or omitted by
Bank, it may request advice at its own cost from counsel of its own choosing
(who may be counsel for the Adviser, the Fund or Bank, at the option of Bank).
(c) Conflicting Advice. In case of conflict
between directions, advice or Oral or Written Instructions received by Bank
pursuant to subparagraph (a) of this Paragraph and advice received by Bank
pursuant to subparagraph (b) of this Paragraph, Bank shall be entitled to rely
on and follow the advice received pursuant to the latter provision alone.
(d) Protection of Bank. Bank shall be protected
in any action or inaction which it takes in reliance on any directions, advice
or Oral or Written Instructions received pursuant to subparagraphs (a) or (b)
of this Paragraph which Bank, after receipt of any such directions, advice or
Oral or Written Instructions, in good faith believes to be consistent with such
directions, advice or Oral or Written Instructions, as the case may be.
However, nothing in this Paragraph shall be construed as imposing upon Bank any
obligation (i) to seek such directions, advice or Oral or Written Instructions,
or (ii) to act in accordance with such directions, advice or Oral or Written
Instructions when received, unless, under the terms of another provision of
this Agreement, the same is a condition to Bank's properly taking or omitting
to take such action. Nothing in this
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<PAGE> 14
subparagraph shall excuse Bank when an action or omission on the part of Bank
constitutes willful misfeasance, bad faith, negligence or reckless disregard by
Bank of any duties or obligations under this Agreement.
20. Compliance with Governmental Rules and Regulations.
Bank assumes no responsibility for ensuring that the Fund complies with all
applicable requirements of the 1933 Act, the 1934 Act, the 1940 Act, the CEA,
and any laws, rules and regulations of governmental authorities having
jurisdiction.
21. Compensation. (a) As compensation for the services
rendered by Bank during the term of this Agreement, the Fund will pay to Bank,
with respect to each portfolio of the Fund, monthly fees that shall be agreed
upon from time to time in writing by Bank and the Fund. The fee attributable
to each portfolio of the Fund shall be the several (and not joint or joint and
several) obligation of each such portfolio.
(b) Notwithstanding anything to the contrary in
Paragraph 6 of this Agreement, in connection with any foreign custody
arrangements entered into by the Fund, or by the Bank on behalf of the Fund,
the Fund shall pay each foreign sub- custodian appointed pursuant to any such
arrangement fees and expenses according to the schedule approved from time to
time by the Board of Trustees of the Fund. The fees and expenses so payable
shall be in addition to any fees and expense reimbursements payable by the Fund
to the Bank pursuant to this Paragraph.
22. Indemnification. The Fund, on behalf of each
portfolio of the Fund, agrees that each portfolio of the Fund shall indemnify
and hold harmless the Bank and its nominees from all taxes, charges, expenses,
assessments, claims and liabilities (including, without limitation, liabilities
arising under the 1933 Act, the 1934 Act, the 1940 Act, the CEA and any state
and foreign securities and blue sky laws, all as or to be amended from time to
time) and expenses, including attorneys' fees and disbursements (as long as
such attorney has been retained with the consent of the Fund, which consent
shall not be unreasonably withheld), arising directly or indirectly from any
action or thing which the Bank or its nominees takes or does or omits to take
or do for a portfolio of the Fund at the request or on the direction of or in
reliance on the advice of the Fund, provided, that neither the Bank nor any of
its nominees shall be indemnified against any liability to the Fund, any
portfolio of the Fund or to the Shareholders (or any expenses incident to such
liability) arising out of the Bank's or any of its nominees' willful
misfeasance, bad faith, negligence or reckless disregard of its duties and
obligations under this Agreement. In the event of any advance of cash for any
purpose made by the Bank resulting from Oral or Written Instructions of the
Fund or in the event
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<PAGE> 15
that the Bank or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Agreement, except such as may arise from it or its nominee's own
negligent action, negligent failure to act or willful misconduct, any Property
at any time held for the account of the Fund shall be security therefor. The
obligations of each portfolio of the Fund under this Paragraph 22 shall be the
several (and not joint or joint and several) obligation of each portfolio of
the Fund.
23. Responsibility of Bank. Bank shall be under no duty
to take any action on behalf of the Fund except as specifically set forth
herein or as may be specifically agreed to by Bank in writing. In the
performance of its duties hereunder, Bank shall be obligated to exercise care
and diligence and to act in good faith and to use its best efforts within
reasonable limits to ensure the accuracy and completeness of all services
performed under this Agreement. Bank shall be responsible for its own
negligent failure to perform its duties under this Agreement, but to the extent
that duties, obligations and responsibilities are not expressly set forth in
this Agreement, Bank shall not be liable for any act or omission which does not
constitute willful misfeasance, bad faith or gross negligence on the part of
Bank or reckless disregard of such duties, obligations and responsibilities.
Without limiting the generality of the foregoing or of any other provision of
this Agreement, Bank in connection with its duties under this Agreement shall
not be under any duty or obligation to inquire into and shall not be liable for
or in respect of (a) the validity or invalidity or authority or lack thereof of
any Oral or Written Instruction, notice or other instrument which conforms to
the applicable requirements of this Agreement, if any, and which Bank
reasonably believes to be genuine; (b) the validity or invalidity of the
issuance of any securities included or to be included in the Property, the
legality or illegality of the purchase of such securities, or the propriety or
impropriety of the amount paid therefor; (c) the legality or illegality of the
sale (or exchange) of any Property or the propriety or impropriety of the
amount for which such Property is sold (or exchanged); or (d) delays or errors
or loss of data occurring by reason of circumstances beyond Bank's control,
including acts of civil or military authority, national emergencies, labor
difficulties, fire, mechanical breakdown, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply, nor shall Bank be under any duty or obligation to ascertain
whether any Property at any time delivered to or held by Bank may properly be
held by or for the Fund. Notwithstanding the foregoing, the Bank shall use its
best efforts to mitigate the effects of the events enumerated in (d) of this
Paragraph, although such efforts shall not impute any liability thereto. Bank
expressly disclaims all
-15-
<PAGE> 16
responsibility for consequential damages, including but not limited to any that
may result from performance or non-performance of any duty or obligation
whether express or implied in this Agreement and also expressly disclaims any
express or implied warranty of products or services provided in connection with
this Agreement.
24. Collections. All collections of monies or other
property in respect, or which are to become part, of the Property (but not the
safekeeping thereof upon receipt by Bank) shall be at the sole risk of the
Fund. In any case in which Bank does not receive any payment due the Fund
within a reasonable time after Bank has made proper demands for the same, it
shall so notify the Fund in writing, including copies of all demand letters,
any written responses thereto, and memoranda of all oral responses thereto and
to telephonic demands, and await instructions from the Fund. Bank shall not be
obliged to take legal action for collection unless and until reasonably
indemnified to its satisfaction. Bank shall also notify the Fund as soon as
reasonably practicable whenever income due on securities is not collected in
due course.
25. Duration and Termination. This Agreement shall
continue as to each portfolio of the Fund until terminated by the Fund on
behalf of a portfolio or by Bank, in either case on sixty (60) days' written
notice. Upon any termination of this Agreement, pending appointment of a
successor to Bank or vote of the shareholders of the applicable portfolio of
the Fund to dissolve or to function without a custodian of its cash, securities
or other property, Bank shall not deliver cash, securities or other property of
the applicable portfolio of the Fund to the Fund, but may deliver them to a
bank or trust company of its own selection, having an aggregate capital,
surplus and undivided profits, as shown by its last published report, of not
less than twenty million dollars ($20,000,000) as a custodian for such
portfolio to be held under terms similar to those of this Agreement, provided,
that Bank shall not be required to make any such delivery or payment until full
payment shall have been made by such portfolio of the Fund of all liabilities
constituting a charge on or against the properties of such portfolio of the
Fund then held by Bank or on or against Bank and until full payment shall have
been made to Bank of all of its fees, compensation, costs and expenses.
26. Notices. All notices and other communications,
including Written Instructions (collectively referred to as "Notice" or
"Notices" in this Paragraph 26), hereunder shall be in writing or by confirming
telegram, cable, telex or facsimile sending device. Notices shall be addressed
(a) if to Bank at Airport Business Center, International Court II, 200 Stephens
Drive, Lester, Pennsylvania 19113, marked for the attention of
-16-
<PAGE> 17
the Mutual Fund Custodian Services Department (or its successor); (b) if to the
Fund, at the address of the Fund; or (c) if to neither of the foregoing, at
such other address as shall have been notified to the sender of any such Notice
or other communication. If the location of the sender of a Notice and the
address of the addressee thereof are, at the time of sending, more than 100
miles apart, the Notice may be sent by first-class mail, in which case it shall
be deemed to have been given five business days after it is sent, or if sent by
confirming telegram, cable, telex or facsimile sending device, it shall be
deemed to have been given immediately, and, if the location of the sender of a
Notice and the address of the addressee thereof are, at the time of sending,
not more than 100 miles apart, the Notice may be sent by first-class mail, in
which case it shall be deemed to have been given three business days after it
is sent, or if sent by messenger, it shall be deemed to have been given on the
day it is delivered, or if sent by confirming telegram, cable, telex or
facsimile sending device, it shall be deemed to have been given immediately.
All postage, cable, telegram, telex and facsimile sending device charges
arising from the sending of the Notice hereunder shall be paid by the sender.
27. Further Actions. Each party agrees to perform such
further acts and execute such further documents as are necessary to effectuate
the purposes hereof.
28. Amendments. This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the party against
which enforcement of such change or waiver is sought.
29. Delegation. On thirty (30) days' prior written
notice to the Fund, Bank may assign its rights and delegate its duties
hereunder to any wholly-owned direct or indirect subsidiary of Bank, provided
that (i) the delegate agrees with Bank to comply with all relevant provisions
of the 1940 Act; and (ii) Bank and such delegate shall promptly provide such
information as the Fund may request, and respond to such questions as the Fund
may ask, relative to the delegation, including (without limitation) the
capabilities of the delegate.
30. Release. The names "The PNC Fund" and "Trustees of
The PNC Fund" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated December 22, 1988 which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "The PNC Fund" entered into in the name or on behalf thereof by
any of the Trustees, officers, representatives or agents are made not
individually, but in such capacities, and
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<PAGE> 18
are not binding upon any of the Trustees, Shareholders, officers,
representatives or agents of the Trust personally, but bind only the Trust
Property (as defined in the Declaration of Trust), and all persons dealing with
any class of shares of the Trust must look solely to the Trust Property
belonging to such class for the enforcement of any claims against the Trust.
31. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
32. Miscellaneous. This Agreement embodies the entire
agreement and understanding between the parties hereto, and supersedes all
prior agreements and understandings relating to the subject matter hereof,
provided that the parties hereto may embody in one or more separate documents
their agreement, if any, with respect to delegated and/or Written or Oral
Instructions. 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. This Agreement shall be deemed
to be a contract made in Pennsylvania and governed by Pennsylvania law. 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 on, and shall inure to the
benefit of, the parties hereto and their respective successors, permitted
assigns and permitted delegates.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below on the day and year
first above written.
Attest: THE PNC FUND
/s/ Morgan R. Jones By:/s/ Edward J. Roach
- ----------------------------- ---------------------------------
its: Secretary its: Treasurer
Attest: PROVIDENT NATIONAL BANK
(Corporate Seal)
By: /s/ J. Richard Carnall
- ----------------------------- ---------------------------------
its: its:
-18-
<PAGE> 1
EXHIBIT (8)(b)
AMENDMENT NO. 1 TO CUSTODIAN AGREEMENT
This Amendment, dated the 3rd day of February 1992, is entered into
between THE PNC(R) FUND (the "Fund"), a Massachusetts business trust, and
PROVIDENT NATIONAL BANK ("Bank"), a national banking association.
WHEREAS, the Fund and Bank have entered into a Custodian Agreement
dated as of October 4, 1989, (the "Custodian Agreement"), pursuant to which the
Fund appointed Bank to act as custodian for its investment portfolios;
WHEREAS, the Fund desires to retain Bank to serve as the Fund's
custodian with respect to shares of the Intermediate Government Portfolio,
Value Equity Portfolio, Index Equity Portfolio, Special Equity Portfolio,
Pennsylvania Tax-Free Money Market Portfolio, Ohio Tax-Free Money Market
Portfolio ("Portfolios") and any such future portfolio of the Fund as listed in
Appendix B of the Custodian Agreement with respect to which it wants to appoint
Bank to act as custodian under the Custodian Agreement;
WHEREAS, Bank has notified the Fund that it wants to serve as
custodian for the Portfolios and any such other future portfolio as listed in
Appendix B; and
WHEREAS, the Fund's Board of Directors has approved this Amendment.
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
Paragraph 1 is amended and restated in full as follows:
1. Appointment. The Fund hereby appoints Bank to act as
custodian of the securities, cash and other property belonging
to each investment portfolio ("Portfolio") of the Fund for the
period and on the terms set forth in this Agreement. Bank
accepts such appointment and agrees to furnish the services
herein set forth in return for the compensation as provided in
Paragraph 21 of this Agreement. Bank agrees to comply with
all relevant provisions of the 1940 Act and applicable rules
and regulations thereunder. The Fund's shares, $.001 par
value per share (the "Shares"), have been classified into
different classes representing interests in the Fund's Value
Equity Portfolio, Growth
-1-
<PAGE> 2
Equity Portfolio, Index Equity Portfolio, Special Equity
Portfolio, International Equity Portfolio, Balanced Portfolio,
Managed Income Portfolio, Tax-Free Income Portfolio,
Intermediate Government Portfolio, Ohio Tax-Free Income
Portfolio, Pennsylvania Tax-Free Income Portfolio, Money
Market Portfolio, Tax-Free Money Market Portfolio, Government
Money Market Portfolio, Ohio Tax-Free Money Market Portfolio,
Pennsylvania Tax-Free Money Market Portfolio and such other
classes as may be created in the future and listed in Appendix
B hereto. The Fund may from time to time issue additional
classes of Shares or classify and reclassify Shares of each
such class. Bank shall identify to each such class property
belonging to such class and in such reports, confirmations and
notices to the Fund called for under this Agreement shall
identify the class to which such report, confirmation or
notice pertains.
2. Miscellaneous. Except to the extent amended and supplemented
hereby, the Custodian Agreement shall remain unchanged and in
full force and effect and is hereby ratified and confirmed in
all respects as amended and supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date and year first above written.
THE PNC(R) FUND
[SEAL]
BY:/s/ Edward J. Roach
--------------------------------
Title: Treasurer
PROVIDENT NATIONAL BANK
[SEAL] BY:/s/ A. Plambeck
-------------------------------
Title: Vice-President
-2-
<PAGE> 1
EXHIBIT (8)(c)
AMENDMENT NO. 2 TO CUSTODIAN AGREEMENT
This Amendment, dated the 1st day of March, 1993, is entered into
between THE PNC(R) FUND, a Massachusetts business trust (the "Fund"), and PNC
BANK NATIONAL ASSOCIATION, a national banking association ("Bank").
WHEREAS, the Fund and Bank have entered into a Custodian Agreement
dated as of October 4, 1989, as amended (the "Custodian Agreement"), pursuant
to which the Fund appointed Bank to act as custodian for its investment
portfolios;
WHEREAS, the Fund desires to retain Bank to serve as the Fund's
custodian with respect to shares of the North Carolina Municipal Money Market,
Short-Term Bond, Intermediate-Term Bond, Small Cap Growth Equity and Core
Equity Portfolios (the "Portfolios"), and any such future portfolio of the Fund
as listed in Appendix B of the Custodian Agreement with respect to which it
wants to appoint Bank to act as custodian under the Custodian Agreement;
WHEREAS, Bank has notified the Fund that it wants to serve as
custodian for the Portfolios and any such other future portfolio as listed in
Appendix B; and
WHEREAS, the Fund's Board of Trustees has approved this Amendment.
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agrees as follows:
Paragraph 1 is amended and restated in full as follows:
1. Appointment. The Fund hereby appoints Bank to act as
custodian of the securities, cash and other property belonging
to each investment portfolio ("Portfolio") of the Fund for the
period and on the terms set forth in this Agreement. Bank
accepts such appointment and agrees to furnish the services
herein set forth in return for the compensation as provided in
Paragraph 21 of this Agreement. Bank agrees to comply with
all relevant provisions of the 1940 Act and applicable rules
and regulations thereunder. The Fund's shares, $.001 par
value per share (the "Shares"), have been classified into
different classes representing interests in the Fund's Money
Market, Municipal Money Market, Government Money Market, Ohio
Municipal Money Market, Pennsylvania Municipal Money Market,
North
<PAGE> 2
Carolina Municipal Money Market, Managed Income, Tax-Free
Income, Intermediate Government, Ohio Tax-Free Income,
Pennsylvania Tax-Free Income, Short-Term Bond,
Intermediate-Term Bond, Value Equity, Growth Equity, Index
Equity, Small Cap Value Equity, International Equity, Small
Cap Growth Equity, Core Equity and Balanced Portfolios and
such other classes as may be created in the future and listed
in Appendix B hereto. The Fund may from time to time issue
additional classes of Shares or classify and reclassify Shares
of each such class. Bank shall identify to each such class
property belonging to such class and in such reports,
confirmations and notices to the Fund called for under this
Agreement shall identify the class to which such report,
confirmation or notice pertains.
2. Miscellaneous. Except to the extent amended and supplemented
hereby, the Custodian Agreement shall remain unchanged and in
full force and effect and is hereby ratified and confirmed in
all respects as amended and supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date and year first above written.
THE PNC(R) FUND
(SEAL) BY:/s/ Edward J. Roach
-----------------------------
Title:Treasurer
PNC BANK, NATIONAL ASSOCIATION
(SEAL) BY:/s/ A. Plambeck
-----------------------------
Title:Vice President
<PAGE> 1
EXHIBIT (8)(d)
The PNC(R) Fund
Appendix B to Custodian
Agreement dated as of October 4, 1989
The Fund hereby appoints Bank to act as custodian of the
securities, cash and other property belonging to each additional Portfolio
listed below ("Additional Portfolios") for the period and on the terms set
forth in this Agreement. Bank accepts such appointment and agrees to furnish
the services herein set forth in return for the compensation as provided in
Paragraph 21 of this Agreement. Bank agrees to comply with all relevant
provisions of the 1940 Act and applicable rules and regulations thereunder.
The Additional Portfolios are as follows:
- Government Income Portfolio
- International Emerging Markets Portfolio
- International Fixed Income Portfolio
- Virginia Municipal Money Market Portfolio
- New Jersey Municipal Money Market Portfolio
Agreed to and accepted as of
, 1995
- ----------------------------
The PNC(R) Fund
By:
------------------------------
PNC Bank, National Association
By:
-------------------------------
<PAGE> 1
EXHIBIT (8)(e)
SUB-CUSTODIAN AGREEMENT
AGREEMENT dated as of April 27, 1992 among THE CHASE MANHATTAN BANK,
N.A. ("Bank"), THE PNC(R) FUND ("Fund") and PROVIDENT NATIONAL BANK
("Company").
WITNESSETH:
WHEREAS, Company has entered into a Custodian Agreement with the Fund,
a Massachusetts business trust, to provide certain custody services; and
WHEREAS, the Company and the Fund wish to retain Bank to provide
certain sub-custodian services to the Company and the Fund for the benefit of
the Fund, and Bank is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Custody Account. The Bank agrees to establish and maintain (a) a
separate custody account for each investment portfolio of the Fund ("Custody
Account") for any and all stocks, shares, bonds, debentures, notes, mortgages
or other obligations for the payment of money and any certificates, receipts,
warrants or other instruments representing rights to receive, purchase or
subscribe for the same or evidencing or representing any other rights or
interests therein and other similar property (hereinafter called "Securities")
from time to time received by the Bank or any sub-custodian (as defined in the
second paragraph of Section 3 hereof) for the account of the particular
investment portfolio of the Fund; and (b) a separate deposit account or
<PAGE> 2
accounts in the name of each investment portfolio of the Fund ("Deposit
Account") for any and all cash and cash equivalents in any currency received by
the Bank or any sub-custodian for the account of the particular investment
portfolio of the Fund, which cash shall not be subject to withdrawal by draft
or check. The term "Property" as used herein shall mean all Securities, cash,
cash equivalents and other assets of the Fund.
2. Maintenance of Property Abroad. Securities in a Custody Account
shall be held in the country or other jurisdiction as shall be specified from
time to time in Instructions (as defined in Section 9 hereof), provided that
such country or other jurisdiction shall be one in which the principal trading
market for such Securities is located or the country or other jurisdiction in
which such Securities are to be presented for payment or are acquired for the
Custody Account, and cash in a Deposit Account shall be credited to an account
in such country or other jurisdiction in which such cash may be legally
deposited or is the legal currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or non-interest
bearing accounts as may be available for the particular currency. To the
extent Instructions are issued and the Bank can comply with such Instructions,
the Bank is authorized to maintain cash balances on deposit for the Fund with
itself or one of its affiliates at such reasonable rates of interest as may
from time to time be paid on such accounts, or in
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<PAGE> 3
non-interest bearing accounts as the Fund may direct, if acceptable to the
Bank.
3. Eligible Foreign Custodians and Securities Depositories. The Board
of Trustees of the Fund authorizes the Bank to hold the Securities in the
Custody Account(s) and the cash in the Deposit Account(s) in custody and
deposit accounts, respectively, which have been established by the Bank with
one of its branches, a branch of a qualified U.S. bank, an eligible foreign
custodian or an eligible foreign securities depository; provided, however, that
the Board of Trustees of the Fund has approved the use of, and the Bank's
contract with, such eligible foreign custodian or eligible foreign securities
depository by resolution, and Instructions to such effect have been provided to
the Bank. Furthermore, if a Bank's branch, a branch of a qualified U.S. bank
or an eligible foreign custodian is selected to act as the Bank's sub-custodian
to hold any Property, such entity is authorized to hold such Property in its
account with any eligible foreign securities depository in which it
participates so long as such foreign securities depository has been approved by
the Board of Trustees of the Fund. For purposes of this Agreement (a)
"qualified U.S. bank" shall mean a qualified U.S. bank as defined in Rule 17f-5
under the Investment Company Act of 1940, as amended ("Rule 17f-5"); (b)
"eligible foreign custodian" shall mean (i) a banking institution or trust
company incorporated or organized under the laws of a country other than the
United States that is regulated as such by that country's government or
-3-
<PAGE> 4
an agency thereof and that has shareholders' equity in excess of $200 million
in U.S. currency (or a foreign currency equivalent thereto) or (ii) a
majority-owned direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws of a country
other than the United States and that has shareholders' equity in excess of
$100 million in U.S. currency (or a foreign currency equivalent thereto); and
(c) "eligible foreign securities depository" shall mean a securities depository
or clearing agency, incorporated or organized under the laws of a country other
than the United States, which operates (i) the central system for handling of
securities or equivalent book-entries in that country or (ii) a transnational
system for the central handling of securities or equivalent book-entries.
Hereinafter the term "sub-custodian" will refer to any Bank branch,
any branch of a qualified U.S. bank, any eligible foreign custodian or any
eligible foreign securities depository with which the Bank has entered into an
agreement of the type contemplated hereunder regarding Securities and/or cash
held in or to be acquired for a Custody Account or a Deposit Account.
If, after the initial approval of the sub-custodians by the Board of
Trustees of the Fund in connection with this Agreement, the Bank wishes to
appoint other sub-custodians to hold the Fund's Property, it will so notify the
Company and the Fund and will provide them with information reasonably
necessary to determine any such new sub-custodian's eligibility under Rule
-4-
<PAGE> 5
17f-5, including a copy of the proposed agreement with such sub-custodian. The
Fund shall within 30 days after receipt of such notice give a written approval
or disapproval of the proposed action.
If the Bank intends to remove any sub-custodian previously approved,
it shall so notify the Fund and the Company and shall move the Property
deposited with such sub-custodian to another sub-custodian previously approved
or to a new sub-custodian, provided that the appointment of any new
sub-custodian will be subject to the requirements set forth in the preceding
paragraph. The Bank shall take steps as may be required to remove any
sub-custodian which has ceased to meet the requirements of Rule 17f-5.
4. Use of Sub-Custodians. With respect to Property which is
maintained by the Bank in the physical custody of a sub-custodian pursuant to
Section 3:
(a) The Bank will identify on its books as belonging to
the particular investment portfolio of the Fund any Property held by such
sub-custodian.
(b) In the event that a sub-custodian permits any of the
Securities placed in its care to be held in an eligible foreign securities
depository, such sub-custodian will be required by its agreement with the Bank
to identify on its books such Securities as being held for the account of the
Bank as a custodian for its customers.
-5-
<PAGE> 6
(c) Any Securities in a Custody Account held by a
sub-custodian of the Bank will be subject only to the instructions of the Bank
or its agents; and any Securities held in an eligible foreign securities
depository for the account of a sub-custodian will be subject only to the
instructions of such sub-custodian.
(d) The Bank will only deposit Property in an account
with a sub-custodian which includes exclusively the assets held by the Bank for
its customers, and the Bank will cause such account to be designated by such
sub-custodian as a special custody account for the exclusive benefit of
customers of the Bank.
(e) Any agreement the Bank shall enter into with a
sub-custodian with respect to the holding of Property shall require that (i)
the Property is not subject to any right, charge, security interest, lien or
claim of any kind in favor of such sub-custodian or its creditors except for a
claim of payment for its safe custody or administration and (ii) beneficial
ownership of such Property is freely transferable without the payment of money
or value other than for safe custody or administration; provided, however, that
the foregoing shall not apply to the extent that any of the above-mentioned
rights, charges, etc. result from any compensation or other expenses arising
with respect to the safekeeping of Property pursuant to such agreement.
(f) The Bank shall allow independent public accountants
of the Fund such reasonable access to the records of
-6-
<PAGE> 7
the Bank relating to Property held in a Custody Account and a Deposit Account
as required by such accountants in connection with their examination of the
books and records pertaining to the affairs of the Fund. The Bank shall,
subject to restrictions under applicable law, also obtain from any
sub-custodian with which the Bank maintains the physical possession of any
Property an undertaking to permit independent public accountants of the Fund
such reasonable access to the records of such sub-custodian as may be required
in connection with their examination of the books and records pertaining to the
affairs of the Fund or to supply a verifiable confirmation of the contents of
such records. The Bank shall furnish the Fund and the Company such reports (or
portions thereof) of the Bank's external auditors as relate directly to the
Bank's system of internal accounting controls applicable to the Bank's duties
under this Agreement.
(g) The Bank will supply to the Fund, care of its
investment adviser, and the Company at least monthly a statement in respect to
any Property in a Custody and a Deposit Account held by each sub-custodian,
including an identification of the entity having possession of such Property,
and the Bank will send to the Fund and the Company an advice or notification of
any transfers of Property to or from the Custody Account and Deposit Account,
indicating, as to Property acquired for an investment portfolio of the Fund,
the identity of the entity having physical possession of such Property. In the
absence of the filing in writing with the Bank by the Fund of exceptions or
objections to
-7-
<PAGE> 8
any such statement within sixty (60) days of the Fund's receipt of such
statement, or within sixty (60) days after the date that a material defect is
reasonably discoverable, the Fund shall be deemed to have approved such
statement; and in such case or upon written approval of the Fund of any such
statement the Bank shall, to the extent permitted by law and provided the Bank
has met the standard of care in Section 12 hereof, be released, relieved and
discharged with respect to all matters and things set forth in such statement
as though such statement has been settled by the decree of a court of competent
jurisdiction in an action in which the Fund and all persons having any equity
interest in the Fund were parties.
(h) The Bank hereby warrants to the Fund and the Company
that in its opinion, after due inquiry, the established procedures to be
followed by each of its branches, each branch of a qualified U.S. bank, each
eligible foreign custodian and each eligible foreign securities depository
holding Property of the Fund pursuant to this Agreement afford protection for
such Property at least equal to that afforded by the Bank's established
procedures with respect to similar Property held by the Bank (and its
securities depositories) in New York.
(i) The Bank hereby warrants to the Fund and the Company
that as of the date of this Agreement it is maintaining a Bankers Blanket Bond
and hereby agrees to notify the Fund and the Company in the event its Bankers
Blanket Bond is cancelled or otherwise lapses.
-8-
<PAGE> 9
5. Deposit Account Payments. Subject to the provisions of
Section 7, the Bank shall make, or cause its sub-custodian to make, payments of
cash credited to a Deposit Account only:
(a) in connection with the purchase of Securities for the
particular investment portfolio of the Fund involved and the delivery of such
Securities to, or the crediting of such Securities to the particular Custody
Account of, the Bank or its sub-custodian, each such payment to be made at
prices as confirmed by Instructions from Authorized Persons (as defined in
Section 10 hereof);
(b) for the purchase or redemption of shares of the
capital stock of the particular investment portfolio of the Fund involved and
the delivery to, or crediting to the account of, the Bank or its sub-custodian
of such shares to be so purchased or redeemed;
(c) for the payment for the account of the particular
investment portfolio of the Fund involved of dividends, interest, taxes,
management or supervisory fees, capital distributions or operating expenses;
(d) for the payments to be made in connection with the
conversion, exchange or surrender of Securities held in a Custody Account;
(e) for other proper corporate purposes of the particular
investment portfolio of the Fund involved; or
(f) upon the termination of this Custody Agreement as
hereinafter set forth.
-9-
<PAGE> 10
All payments of cash for a purpose permitted by subsection (a), (b), (c) or (d)
of this Section 5 will be made only upon receipt by the Bank of Instructions
from Authorized Persons which shall specify the purpose for which the payment
is to be made and the applicable subsection of this Section 5. In the case of
any payment to be made for the purpose permitted by subsection (e) of this
Section 5, the Bank must first receive a certified copy of a resolution of the
Board of Trustees of the Fund adequately describing such payment, declaring
such purpose to be a proper corporate purpose, and naming the person or persons
to whom such payment shall be made. Any payment pursuant to subsection (f) of
this Section 5 will be made in accordance with Section 17 hereof.
In the event that any payment for an investment portfolio of the Fund
made under this Section 5 exceeds the funds available in that investment
portfolio's Deposit Account, the Bank may, in its discretion, advance the Fund
on behalf of that investment portfolio an amount equal to such excess and such
advance shall be deemed a loan from the Bank to that investment portfolio
payable on demand, bearing interest at the rate of interest customarily charged
by the Bank on similar loans. If the Bank causes a Deposit Account to be
credited on the payable date for interest, dividends or redemptions, the
particular investment portfolio of the Fund involved will promptly return to
the Bank any such amount or property so credited upon oral or written
notification that neither the Bank nor its sub-custodian can collect such
amount or property in the ordinary course of
-10-
<PAGE> 11
business. The Bank or its sub-custodian, as the case may be, shall have no
duty or obligation to institute legal proceedings, file a claim or proof of
claim in any insolvency proceeding or take any other action with respect to the
collection of such amount or property beyond its ordinary collection
procedures.
6. Custody Account Transactions. Subject to the provisions of
Section 7, Securities in a Custody Account will be transferred, exchanged or
delivered by the Bank or its sub-custodians only:
(a) upon sale of such Securities for the particular
investment portfolio of the Fund involved and receipt by the Bank or its
sub-custodian of payment therefor, each such payment to be in the amount
confirmed by Instructions from Authorized Persons;
(b) when such Securities are called, redeemed or retired,
or otherwise become payable;
(c) in exchange for or upon conversion into other
Securities alone or other Securities and cash pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment;
(d) upon conversion of such Securities pursuant to their
terms into other Securities;
(e) upon exercise of subscription, purchase or other
similar rights represented by such Securities;
(f) for the purpose of exchanging interim receipts or
temporary Securities for definitive Securities;
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<PAGE> 12
(g) for the purpose of redeeming in kind shares of the
capital stock of the particular investment portfolio of the Fund involved
against delivery to the Bank or its sub-custodian of such shares to be
redeemed;
(h) for other proper corporate purposes of the particular
investment portfolio of the Fund involved; or
(i) upon the termination of this Custody Agreement as
hereinafter set forth.
All transfers, exchanges or deliveries of Securities in a Custody
Account for a purpose permitted by either subsection (a), (b), (c), (d), (e) or
(f) of this Section 6 will be made, except as provided in Section 8 hereof,
only upon receipt by the Bank of Instructions from Authorized Persons which
shall specify the purpose of the transfer, exchange or delivery to be made and
the applicable subsection of this Section 6. In the case of any transfer or
delivery to be made for the purpose permitted by subsection (g) of this Section
6, the Bank must first receive Instructions from Authorized Persons specifying
the shares held by the Bank or its sub-custodian to be so transferred or
delivered and naming the person or persons to whom transfers or delivery of
such shares shall be made. In the case of any transfer, exchange or delivery
to be made for the purpose permitted by subsection (h) of this Section 6, the
Bank must first receive a certified copy of a resolution of the Board of
Trustees of the Fund adequately describing such transfer, exchange or delivery,
declaring such purpose to be a proper
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<PAGE> 13
corporate purpose, and naming the person or persons to whom delivery of such
Securities shall be made. Any transfer or delivery pursuant to subsection (i)
of this Section 6 will be made in accordance with Section 17 hereof.
7. Custody Account Procedures. With respect to any transaction
involving Securities held in or to be acquired for a Custody Account, the Bank
in its discretion may cause the Deposit Account for the particular investment
portfolio of the Fund involved to be credited on the contractual settlement
date with the proceeds of any sale or exchange of Securities from the
particular Custody Account and to be debited on the contractual settlement date
for the cost of Securities purchased or acquired for the particular Custody
Account. The Bank may reverse any such credit or debit if the transaction with
respect to which such credit or debit was made fails to settle within a
reasonable period, determined by the Bank in its discretion, after the
contractual settlement date, except that if any Securities delivered pursuant
to this Section 7 are returned by the recipient thereof, the Bank may cause any
such credits and debits to be reversed at any time. With respect to any
transactions as to which the Bank does not determine so to credit or debit the
particular Deposit Account, the proceeds from the sale or exchange of
Securities will be credited and the cost of such Securities purchased or
acquired will be debited to the particular Deposit Account on the date such
proceeds or Securities are received by the Bank.
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<PAGE> 14
Notwithstanding the preceding paragraph, settlement and payment for
Securities received for, and delivery of Securities out of, a Custody Account
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,
delivering 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.
8. Actions of the Bank. Until the Bank receives Instructions from
Authorized Persons to the contrary, the Bank will, or will instruct its
sub-custodian, to:
(a) present for payment any Securities in a Custody
Account which are called, redeemed or retired or otherwise become payable and
all coupons and other income items which call for payment upon presentation to
the extent that the Bank or sub-custodian is aware of such opportunities for
payment, and hold cash received upon presentation of such Securities in
accordance with the provisions of Sections 2, 3 and 4 hereof;
(b) in respect of Securities in a Custody Account,
execute in the name of the Fund on behalf of the particular investment
portfolio involved such ownership and other certificates as may be required to
obtain payments in respect thereof;
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<PAGE> 15
(c) exchange interim receipts or temporary Securities in
a Custody Account for definitive Securities;
(d) (if applicable) convert monies received with respect
to Securities of foreign issue into United States dollars or any other currency
necessary to effect any transaction involving the Securities whenever it is
practicable to do so through customary banking channels, using any method or
agency available, including, but not limited to, the facilities of the Bank,
its subsidiaries, affiliates or sub-custodians;
(e) (if applicable) appoint brokers and agents for any
transaction involving the Securities in a Custody Account, including, without
limitation, affiliates of the Bank or any sub-custodian; and
(f) reclaim taxes withheld by foreign issuers where
reclaim is possible, provided that Bank has been provided with all
documentation it may require.
9. Instructions. As used in this Agreement, the term
"Instructions" means instructions of the Fund or the Company received by the
Bank via telephone, telex, TWX, facsimile transmission, bank wire or other
teleprocess or electronic instruction system acceptable to the Bank which the
Bank believes in good faith to have been given by Authorized Persons or which
are transmitted with proper testing or authentication pursuant to terms and
conditions which the Bank may specify.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized
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<PAGE> 16
Person (which confirmation may bear the facsimile signature of such Person),
but the particular investment portfolio of the Fund involved and the Company
will hold the Bank harmless for the Company's or the Fund's (i) failure to send
such confirmation in writing, or (ii) the failure of such confirmation to
conform to the telephone Instructions received. Unless otherwise expressly
provided, all Instructions shall continue in full force and effect until cancel
led or superseded. If the Bank requires test arrangements, authentication
methods or other security devices to be used with respect to Instructions, any
Instructions given by the Fund or the Company thereafter shall be given and
processed in accordance with such terms and conditions for the use of such
arrangements, methods or devices as the Bank may put into effect and modify
from time to time. The Fund and the Company shall safeguard any testkeys,
identification codes or other security devices which the Bank shall make
available to them. The Bank may electronically record any Instructions given
by telephone, and any other telephone discussions, with respect to a Custody
Account.
10. Authorized Persons. As used in this Agreement, the term
"Authorized Persons" means such officers or such agents of the Fund or the
Company as have been designated by a resolution of the Board of Trustees of the
Fund, a certified copy of which has been provided to the Bank, to act on behalf
of the Fund in the performance of any acts which Authorized Persons may do
under this Agreement. Such persons shall continue to be Authorized
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<PAGE> 17
Persons until such time as the Bank receives Instructions from Authorized
Persons that any such officer or agent is no longer an Authorized Person.
11. Nominees. Securities in a Custody Account which are ordinarily
held in registered form may be registered in the name of the Bank's nominee or,
as to any Securities in the possession of an entity other than the Bank, in the
name of such entity's nominee. The particular investment portfolio of the Fund
involved agrees to hold any such nominee harmless from any liability as a
holder of record of such Securities, but not if such liability is a result of
such nominee's negligence. The Bank may without notice to the Company or the
Fund cause any such Securities to cease to be registered in the name of any
such nominee and to be registered in the name of the Fund. In the event that
any Securities registered in the name of the Bank's nominee or held by one of
its sub-custodians and registered in the name of such sub-custodian's nominee
are called for partial redemption by the issuer of such Security, the Bank may
allot, or cause to be allotted, the called portion to the respective beneficial
holders of such class of security in any manner the Bank deems to be fair and
equitable.
12. Standard of Care.
(a) The Bank shall be obligated to perform only such
duties as are set forth in this Agreement or expressly contained in
instructions given to Bank which are consistent with the provisions of this
Agreement.
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<PAGE> 18
(i) The Bank will use reasonable care with respect
to its obligations under this Agreement and the
safekeeping of Property. The Bank shall be
liable to the Fund and the Company for any loss
which shall occur as the result of the failure
of a sub-custodian or an eligible foreign
securities depository to exercise reasonable
care with respect to the safekeeping of such
Property to the same extent that the Bank would
be liable to the Fund and the Company if the
Bank were holding such Property in New York.
In the event of any loss to the Fund or the
Company by reason of the failure of the Bank or
its sub-custodian or an eligible foreign
securities depository to exercise reasonable
care, the Bank shall be liable to the Fund or
the Company only to the extent of the Fund's or
Company's direct damages and expenses to be
determined based on, but not limited to, the
market value of the Property which is the
subject of the loss at the date of discovery of
such loss and without reference to any special
conditions or circumstances.
(ii) The Bank will not be responsible for any act,
omission, default or for the solvency of any
broker or agent (other than as provided herein)
which it or a sub-custodian appoints and uses
unless such appointment and use were made or
done negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without
liability to the particular investment
portfolio of the Fund involved and the Company
for any action taken or omitted by the Bank
whether pursuant to Instructions or otherwise
within the scope of this Agreement if such act
or omission was in good faith and without
negligence. In performing its obligations
under this Agreement, the Bank may rely on the
genuineness of any document which it believes
in good faith and without negligence to have
been validly executed.
(iv) The Fund, on behalf of the particular
investment portfolio of the Fund involved,
agrees to cause such investment portfolio to
pay for and hold the Bank harmless from any
liability or loss resulting from the imposition
or assessment of any taxes or other
governmental charges, and any related expenses
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<PAGE> 19
with respect to income from or Property in
such investment portfolio's Custody Account
and Deposit Account.
(v) The Bank shall be entitled to rely, and may act
upon the advice of counsel (who may be counsel
for the Fund or the Company) on all matters and
shall be without liability for any action
reasonably taken or omitted in good faith and
without negligence pursuant to such advice.
(vi) The Bank need not maintain any insurance for
the exclusive benefit of the Fund or Company.
(vii) Without limiting the foregoing, the Bank shall
not be liable for any loss which results from:
1) the general risk of investing, or
2) subject to Section 12(a)(i) hereof,
investing or holding Property in a
particular country including, but not
limited to, losses resulting from
nationalization, expropriation or other
governmental actions; regulation of the
banking or securities industry; currency
restrictions, devaluations or
fluctuations; and market conditions
which prevent the orderly execution of
securities transactions or affect the
value of Property.
(viii) No party shall be liable to the other for any
loss due to forces beyond its control including
but not limited to strikes or work stoppages,
acts of war or terrorism, insurrection,
revolution, nuclear fusion, fission or
radiation, or acts of God.
(b) Consistent with and without limiting the first
paragraph of this Section 12, it is specifically acknowledged that the Bank
shall have no duty or responsibility to:
(i) Question Instructions or make any suggestions
to the Fund, Company or an Authorized Person
regarding such Instructions;
(ii) Supervise or make recommendations with respect
to investments or the retention of Securities;
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<PAGE> 20
(iii) Subject to Section 12(a) (ii) hereof, evaluate
or report to the Fund, Company or an Authorized
Person regarding the financial condition of any
broker, agent or other party to which
Securities are delivered or payments are made
pursuant to this Agreement; or
(iv) Review or reconcile trade confirmations
received from brokers.
(c) The Bank shall provide to the Fund, on an annual
basis, a report confirming that the arrangements hereunder remain in compliance
with the rules of the Securities and Exchange Commission governing such
arrangements.
13. Compliance with Securities and Exchange Commission Rules and
Orders. Except to the extent the Bank has specifically agreed pursuant to this
Agreement or in an exemptive order to comply with a condition of Rule 17f-5 or
any interpretation or exemptive order promulgated thereunder by or under the
authority of the Securities and Exchange Commission, the Fund shall be solely
responsible to assure that the maintenance of Securities and cash under this
Agreement complies with such Rule 17f-5.
14. Corporate Action. Whenever the Bank or its sub-custodian
receives information concerning the Securities which requires discretionary
action by the beneficial owner of the Securities (other than a proxy), such as
subscription rights, bonus issues, stock repurchase plans and rights offerings,
or legal notices or other material intended to be transmitted to securities
holders ("Corporate Actions"), the Bank will give the Company notice of such
Corporate Actions to the extent that the
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<PAGE> 21
Bank's central corporate actions department has actual knowledge of a Corporate
Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank or its sub-custodians will
endeavor to obtain Instructions from the Fund, Company or its Authorized
Person, but if Instructions are not received in time for the Bank to take
timely action, or actual notice of such Corporate Action was received too late
to seek Instructions, the Bank is authorized to sell such rights entitlement or
fractional interest and to credit the applicable Deposit Account with the
proceeds and to take any other action it deems, in good faith, to be
appropriate in which case, provided it has met the standard of care in Section
12 hereof, it shall be held harmless by the particular investment portfolio of
the Fund involved for any such action.
The Bank will deliver proxies to the Company or its designated agent
pursuant to special arrangements which may have been agreed to in writing
between the parties hereto. Such proxies shall be executed in the appropriate
nominee name relating to Securities in a Custody Account registered in the name
of such nominee but without indicating the manner in which such proxies are to
be voted; and where bearer Securities are involved, proxies will be delivered
in accordance with instructions from Authorized Persons.
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<PAGE> 22
15. Fees and Expenses. The Fund agrees to pay to the Bank from
time to time such compensation for its services pursuant to this Agreement as
may be mutually agreed upon in writing from time to time and the Bank's
out-of-pocket or incidental expenses, including (but without limitation)
reasonable legal fees. The Fund hereby agrees on behalf of its respective
investment portfolios to cause the particular investment portfolio of the Fund
involved to hold the Bank harmless from any liability or loss resulting from
any taxes or other governmental charges, and any expenses related thereto,
which may be imposed, or assessed with respect to such investment portfolio's
Custody Account and also agrees on behalf of its respective investment
portfolios to cause the particular investment portfolio of the Fund involved to
hold the Bank, its sub-custodians, and their respective nominees harmless from
any liability as a record holder of Securities in such investment portfolio's
Custody Account. The Bank is authorized to charge any account of the
particular investment portfolio of the Fund involved for such items and the
Bank shall have a lien on Securities in such investment portfolio's Custody
Account and on cash in such investment portfolio's Deposit Account for any
amount owing to the Bank in connection with such investment portfolio from time
to time under this Agreement.
16. Effectiveness. This Agreement shall be effective on the date
first noted above.
17. Termination. This Agreement may be terminated by the Fund, the
Company or the Bank by 60 days' written notice to the
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<PAGE> 23
other, sent by registered mail, provided that any termination by the Company
shall be authorized by a resolution of the Board of Trustees of the Fund, a
certified copy of which shall accompany such notice of termination, and
provided further, that such resolution shall specify the names of persons to
whom the Bank shall deliver the Securities in each Custody Account and to whom
the cash in each Deposit Account shall be paid. If notice of termination is
given by the Bank, the Fund or the Company shall, within 60 days following the
giving of such notice, deliver to the Bank a certified copy of a resolution of
the Board of Trustees of the Fund specifying the names of the persons to whom
the Bank shall deliver such Securities and cash, after deducting therefrom any
amounts which the Bank determines to be owed to it under Section 15 hereof. If
within 60 days following the giving of a notice of termination by the Bank, the
Bank does not receive from the Fund or the Company a certified copy of a
resolution of the Board of Trustees of the Fund specifying the names of the
persons to whom the cash in each Deposit Account shall be paid and to whom the
Securities in each Custody Account shall be delivered, the Bank, at its
election, may deliver such Securities and pay such cash to a bank or trust
company doing business in the State of New York and qualified as a custodian
under the Investment Company Act of 1940 to be held and disposed of pursuant to
the provisions of this Agreement, or to Authorized Persons, or may continue to
hold such Securities and cash until a certified copy of one or more resolutions
as aforesaid is
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<PAGE> 24
delivered to the Bank. The obligations of the parties hereto regarding the use
of reasonable care, indemnities and payment of fees and expenses shall survive
the termination of this Agreement, and the obligations of each investment
portfolio of the Fund to indemnify and/or hold harmless other persons or
entities under this Agreement shall be the several (and not the joint or joint
and several) obligation of each investment portfolio of the Fund.
18. Notices. Any notice or other communication from the Fund or the
Company to the Bank is to be sent to the office of the Bank at 1211 Avenue of
the Americas (33rd floor), New York, New York, 10036, Attention: Global
Custody Division, or such other address as may hereafter be given to the Fund
or the Company in accordance with the notice provisions hereunder, and any
notice from the Bank to the Fund or the Company is to be mailed postage
prepaid, addressed to the Fund and to the Company at the addresses appearing
below, or as the same may hereafter be changed on the Bank's records in
accordance with notice hereunder from the Fund or the Company.
19. Governing Law and Successors and Assigns. This Agreement
shall be governed by the law of the State of New York and shall not be
assignable by any party, but shall bind the successors and assigns of the Fund,
the Company and the Bank.
20. Headings. The headings of the paragraphs hereof are included
for convenience of reference only and do not form a part of this Agreement.
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<PAGE> 25
21. Counterpart Execution. This Agreement may be executed in any
number of counterparts with the same effect as if all parties hereto had signed
the same document. All counterparts shall be construed together and shall
constitute one agreement.
22. Confidentiality. Bank agrees on behalf of itself and its
employees to treat confidentially all records and other information relative to
the Fund and its prior, present, or potential shareholders, and relative to the
Company and its prior, present, or potential customers, except, after prior
notification to and approval in writing by the Fund or the Company, which
approval shall not be unreasonably withheld and may not be withheld where Bank
may be exposed to civil or criminal contempt proceedings for failure to comply,
when
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<PAGE> 26
requested to divulge such information by duly constituted authorities, or when
so requested by the Fund or the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
PROVIDENT NATIONAL BANK
By:/s/ A. Plambeck
Address for record:
Airport Business Center
200 Stevens Drive
Lester, PA 19113
THE CHASE MANHATTAN BANK, N.A.
By:/s/
-----------------------------------
Address for record:
1211 Avenue of the Americas
New York, NY 10036
THE PNC(R) FUND
By:/s/ Edward J. Roach, Treasurer
Address for record:
Bellevue Park Corporate Center
103 Bellevue Parkway
Wilmington, DE 19809
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<PAGE> 1
EXHIBIT (8)(f)
GLOBAL CUSTODY AGREEMENT dated as of October 28, 1992 between
Barclays Bank PLC, a company organized and existing under the laws of England
and Wales (hereinafter called "Barclays"), and Provident National Bank
(hereinafter called the "Custodian"), and the investment companies which are
signatories hereto.
WHEREAS, the Custodian acts as a custodian of the property of
certain of its customers (the "Customers"), including without limitation
certain investment companies registered under the Investment Company Act of
1940, as amended (the "Act");
WHEREAS, the agreements between each Customer and the
Custodian (the "Custodian Agreements") provide that the Custodian may from time
to time employ as its agent one or more subcustodians, all in compliance with
Section 17(f) of the Act and Rule 17f-5 thereunder; and
WHEREAS, the Custodian and each Customer a party hereto wish
to employ Barclays as such intermediary custodian and expert third party for
the Customers and appoint Barclays as the agent of the Custodian and its
Customers and Barclays is willing to act as such subcustodian, expert third
party and agent;
NOW, THEREFORE, in consideration of the mutual promises herein
made, the Custodian and Barclays agree as follows:
1. Custody and Cash Accounts. (a) Upon satisfaction of
the condition specified in paragraph (b) below, Barclays agrees to establish
and maintain (i) separate custody accounts for the benefit of the Custodian,
acting as custodian for each Customer (each a "Custody Account"), for any and
all stocks, shares, bonds, debentures, notes, mortgages or other obligations
for the payment of money and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase or subscribe for the same
or evidencing or representing any other rights or interests therein and other
similar property (hereinafter called "Securities") and all other assets (except
cash) from time to time received by Barclays or its Subcustodians (as defined
in Section 3 hereof) on behalf of a Customer of the Custodian, and (ii)
separate deposit accounts for the benefit of the Custodian, acting as
custodians for each Customer (each a "Cash Account"; the Custody Account(s) and
the Cash Account(s), collectively referred to herein as the "Accounts") for any
and all cash in any currency received by Barclays or its Subcustodians on
behalf of a Customer of the Custodian, which cash shall not be subject to
withdrawal by draft or check except upon Instructions (as defined in Section 8
hereof) from the Custodian or as provided in Sections 7 and 16 hereof.
(b) The obligation of Barclays to establish and maintain
any account is subject to the condition precedent that
<PAGE> 2
it shall have received an agreement setting forth the fees payable to Barclays
in respect of its services hereunder.
2. Maintenance of Securities and Assets Abroad. (a)
Securities and other assets in each Custody Account shall be held in such
country or other jurisdiction as shall be the one in which the principal
trading market for such Securities is located or the country or jurisdiction in
which such Securities may be presented for payment or are acquired for a
Custody Account. Cash credited to any Cash Account shall be denominated in the
legal currency for the payment of public or private debts for the country or
jurisdiction where such Cash Account is located.
(b) Barclays is authorized to enter into separate
transfer or foreign exchange arrangements with Custodian, from time to time, in
order to facilitate the transfer of cash to or from any Cash Account.
3. Foreign Subcustodians and Depositories. Barclays may
act under this Agreement through the subcustodians listed in Schedule A hereto,
with each of whom Barclays has entered into subcustodial agreements
("Subcustodians"). The Custodian authorizes Barclays to hold cash and
Securities in accounts which Barclays has established with its branches and the
Subcustodians. Barclays and the Subcustodians are authorized to hold
Securities with securities depository facilities with whom they participate.
Barclays reserves the right to add new, or to replace or remove, Subcustodians.
The Custodian will be given reasonable prior notice by Barclays of any
amendment to Schedule A.
4. Use of Subcustodian. With respect to Securities,
other assets and cash of any Customer which are maintained by Barclays in the
custody of any Subcustodian of Barclays pursuant to Section 3 hereof (such
Securities, other assets and cash hereinafter referred to as "Assets"):
(a) Barclays will identify on its books as belonging to
the Custodian, as custodian for such Customer, any Assets held by such
Subcustodian.
(b) Each Subcustodian will hold Assets together with
assets belonging to other customers of Barclays in accounts identified on such
Subcustodian's books as special custody accounts for the exclusive benefit of
customers of Barclays; in the event that a Subcustodian permits any of the
Securities placed in its care to be held in a foreign securities depository,
such Subcustodian will be required by its agreement with Barclays to identify
on its books such Assets as being held for the account of Barclays as agent for
the Custodian. Each Subcustodian will hold Securities in a separate custody
account for each Customer and cash in a general account established with
Barclays.
(c) Any Assets in the Custody Account or a Cash Account
held by such Subcustodian will be subject only to the
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<PAGE> 3
instructions of Barclays, and any Securities held in a securities depository
for the account of a Subcustodian will be subject only to the instructions of
such Subcustodian.
(d) Each Foreign Sub-Custody Agreement shall provide,
through Barclays, that the Assets will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of such Subcustodian or
its creditors except a claim for payment for their safe custody or
administration and that beneficial ownership of the Assets will be freely
transferable without payment of money or value other than for safe custody or
administration.
(e) Barclays shall allow independent public accountants
of each Customer such reasonable access to the records of Barclays relating to
the Assets of such Customer held in the Custody Accounts or Cash Accounts as is
required by such accountants in connection with their examination of the books
and records pertaining to the affairs of such Customer. Barclays shall,
subject to restrictions under applicable law, also obtain from any Subcustodian
with which Barclays maintains the custody of any Assets in the Custody Accounts
or Cash Accounts an undertaking to permit independent public accountants of
such Customer such reasonable access to the records of such Subcustodian as may
be required in connection with their examination of the books and records
pertaining to the affairs of such Customer.
(f) Barclays will supply to the Custodian from time to
time as mutually agreed upon a statement with respect to any Assets in the
Custody Accounts and Cash Accounts held by a Subcustodian, including an
identification of the entity having possession of such Assets, and Barclays
will send to the Custodian an advice or notification of any transfers of Assets
to or from any Custody Account or Cash Account, indicating as to the Assets
acquired for the Custodian the identity of the entity having physical
possession of such Assets. Unless the Custodian sends Barclays an exception or
objection to any statement within sixty days of receipt (such objection or
exception to be subsequently confirmed in writing), the Custodian shall be
deemed to have approved such statement. In such event, or where the Custodian
has otherwise approved any such statement, Barclays shall, to the extent
permitted by law, be released, relieved and discharged with respect to all
matters set forth in such statement or reasonably implied therefrom as though
it had been settled by decree of a court of competent jurisdiction in an action
where the Custodian and all persons having or claiming an interest in the
Custodian or the Accounts were parties.
5. Cash Account Transactions. (a) Subject to Sections
7 and 8, Barclays shall make, or cause its Subcustodians to make, payments of
cash credited to a Cash Account only:
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<PAGE> 4
(i) in connection with the purchase of Assets for a
Customer, which purchase (A) shall, unless Instructions are received
to the contrary, be made in accordance with the customary or
established securities trading and processing practices and procedures
in the jurisdiction or market in which such purchase is to take place,
including, without limitation, payments of cash in connection with
such purchase to the seller, the dealer or their agents against a
receipt indicating, or the expectation of, future delivery of such
Security, and (B) shall be made at prices set forth in Instructions
from Authorized Persons (as defined in Section 10 hereof);
(ii) when required in connection with the conversion,
exchange or surrender of Assets held in a Custody Account;
(iii) for any other proper corporate purpose of a Customer;
or
(iv) upon the termination of this Agreement as hereinafter
set forth.
All payments of cash for a purpose permitted by subsection (i), (ii) or (iii)
of this Section 5 will be made, except as provided in Sections 7 and 8 hereof,
only upon receipt by Barclays of Instructions from Authorized Persons which
shall specify the purpose for which the payment is to be made and all other
information required by Barclays. Any payment pursuant to subsection (iv)
above will be made in accordance with Section 16 hereof.
(b) In the event that any payment made under this Section
5 exceeds the funds available in the applicable Cash Account, Barclays may, in
its discretion, advance the Custodian an amount equal to such excess and such
advance shall be deemed a loan from Barclays to the Custodian, payable on
demand and bearing interest at the rate of interest customarily charged by
Barclays on similar loans.
6. Custody Account Transactions. Subject to Sections 7
and 8, Assets of any Customer in a Custody Account will be transferred,
exchanged or delivered by Barclays or its Subcustodians only:
(a) upon sale of such Assets for the account of such
Customer, which sale (i) shall, unless Instructions are received to
the contrary, be made in accordance with the customary or established
securities trading and processing practices and procedures in the
jurisdiction or market in which such sale is to take place, including,
without limitation, delivery of a Security in connection with such
sale to the buyer, the dealer or their agents against a
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<PAGE> 5
receipt indicating, or the expectation of, future payment for such
Security and (ii) shall be at prices set forth in Instructions from
Authorized Persons;
(b) to a depository agent in connection with tender or
other similar offers for Securities of such Customer;
(c) to the issuer of Securities or its agent, when such
Securities are called, redeemed or retired or otherwise become
payable; provided that, in any such case, the cash or other
consideration is to be delivered to Barclays or its Subcustodian;
(d) to the issuer of Securities, or its agent, for
transfer into the name of any nominee of Barclays or any of its
Subcustodians; or for exchange for a different number of bonds,
certificates or other evidences of securities representing the same
aggregate face amount or number of shares or units; provided that, in
any such case, the new Securities are to be delivered to Barclays or
its Subcustodian;
(e) for exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization or
readjustment of Securities or pursuant to provisions for conversion of
such Securities, or pursuant to any deposit agreement; provided that
in any such case, the new Securities or cash, if any, are to be
delivered to Barclays or its Subcustodian;
(f) in the case of warrants, rights or similar
securities, the surrender thereof in connection with exercise of such
warrants, rights or similar securities, or the surrender of interim
receipts or temporary Securities for definitive Securities, provided
that, in any such case, the new Securities and cash, if any, are to be
delivered to Barclays or its Subcustodian;
(g) for any other proper corporate purposes of such
Customer; and
(h) upon the termination of this Agreement as hereinafter
set forth;
All transfers, exchanges or deliveries of Assets in a Custody
Account for a purpose permitted by either subsection (a), (b), (c), (d), (e),
(f) or (g) of this Section 6 will be made, except as provided in Section 7
hereof, only upon receipt by Barclays of Instructions from Authorized Persons
which shall specify the purpose of the transfer, exchange or delivery to be
made and all other information required by Barclays. Any
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<PAGE> 6
transfer or delivery pursuant to subsection (h) of this Section 6 will be made
in accordance with Section 16 hereof.
7. Accounting Procedures. (a) Barclays may, in its
sole discretion, credit or debit any of the Cash Accounts on the contractual
settlement date in amounts equal to the sale proceeds or purchase price
relating to any sale, exchange or purchase of Securities. Otherwise, such
transactions will be credited or debited to the Cash Account on the date cash
is actually received by Barclays and reconciled to the Cash Account.
(b) Barclays will provisionally credit, or will cause
provisional credits to be made to, each relevant Cash Account with Subject
Income (as defined in the second following sentence) on or before specific
crediting dates as established by Barclays from time to time for such Subject
Income ("Crediting Dates"). Schedule B attached hereto sets forth the
Crediting Dates as of the date hereof. For purposes hereof, "Subject Income"
with respect to a Customer shall mean interest on, or dividends with respect
to, Securities actually known by Barclays to be part of such Customer's
portfolio credited to the relevant Customer Custody Account and with respect to
which the issuer thereof has declared or scheduled an interest or dividend
payment date. In no event shall Subject Income include any income not referred
to above, including market claims and non-cash distributions or entitlements,
such as stock dividends.
(c) Subject to the immediately following sentence,
Barclays may reverse credits or debits made to any Account in its sole
discretion if the related transaction fails to settle within a reasonable
period, determined by Barclays in its discretion, after the contractual
settlement date for the related transaction. If Barclays credits any Cash
Account on a payable date, or at any time prior to actual collection and
reconciliation to such Cash Account, with interest, dividends, redemptions or
any other amount, including, without limitation, any provisional credit under
Section 7(b) hereof, the Custodian will promptly return any such amount upon
oral or written notification: (i) that such amount has not been received in
the ordinary course of business or (ii) that such amount was incorrectly
credited. If the Custodian does not promptly return any amount upon such
notification, Barclays shall be entitled, upon oral or written notification to
the Custodian, to reverse such credit by debiting the relevant Cash Account for
the amount previously credited. Barclays or its Subcustodian shall have no
duty or obligation to institute legal proceedings, file a claim or a proof of
claim in any insolvency proceeding or take any other action with respect to the
collection of such amount, but may act for the Custodian upon instructions
after consultation with the Custodian.
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<PAGE> 7
(d) If any Securities delivered pursuant to this Section
7 are returned by the recipient thereof, Barclays may reverse the credits and
debits of the particular transaction at any time.
8. Actions of Barclays. Until Barclays receives
Instructions from Authorized Persons to the contrary, Barclays will, or will
instruct its Subcustodian to:
(a) promptly collect all income and other payments known
by Barclays or its Subcustodian to be payable with respect to
Securities held hereunder and credit such income, as collected, to the
applicable Cash Account. Barclays or its Subcustodian shall do all
things necessary and proper in connection with such prompt collections
and, without limiting the foregoing, Barclays or its Subcustodian
will:
(i) present for payment all coupons and other
income items known by Barclays or its Subcustodian as
requiring presentation;
(ii) present for payment all Securities, known to
Barclays or its Subcustodian which have matured or have been
called, redeemed, retired or otherwise become payable; and
(iii) endorse and deposit for collection, in the
name of the Custodian, checks, drafts or other negotiable
instruments;
(b) in respect of Securities in a Custody Account,
execute in the name of the Custodian such ownership and other
certificates as may be required to obtain payments in respect thereof;
(c) exchange interim receipts or temporary Securities in
a Custody Account for definitive Securities;
(d) where any Securities held in any securities
depository are called for a partial redemption by the issuer of such
Securities, allot in Barclays' or such Subcustodian's sole discretion
the called portion to the respective holders in any manner deemed to
be fair and equitable in Barclays' or such Subcustodian's judgment;
and
(e) subject to the prior receipt of all documentation
required by applicable law, pay or cause to be paid any and all taxes
and levies in the nature of taxes imposed on the Assets in the Custody
or Cash Accounts by any governmental authority and shall use
reasonable efforts where appropriate to promptly enable the Custodian
or a Customer to reclaim any foreign withholding tax relating to any
such Assets.
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<PAGE> 8
9. Settlement Procedures; Instructions.
(a) Promptly after the acceptance of an offer to purchase
Securities by a Customer for which such Customer intends Barclays, directly or
through any foreign custodian or depository, to act as custodian, the Custodian
shall deliver to Barclays Instructions specifying, inter alia and as necessary,
with respect to each such purchase: (a) the name of the issuer and the title
of the Securities, including CUSIP number or other similar securities
identification number, if any, (b) the number of shares or the principal amount
purchased and accrued interest, if any, (c) to the extent known, the date
payment is due and the date delivery is to be made, (d) the purchase price per
unit, (e) the total amount payable upon such purchase, (f) the name of the
person from whom or the broker through whom the purchase was made, and (g) the
foreign subcustodian or depository where such Securities are to be delivered
and held, and whether the total amount payable will be paid from the Cash
Account maintained in the country or jurisdiction where such subcustodian or
depository is located. Subject to Section 5, Barclays directly or through the
applicable foreign subcustodian or depository shall receive Securities
purchased by a Customer from the person through or from whom the same were
purchased, and shall pay, out of the monies credited to the applicable Cash
Account, the total amount payable upon such purchase, provided that the same
conforms to the total amount payable shown on the Instructions with respect to
such purchase. On the scheduled date for payment for any Security to be
purchased for deposit in a Custody Account, the Custodian shall have caused
there to be deposited in the Cash Account located in the country or
jurisdiction where such purchase is to take place, amounts sufficient, and in
such denominations, to enable Barclays or the foreign subcustodian to pay for
such Security.
(b) Promptly after the acceptance of an offer to sell any
Securities by a Customer, the Custodian shall deliver to Barclays Instructions
specifying, inter alia and as necessary, with respect to such sale: (a) the
name of the issuer and the title of the Security, including CUSIP number or
other similar securities identification number, if any, (b) the number of
shares or principal amount sold, and accrued interest, if any, (c) to the
extent known, the date payment is to be received and the date delivery of the
Security is to be made, (d) the sale price per unit, (e) the total amount
payable upon such sale, (f) the name of the broker through whom or the person
to whom the sale was made and to whom the Security is to be delivered, and (g)
the foreign subcustodian or depositary from which such Securities are to be
delivered. Subject to Section 6, Barclays shall directly or through the
applicable foreign subcustodian or depository deliver the Securities sold to
the broker or other person named in such Instructions upon receipt by Barclays
or a foreign subcustodian of the total amount payable to such Customer
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<PAGE> 9
upon such sale provided that the same conforms to the total amount payable to
the Customer as set forth in the Instructions with respect to such sale.
Unless Barclays shall be in receipt of Instructions to the contrary, amounts
received from the sale of any Security shall be deposited in the Cash Account
located in the country or jurisdiction where such sale shall have occurred, in
the denomination in which payment was made, and, subject to the provisions of
Section 5, shall be held in such Cash Account until Instructions are received
from the Custodian.
(c) As used in this Agreement, the term "Instructions"
means instructions of the Custodian to Barclays containing all information
required by Barclays received via telephone, telex, TWX, facsimile
transmission, bank wire or other teleprocess or electronic instruction systems
acceptable to Barclays which Barclays believes in good faith to have been given
by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which Barclays may specify.
(d) Any Instructions delivered to Barclays by telephone
or facsimile transmission shall promptly thereafter be confirmed in writing by
an Authorized Person (which confirmation shall bear the original or facsimile
signature of such Authorized Person). However, Barclays may rely upon
instructions by telephone or facsimile transmission in the event of failure of
an Authorized Person to send such confirmation in writing. Barclays may rely
upon telephone instructions in the event of the failure of such confirmation to
conform to the telephone instructions received if such telephone instructions
are acted upon prior to receipt of such confirmation. Unless otherwise
expressly provided, all Instructions shall continue in full force and effect
until cancelled or superseded. If Barclays requires test arrangements,
authentication methods or other security devices to be used with respect to
Instructions, any Instructions given by the Custodian thereafter shall be given
and processed in accordance with such terms and conditions for the use of such
arrangements, methods or devices as Barclays may put into effect and modify
from time to time. The Custodian shall safeguard any testkeys,
identifications, codes or other security devices which Barclays shall make
available to it. Barclays and the Custodian may electronically record any
Instructions given by telephone, and any other telephone discussions, with
respect to a Custody Account or a Cash Account.
(e) If the Custodian elects, Barclays shall provide the
Custodian with such instructions and passwords as may be necessary in order for
the Custodian to have dial up access or other means of access to Barclays
telecommunications system for securities in custody accounts. The Custodian
understands information provided to it through such system shall be limited to
information relating to the Custody Accounts and the Cash
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<PAGE> 10
Accounts. If the Custodian elects to utilize such system, the Custodian agrees
to assume full responsibility for the consequence of any misuse or unauthorized
use by the Custodian of any terminal device or the instructions or passwords
mentioned above.
10. Authorized Persons. As used in this Agreement, the
term "Authorized Persons" means such officials or such agents of the Custodian
as have been designated in writing to Barclays to act on behalf of the
Custodian in the performance of any acts which Authorized Persons may do under
this Agreement. Such persons shall continue to be Authorized Persons until
such time as Barclays receives Instructions from Authorized Persons that any
such official or agent is no longer an Authorized Person.
11. Nominees. Securities in a Custody Account which are
ordinarily held in registered form may be registered in the nominee name of
Barclays, any Subcustodian or securities depository. The Custodian agrees to
hold any such nominee harmless from any liability as a holder of record of such
Securities. Barclays may cause any such Securities to cease to be registered
in the name of any such nominee and to be registered in the name of another
nominee provided such nominee is either a Subcustodian or a securities
depository.
12. Standard of Care.
(a) Barclays shall be responsible for the performance
only of such duties as are specifically set forth herein or contained in
Instructions given to Barclays by Authorized Persons which are not contrary to
the provisions of this Agreement. Barclays will use reasonable care with
respect to the safekeeping of the Assets in the Custody Accounts and Cash
Accounts and in the performance of its functions and duties under this
Agreement. Barclays shall be liable to the Custodian for any loss which shall
occur as the direct and foreseeable result of the failure of a Subcustodian to
exercise reasonable care with respect to the safekeeping of Assets or in the
performance of its functions or duties in connection herewith to the same
extent that such Subcustodian would be liable to the Custodian under applicable
law if such Subcustodian and the Custodian had directly entered into a
custodial agreement governed by the law of the country of such Subcustodian.
In the event of any loss to the Custodian by reason of the failure of Barclays
or its Subcustodian to utilize reasonable care, Barclays shall be liable to the
Custodian to the extent of the Custodian's direct and foreseeable damages, to
be determined (in the case of a loss of property) based on the market value in
U.S. dollars of the property which is the subject of the loss at the date on
which actual notice of such loss is received by Barclays, and without reference
to any special conditions or circumstances. Barclays shall be held to the
exercise of reasonable care in carrying out this Agreement but
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<PAGE> 11
shall be indemnified by, and shall be without liability to, the Custodian for
any action taken or omitted by Barclays in good faith without negligence in
accordance with the terms of this Agreement. Barclays shall be entitled to
rely, and may act, on advice of counsel (who may be counsel for the Custodian)
on all matters and shall be without liability for any action reasonably taken
or omitted pursuant to such advice. Barclays will be subject to the
reasonableness standard articulated above.
(b) Except as otherwise specifically agreed to herein,
Barclays shall have no liability for any loss occasioned by any mistakes
contained in, or errors in the transmission of, any Instruction, or by delay in
the actual receipt of any Instruction or any notice to Barclays or by or to its
Subcustodian of any payment, redemption or other transaction regarding
Securities in the Custody Accounts in respect of which Barclays has agreed to
take action as provided in Section 8 hereof. Barclays shall not be liable for
any action taken in good faith upon Instructions or in reliance upon the
designation of "Authorized Persons" referred to in Section 10 hereof and may
rely on the genuineness of any such documents which it may in good faith
believe to be validly executed. Barclays shall not be liable for any loss or
damage resulting from or caused by nationalization, expropriation, currency or
other regulatory restrictions, labor unrest, acts of war, civil war or
terrorism, insurrection, revolution, military or usurped powers, nuclear
fusion, fission or radiation, earthquake, storm or other disturbance of nature
or acts of God.
(c) Without limiting the generality of the foregoing,
neither Barclays nor any Subcustodian shall be under any duty or obligation to
inquire into, or be liable for:
(i) the validity of the issue of any Securities purchased
by or for any Customer, the legality of the purchase thereof, or the
propriety of the amount paid therefor; or
(ii) the legality of the sale of any Securities by or for
any Customer, or the propriety of the amount for which the same are
sold; or
(iii) any default in the payment of principal or income of
any security other than as provided in Section 7 of this Agreement; or
(iv) the financial condition of any broker, agent or
other party to which Securities are delivered or payments are made
pursuant to this Agreement; or
(v) the existence or content of any trade confirmations
received from brokers; the Custodian or its Authorized Persons issuing
Instructions shall bear any
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<PAGE> 12
responsibility to review such confirmations against Instructions
issued to and statements issued by Barclays.
(d) Neither Barclays nor any Subcustodian shall be liable
for, or considered to be the custodian of, any money represented by any check,
draft, or other instrument for the payment of money received by it on behalf of
any Customer, until Barclays or such Subcustodian actually receives such money.
(e) Neither Barclays nor any Subcustodian shall 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 Instructions, and (ii) it shall be assured to
its satisfaction of reimbursement of its costs and expenses by the Custodian in
connection with any such action.
(f) Neither Barclays nor any Subcustodian shall be under
any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it in any Custody Account are such as may properly be
held by a Customer.
(g) It is understood and agreed that Barclays is not
under any duty to maintain any insurance for the benefit of any Customer or the
Custodian or to supervise the investment of, or to advise or make any
recommendation to any Customer or the Custodian with respect to the sale or
other disposition of any Securities at any time held hereunder or to advise or
recommend the purchase of any Securities at any time.
(h) The Custodian will indemnify Barclays for any direct
and foreseeable damages to Barclays with respect to the performance of
Barclays' obligations under this Agreement (including, but not limited to,
Barclays' legal fees and expenses and any other legal fees and expenses for
which Barclays is liable, and any loss or liability in connection with a claim
settled by Barclays, which agreement is accepted by the Custodian) unless such
direct and foreseeable damages arises from any failure by Barclays or any
Subcustodian to exercise reasonable care with respect to any assets in any
Custody or Cash Account or from any negligence, fraud, bad faith, willful
misconduct or reckless disregard of duties on the part of Barclays or any
Subcustodian which maintains any Securities.
13. Proxies; Corporate Action. Unless Instructions to
the contrary are received, Barclays or its Subcustodian shall forward to the
Custodian only such communications from issuers relating to the Securities in a
Custody Account as call for voting or the exercise of rights or other specific
action (including material relative to legal proceedings intended to be
transmitted to security holders) to the extent sufficient copies
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<PAGE> 13
are received by Barclays or its Subcustodian in time for forwarding to the
Custodian. Barclays or its Subcustodian will cause its nominee to execute and
deliver to the Custodian proxies relating to Securities in a Custody Account
registered in the name of such nominee, but without indicating the manner in
which such proxies are to be voted. Proxies relating to bearer Securities will
be delivered in accordance with written Instructions.
14. Fees and Expenses. The Custodian agrees to pay to
Barclays from time to time such compensation for its services pursuant to this
Agreement and such out-of-pocket or incidental expenses as may be mutually
agreed upon in writing from time to time. The Custodian hereby agrees to hold
Barclays harmless from any liability or loss resulting from any taxes or other
governmental charges, and any expenses related thereto, which may be imposed or
assessed with respect to any Custody Account. The Custodian agrees to pay for
and hold Barclays harmless from any liability or loss resulting from the
imposition or assessment of any taxes or other governmental charges, and any
related expenses with respect to income from or Assets in the Accounts and
Barclays is authorized to charge any account of the Custodian for such items.
15. Effectiveness. This Agreement shall be effective on
the date first noted above.
16. Termination. This Agreement or the accounts of any
Customer may be terminated by the Custodian or Barclays by 90 days' written
notice to the other, sent by registered mail, provided that such notice from
the Custodian shall specify the names of the persons to whom Barclays shall
deliver the Securities in the applicable Custody Accounts and to whom the cash
in the applicable Cash Accounts shall be paid. If notice of termination is
given by Barclays, the Custodian shall, within 60 days following the giving of
such notice, specify in writing the names of the persons to whom Barclays shall
deliver the Securities in the applicable Custody Accounts and to whom the cash
in the applicable Cash Accounts shall be paid. In either case Barclays will
deliver such Securities and cash to the person so specified. If within 60 days
following the giving of a notice of termination by Barclays, the Custodian has
not specified in writing the names of the persons to whom Barclays shall
deliver the Securities in the applicable Custody Accounts and to whom the cash
in the applicable Cash Accounts shall be paid, Barclays, at its election, may
deliver such Securities and pay such cash to a bank or trust company doing
business in the State of New York to be held and disposed of pursuant to the
provisions of this Agreement, or to Authorized Persons, or may continue to hold
such Securities and cash until such information is delivered in writing to
Barclays. The obligations of the parties hereto regarding the use of
reasonable care, indemnities and payment of
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fees and expenses shall survive the termination of this Agreement.
17. Notices. Any notice or other communication including
Instructions from the Custodian to Barclays is to be delivered or mailed,
postage prepaid to the office of Barclays at 75 Wall Street, New York, New York
10265, Attention: Global Custody Group, Telephone: (212) 412-4000,
Telecopier: (212) 797-3024 or such other address as may hereafter be given to
the Custodian in accordance with the notice provisions hereunder. Any notice
from Barclays to any Customer or the Custodian is to be delivered or mailed
postage prepaid to the office of the Custodian as set forth below, or such
other address as may hereafter be given to Barclays in accordance with the
notice provisions hereunder.
18. Governing Law, Successors and Assigns and Third Party
Beneficiaries. This Agreement shall be governed by the law of the State of New
York and shall not be assignable by either party, but shall bind the successors
(including, without limitation, by merger) and assigns of the Custodian and
Barclays.
19. Headings. The headings of the paragraphs hereof are
included for convenience of reference only and do not form a part of this
Agreement.
20. Riders. Rider A to this Agreement is incorporated
herein to the extent Assets governed hereby are subject to the Employee
Retirement Income Security Act of 1974, as amended. Rider B to this Agreement
is incorporated herein to the extent Assets governed hereby are subject to the
Investment Company Act of 1940, as amended.
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<PAGE> 15
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed in its name and behalf by its duly authorized officer
as of the date first above written.
Attest: PROVIDENT NATIONAL BANK
By:
- ------------------------- --------------------------
Title:
--------------------
Address: 200 Stevens Drive
Lester, PA 19113
Attest: BARCLAYS BANK PLC
By:
- ------------------------- --------------------------
Authorized Officer
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<PAGE> 16
Rider A
Required Revisions for Pension Funds
SECTION 1. CUSTODY AND CASH ACCOUNTS.
Add the following language to the end of Section 1:
(c) The Custodian represents that the Assets being placed
in Barclays' custody are subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). It is understood that in connection therewith
Barclays is a service provider and not a fiduciary of the plan and trust to
which the assets are related. Barclays shall not be considered a party to the
underlying plan and trust, and the Custodian hereby assumes all responsibility
to assure that Instructions issued under this Agreement are in compliance with
such plan and trust and all applicable requirement under ERISA.
(d) This Agreement will be interpreted so as to be in
compliance with the Department of Labor Regulations Section 2550. 404b-1
concerning the maintenance of indicia of ownership of plan assets outside of
the jurisdiction of the district courts of the United States.
SECTION 2. MAINTENANCE OF SECURITIES AND ASSETS ABROAD.
Add the following paragraph at the end of Subsection 2(b):
Instructions to execute foreign exchange transactions with
Barclays, its subsidiaries, affiliates or Subcustodians will include (1) the
time period in which the transaction must be completed; (2) the location or the
Subcustodian with whom the contract is to be executed and (3) such additional
information and guidelines as may be deemed necessary; and, if the instruction
is a standing instruction, a provision allowing such instruction to be
overridden by specific contrary instructions.
SECTION 3. FOREIGN SUBCUSTODIANS AND DEPOSITORIES.
Add the following language to the end of Section 3:
As used in this Agreement, the term Subcustodian and the term
securities depositories include a branch of Barclays, a branch of a qualified
U.S. bank, an eligible foreign custodian, or an eligible foreign securities
depository, where such terms shall mean:
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<PAGE> 17
(a) "qualified U.S. bank" shall mean a U.S. bank as
described in paragraph (a)2(ii)(A)(1) of the Department of Labor
Regulations Section 2550.404b-1;
(b) "eligible foreign custodian" shall mean a banking
institution incorporated or organized under the laws of a country
other than the United States which is supervised or regulated by that
country's government or an agency thereof or other regulatory
authority in the foreign jurisdiction having authority over banks; and
(c) "eligible foreign securities depository" shall mean a
securities depository or clearing agency, incorporated or organized
under the laws of a country other than the United States, which is
supervised or regulated by that country's government or an agency
thereof or other regulatory authority in the foreign jurisdiction
having authority over such depositories or clearing agencies and which
is described in paragraph (c)(2) of the Department of Labor
Regulations Section 2550.404b-1.
SECTION 5. CASH ACCOUNT TRANSACTIONS.
Subsection (b) is amended to read as follows:
(b) in the event that any payment made under this Section
5 exceeds the funds available in the Cash Account, such discretionary
advance shall be deemed a service provided by Barclays under this
Agreement for which it is entitled to recover its reasonable costs and
expenses as may be determined by Barclays in good faith.
SECTION 10. AUTHORIZED PERSONS.
Add the following paragraph at the end of Section 10:
The Custodian represents that: (i) Instructions will only be
issued by or for a fiduciary pursuant to Department of Labor Regulations
Section 404b-1(a)(2)(i), and (ii) if instructions are to be issued by an
investment manager, such entity will meet the requirements of Section 3(38) of
ERISA and will have been designated by the Custodian or the Customer to manage
assets held in the Accounts ("Investment Manager"). An Investment Manager may
designate certain of its employees to act as Authorized Persons under this
Agreement.
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Rider B
Required Revision for Mutual Funds
SECTION 1. CUSTODY AND CASH ACCOUNTS.
Add the following language to the end of Section 1:
(c) The Custodian represents that the Assets being placed
in Barclays' custody are subject to the Investment Company Act of 1940 (the
"Act"), as the same may be amended from time to time.
(d) Barclays shall be responsible for assuring that it
and each Subcustodian is an eligible foreign custodian, qualified U.S. Bank or
overseas branch of a qualified U.S. Bank in accordance with the definitions
thereof set forth herein.
(e) Except to the extent that Barclays has specifically
agreed to comply with a condition of a rule, regulation or interpretation
promulgated by or under the authority of the Securities Exchange Commission
(the "SEC") or an exemptive order applicable to accounts of this nature issued
to Barclays, one or more of the other parties hereto shall be responsible to
assure that the maintenance of assets under this Agreement complies with such
rules, regulations, interpretations or exemptive order promulgated by or under
the authority of the SEC.
(f) As used in this Agreement, as applied to any assets
or property of an investment company having multiple portfolios or series, the
term "Customer" shall mean each of such Customer's individual investment
portfolios or series.
SECTION 3. FOREIGN SUBCUSTODIANS AND DEPOSITORIES.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in
this Agreement shall mean a branch of a qualified U.S. bank, an eligible
foreign custodian or an eligible foreign securities depository, which are
further defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S.
bank as defined in Rule 17f-5 under the Act;
(b) "eligible foreign custodian" shall mean (i) a banking
institution or trust company incorporated or organized under the laws
of a country other than the United States that is regulated as such by
that country's government or an agency thereof and that has
shareholders'
-18-
<PAGE> 19
equity in excess of $200 million in U.S. currency (or foreign currency
equivalent thereof), (ii) a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100
million in U.S. currency (or a foreign currency equivalent thereof),
(iii) a banking institution or trust company incorporated or organized
under the laws of a country other than the United States or a majority
owned direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws of a
country other than the United States which has such qualifications, in
addition to those set forth in clause (i) or (ii) above, as shall be
specified in Instructions and approved by Barclays, or (iv) any other
entity that shall have been so qualified by exemptive order, rule or
other appropriate action of the SEC; and
(c) "eligible foreign securities depository" shall mean a
securities depository or clearing agency, incorporated or organized
under the laws of a country other than the United States, which
operates (i) the central system for handling securities or equivalent
book-entries in that country or (ii) a transnational system for the
central handling of securities or equivalent book-entries.
The Custodian represents that the Board of each Customer has
approved each of the Subcustodians listed in Schedule A to this Agreement and
the terms of each subcustody agreement between Barclays and each Subcustodian,
and further represents that each Board has determined that the use of each
Subcustodian and the terms of each subcustody agreement are consistent with the
best interests of the Customer's fund(s) and its (their) shareholders, in each
case, to the extent required by the Act. Barclays will supply the Custodian
with any amendment to Schedule A for approval and will supply the Custodian
and, at the Custodian's request, each Customer's Board of Directors, with
information reasonably necessary to determine such new Subcustodian's
eligibility under Rule 17f-5, including a copy of the proposed agreement with
such Subcustodian. Each Customer has supplied or will supply the Custodian
with certified copies of its Board resolution(s) with respect to the foregoing
prior to placing Assets of such Customer with any Subcustodian so approved. If
Barclays intends to remove any Subcustodian previously approved, it shall so
notify the Custodian and shall move the Securities and other assets to another
Subcustodian previously approved or to a new Subcustodian, subject to the
requirements set forth in this paragraph. Barclays shall take steps as may be
required to remove any Subcustodian which has ceased to meet the requirements
of Rule 17f-5.
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<PAGE> 20
Barclays hereby warrants to the Customers and the Custodian
that in its opinion, after due inquiry, the established procedures to be
followed by each of its branches, each branch of a qualified U.S. bank, each
eligible foreign custodian and each eligible foreign securities depository
holding Securities pursuant to this Agreement afford protection for such
Securities not materially different than that provided with respect to similar
securities held by Barclays (and its securities depositories) in the United
States.
The Custodian acknowledges that Barclays, in accordance with
orders of the Commission (Investment Company Act Release No. IC-16536 August
24, 1988 and No. IC-17268 December 19, 1989), shall be permitted to delegate to
its subsidiaries located in Australia, Canada, France, Japan, Spain and
Switzerland, such of Barclays' duties and obligations as is necessary to permit
any such subsidiary to hold Securities and cash in custody in the country or
countries in which it operates; provided, however, Barclays shall continue to
be liable for any loss due to such delegation except such loss as may result
from political risk or any other risk of loss (excluding bankruptcy or
insolvency of the subsidiary) for which neither Barclays nor the subsidiary
would otherwise be liable.
SECTION 9. SETTLEMENT PROCEDURES; INSTRUCTIONS.
Add the following language to the end of Section 9:
(f) Account transactions made pursuant to Section 5 and 6 of
this Agreement may be made only for the purposes listed below. Instructions
must specify the purpose for which any transaction is to be made and the
Custodian shall be solely responsible to assure that instructions are in accord
with any limitations or restrictions applicable to the Customer by law or as
may be set forth in its prospectus.
(i) In connection with the purchase or sale of Securities
at prices as confirmed by Instructions.
(ii) When Securities are called, redeemed or retired, or
otherwise become payable.
(iii) In exchange for or upon conversion into other
securities alone or other securities and cash pursuant to any plan or
merger, consolidation, reorganization, recapitalization or
readjustment.
(iv) Upon conversion of Securities pursuant to their terms
into other securities.
(v) Upon exercise of subscription, purchase or other
similar rights represented by Securities.
-20-
<PAGE> 21
(vi) For the payment of interest, taxes, management or
supervisory fees, distributions or operating expanses.
(vii) In connection with any borrowings by the Customer
requiring a pledge of Securities, but only against receipt of amounts
borrowed.
(viii) In connection with any loans, but only against
receipt of adequate collateral as specified in Instructions which
shall reflect any restrictions applicable to the Customer.
(ix) For the purpose of redeeming shares of the capital
stock of the Customer and the delivery to, or the crediting to the
account of Barclays, its Subcustodian or the Customer's transfer
agent, such shares to be purchased or redeemed.
(x) For the purpose of redeeming in kind shares of the
Customer against delivery of the shares to be redeemed to Barclays,
its Subcustodian or the Customer's transfer agent.
(xi) For delivery in accordance with the provisions of any
agreement among the Customer, Barclays and a broker-dealer registered
under the Securities Exchange Act of 1934 (the "Exchange Act") and a
member of the National Association of Securities Dealers, Inc.,
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Customer.
(xii) For release of Securities to designated brokers under
covered call options, provided, however, that such Securities shall be
released only upon payment to Barclays of monies for the premium due
and a receipt for the Securities which are to be held in escrow. Upon
exercise of the option, or at expiration, Barclays will receive the
Securities previously deposited from brokers. Barclays will act
strictly in accordance with Instructions in the delivery of Securities
to be held in escrow and will have no responsibility or liability for
any such Securities which are not returned promptly when due other
than to make proper request for such return.
(xiii) For spot or forward foreign exchange transactions to
facilitate security trading, receipt of income from Securities or
related transactions.
(xiv) For other proper purposes as may be specified in
Instructions, which shall include a statement that the
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<PAGE> 22
purpose is a proper purpose under the instruments governing the
Customer.
(xv) Upon the termination of this Agreement as set forth
in Section 16.
SECTION 12. STANDARD OF CARE.
Section 12(a) is hereby amended by deleting paragraph (a)
thereof in its entirety and substituting therefore the following:
(a) Barclays shall be responsible for the performance
only of such duties as are specifically set forth herein or contained
in Instructions given to Barclays by Authorized Persons which are not
contrary to the provisions of this Agreement. Barclays will use
reasonable care with respect to the safekeeping of the Assets in the
Custody Accounts and Cash Accounts and in the performance of its
functions and duties under this Agreement. Barclays shall be liable
to, and indemnify and hold harmless, the Custodian and the Customer,
for any loss which shall occur as the direct and foreseeable result of
the failure of a Subcustodian to exercise reasonable care with respect
to the safekeeping of Assets or in the performance of its functions or
duties in connection herewith to the same extent that such
Subcustodian would be liable to the Custodian and the Customer, as
under applicable law if such Subcustodian and the Custodian and the
Customer had directly entered into a custodial agreement governed by
the law of the country of such Subcustodian. In the event of any loss
to the Custodian or the Customer by reason of the failure of Barclays
or its Subcustodian to utilize reasonable care, Barclays shall be
liable to, and indemnify and hold harmless, the Custodian and the
Customer to the extent of such party's direct and foreseeable damages,
to be determined (in the case of a loss of property) based on the
market value in U.S. dollars of the property which is the subject of
the loss at the date on which actual notice of such loss is received
by Barclays, and without reference to any special conditions or
circumstances. Barclays shall be held to the exercise of reasonable
care in carrying out this Agreement but shall be indemnified by, and
shall be without liability to, the Custodian and the Customer for any
action taken or omitted by Barclays in good faith without negligence
in accordance with this Agreement. Barclays shall be entitled to
rely, and may act, on advice of counsel (who may be counsel for the
Custodian) on all matters and shall be without liability for any
action reasonably taken or omitted pursuant to such advice. Barclays
will be subject to the reasonableness standard articulated above.
-22-
<PAGE> 23
SECTION 21. REPORTS.
In addition to the reports specified in Section 4(f) of this
Agreement, which Barclays shall provide at least monthly to the Custodian, and
at the Custodian's request, to the Board of Directors of each Customer,
Barclays shall provide to the Custodian and to the Board of Directors of each
Customer on an annual basis a report confirming that it and each of the
Subcustodians is an eligible foreign custodian, a qualified U.S. Bank or branch
of a qualified U.S. Bank, as defined herein. Barclays shall also provide such
information regarding the Securities and other assets, any Subcustodian, any
foreign country or itself as may be reasonably requested from time to time by
the Custodian.
SECTION 22. CORPORATE ACTION.
Whenever Barclays or a Subcustodian receives information
concerning the Securities which requires discretionary action by the beneficial
owner of the Securities (other than a proxy), such as subscription rights,
bonus issues, stock repurchase plans and rights offerings, or legal notice or
other material intended to be transmitted to securities holders ("Corporate
Actions"), Barclays will promptly give the Custodian notice of such Corporate
Actions to the extent that Barclays has actual knowledge of a Corporate Action.
When a rights entitlement or a fractional interest resulting
from a rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, Barclays will endeavor to obtain
Instructions, but if Instructions are not received in time for Barclays to take
timely action, or actual notice of such Corporate Action was received too late
to seek Instructions, Barclays is authorized to sell such rights entitlement or
fractional interest and to credit the applicable Cash Account with the proceeds
and to take any other action it deems, in good faith, to be appropriate in
which case, provided it has met the standard of care in this Agreement, it
shall be held harmless by the Customers for any such action.
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<PAGE> 24
SIGNATURES.
Add the following after the signature lines:
The provisions of Section 3 hereof
are hereby acknowledged by:
BARCLAYS BANK OF CANADA
By:
---------------------------
Authorized Attorney-in-Fact
BARCLAYS BANK S.A. (FRANCE)
By:
---------------------------
Authorized Attorney-in-Fact
BARCLAYS TRUST AND BANKING
COMPANY (JAPAN) LIMITED
By:
---------------------------
Authorized Attorney-in-Fact
BARCLAYS BANK S.A.E. (SPAIN)
By:
---------------------------
Authorized Attorney-in-Fact
BARCLAYS BANK S.A. (SWITZERLAND)
By:
---------------------------
Authorized Attorney-in-Fact
BARCLAYS BANK AUSTRALIA LIMITED
By:
---------------------------
Authorized Attorney-in-Fact
-24-
<PAGE> 25
The following investment companies hereby agree and become parties to the
provision of the Global Custody Agreement of which this Rider B is a part.
Barclays and the Custodian undertake to discharge their respective obligations
set forth in the Global Custody Agreement and herein to the undersigned
investment companies which shall each be a "Customer" under this Agreement.
By:
-------------------------
Title:
----------------------
Dated as of:
-25-
<PAGE> 1
EXHIBIT (8)(g)
CUSTODIAN AGREEMENT
AGREEMENT made as of this 13th day of June, 1983, between
Provident National Bank, a Pennsylvania corporation having a place of business
at 17th & Chestnut Streets, Phila., PA (hereinafter called the "Company"), and
STATE STREET BANK AND TRUST COMPANY, a Massachusetts banking corporation,
having its principal place of business at Boston, Massachusetts (hereinafter
called "State Street").
WITNESSETH THAT:
In consideration of the mutual agreements herein contained the
Company and State Street hereby agree as follows:
1. The Company agrees to and does hereby appoint State
Street its Custodian and Agent, and agrees that State
Street shall retain all securities received from the
Company at State Street Bank & Trust Company, 12
Nicholas Lane, London, England.
2. All securities delivered to State Street (other than
bearer securities) shall be properly endorsed and in
form for transfer or in the name of a nominee of
State Street.
3. State Street shall have the following powers and
perform the following duties:
A. To keep safely the securities of the Company
and on behalf of the Company, from time to
<PAGE> 2
time, to receive delivery of certificates for
safekeeping. Securities of the Company may
be maintained by State Street at its
premises, or upon receipt of proper
instructions from the Company and a
representation that no rule or regulation
applicable to the Company prohibits the
safekeeping of the Company's securities in a
foreign depository or in a book-entry system,
at a sub-custodian bank or in a book-entry
system for the central handling of
securities. State Street shall maintain
records of all receipts, deliveries and
locations of such securities, together with a
current inventory thereof.
B. To register securities of the Company held by
State Street in the name of the nominee of
State Street.
C. Upon receipt of proper instructions, and
insofar as cash is available for the purpose,
to pay for and receive all securities
purchased for the account of the Company and
to collect all dividends, interest, or other
distributions of the issuer, due the
purchaser.
D. Upon receipt of proper instructions, to
exchange securities held by it for the
-2-
<PAGE> 3
account of the Company for other securities
or for other securities and cash, and to
expend cash, in connection with any merger,
consolidation, reorganization,
recapitalization, split-up of shares, changes
of par value or conversion or in connection
with the exercise of subscription or purchase
rights, or otherwise.
E. Upon receipt of proper instructions to make
delivery of securities which have been sold
for the account of the Company, or which have
been called, redeemed, retired, or otherwise
become payable, upon payment therefor. All
such payments are to be made in cash, by a
certified check or a treasurer's or cashier's
check of a bank or in the case of delivery
through a securities depository, by credit by
the securities depository, all in accordance
with street custom.
F. Promptly to execute all proxies in favor of
management unless otherwise directed and to
mail said proxies to the address specified.
4. State Street shall have and perform the following
additional powers and duties:
A. To retain cash of the Company in the banking
department of an agent bank in a separate
-3-
<PAGE> 4
account or accounts in the name of State
Street for the account of the Company,
subject only to draft or order by State
Street acting pursuant to the terms of this
Agreement. State Street reserves the right
to reverse erroneous entries to the Company's
account and to charge the account for the
amount of securities for which payment has
not been made.
B. To collect, receive and deposit in the bank
account maintained pursuant to Paragraph 4(A)
all income and other payments with respect to
the securities held hereunder.
C. Except as otherwise agreed to in writing, any
securities or other property of the Company
at any time in the possession of State Street
may at all times be held and treated as
collateral for the payment of securities for
which payment has not been made.
D. To render reports as agreed upon from time to
time between both parties.
5. State Street shall be deemed to have received proper
instructions upon receipt of written instructions
signed by a majority of the Board of Directors of the
Company or by one or more persons as the Board of
Directors shall have from time to
-4-
<PAGE> 5
time authorized to give the particular instructions
in question. Different persons may be authorized to
give instructions for different purposes. A
certified copy of a resolution or action of the Board
of Directors of the Company may be received and
accepted by State Street as conclusive evidence of
the authority of any such person or persons to act
and may be considered as in full force and effect
until receipt of written notice to the contrary.
Such instructions may be general or specific in
terms, and unless specified to the contrary, State
Street is authorized to act upon such instructions
whether given orally, by telephone, telex or
otherwise.
6. State Street shall be kept indemnified by the Company
and be without liability for any action taken or
thing done by it in carrying out the terms and
provisions of this Agreement provided that State
Street has acted in good faith and has not been
guilty of gross negligence. State Street shall have
no more or less responsibility or liability to the
Company on account of any action or omission of any
subcustodian employed by State Street than any such
subcustodian has to State Street.
-5-
<PAGE> 6
7. The Company shall pay to State Street the
compensation set forth in Exhibit A hereto until a
different compensation shall be agreed upon in
writing between the parties together with United
Kingdom Value Added Tax (if any) hereon and any other
includable expenses incurred in connection herewith.
8. If State Street has issued to the Company a test key
security system in order that State Street may verify
that certain transmission of information has been
originated by the Company, the Company hereby agrees:
A. To indemnify State Street against and to save
State Street harmless from all liability,
claims, loss and demands whatsoever,
including attorney's fees, howsoever arising
or incurred because of or in connection with
State Street's relying on receipt of a test
key to authenticate previous transmission
received by State Street apparently from the
Company.
B. To cause the Company's internal auditors to
verify to State Street from time to time that
use of and access to the test key system is
restricted to authorized employees.
-6-
<PAGE> 7
C. To cause the Company's independent auditors
to certify to State Street on an annual basis
that use of, and access to, the test key
system is restricted to authorized employees.
9. These provisions may be altered in any manner and to
any extent by written agreement between the Company
and State Street.
10. Either party may terminate this Agreement by notice
in writing delivered or mailed to the other party
hereto not less than thirty (30) days prior to the
date on which such termination shall take place and
thereupon this Agreement shall terminate in
accordance with such notice and all property then
held shall be delivered to the Company or upon its
order to its successor.
IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be executed in its name on its behalf
by a duly authorized officer as of the day and year first
above written.
STATE STREET BANK AND TRUST COMPANY
By
---------------------------------
PROVIDENT NATIONAL BANK
By
---------------------------------
-7-
<PAGE> 1
EXHIBIT (8)(h)
AMENDMENT NO. 1 TO CUSTODIAN AGREEMENT
This Agreement made as of the 21st day of November, 1989
between PROVIDENT NATIONAL BANK. a national banking association ("Provident")
and STATE STREET BANK AND TRUST COMPANY, a Massachusetts banking corporation,
("State Street") amends a Custodian Agreement between Provident and State
Street dated as of June 13, 1983 (the "Agreement").
The parties hereto, intending to be legally bound, agree as
follows:
1. That the phrase "State Street Bank & Trust Company,
12 Nicholas Lane, London, England" in paragraph 1 of the Agreement be replaced
with "State Street London Limited and Euroclear."
2. That the following sentence be added as the last
sentence of paragraph 3(E) of the Agreement:
"Notwithstanding any provision of this Agreement to the
contrary, settlement and payment for securities received for
the account of the Company and delivery of securities
maintained for the account of the Company 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, delivering 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. All collection and receipt of
funds or securities and all payment and delivery of funds or
securities under this Agreement shall be made by State Street,
at Company's risk, including without limitation the risk
associated with such street delivery practices of delivering
securities against a receipt, before receiving payment."
<PAGE> 2
3. That the phrase "in the banking department of an
agent bank" in the first sentence of paragraph 4(A) of the Agreement be deleted.
4. That paragraph 6 of the Agreement be deleted and
replaced in its entirety with the following:
"State Street shall not be responsible for the title, validity
or genuineness of any security received by it or delivered by
it pursuant to this Agreement and shall be kept indemnified by
the Company and be without liability for any action taken or
thing done by it in carrying out the terms and provisions of
this Agreement, including reasonable attorney's fees, provided
that State Street has acted in good faith and has not been
guilty of negligence. State Street shall have no more or less
responsibility or liability to the Company on account of any
action or omission of any subcustodian or securities
depository employed by State Street than any such subcustodian
or securities depository has to State Street.
In the event State Street delegates its duties and obligations
to State Street London Limited, State Street agrees that such
delegation shall not relieve State Street of any
responsibility for loss due to such delegation except such
loss as may result from: (a) Political (e.g., exchange
control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed
hostilities) or (b) other risk of loss (excluding a bankruptcy
or insolvency of State Street London Limited not caused by a
political risk) for which neither State Street nor State
Street London Limited would be liable (e.g., losses due to
Acts of God, nuclear incident and the like, despite the
exercise of reasonable care).
In no event shall State Street be liable for indirect, special
or consequential damages even if advised of the possibility of
such damages."
5. That paragraphs 7, 8, 9 and 10 of the Agreement be
renumbered as paragraphs 9, 10, 11 and 12, respectively.
6. That a new paragraph 7 be added to the Agreement to
read in full as follows:
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<PAGE> 3
"State Street shall have no responsibility or liability for
any obligations now or hereafter imposed on the Company or
State Street as custodian of the Securities by the tax law of
the United States of America or any state or political
subdivision thereof. State Street shall be kept indemnified
by and be without liability to the Company for any such
obligations including taxes, withholding and reporting
requirements, claims for exemption or refund, additions for
late payment, interest, penalties and other expenses
(including legal expenses) that may be assessed against the
Company or State Street as custodian of the Securities."
7. That a new paragraph 8 be added to the Agreement
to read in full as follows:
"It shall be the responsibility of the Company to notify State
Street of the obligations imposed on the Company with respect
to the securities, by the tax law of jurisdictions other than
those mentioned in paragraph 7 hereof. State Street shall use
its best efforts to assist the Company with respect to any
claim for exemption or refund under the tax law of
jurisdictions for which the Company has provided such
information. Nevertheless, State Street shall be kept
indemnified by and shall be without liability to the Company
for any such obligations including taxes, withholding and
reporting requirements, claims for exemptions or refund,
additions for late payment, interest, penalties and other
expenses (including legal expenses) that may be assessed
against State Street or the Company as custodian of the
securities."
8. That a new paragraph 13 be added to the Agreement to
read in full as follows:
"State Street hereby represents and warrants to the Company
that it or an affiliate of State Street currently maintains a
Banker's Blanket Bond (the "Bond") in the principal amount of
not less than fifty million dollars ($50,000,000) and an all
risk excess policy in an amount of not less than two hundred
million dollars ($200,000,000) and that the terms of the Bond
cover all securities received from the Company and held by
State Street or State Street London Limited. State Street
agrees to maintain the Bond during the term of the Agreement
and shall immediately notify the Company in the event that the
Bond terminates or otherwise lapses."
-3-
<PAGE> 4
9. That a new paragraph 14 be added to the Agreement to
read in full an follows:
"If State Street has issued to the Company a data access
security system in order that the Company may have access to
certain data and functions, the Company hereby agrees:
(a) To access data and functions only in accordance
with the Data Access Operating Procedures annexed hereto as
Exhibit A and to regard and preserve as confidential all
information obtained with respect to the issuance to the
Company of a data access security system.
(b) To access data and functions solely for its
own internal use and benefit.
(c) To discontinue use of the data access
security system at any time for reasonable security reasons
upon notice from State Street.
(d) Upon request, to cause the Company's internal
auditors to verify to State Street that data access is
restricted to authorized employees.
(e) To indemnify State Street against and to hold
State Street harmless from all liability, claims, loss and
demands whatsoever, including reasonable attorney's fees,
howsoever arising or incurred because of or in connection with
the access of data and functions by the Company and the use by
the Company or any of its employees, whether authorized or
unauthorized, of the data access security system, provided
that State Street shall not be so indemnified if any portion
of such loss is attributable to State Street's willful
misfeasance, bad faith or negligence."
-4-
<PAGE> 5
IN WITNESS WHEREOF, each of the parties hereto has caused this
amendment to be executed in its name on its behalf by a duly authorized officer
as of the day and year first above written.
STATE STREET BANK AND TRUST COMPANY
By: /s/ F.A. Dintelli
-----------------------------------
F.A. DINTELLI, VICE PRESIDENT
PROVIDENT NATIONAL BANK
By: /s/ Allyn Plambeck
-----------------------------------
ALLYN PLAMBECK, VICE PRESIDENT
-5-
<PAGE> 1
EXHIBIT (8)(i)
The PNC(R) Fund
103 Belleview Parkway
Wilmington, DE 19809
Re: Custodian Fees
Dear Sir/Madam:
This letter constitutes our agreement with respect to
compensation be paid to Provident National Bank ("Provident") under the terms
of a Custodian Agreement dated October 4, 1989 between you (the "Fund") and
Provident. Pursuant to paragraph 21 of that agreement, and in consideration of
the services to be provided to you, you will pay Provident the following:
With respect to securities held by the Tax-Free
Income Portfolio (the "Portfolio"), an annual custody fee of $.25 for each
$1,000 of the Portfolio's first $50 million of average gross assets, $.20 for
each $1,000 on the next $50 million of the Portfolio's average daily gross
assets, and $.15 for each $1,000 on the average gross assets of the Portfolio
which exceed $100 million, which custody fees shall be calculated daily and
paid monthly.
A transaction charge of $15.00 for each purchase,
sale, maturity or delivery of a security for reissuance; $30.00 per sale,
purchase, exercise or expiration of an option contract (round trip); $50.00 per
sale, purchase, exercise or expiration of a futures contract (round trip);
$15.00 for each repurchase trade with an institution other than Provident
(round trip).
Provident's out-of-pocket expenses including, but not
limited to, postage, telephone, telex, interest claim fee ($50.00 per claim),
transfer and registration fees ($10.00 per item), federal express charges,
telex and federal reserve wire fees.
Provident's costs in providing foreign custody
services.
<PAGE> 2
The minimum monthly fee shall be $1,000 for the
Portfolio, exclusive of out-of-pocket expenses and transaction charges.
The fee for the period from the day of the year this agreement
is entered into until the end of that year shall be prorated according to the
proportion which such period bears to the full annual period.
This letter agreement is dated as of May 1, 1990.
If the foregoing accurately sets forth our agreement and you
intend to be legally bound hereby, please execute a copy of this letter and
return it to us.
Very truly yours,
Provident National Bank
By:
-----------------------
Accepted:
By: /s/ Edward J. Roach
----------------------
Treasurer
<PAGE> 1
EXHIBIT (8)(j)
February 3, 1992
The PNC(R) Fund
103 Belleview Parkway
Wilmington, DE 19809
Re: Custodian Fees
Dear Sir/Madam:
This letter constitutes our agreement with respect to
compensation to be paid to Provident National Bank ("Provident") under the
terms of a Custodian Agreement dated October 4, 1989 between you (the "Fund")
and Provident. Pursuant to paragraph 21 of that agreement, and in
consideration of the services to be provided to you, you will pay Provident the
following:
1. With respect to securities held by the Ohio Tax-Free
Money Market, Pennsylvania Tax-Free Money Market, Intermediate Government, Ohio
Tax-Free Income, Pennsylvania Tax-Free Income, Value Equity, Index Equity and
Special Equity Portfolios (the "Portfolios"), an annual custody fee of $.25 for
each $1,000 of each Portfolio's first $50 million of average gross assets, $.20
for each $1,000 on the next $50 million of each Portfolio's average daily gross
assets, and $.15 for each $1,000 on the average gross assets of each Portfolio
which exceed $100 million, which custody fees shall be calculated daily and
paid monthly.
2. A transaction charge of $15.00 for each purchase,
sale, maturity or delivery of a security for reissuance; $30.00 per sale,
purchase, exercise or expiration of an option contract (round trip); $50.00 per
sale, purchase, exercise or expiration of a futures contract (round trip);
$15.00 for each repurchase trade with an institution other than Provident
(round trip).
3. Provident's out-of-pocket expenses including, but not
limited to, postage, telephone, telex, interest claim fee ($50.00 per claim),
transfer and registration fees ($10.00 per
<PAGE> 2
item), federal express charges, telex and federal reserve wire fees.
4. Provident's costs in providing foreign custody
services.
5. The minimum monthly fee shall be $1,000 for each
Portfolio, exclusive of out-of-pocket expenses and transaction charges.
The fee for the period from the day of the year this agreement
is entered into until the end of that year shall be prorated according to the
proportion which such period bears to the full annual period.
If the foregoing accurately sets forth our agreement and you
intend to be legally bound hereby, please execute a copy of this letter and
return it to us.
Very truly yours,
Provident National Bank
By:
-----------------------
Accepted:
The PNC (R) Fund
By: /s/ Edward J. Roach
---------------------
Treasurer
<PAGE> 1
EXHIBIT (8)(k)
March 1, 1993
The PNC(R) Fund
103 Bellevue Parkway
Wilmington, DE 19809
Re: Custodian Fees
Dear Sir/Madam:
This letter constitutes our agreement with respect to compensation to
be paid to PNC Bank, National Association (successor to Provident National
Bank) ("PNC") under the terms of a Custodian Agreement dated October 4, 1989,
as amended (the "Agreement") between you (the "Fund") and PNC. Pursuant to
paragraph 21 of the Agreement, and in' consideration of the services to be
provided to you, you will pay PNC the following:
1. With respect to each of the Fund's investment portfolios
listed in the Agreement (the "Portfolios"), an annual custody fee of $.25 for
each $1,000 of each Portfolio's first $50 million of average gross assets, $.20
for each $1,000 on the next $50 million of each Portfolio's average daily gross
assets, and $.15 for each $1,000 on the average gross assets of each Portfolio
which exceed $100 million, which custody fees shall be calculated daily and
paid monthly.
2. A transaction charge of $15.00 for each purchase, sale,
maturity or delivery of a certificated security for reissuance; $15.00 for each
purchase, sale, maturity or delivery of a security through DTC, $10.00 for each
purchase, sale, maturity or delivery of a security through the Federal Reserve,
$30.00 per sale, purchase, exercise or expiration of an option contract (round
trip); $50.00 per sale, purchase, exercise or expiration of a futures contract
(round trip); $15.00 for each repurchase trade with an institution other than
PNC (round trip).
3. PNC's out-of-pocket expenses including, but not limited to,
postage, telephone, telex, interest claim fee ($50.00 per claim), transfer and
registration fees ($10.00 per item), Federal Express charges, telex and Federal
Reserve wire fees.
<PAGE> 2
4. PNC's costs in providing foreign (i) custody services and (ii)
additional out-of-pocket expenses including, but not limited to, Federal
Express charges, Federal Reserve wire fees and telex charges.
5. The minimum monthly fee shall be $1,000 for each Portfolio,
exclusive of out-of-pocket expenses and transaction charges.
The fee for the period from the day of the year this agreement is
entered into until the end of that year shall be prorated according to the
proportion which such period bears to the full annual period.
If the foregoing accurately sets forth our agreement and you intend to
be legally bound thereby, please execute a copy of this letter and return it to
us.
Very truly yours,
PNC BANK, NATIONAL ASSOCIATION
By:/s/ A. Plambeck
Title:Vice President
Accepted:
THE PNC FUND
By:/s/ Edward J. Roach
Title:Treasurer
<PAGE> 1
EXHIBIT (9)(a)
THE PNC(R) FUND
ADMINISTRATION AGREEMENT
AGREEMENT dated as of January 18, 1993 between THE PNC(R)
FUND, a Massachusetts business trust (the "Company"), PROVIDENT FINANCIAL
PROCESSING CORPORATION ("PFPC"), a Delaware corporation, and MFD GROUP, INC.
("MFD"), a Delaware corporation (collectively, the "Administrators").
WHEREAS, the Company is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Company desires to retain the Administrators to
provide, as co-administrators, certain administration services and PFPC agrees
to provide certain accounting services for each class and series of units of
beneficial interest ("shares") in each of the Company's investment portfolios
(individually, a "Fund," collectively, the "Funds") as listed on Appendix A (as
such Appendix may, from time to time, be supplemented (or amended)) and the
Administrators are willing to furnish such administration services, and PFPC is
willing to furnish such accounting services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and intending to be legally bound, it is agreed
between the parties hereto as follows:
1. APPOINTMENT OF ADMINISTRATORS. The Company hereby
appoints each of the Administrators jointly to provide administration services,
and PFPC to provide accounting services, for each class and series of shares in
each of the Company's Funds on the terms and for the period set forth in this
Agreement. The Administrators and PFPC each accept such respective
appointments and agree to perform the services and duties set forth in Section
3 below in return for the compensation provided in Section 5 below. In the
event that the Company establishes additional classes or investment portfolios
other than the Funds listed on Appendix A with respect to which it desires to
retain the Administrators to act as co-administrators and PFPC to act as fund
accountant hereunder, the Company shall notify the Administrators and PFPC,
whereupon such Appendix A shall be supplemented (or amended) and such portfolio
shall become a Fund hereunder and shall be subject to the provisions of this
Agreement to the same extent as the Funds (except to the extent that said
provisions, including the compensation payable on behalf of such new Fund, may
be modified in writing by the Company and Administrators at the time).
<PAGE> 2
2. DELIVERY OF DOCUMENTS. The Company has furnished each of
the Administrators with copies, properly certified or authenticated, of each of
the following documents and will deliver to it all future amendments and
supplements, if any:
a. The Company's Declaration of Trust, filed
with the Secretary of State of the Commonwealth of Massachusetts on December
22, 1988, as amended (the "Charter");
b. The Company's Code of Regulations, as amended
("Code");
c. Resolutions of the Company's Board of
Trustees authorizing the execution and delivery of this Agreement;
d. The Company's most recent amendment to its
Registration Statement under the Securities Act of 1933, as amended, and under
the 1940 Act on Form N-1A as filed with the Securities and Exchange Commission
(the "Commission") on December 1, 1992 relating to its Funds (the Registration
Statement, as presently in effect and as amended or supplemented from time to
time, is herein called the "Registration Statement");
e. The Company's most recent Prospectuses and
Statements of Additional Information and all amendments and supplements thereto
(such Prospectuses and Statements of Additional Information and supplements
thereto, as presently in effect and as from time to time amended and
supplemented, are herein called the "Prospectuses"); and
f. The Company's Amended and Restated Service
Plan (non 12b-1 Plan), effective July 7, l992 and related Servicing Agreement,
and the Amended and Restated Distribution and Servicing Agreement (Rule 12b-1
Plan), effective July 7, 1992, and related Distribution and Servicing
Agreement.
3. SERVICES AND DUTIES. The Administrators enter into
the following covenants jointly and severally with respect to their
administration and PFPC's accounting services and duties:
a. Subject to the supervision and control of the
Company's Board of Trustees, the Administrators shall assist in supervising all
aspects of the Funds' operations, other than those investment advisory
functions which are to be performed by the Company's investment adviser
pursuant to the Advisory Agreement and those advisory and other services to be
performed by any sub-adviser or the custodian pursuant to the Company's
Sub-Advisory Agreement and Custodian Agreement, as amended from
-2-
<PAGE> 3
time to time, services to be performed by the distributor pursuant to the
Company's Distribution Agreement and the transfer agent pursuant to the
Company's Transfer Agency Agreement, as amended from time to time. In this
regard, the Administrators' responsibilities include:
(1) Providing personnel and supervising
a facility in Wilmington, Delaware (or in such other location as the
Company shall reasonably request) to receive purchase and redemption
orders via the Company's toll-free in-WATS telephone lines and
transmitting such requests to the Company's transfer agent as promptly
as practicable;
(2) Providing for the preparing,
supervising and mailing of confirmations for all purchase and
redemption orders to shareholders of record;
(3) Providing and supervising the
operation of an automated data processing system to process purchase
and redemption orders (the Administrators assume responsibility for
the accuracy of the data transmitted for processing or storage);
(4) Maintaining a procedure external to
the transfer agent's system to reconstruct lost purchase and
redemption data;
(5) Providing information and
distributing written communications concerning the Funds to their
shareholders of record; handling shareholder problems and calls;
(6) Supervising the services of
individuals ("shareholder representatives") provided by MFD whose
principal responsibility and function shall be to preserve and
strengthen the Company's relationships with its shareholders;
(7) Monitoring the Company's
arrangements with respect to services provided by certain
institutional shareholders ("Service Organizations") under its Amended
and Restated Service Plan, including monitoring and reviewing the
services rendered by Service Organizations to their customers who
beneficially own shares, pursuant to agreements between the Company
and such Service Organizations ("Servicing Agreements"); reviewing the
qualifications of Service Organizations wishing to enter into
Servicing Agreements with the Company; assisting in the execution and
delivery of Servicing Agreements; monitoring the Distributor's
operations under the Amended and Restated Distribution and Servicing
Agreement; reporting to the Company's Board of Trustees with respect
to the amounts paid
-3-
<PAGE> 4
or payable by the Company from time to time under the Plans and the
nature of the services provided by Service Organizations; and
maintaining appropriate records in connection with such duties.
b. The Administrators shall prepare or review,
and provide advice with respect to, all sales literature (advertisements,
brochures and shareholder communications) for each of the Funds and any class
of shares thereof.
c. The Administrators shall participate to the
extent requested by the Company and its counsel in the periodic updating of the
Company's Registration Statement; compile data and accumulate information for
and coordinate with the Company's Treasurer the preparation of reports to
shareholders of record and the Commission (e.g., Annual and Semi-Annual Reports
on Form N-SAR), it being understood that the preparation and filing of timely
Notices pursuant to Rule 24f-2 shall be performed by the Company's Treasurer
with the assistance and advice of the Company's counsel; and file with the
Commission and other federal and state agency, subject to the approval of the
Company's Treasurer, reports and documents including, without limitation,
Annual and Semi-Annual Reports on Form N-SAR and federal and state tax returns
and required tax filings other than those required to be filed by the Company's
custodian or transfer agent.
d. For so long as the Company maintains an
office in Wilmington, Delaware, the Administrators shall pay the Company on the
first day of each month during such period an amount not to exceed $1,500 (or
such lesser amount as is appropriate in the event that the combined annual
expenses of the Company, Trust for Federal Securities, Municipal Fund for
California Investors, Inc., Municipal Fund for New York Investors, Inc.,
Municipal Fund for Temporary Investment, Portfolios for Diversified Investment
and Temporary Investment Fund, Inc. (collectively, herein called the
"Companies") in maintaining their offices in Wilmington, Delaware total less
than $18,000 divided by the number of Companies which have maintained an office
in Wilmington, Delaware during the previous month).
e. The Administrators, after consultation with
the distributor and counsel for the Company, shall determine the jurisdictions
in which the Company's shares shall be registered or qualified for sale. The
Administrators shall be responsible for maintaining the registration or
qualification of shares for sale under the securities laws of any state and for
preparing compliance filings pursuant to state securities laws with the advice
of the Company's counsel. Payment of share registration fees and any fees for
qualifying or continuing the qualification of the Company or any Fund as a
dealer or broker shall be made by the Company or Fund involved.
-4-
<PAGE> 5
f. Monitor, and assist in developing compliance
procedures for each of the classes of the Company's Funds, which will include
without limitation, procedures to monitor compliance with each Fund's
investment objective, policies and limitations, tax matters, and applicable
laws and regulations.
g. The Administrators shall assist in monitoring
of regulatory and legislative developments which may affect the Company; assist
in counseling the Company with respect to regulatory examinations or
investigations of the Company; and work with the Company's counsel in
connection with regulatory matters or litigation.
h. PFPC agrees to maintain all financial
accounts, records, journals, ledgers and schedules for each Fund (other than
those maintained by the Company's Custodian and its Transfer Agent), and to
install and maintain a system of internal controls appropriate for entities of
the size and complexity of each Fund, and to provide reports, financial
statements and other statistical data as requested from time to time by the
Administrators or by the Company. In addition, PFPC shall compute each Fund's
net asset value, net income and net capital gain (loss) in accordance with the
Company's Prospectus and resolutions of its Board of Directors. PFPC shall,
together with the Company's Treasurer, act as liaison with the Company's
independent public accountants and shall provide account analyses, fiscal year
summaries and other audit related schedules. PFPC shall take all reasonable
action in the performance of its obligations under this Agreement to assure
that the necessary information is made available to such accountants for the
expression of their opinion, as such may be required by the Company from time
to time.
i. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Administrators agree that all records which they
maintain for the Company are the property of the Company and further agree to
surrender promptly to the Company any of such records upon the Company's
request. The Administrators further agree 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 said Act.
j. If the expenses borne by any Fund in any
fiscal year exceed the applicable expense limitations imposed by the securities
regulations of any state in which the Fund's shares are registered or qualified
for sale to the public, the Administrators jointly and severally agree to
reimburse such Fund for a portion of any such excess expense in an amount equal
to the portion that the administration fees otherwise payable by the Fund to
the Administrators bear to the total amount of the investment advisory and
administration fees otherwise payable by the Fund. The expense reimbursement
obligation of the
-5-
<PAGE> 6
Administrators is limited to the amount of their fees hereunder for such fiscal
year, provided, however, that notwithstanding the foregoing, the Administrators
shall reimburse such Fund for a portion of any such excess expenses in an
amount equal to the proportion that the fees otherwise payable to the
Administrators bear to the total amount of investment advisory and
administration fees otherwise payable by the Fund regardless of the amount of
fees paid to the Administrators during such fiscal year to the extent that the
securities regulations of any state having jurisdiction over the Fund so
require. Such expense reimbursement, if any, will be estimated, reconciled and
paid on a monthly basis.
k. In the event of equipment failures beyond
PFPC's control, PFPC shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions but shall have no liability
with respect thereto. PFPC shall enter into and shall maintain in effect with
appropriate parties one or more agreements making reasonable provision for
emergency use of electronic data processing equipment to the extent appropriate
equipment is available.
l. In performing all of their services and
duties as co-administrators, the Administrators will act in conformity with the
Charter, Code, Prospectuses and resolutions and other instructions of the
Company's Board of Trustees and will comply with the requirements of the 1940
Act and other applicable federal or state law.
4. EXPENSES ASSUMED AS ADMINISTRATORS. The
Administrators will bear all expenses incurred by them in performing their
services and duties as co-administrators, except as otherwise expressly
provided herein. Other expenses to be incurred in the operation of the Funds,
including taxes, interest, brokerage fees and commissions, if any, salaries and
fees of officers and trustees who are not officers, directors, shareholders or
employees of the Administrators, or the Company's investment adviser or
distributor for the Funds, Commission fees and state Blue Sky qualification
fees, advisory and administration fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, outside auditing
and legal expenses, costs of maintaining corporate existence, typesetting and
printing of prospectuses for regulatory purposes and for distribution to
current shareholders of the Funds, costs of shareholders' reports and corporate
meetings and any extraordinary expenses, will be borne by the Company,
provided, however, that the Company will not bear, directly or indirectly, the
cost of any activity which is primarily intended to result in the sale of
shares of the Funds otherwise than pursuant to its Amended and Restated
Distribution and Servicing Agreement.
-6-
<PAGE> 7
5. COMPENSATION.
a. For the services provided and the expenses
assumed as Administrators pursuant to Section 4 above, the Company will pay to
PFPC, as agent for itself and MFD, a monthly fee based on the net assets of
each Fund, initially in the amounts or at rates set forth on Appendix B hereto,
and as modified by agreement of the Administrators and the Company from time to
time. The fee attributable to each Fund shall be the several (and not joint or
joint and several) obligation of each portfolio.
b. For the purpose of determining fees payable to
the Administrators for administration services and PFPC for accounting
services, the value of each Fund's net assets shall be computed as required by
its Prospectuses, generally accepted accounting principles and resolutions of
the Company's Board of Trustees. The fee attributable to each Fund shall be
the several (and not joint or joint and several) obligation of each such Fund.
c. The Administrators will from time to time employ
or associate with themselves such person or persons as they may believe to be
fitted to assist them in the performance of this Agreement. Such person or
persons may be officers and employees who are employed by both the Company and
either of the Administrators. The compensation of such person or persons shall
be paid by the Administrators, and no obligation shall be incurred on behalf of
the Company in such respect.
6. PROPRIETARY AND CONFIDENTIAL INFORMATION. The
Administrators agree on behalf of themselves and their employees to treat
confidentially and as proprietary information of the Company all records and
other information relative to the Company and its Funds and prior, present or
potential shareholders, and not to use such records and information for any
purpose other than performance of their responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Company,
which approval shall not be unreasonably withheld and may not be withheld where
the Administrators may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Company.
7. LIMITATIONS OF LIABILITY. Neither Administrator
shall be liable for any error of judgment or mistake of law or for any loss
suffered by the Company in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard
-7-
<PAGE> 8
by it of its obligations and duties under this Agreement. Any person, even
though also an officer, director, employee or agent of either of the
Administrators, who may be or become an officer, employee or agent of the
Company, shall be deemed, when rendering services to the Company or acting on
any business of the Company (other than services or business in connection with
the Administrators' duties as co-administrator hereunder) to be rendering such
services to or acting solely for the Company and not as an officer, director,
employee or agent or one under the control or direction of the Administrators
even though paid by either of them. The Administrators agree that their
liability under this Agreement, as set forth herein, shall be joint and
several.
8. DURATION AND TERMINATION. This Agreement shall
become effective upon its execution as of the date first written above and,
unless sooner terminated as provided herein, shall continue until October 31,
1993. Thereafter, if not terminated, this Agreement shall continue
automatically for successive terms of one year, provided that such continuance
is specifically approved at least annually (a) by a vote of a majority of those
members of the Company's Board of Trustees who are not parties to this
Agreement or "interested persons" of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the
Company's Board of Trustees or by vote of a "majority of the outstanding voting
securities" of the Company; provided, however, that this Agreement may be
terminated by the Company at any time, without the payment of any penalty, by
vote of a majority of the entire Board of Trustees or a vote of a "majority of
the outstanding voting securities" of the Company, on 60-days' written notice
to the Administrators, or by the Administrators at any time, without the
payment of any penalty, on 90-days' written notice to the Company. This
Agreement will automatically and immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested person" and "assignment" shall have the same
meaning as such terms have in the 1940 Act.)
9. AMENDMENT OF THIS AGREEMENT. No provision of this
Agreement may be changed, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought.
10. NOTICES. Notices of any kind to be given to the
Company hereunder by the Administrators shall be in writing and shall be duly
given if mailed or delivered to the Company at Bellevue Park Corporate Center,
Suite 152, 103 Bellevue Parkway,
-8-
<PAGE> 9
Wilmington, Delaware 19809, Attention: Mr. Edward J. Roach, Treasurer, with a
copy to Philadelphia National Bank Building, 1345 Chestnut Street, Philadelphia
Pennsylvania 19107-3496, Attention: Morgan R. Jones, Secretary, or at such
other address or to such individual as shall be so specified by the Company to
the Administrators. Notices of any kind to be given to the Administrators
hereunder by the Company shall be in writing and shall be duly given if mailed
or delivered to MFD Group, Inc. 259 Radnor-Chester Road, Suite 135, Radnor,
Pennsylvania 19087, Attention: Monroe J. Haegele and to Provident Financial
Processing Corporation, Bellevue Park Corporate Center, 103 Bellevue Parkway,
Wilmington, Delaware 19809, Attention: Vincent J. Ciavardini, or at such other
address or to such other individual as shall be so specified by an
Administrator to the Company.
11. MISCELLANEOUS.
a. 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.
b. The names "The PNC(R) Fund" and "Trustees of
The PNC(R) Fund" refer specifically to the trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated December 22, 1988, which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Company. The
obligations of "The PNC(R) Fund" entered into in the name or on behalf thereof
by any of the Trustees, officers, representatives or agents are not made
individually, but in such capacities, and are not binding upon any of the
Trustees, shareholders, representatives or agents of the Company personally,
but bind only the Trust property (as defined in the Declaration of Trust), and
all persons dealing with any Fund or class of shares of the Company must look
solely to the Trust property belonging to such Fund or class for the
enforcement of any claims against the Company.
12. COUNTERPARTS. This Agreement may be executed in
counterparts, all of which together shall constitute one and the same
instrument.
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<PAGE> 10
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 PNC(R) FUND
By:/s/ G. Willing Pepper
---------------------
PROVIDENT FINANCIAL PROCESSING CORPORATION
By:/s/ J. Richard Carnall
--------------------------
MFD GROUP, INC.
By:
--------------------------------
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<PAGE> 11
APPENDIX A
to the
ADMINISTRATION AGREEMENT
between
The PNC(R) Fund
and
PFPC Inc.
and
Provident Distributors, Inc.
- -------------------------------------------------------------------------------
Money Market Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Municipal Money Market Portfolio (Institutional Shares, Service Shares and
Series A Investor Shares)
Government Money Market Portfolio (Institutional Shares, Service Shares and
Series A Investor Shares)
Ohio Municipal Money Market Portfolio (Institutional Shares, Service Shares and
Series A Investor Shares)
Pennsylvania Municipal Money Market Portfolio (Institutional Shares, Service
Shares and Series A Investor Shares)
North Carolina Municipal Money Market Portfolio (Institutional Shares, Service
Shares and Series A Investor Shares)
Managed Income Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Tax-Free Income Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Intermediate Government Portfolio (Institutional Shares, Service Shares, Series
A Investor Shares and Series B Investor Shares)
Ohio-Tax Free Income Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Pennsylvania Tax-Free Income Portfolio (Institutional Shares, Service Shares,
Series A Investor Shares and Series B Investor Shares)
Short-Term Bond Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Intermediate-Term Bond Portfolio (Institutional Shares, Service Shares, Series
A Investor Shares and Series B Investor Shares)
<PAGE> 12
Value Equity Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Growth Equity Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Index Equity Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Small Cap Value Equity Portfolio (Institutional Shares, Service Shares, Series
A Investor Shares and Series B Investor Shares)
International Equity Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Balanced Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Small Cap Growth Equity Portfolio (Institutional Shares, Service Shares, Series
A Investor Shares and Series B Investor Shares)
Core Equity Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Government Income Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
International Emerging Markets Portfolio (Institutional Shares, Service Shares,
Series A Investor Shares and Series B Investor Shares)
International Fixed Income Portfolio (Institutional Shares, Service Shares,
Series A Investor Shares and Series B Investor Shares)
Virginia Municipal Money Market Portfolio (Institutional Shares, Service Shares
and Series A Investor Shares)
Agreed to and accepted as of September 23, 1994
THE PNC(R) FUND
By:/s/ G. Willing Pepper
-------------------------------
PFPC INC.
By:/s/ J. Richard Carnall
-----------------------------------
PROVIDENT DISTRIBUTORS, INC.
By:
-------------------------------
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<PAGE> 1
EXHIBIT 9(b)
The PNC (R) Fund
Amendment No. 1 to the Administration Agreement
This Amendment dated as of the 23rd day of September, 1994, is
entered into between The PNC FUND, a Massachusetts business trust (the "Fund"),
PFPC Inc. ("PFPC"), a Delaware corporation and Provident Distributors, Inc.
("PDI"), a Delaware corporation (collectively the "Administrators").
WHEREAS, the Fund and the Administrators have entered into an
Administration Agreement dated as of January 18, 1993 (the "Administration
Agreement"), pursuant to which the Fund appointed the Administrators to act as
administrators to the Fund; and
WHEREAS, the parties hereto desire to amend the Administration
Agreement in accordance with the terms of such Administration Agreement to
change the stated expiration date of the Administration Agreement from October
31 to March 31;
WHEREAS, except to the extent amended hereby, the
Administration Agreement shall remain unchanged and in full force and effect,
and is hereby ratified and confirmed in all respects as amended hereby.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
Section 8 of the Administration Agreement is amended to read
in its entirety as follows:
"8. Duration and Termination. Unless sooner terminated
as provided herein, this Agreement shall continue in
effect with respect to the Fund until March 31, 1995,
and thereafter for successive annual periods ending
on March 31, provided such continuance is
specifically approved in accordance with the terms of
this Agreement. Thereafter, if not terminated, this
Agreement shall continue automatically for successive
terms of one year, provided that such continuance is
specifically approved at least annually (a) by a vote
of a majority of those members of the Company's Board
of Trustees who are not parties to this Agreement or
"interested persons" of any such party, cast in
person at a meeting called for the purpose of voting
on such approval, and (b) by the Company's Board of
Trustees or by vote of a "majority of the outstanding
voting securities" of the Company; provided, however,
that this Agreement may be terminated by the Company
at any
<PAGE> 2
time, without the payment of any penalty, by vote of
a majority of the entire Board of Trustees or a vote
of a "majority of the outstanding voting securities"
of the Company, on 60-days' written notice to the
Administrators, or by the Administrators at any time,
without the payment of any penalty, on 90-days'
written notice to the Company. This Agreement will
automatically and immediately terminate in the event
of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting
securities," "interested person" and "assignment"
shall have the same meaning as such terms have in the
1940 Act.)
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date and year first written above.
The PNC(R) Fund
By: /Edward J. Roach/
------------------------------
Name: Edward J. Roach
----------------------------
Title: Vice President & Treasurer
---------------------------
PFPC Inc.
By: /Stephen M. Wynne/
----------------------------
Name: Stephen M. Wynne
--------------------------
Title: Executive Vice President
-------------------------
Provident Distributors, Inc.
By: /Monroe Haegele/
---------------------------
Name: Monroe Haegele
-------------------------
Title: Chief Executive Officer
------------------------
-2-
<PAGE> 1
EXHIBIT (9)(c)
APPENDIX A
to the
ADMINISTRATION AGREEMENT
among
The PNC(R) Fund
and
PFPC, Inc.
and
Provident Distributors, Inc.
Money Market Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Municipal Money Market Portfolio (Institutional Shares, Service Shares and
Series A Investor Shares)
Government Money Market Portfolio (Institutional Shares, Service Shares and
Series A Investor Shares)
Ohio Municipal Money Market Portfolio (Institutional Shares, Service Shares and
Series A Investor Shares)
Pennsylvania Municipal Money Market Portfolio (Institutional Shares, Service
Shares and Series A Investor Shares)
North Carolina Municipal Money Market Portfolio (Institutional Shares, Service
Shares and Series A Investor Shares)
Managed Income Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Tax-Free Income Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Intermediate Government Portfolio (Institutional Shares, Service Shares, Series
A Investor Shares and Series B Investor Shares)
Ohio Tax-Free Income Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Pennsylvania Tax-Free Income Portfolio (Institutional Shares, Service Shares,
Series A Investor Shares and Series B Investor Shares)
Short-Term Bond Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Intermediate-Term Bond Portfolio (Institutional Shares, Service Shares, Series
A Investor Shares and Series B Investor Shares)
<PAGE> 2
Value Equity Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Growth Equity Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
Index Equity Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Small Cap Value Equity Portfolio (Institutional Shares, Service Shares, Series
A Investor Shares and Series B Investor Shares)
International Equity Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor shares)
Balanced Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Small Cap Growth Equity Portfolio (Institutional Shares, Service Shares, Series
A Investor Shares and Series B Investor Shares)
Core Equity Portfolio (Institutional Shares, Service Shares, Series A Investor
Shares and Series B Investor Shares)
Government Income Portfolio (Institutional Shares, Service Shares, Series A
Investor Shares and Series B Investor Shares)
International Emerging Markets Portfolio (Institutional Shares, Service Shares,
Series A Investor Shares and Series B Investor Shares)
International Fixed Income Portfolio (Institutional Shares, Service Shares,
Series A Investor Shares and Series B Investor Shares)
Virginia Municipal Money Market Portfolio (Institutional Shares, Service Shares
and Series A Investor Shares)
New Jersey Municipal Money Market Portfolio (Institutional Shares, Service
Shares and Series A Investor Shares)
Agreed to and accepted as of March 28, 1995
THE PNC(R) FUND
By:
----------------------
PFPC INC.
By:
-----------------------
PROVIDENT DISTRIBUTORS, INC.
By:
--------------------------
<PAGE> 1
EXHIBIT 9(d)
AMENDMENT NO. 2 TO ADMINISTRATION AGREEMENT
This Agreement, dated as of the 18th day of October, 1994, is
entered into by The PNC(R) Fund (the "Fund"), a Massachusetts business trust,
PFPC Inc. ("PFPC"), a Delaware corporation, and Provident Distributors, Inc.
("PDI" and, collectively with PFPC, the "Administrators"), a Delaware
corporation.
WHEREAS, the Fund and the Administrators have entered into an
Administration Agreement dated as of January 18, 1993, and amended on September
23, 1994 (the "Administration Agreement"), pursuant to which the Fund appointed
PFPC and PDI to act as Administrators to the Fund;
WHEREAS, the Fund and the Administrators wish to amend the
Administration Agreement to set forth additional responsibilities of the
Administrators relating to the issuance, offering, sale and redemption of
Series B Investor Shares in the investment portfolios of the Fund;
WHEREAS, the Fund's Board of Trustees has approved the
amendment effected by this Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, hereby agree as follows:
1. Paragraph (f) of Section 2 of the Administration
Agreement (relating to the delivery of documents) is amended and restated to
read in full as follows:
f. The Company's non-12b-1 Service Plan and form of
Servicing Agreement and non-12b-1 Series B Service
Plan and form of Series B Servicing Agreement
relating to Service Class Shares and Series B
Investor Class Shares, respectively, of the Company's
investment portfolios (collectively, the "Service
Plans"); and
2. The following paragraph is added to the
Administration Agreement as paragraph 2(g):
g. The Company's Distribution and Service Plan and
form of Distribution and Servicing Agreement and
Series B Distribution Plan relating to Series A
Investor Class Shares and Series B Investor Class
Shares, respectively, of the Company's investment
portfolios (collectively, the "Distribution Plans").
<PAGE> 2
3. Paragraph (a)(7) of Section 3 of the Administration
Agreement (relating to services and duties to be performed by the
Administrators) has been amended and restated to read in full as follows:
(7) Monitoring the Company's arrangements with
respect to services provided by certain institutional shareholders
("Service Organizations") under its Service Plans, including
monitoring and reviewing the services rendered by Service
Organizations to their customers who beneficially own shares, pursuant
to agreements between the Company and such Service Organizations
("Servicing Agreements"); reviewing the qualifications of Service
Organizations wishing to enter into Servicing Agreements with the
Company; assisting in the execution and delivery of Servicing
Agreements; monitoring the Distributor's operations under the
Distribution Plans; monitoring the activities of the Company's
transfer agent relating to the calculation of front-end sales charges
and deferred sales charges payable in connection with the purchase of
Series A Investor Class Shares and Series B Investor Class Shares,
respectively, and the payment of all such sales charges to the
Distributor (subject to the applicable limitations of the National
Association of Securities Dealers, Inc. on asset-based sales charges);
reporting to the Company's Board of Trustees with respect to the
amounts paid or payable by the Company from time to time under the
Service Plans and the Distribution Plans and the nature of the
services provided by Service Organizations; and maintaining
appropriate records in connection with such duties; and
4. The following item is inserted as paragraph (a)(8) of
Section 3 of the Administration Agreement:
(8) Calculating the amount of distribution fees payable with
respect to each Distribution Plan on a daily basis and
remitting such distribution fees to the Distributor on a
monthly basis.
5. Section 4 of the Administration Agreement is amended and
restated to read in full as follows:
4. Expenses Assumed as Administrators. The
Administrators will bear all expenses incurred by them in
performing their services and duties as co-administrators,
except as otherwise expressly provided herein. Other expenses
to be incurred in the operation of the Funds, including taxes,
interest, brokerage fees and commissions, if any, salaries and
fees of officers and trustees who are not officers, directors,
shareholders or employees of the Administrators, or the
Company's investment adviser or Distributor for the Funds,
Commission fees and state Blue Sky qualification fees,
advisory and administration fees, charges of
<PAGE> 3
custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, outside auditing and legal
expenses, costs of maintaining corporate existence,
typesetting and printing of prospectuses for regulatory
purposes and for distribution to current shareholders of the
Funds, costs of shareholders' reports and corporate meetings
and any extraordinary expenses, will be borne by the Company,
provided, however, that the Company will not bear, directly or
indirectly, the cost of any activity which is primarily
intended to result in the sale of shares of the Funds
otherwise than pursuant to its Distribution Plans.
6. Miscellaneous: Except to the extent supplemented hereby,
the Administration Agreement shall remain unchanged and in full force and
effect and is hereby ratified and confirmed in all respects as supplemented
hereby.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the date and year first above written.
THE PNC(R) FUND
By:
-----------------------
Vice President and Treasurer
PFPC INC.
By:
-----------------------
Title:
PROVIDENT DISTRIBUTORS, INC.
By:
-----------------------
Title:
<PAGE> 1
EXHIBIT (9)(e)
TRANSFER AGENCY AGREEMENT
THIS AGREEMENT is made as of October 4, 1989 between THE
PNC(R) FUND, a Massachusetts business trust (the "Fund"), and PROVIDENT
FINANCIAL PROCESSING CORPORATION, a Delaware corporation (the "Transfer Agent")
which is an indirect, wholly-owned subsidiary of PNC Financial Corp.
R E C I T A L
WHEREAS, the Fund is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Fund desires to retain the Transfer Agent to
serve as the Fund's transfer agent, registrar, and dividend disbursing agent
with respect to its shares, par value $.001 per share (the "Shares") of its
Money Market, Tax-Free Money Market, Government Money Market, Capital
Appreciation, Total Return, Managed Income and International Portfolios, and
the Transfer Agent is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Transfer
Agent to serve as transfer agent, registrar and dividend disbursing agent for
the Fund for the period and on the terms set forth in this Agreement. The
Transfer Agent shall identify to each class ("Class") of the Shares, or any
additional class hereafter created that is designated by the Fund as a Class,
property belonging to such Class and in such reports, confirmations and notices
to the Fund called for under this Agreement and shall identify the Class to
which such report, confirmation or notice pertains. The Transfer Agent accepts
such appointment and agrees to furnish the services herein set forth in return
for the compensation as provided in Paragraph 16 of this Agreement.
2. Delivery of Documents. The Fund has furnished the
Transfer Agent with copies, properly certified or authenticated, of each of the
following:
(a) Resolutions of the Fund's Board of Trustees
authorizing the appointment of the Transfer Agent as transfer agent and
registrar and dividend disbursing agent for the Shares and approving this
Agreement;
<PAGE> 2
(b) Appendix A identifying and containing the
signatures of the Fund's officers and other persons authorized to issue Oral
Instructions and to sign Written Instructions, as hereinafter defined, on
behalf of the Fund and to execute certificates representing Shares;
(c) The Fund's Declaration of Trust as filed with
the State Secretary of the Commonwealth of Massachusetts and the Boston City
Clerk on December 22, 1988;
(d) The Fund's Code of Regulations;
(e) The Investment Advisory Agreement between
Provident Institutional Management Corporation ("Adviser") and the Fund;
(f) The Sub-Advisory Agreements between Adviser
and Provident National Bank (relating to the Money Market and Government Money
Market Portfolios and the Total Return Portfolio), Adviser and The Central
Trust Company, N.A. (relating to the Tax-Free Money Market, Capital
Appreciation and Managed Income Portfolios) and Adviser and Provident Capital
Management, Inc. (relating to the International Portfolio);
(g) The Administration Agreement between the
Boston Company Advisors, Inc. and the Fund;
(h) The Administration and Accounting Services
Agreement between Provident Financial Processing Corporation and the Fund;
(i) The Distribution Agreement between TBC Funds
Distributor, Inc. and the Fund;
(j) The Custodian Agreement between Provident
National Bank (the "Custodian") and the Fund;
(k) The Fund's Notification of Registration on
Form N-8A under the 1940 Act as filed with the Securities and Exchange
Commission ("SEC") on December 22, 1988;
(l) The Fund's Registration Statement on Form
N-1A (the "Registration Statement") under the Securities Act of 1933 (the "1933
Act") and the 1940 Act, as filed with the SEC on December 23, 1988, and all
amendments thereto;
(m) The Fund's non-12b-1 Shareholder Services
Plan and the Fund's form of shareholder servicing agreement;
(n) The Fund's 12b-1 Plan and the Fund's form of
dealer agreement and shareholder servicing agreement;
-2-
<PAGE> 3
(o) The Fund's most recent Prospectuses and
Statements of Additional Information and all amendments and supplements
thereto; and
(p) Before any investment portfolio of the Fund
engages in any transaction regulated by the Commodity Futures Trading
Commission ("CFTC"), a copy of either (i) a filed notice of eligibility to
claim the exclusion from the definition of "commodity pool operator" contained
in Section 2(a)(1)(A) of the Commodity Exchange Act ("CEA") that is provided in
Rule 4.5 under the CEA, together with all supplements as are required by the
CFTC, or (ii) a letter which has been granted the Fund by the CFTC which states
that the Fund will not be treated as a "pool" as defined in Section 4.10(d) of
the CFTC's General Regulations, or (iii) a letter which has been granted the
Fund by the CFTC which states that the CFTC will not take any enforcement
action if the Fund does not register as a "commodity pool operator."
The Fund will furnish the Transfer Agent from time to time
with copies, properly certified or authenticated, of all amendments of or
supplements to the foregoing, if any.
3. Definitions.
(a) "Authorized Person." As used in this
Agreement, the term "Authorized Person" means any officer of the Fund and any
other person, whether or not any such person is an officer or employee of the
Fund, duly authorized by the Board of Trustees of the Fund to give Oral and
Written Instructions on behalf of the Fund and listed on the Certificate
annexed hereto as Appendix A or any amendment thereto as may be received by the
Transfer Agent from time to time.
(b) "Oral Instructions." As used in this
Agreement, the term "Oral Instructions" means oral instructions actually
received by the Transfer Agent from an Authorized Person or from a person
reasonably believed by the Transfer Agent to be an Authorized Person. The Fund
agrees to deliver to the Transfer Agent, at the time and in the manner
specified in Paragraph 4(b) of this Agreement, Written Instructions confirming
Oral Instructions.
(c) "Written Instructions." As used in this
Agreement, the term "Written Instructions" means written instructions delivered
by hand, mail, tested telegram, cable, telex or facsimile sending device, and
received by the Transfer Agent and signed by an Authorized Person.
4. Instructions Consistent with Declaration of Trust and
Code of Regulations.
-3-
<PAGE> 4
(a) Unless otherwise provided in this Agreement,
the Transfer Agent shall act only upon Oral or Written Instructions. Although
the Transfer Agent may know of the provisions of the Declaration of Trust or
Code of Regulations (collectively, the "Organization Documents") of the Fund,
the Transfer Agent may assume that any Oral or Written Instructions received
hereunder are not in any way inconsistent with any provisions of the
Organization Documents or any vote, resolution or proceeding of the Fund's
shareholders (the "Shareholders"), or of the Board of Trustees, or of any
committee thereof.
(b) The Transfer Agent shall be entitled to rely
upon any Oral Instructions and any Written Instructions actually received by
the Transfer Agent pursuant to this Agreement. The Fund agrees to forward to
the Transfer Agent Written Instructions confirming Oral Instructions in such
manner that the Written Instructions are received by the Transfer Agent by the
close of business of the same day that such Oral Instructions are given to the
Transfer Agent. The Fund agrees that the fact that such confirming Written
Instructions are not received by the Transfer Agent shall in no way affect the
validity of the transactions or enforceability of the transactions authorized
by the Fund by giving Oral Instructions. The Fund agrees that the Transfer
Agent shall incur no liability to the Fund in acting upon Oral Instructions
given to the Transfer Agent hereunder concerning such transactions, provided
such instructions reasonably appear to have been received from an Authorized
Person.
5. Transactions Not Requiring Instructions. In the
absence of contrary Written Instructions, the Transfer Agent is authorized to
take the following actions:
(a) Issuance of Shares. Upon receipt of a
purchase order from or on behalf of an investor for the purchase of Shares and
sufficient information, including a completed application to purchase
("Application") (if any), to enable the Transfer Agent to establish a
Shareholder account and to determine which Class of Shares the investor wishes
to purchase, and after confirmation of receipt of payment in the form described
in the prospectus and statement of additional information for the Class of
Shares involved, the Transfer Agent shall issue and credit the account of the
investor or other record holder with Shares in the manner described in the
Prospectus relating to such Shares and shall prepare and mail the appropriate
confirmation in accordance with legal requirements.
(b) Transfer of Shares; Uncertificated
Securities. Where a Shareholder does not hold a certificate representing the
number of Shares in his account and does provide the Transfer Agent with
instructions for the transfer of such Shares and such other appropriate
documentation to permit a transfer as specified in the Prospectus relating to
such Shares,
-4-
<PAGE> 5
then the Transfer Agent shall register such Shares and shall deliver them
pursuant to instructions received from the transferor, pursuant to the rules of
the exchange upon which the Shares are listed (if any), the rules and
regulations of the SEC, and the law of the Commonwealth of Massachusetts
relating to the transfer of shares of common stock.
(c) Share Certificates. If at any time the Fund
issues share certificates with respect to any Class of Shares, the following
provisions will apply with respect to such Class of Shares:
(i) The Fund will supply the Transfer Agent
with a sufficient supply of share certificates representing such Class
of Shares, in the form approved from time to time by the Board of
Trustees of the Fund, and, from time to time, shall replenish such
supply upon request of the Transfer Agent. Such share certificates
shall be properly signed, manually or by facsimile signature, by the
duly authorized officers of the Fund, whose names and positions shall
be set forth on Appendix B hereto, and notwithstanding the death,
resignation or removal of any officer of the Fund, such executed
certificates bearing the manual or facsimile signature of such officer
shall remain valid and may be issued to Shareholders until the
Transfer Agent is otherwise directed by Written Instructions.
(ii) In the case of the loss or destruction
of any certificate representing any class of Shares, no new
certificate shall be issued in lieu thereof, unless there shall first
have been furnished an appropriate bond of indemnity issued by the
surety company approved by the Transfer Agent.
(iii) Upon receipt of signed share
certificates, which shall be in proper form for transfer, and upon
cancellation or destruction thereof, the Transfer Agent shall
countersign, register and issue new certificates for the same number
of such Class of Shares and shall deliver them pursuant to
instructions received from the transferor, the rules and regulations
of the SEC, and the law of the Commonwealth of Massachusetts relating
to the transfer of Shares.
(iv) Upon receipt of the share certificates,
which shall be in proper form for transfer, together with the
Shareholder's instructions to hold such share certificates for
safekeeping, the Transfer Agent shall reduce such Shares to
uncertificated status, while retaining the appropriate registration in
the name of the Shareholder upon the transfer books.
-5-
<PAGE> 6
(v) Upon receipt of written instructions
from a Shareholder of uncertificated securities for a certificate in
the number of Shares in his account, the Transfer Agent will issue
such share certificates and deliver them to the Shareholder.
(d) Redemption of Shares. Upon receipt of a
redemption order from a Shareholder in the manner and form specified in the
Prospectus relating to such Shares, the Transfer Agent shall redeem the number
of Shares so indicated from the redeeming Shareholder's account and receive
from the Custodian and disburse to the redeeming Shareholder or account as
designated in the Application the redemption proceeds therefor or arrange for
direct payments of redemption proceeds to such Shareholder by the Custodian, in
the case of a redemption check, to the party presenting such check for payment
in accordance with such procedures and controls as are mutually agreed upon
from time to time by and among the Fund, the Transfer Agent and the Custodian.
6. Authorized Shares. The Fund's authorized capital
shares consist of an unlimited number of Shares in each of seven classes, i.e.,
Classes A-1, B-1, C-1, D, E, F and G. The Fund's Board of Trustees in
authorized to classify and reclassify any unissued Shares into one or more
classes. The Fund shall notify the Transfer Agent of any such classification
or reclassification. The Fund agrees to notify the Transfer Agent promptly
of any termination of the Fund's Declaration under Rule 24f-2 of the 1940 Act.
7. Dividends and Distributions. The Fund shall furnish
the Transfer Agent with appropriate evidence of action by the Fund's Board of
Trustees authorizing the declaration and payment of dividends and distributions
as described in the Prospectuses. After deducting any amount required to be
withheld by any applicable tax laws, rules and regulations or applicable laws,
the Transfer Agent shall in accordance with the instructions in proper form
from a Shareholder and the provisions of the Organization Documents and
applicable Prospectus, pay such dividends to the Shareholders in the manner
described in the applicable Prospectus. In lieu of receiving from the
Custodian and paying to Shareholders cash dividends or distributions, the
Transfer Agent may arrange for the direct payment of cash dividends and
distributions to Shareholders by the Custodian, in accordance with such
procedures and controls as are mutually agreed upon from time to time by and
among the Fund, the Transfer Agent and the Custodian.
The Transfer Agent shall prepare, file with the Internal
Revenue Service and other appropriate taxing authorities, and address and mail
to Shareholders such returns and information relating to dividends and
distributions paid by
-6-
<PAGE> 7
the Fund as are required to be so prepared, filed and mailed by applicable
laws, rules and regulations, or such substitute form of notice as may from time
to time be permitted or required by the internal Revenue Service. On behalf of
the Fund, the Transfer Agent shall mail certain requests for Shareholders'
certifications under penalties of perjury and pay on a timely basis to the
appropriate Federal authorities any taxes to be withheld on dividends and
distributions paid by the Fund, all as required by applicable Federal tax laws
and regulations.
In accordance with the applicable Prospectus and such
procedures and controls as are mutually agreed upon from time to time by and
among the Fund, the Transfer Agent and the Custodian, the Transfer Agent shall
(a) arrange for issuance of Shares obtained through (1) transfers of funds from
Shareholders' accounts at financial institutions, (2) the Fund's pre-authorized
check plan, and (3) the Fund's right of accumulation plan; (4) the Fund's
automatic investing program; (b) arrange for the exchange of Shares of a Class
or series of the Fund having an exchange privilege for Shares of other Classes
or series of the Fund to which such exchange privilege extends; and (c) arrange
for systematic withdrawals from the account of a Shareholder participating in
the Fund's systematic withdrawal program.
8. Communications with Shareholders.
(a) Communications to Shareholders. The Transfer
Agent will address and mail all communications by the Fund to Shareholders,
including, without limitation, reports to Shareholders, confirmations of
purchases and sales of Shares, monthly statements, year-end Federal tax
information, dividend and distribution notices and proxy material for its
meetings of Shareholders. The Transfer Agent will receive and tabulate the
proxy cards for the meetings of the Shareholders.
(b) Correspondence. The Transfer Agent will
answer such correspondence from Shareholders, securities brokers and others
relating to its duties hereunder and such other correspondence as may from time
to time be mutually agreed upon between the Transfer Agent and the Fund.
9. Records. The Transfer Agent shall maintain records
of the accounts for each Shareholder showing the following information:
(a) name, address and United States Tax
Identification or Social Security number;
(b) number and Class of Shares held and number
and Class of Shares for which certificates, if any, have been issued, including
certificate numbers and denominations;
-7-
<PAGE> 8
(c) historical information regarding the account
of each Shareholder, including dividends and distributions paid and the date
and price for all transactions on a Shareholder's account;
(d) any stop or restraining order placed against
a Shareholder's account;
(e) any correspondence relating to the current
maintenance of a Shareholder's account;
(f) information with respect to withholdings; and,
(g) any information required in order for the
Transfer Agent to perform any calculations contemplated or required by this
Agreement.
The Transfer Agent shall maintain sub-accounts for each
Shareholder requesting such services in connection with Shares held by such
Shareholder for separate accounts containing the same information for each
sub-account as that described above for accounts.
The Transfer Agent shall keep a record of all redemption
checks and dividend checks returned by postal authorities, and shall maintain
such records as are required for the Fund to comply with the escheat laws of
any State or other authority.
The books and records pertaining to the Fund which are in the
possession of the Transfer Agent shall be the property of the Fund. Such books
and records shall be prepared and maintained as required by the 1940 Act and
other applicable securities laws and rules and regulations and shall, to the
extent practicable, be maintained separately for each portfolio of the Fund.
The Fund, or the Fund's authorized representatives, shall have access to such
books and records at all times during the Transfer Agent's normal business
hours. Upon the reasonable request of the Fund, copies of any such books and
records shall be provided by the Transfer Agent to the Fund or the Fund's
authorized representative at the Fund's expense.
10. Ongoing Functions. The Transfer Agent will perform
the following functions on an ongoing basis:
(a) furnish daily reports of transactions in
Shares;
(b) furnish monthly reports of transactions in
Fund Shares by type (custodial, trust, Keogh, IRA, other) including numbers of
accounts;
-8-
<PAGE> 9
(c) furnish state-by-state blue sky registration
reports to the Fund;
(d) calculate sales load or compensation payment,
if applicable, and provide such information to the Fund;
(e) calculate dealer commissions for the Fund, as
applicable;
(f) provide toll-free lines for direct
Shareholder use, plus customer liaison staff with on-line inquiry capacity;
(g) mail duplicate confirmations to dealers of
their clients' activity, whether executed through the dealer or directly with
the Transfer Agent;
(h) provide detail for underwriter or broker
confirmations and other participating dealer Shareholder accounting, in
accordance with such procedures as may be agreed upon between the Fund and the
Transfer Agent;
(i) provide Shareholder lists and statistical
information concerning accounts to the Fund; and
(j) provide timely notification of Fund activity
and such other information as may be agreed upon from time to time between the
Transfer Agent and the Custodian, to the Fund or the Custodian.
11. Cooperation with Accountants. The Transfer Agent
shall cooperate with the Fund's independent public accountants and shall take
all reasonable action in the performance of its obligations under this
Agreement to assure that the necessary information is made available to such
accountants for the expression of their opinion as such may be required by the
Fund from time to time.
12. Confidentiality. The Transfer Agent agrees on behalf
of itself and its employees to treat confidentially all records and other
information relative to the Fund, each portfolio of the Fund, and the Fund's
prior, current or potential Shareholders, except after prior notification to
and approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Transfer Agent 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 Fund.
13. Equipment Failures. In the event of equipment
failures beyond the Transfer Agent's control, the Transfer Agent shall, at no
additional expense to the Fund, take reasonable
-9-
<PAGE> 10
steps to minimize service interruptions but shall have no liability with
respect thereto. The foregoing obligation shall not extend to computer
terminals located outside of premises maintained by the Transfer Agent. The
Transfer Agent shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provision for emergency use of
electronic data processing equipment to the extent appropriate equipment is
available.
14. Right to Receive Advice.
(a) Advice of Fund. If the Transfer Agent shall
be in doubt as to any action to be taken or omitted by it, it may request, and
shall receive, from the Fund directions or advice, including Oral or Written
Instructions where appropriate.
(b) Advice of Counsel. If the Transfer Agent
shall be in doubt as to any question of law involved in any action to be taken
or omitted by the Transfer Agent, it may request advice at its own cost from
counsel of its own choosing (who may be counsel for the Fund or the Transfer
Agent at the option of the Transfer Agent).
(c) Conflicting Advice. In case of conflict
between directions, advice or Oral or Written Instructions received by the
Transfer Agent pursuant to subparagraph (a) of this Paragraph 14 and advice
received by the Transfer Agent pursuant to subparagraph (b) of this Paragraph
14, the Transfer Agent shall be entitled to rely on and follow the advice
received pursuant to the latter provision alone.
(d) Protection of the Transfer Agent. The
Transfer Agent shall be protected in any action or inaction which it takes in
reliance on any directions, advice or Oral or Written Instructions received
pursuant to subparagraphs or (b) of this Paragraph 14 which the Transfer Agent,
after receipt of any such directions, advice or Oral or Written Instructions,
in good faith believes to be consistent with such directions, advice or Oral or
Written Instructions, as the case may be. However, nothing in this Paragraph
shall be construed as imposing upon the Transfer Agent any obligation (i) to
seek such directions, advice or Oral or Written Instructions, or (ii) to act in
accordance with such directions, advice or Oral or Written Instructions when
received, unless, under the terms of another provision of an Agreement, the
same is a condition to the Transfer Agent's properly taking or omitting to take
such action. Nothing in this subparagraph shall excuse the Transfer Agent when
an action or omission on the part of the Transfer Agent constitutes willful
misfeasance, bad faith, negligence or reckless disregard by the Transfer Agent
of its duties and obligations under this Agreement.
-10-
<PAGE> 11
15. Compliance with Governmental Rules and Regulations.
The Transfer Agent assumes no responsibility for ensuring that the Fund
complies with all applicable requirements of the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act, the CEA, and
any laws, rules and regulations of governmental authorities having
jurisdiction.
16. Compensation. As compensation for the services
rendered by the Transfer Agent during the term of this Agreement, the Fund will
pay to the Transfer Agent, with respect to each Class of the Fund, monthly fees
that shall be agreed to from time to time by the Fund and the Transfer Agent,
for each account open at any time during the month for which payment is being
made, plus certain of the Transfer Agent's expenses relating to such services,
as shall be agreed to from time to time by the Fund and the Transfer Agent.
The fee attributable to each Class shall be the several (and not joint or joint
and several) obligation of each Class.
17. Indemnification. The Fund, on behalf of each
portfolio of the Fund, agrees that each portfolio of the Fund shall indemnify
and hold harmless the Transfer Agent and its nominees and sub-contractors from
all taxes, charges, expenses, assessments, claims and liabilities (including,
without limitation, liabilities arising under the 1933 Act, the 1934 Act, the
1940 Act, the CEA and any state and foreign securities and blue sky laws, all
as or to be amended from time to time) and expenses, including attorneys' fees
and disbursements (as long as such attorney has been retained with the consent
of the Fund, which consent shall not be unreasonably withheld), arising
directly or indirectly from any action or thing which the Transfer Agent or its
nominees or sub-contractors takes or does or omits to take or do for a
portfolio of the Fund at the request or on the direction of or in reliance on
the advice of the Fund, provided, that neither the Transfer Agent nor any of
its nominees or sub-contractors shall be indemnified against any liability to
the Fund, any portfolio of the Fund or to the Shareholders (or any expenses
incident to such liability) arising out of the Transfer Agent's or any of its
nominees' or sub-contractors' willful misfeasance, bad faith, negligence or
reckless disregard of its duties and obligations under this Agreement. The
obligations of each portfolio of the Fund under this Paragraph 17 shall be the
several (and not joint or joint and several) obligation of each portfolio of
the Fund.
18. Responsibility of the Transfer Agent. The Transfer
Agent shall be under no duty to take any action on behalf of the Fund except as
specifically set forth herein or as may be specifically agreed to by the
Transfer Agent in writing. In the performance of its duties hereunder, the
Transfer Agent shall be obligated to exercise care and diligence and to act in
good faith and to use its best efforts within reasonable limits
-11-
<PAGE> 12
to ensure the accuracy and completeness of all services performed under this
Agreement. The Transfer Agent shall be responsible for its own negligent
failure to perform its duties under this Agreement, but to the extent that
duties, obligations and responsibilities are not expressly set forth in this
Agreement, the Transfer Agent shall not be liable for any act or omission which
does not constitute willful misfeasance, bad faith or gross negligence on the
part of the Transfer Agent or reckless disregard of such duties, obligations
and responsibilities. Without limiting the generality of the foregoing or of
any other provision of this Agreement, the Transfer Agent in connection with
its duties under this Agreement shall not be under any duty or obligation to
inquire into and shall not be liable for or in respect of (a) the validity or
invalidity or authority or lack thereof of any Oral or Written Instruction,
notice or other instrument which conforms to the applicable requirements of
this Agreement, if any, and which the Transfer Agent reasonably believes to be
genuine, or (b) delays or errors or loss of data occurring by reason of
circumstances beyond the Transfer Agent's control, including acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown (except as provided in Paragraph 13), flood or catastrophe, acts of
God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply. Notwithstanding the foregoing, the Transfer
Agent shall use its best efforts to mitigate the effects of such events,
although such efforts shall not impute any liability thereto. The Transfer
Agent expressly disclaims all responsibility for consequential damages,
including but not limited to any that may result from performance or
non-performance of any duty or obligation whether express or implied in this
Agreement, and also expressly disclaims any express or implied warranty of
products or services provided in connection with this Agreement.
19. Duration and Termination. This Agreement shall
continue as to each portfolio of the Fund until terminated by the Fund or by
the Transfer Agent on sixty (60) days' written notice.
20. Registration as a Transfer Agent. The Transfer Agent
represents that it is currently registered with the appropriate Federal agency
for the registration of transfer agents, and that it will remain so registered
for the duration of this Agreement. The Transfer Agent agrees that it will
promptly notify the Fund in the event of any material change in its status as a
registered transfer agent. Should the Transfer Agent fail to be registered
with the appropriate Federal Agency as a transfer agent at any time during this
Agreement, the Fund may, on written notice to the Transfer Agent, immediately
terminate this Agreement as to any or all portfolios of the Fund.
21. Notices. All notices and other communications,
including Written Instructions (collectively referred to as
-12-
<PAGE> 13
"Notice" or "Notices" in this Paragraph 21), hereunder shall be in writing or
by confirming telegram, cable, telex or facsimile sending device. Notice shall
be addressed (a) if to the Transfer Agent at P.O. Box 8950, Wilmington,
Delaware 19899; (b) if to the Fund, at the address of the Fund; or (c) if to
neither of the foregoing, at such other address as shall have been notified to
the sender of any such Notice of other communication. If the location of the
sender of a Notice and the address of the addressee thereof are, at the time of
sending, more than 100 miles apart, the Notice may be sent by first-class mail,
in which case it shall be deemed to have been given five business days after it
is sent, or if sent by confirming telegram, cable, telex or facsimile sending
device, it shall be deemed to have been given immediately, and, if the location
of the sender of a Notice and the address of the addressee thereof are, at the
time of sending, not more than 100 miles apart, the Notice may be sent by
first-class mail, in which case it shall be deemed to have been given three
business days after it is sent, or if sent by messenger, it shall be deemed to
have been given on the day it is delivered, or if sent by confirming telegram,
cable, telex or facsimile sending device, it shall be deemed to have been given
immediately. All postage, cable, telegram, telex and facsimile sending device
charges arising from the sending of a Notice hereunder shall be paid by the
sender.
22. Further Actions. Each party agrees to perform such
further acts and execute such further documents as are necessary to effectuate
the purposes hereof.
23. Amendments. This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the party against
which enforcement of such change or waiver is sought.
24. Delegation of Duties. On thirty (30) days' prior
written notice to the Fund, the Transfer Agent may assign its rights and
delegate its duties hereunder to any wholly-owned direct or indirect subsidiary
of Provident National Bank or PNC Financial Corp., provided that (i) the
delegate agrees with the Transfer Agent to comply with all relevant provisions
of the 1940 Act; and (ii) the Transfer Agent and such delegate shall promptly
provide such information as the Fund may request, and respond to such question
as the Fund may ask, relative to the delegation, including (without limitation)
the capabilities of the delegate.
-13-
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below on the day and year
first above written.
Attest: THE PNC(R) FUND
By:/s/ Edward J. Roach
- ------------------------ -----------------------------
Its: Its: Treasurer
Attest: PROVIDENT FINANCIAL PROCESSING
CORPORATION
(Corporate Seal)
By:/s/ J. Richard Carnall
- ------------------------ ------------------------------
Its: Its:
-14-
<PAGE> 15
APPENDIX A
Authorized Persons
- ---------------------------- ------------------------------
(name) (signature)
- ---------------------------- ------------------------------
(name) (signature)
- ---------------------------- ------------------------------
(name) (signature)
- ---------------------------- ------------------------------
(name) (signature)
- ---------------------------- ------------------------------
(name) (signature)
- ---------------------------- ------------------------------
(name) (signature)
-15-
<PAGE> 16
APPENDIX B
- ---------------------------- ------------------------------
President (signature)
- ---------------------------- ------------------------------
Secretary (signature)
-16-
<PAGE> 1
EXHIBIT (9)(f)
AMENDMENT TO TRANSFER AGENCY AGREEMENT
This agreement, dated as of the 6th day of April, 1990,
between The PNC(R) Fund (the "Fund"), a Massachusetts business trust, and
Provident Financial Processing Corporation (the "Transfer Agent"), a Delaware
Corporation.
WITNESSETH:
WHEREAS, Provident and the Fund wish to amend the Transfer
Agency Agreement between them dated October 4, 1989 (the "Transfer Agency
Agreement"); and
WHEREAS, the Fund's Board of Trustees has approved the
amendment effected by this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained in the Transfer Agency Agreement, it is agreed between the
parties hereto as follows:
The second paragraph of the first page of the Transfer Agency
Agreement is amended and restated to read in full as follows:
"WHEREAS, the Fund desires to retain the Transfer Agent to
serve as the Fund's transfer agent, registrar, and dividend disbursing agent
with respect to its shares, par value $.001 per share (the "Shares") of its
Money Market, Tax-Free Money Market, Government Money Market, Capital
Appreciation, Total Return, Managed Income, International, Tax-Free Income
Portfolios, and any future portfolio of the Fund, and the Transfer Agent is
willing to furnish such services;"
The PNC(R) Fund
By:/s/ Edward J. Roach, Treasurer
--------------------------------
Provident Financial Processing
Corporation
By:/s/ Marie S. Gipple
--------------------------------
<PAGE> 1
EXHIBIT (9)(g)
AMENDMENT NO. 2 TO TRANSFER AGENCY AGREEMENT
This Amendment, dated as of the 3rd day of February 1992, is entered
into between THE PNC(R) FUND, (the "Fund"), a Massachusetts business trust, and
PROVIDENT FINANCIAL PROCESSING CORPORATION (the "Transfer Agent"), a Delaware
corporation which is an indirect wholly-owned subsidiary of PNC Financial Corp.
WHEREAS, the Fund and the Transfer Agent have entered into a Transfer
Agency Agreement dated as of October 4, 1989, and amended on April 6, 1990 (the
"Transfer Agency Agreement"), pursuant to which the Fund appointed the Transfer
Agent to act as transfer agent, registrar and dividend disbursing agent to its
investment portfolios;
WHEREAS, the Fund wishes to retain PFPC as transfer agent, registrar
and dividend disbursing agent with respect to shares of the Intermediate
Government Portfolio, Value Equity Portfolio, Index Equity Portfolio, Special
Equity Portfolio, Pennsylvania Tax-Free Income Portfolio, Ohio Tax-Free Income
Portfolio, Pennsylvania Tax-Free Money Market Portfolio Ohio Tax-Free Money
Market Portfolio (the "Portfolio(s)"), and any such future portfolio of the
Fund as listed in Appendix C of the Transfer Agency Agreement with respect to
which it desires to retain the Transfer Agent to act as transfer agent,
registrar and dividend disbursing agent under the Transfer Agency Agreement;
and
WHEREAS, the Transfer Agent has notified the Fund that it is willing
to serve as transfer agent for the Portfolios and any such other future
portfolio as listed in Appendix C; and
WHEREAS, the Fund's Board of Trustees has approved the amendment
effected by this Agreement.
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The second paragraph of the first page of the Transfer Agency
Agreement is amended and restated to read in full as follows:
"WHEREAS, the Fund desires to retain the Transfer Agent to serve as
the Fund's transfer agent, registrar and dividend disbursing agent with respect
to shares, par value $.001 per share (the "Shares"), of its Intermediate
Government Portfolio, Value Equity Portfolio, Index Equity Portfolio, Special
Equity Portfolio, Growth Equity Portfolio, International Equity
<PAGE> 2
Portfolio, Balanced Portfolio, Managed Income Portfolio, Tax-Free
Income Portfolio, Pennsylvania Tax-Free Income Portfolio, Ohio Tax-Free Income
Portfolio, Money Market Portfolio, Tax-Free Money Market Portfolio, Government
Money Market Portfolio, Pennsylvania Tax-Free Money Market Portfolio, Ohio
Tax-Free Money Market Portfolio ("Portfolios"), and any future portfolio of the
Fund as listed in Appendix C hereto, and the Transfer Agent is willing to
furnish such services;"
2. Capitalized Terms. From and after the date hereof, the
following term as used in the Administration Agreement shall be deemed to
include also the meaning specified herein: "Class" shall be deemed to include
the Portfolios and such classes of shares as listed in Appendix C.
3. Miscellaneous. Except to the extent supplemented hereby, the
Transfer Agency Agreement shall remain unchanged and in full force and effect
and is hereby ratified and confirmed in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date and year first above written.
THE PNC(R) FUND
(SEAL) BY:/s/ Edward J. Roach
-----------------------------
Title:Treasurer
PROVIDENT FINANCIAL
PROCESSING CORPORATION
(SEAL) BY:/s/ Marie S. Gipple
-----------------------------
Title:
<PAGE> 1
EXHIBIT (9)(h)
AMENDMENT NO. 3 TO TRANSFER AGENCY AGREEMENT
This Amendment, dated as of the 1st day of March 1993, is entered into
between THE PNC(R) FUND, a Massachusetts business trust (the "Fund"), and PFPC
INC. (the "Transfer Agent"), a Delaware corporation which is an indirect
wholly-owned subsidiary of PNC Bank Corp.
WHEREAS, the Fund and the Transfer Agent have entered into a Transfer
Agency Agreement dated as of October 4, 1989, as amended (the "Transfer Agency
Agreement"), pursuant to which the Fund appointed the Transfer Agent to act as
transfer agent, registrar and dividend disbursing agent to its investment
portfolios;
WHEREAS, the Fund wishes to retain PFPC as transfer agent, registrar
and dividend disbursing agent with respect to shares of the North Carolina
Municipal Money Market, short-Term Bond, Intermediate-Term Bond, Small Cap
Growth Equity and Core Equity Portfolio (the "Portfolios"), and any such future
portfolio of the Fund as listed in Appendix C of the Transfer Agency Agreement
with respect to which it desires to retain the Transfer Agent to act as
transfer agent, registrar and dividend disbursing agent under the Transfer
Agency Agreement; and
WHEREAS, the Transfer Agent has notified the Fund that it is willing
to serve as transfer agent for the Portfolios and any such other future
portfolio as listed in Appendix C; and
WHEREAS, the Fund's Board of Trustees has approved the amendment
effected by this Agreement.
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The second paragraph of the first page of the Transfer Agency
Agreement is amended and restated to read in full as follows:
"WHEREAS, the Fund desires to retain the Transfer Agent to serve as
the Fund's transfer agent, registrar and dividend disbursing agent with respect
to shares, par value $.001 per share (the "Shares"), of its Money Market,
Municipal Money Market, Government Money Market, Ohio Municipal Money Market,
Pennsylvania Municipal Money Market, North Carolina Municipal Money Market,
Managed Income, Tax-Free Income, Intermediate Government, Ohio Tax-Free Income,
Pennsylvania Tax-Free Income, Short-Term Bond, Intermediate-Term Bond, Value
Equity, Growth
<PAGE> 2
Equity, Index Equity, Small Cap Value Equity, International Equity, Small Cap
Growth Equity, Core Equity and Balanced Portfolios (the "Portfolios"), and any
future portfolio of the Fund as listed in Appendix C hereto, and the Transfer
Agent is willing to furnish such services;"
2. Capitalized Terms. From and after the date hereof, the
following term as used in the Transfer Agency Agreement shall be deemed to
include also the meaning specified herein: "Class" shall be deemed to include
the Portfolios and such classes of shares as listed in Appendix C.
3. Miscellaneous. Except to the extent supplemented hereby, the
Transfer Agency Agreement shall remain unchanged and in full force and effect
and is hereby ratified and confirmed in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date and year first above written.
THE PNC(R) FUND
(SEAL) BY:/s/ Edward J. Roach
---------------------------
Title:
(SEAL) BY:
-----------------------
Title:
<PAGE> 1
EXHIBIT 9(i)
AMENDMENT NO. 4 TO TRANSFER AGENCY AGREEMENT
This Amendment, dated as of the 18th day of October, 1994, is entered
into between The PNC(R) Fund (the "Fund"), a Massachusetts business trust, and
PFPC Inc. (the "Transfer Agent"), a Delaware corporation which is an indirect
wholly-owned subsidiary of PNC Bank Corp.
WHEREAS, the Fund and the Transfer Agent have entered into a Transfer
Agency Agreement dated as of October 4, 1989, and amended on April 6, 1990,
February 3, 1992 and March 1, 1993 (the "Transfer Agency Agreement"), pursuant
to which the Fund appointed the Transfer Agent to act as transfer agent,
registrar and dividend disbursing agent to the Fund;
WHEREAS, the Fund and the Transfer Agent wish to amend the Transfer
Agency Agreement to set forth additional responsibilities of the Transfer Agent
relating to the issuance, offering, sale and redemption of Series B Investor
Shares in the investment portfolios of the Fund;
WHEREAS, the Fund's Board of Trustees has approved the amendment
effected by this Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, hereby agree as follows:
1. Paragraphs (m) and (n) of Section 2 of the Transfer Agency Agreement
(relating to the delivery of documents) are amended and restated to read in
full as follows:
(m) The Fund's non-12b-1 Service Plan and form of Servicing Agreement
and non-12b-1 Series B Service Plan and form of Series B Servicing
Agreement relating to Service Class Shares and Series B Investor Class
Shares, respectively, of the Fund's investment portfolios;
(n) The Fund's Distribution and Service Plan and form of Distribution
and Servicing Agreement and Series B Distribution Plan relating to
Series A Investor Class Shares and Series B Investor Class Shares,
respectively, of the Fund's investment portfolios, and the Fund's form
of dealer agreement;
2. Paragraph (d) of Section 5 of the Transfer Agency Agreement (relating to
transactions not requiring instructions) is amended and restated to read in
full as follows:
<PAGE> 2
(d) Redemption of Shares. Upon receipt of a redemption order from a
Shareholder in the manner and form specified in the Prospectus
relating to such Shares, the Transfer Agent shall redeem the number of
Shares so indicated from the redeeming Shareholder's account and
disburse, either directly or indirectly through the Custodian: i) the
amount of any deferred sales charges payable to the Fund's distributor
with respect to Series B Investor Class Shares, and ii) the balance of
the redemption proceeds to the person entitled to such proceeds.
3. Paragraph (c) of Section 9 (relating to the maintenance of records) has been
amended and restated to read in full as follows:
(c) historical information regarding the account of each Shareholder,
including: i) information relating to dividends and distributions
paid, ii) the date and price for all transactions relating to a
Shareholder's account, and iii) information necessary to calculate, in
accordance with the Fund's registration statement, the appropriate
contingent deferred sales charge ("CDSC") payable with respect to
Series B Investor Class Shares;
4. Paragraph (d) of Section 10 (relating to ongoing functions of the Transfer
Agent) has been amended and restated to read in full as follows:
(d) calculate front-end sales charges and deferred sales charges
payable in connection with the purchase of Series A Investor Class
Shares and Series B Investor Class Shares, respectively, and provide
for the payment of all such sales charges to the Fund's distributor
(subject to the applicable limitations of the National Association of
Securities Dealers, Inc. on asset-based sales charges);
5. Miscellaneous. Except to the extent supplemented hereby, the Transfer
Agency Agreement shall remain unchanged and in full
<PAGE> 3
force and effect and is hereby ratified and confirmed in all respects as
supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date and year first above written.
THE PNC(R) FUND
By:/s/ Edward J. Roach
-----------------------------
Vice President and Treasurer
PFPC INC.
By:/s/ Robert J. Perlswaig
-----------------------------
Title:
<PAGE> 1
EXHIBIT (9)(j)
The PNC(R) Fund
Appendix C to the
Transfer Agency Agreement dated
as of October 4, 1989
The Fund desires to retain the Transfer Agent to serve as the
Fund's transfer agent, registrar and dividend disbursing agent with respect to
Shares, par value $.001 per Share, of the additional Portfolios listed below
("Additional Portfolios") and the Transfer Agent is willing to furnish such
services.
The Additional Portfolios are as follows:
- Government Income Portfolio
- International Emerging Markets Portfolio
- International Fixed Income Portfolio
- Virginia Municipal Money Market Portfolio
- New Jersey Municipal Money Market Portfolio
Agreed to and accepted as of
, 1995
- ------------------------------------
The PNC(R) Fund
By:
---------------------------------
PFPC Inc.
By:
---------------------------------
<PAGE> 1
EXHIBIT (9)(k)
THE PNC(R) FUND
AMENDED AND RESTATED
SERVICE PLAN
SECTION 1. Upon the recommendation of Provident Distributors, Inc.
("PDI"), the administrator of The PNC Fund (the "Fund"), any officer of the
Fund is authorized to execute and deliver, in the name and on behalf of the
Fund, written agreements based on the form attached hereto as Appendix A or any
other form duly approved by the Fund's Board of Trustees ("Agreements") with
institutional investors ("Shareholder Organizations") which are shareholders or
dealers of record or which have a servicing relationship with the beneficial
owners of Service Shares in the Fund's Money Market, Government Money Market,
Municipal Money Market, Ohio Municipal Money Market, Pennsylvania Municipal
Money Market, North Carolina Municipal Money Market, Value Equity, Growth
Equity, Index Equity, Small Cap Value Equity, International Equity, Balanced,
Small Cap Growth Equity, Core Equity, Managed Income, Tax-Free Income,
Intermediate Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income,
Short-Term Bond and Intermediate-Term Bond Portfolios, and any future
investment portfolio of the Fund. Pursuant to such Agreements, Shareholder
Organizations shall provide support services as set forth therein to their
clients who beneficially own Service Shares in consideration of fees, computed
monthly in the manner set forth in the Agreements, at annual rates aggregating
up to .30% of the average daily net asset value of the Service Shares
beneficially owned by such clients. PNC Bank, National Association, PNC Bank,
Ohio, National Association and their affiliates are eligible to become
Shareholder Organizations and to receive fees under this Plan.
SECTION 2. PDI shall monitor the arrangements pertaining to the
Fund's Agreements with Shareholder Organizations in accordance with the terms
of PDI's administration agreement with the Fund. PDI shall not, however, be
obligated by this Plan to recommend, and the Fund shall not be obligated to
execute, any Agreement with any qualifying Shareholder Organization.
SECTION 3. So long as this Plan is in effect, PDI shall provide to
the Fund's Board of Trustees, and the trustees shall review, at least
quarterly, a written report of the amounts expended pursuant to this Plan and
the purposes for which such expenditures were made.
SECTION 4. This Plan shall become effective immediately with respect
to each class of Service Shares upon the approval of the Plan (and the form of
Agreement attached hereto) by a majority of the Fund's Board of Trustees,
including a majority of the trustees who are not "interested persons," as
defined in the
<PAGE> 2
Investment Company Act of 1940 (the "Act"), of the Fund and have no direct or
indirect financial interest in the operation of this Plan or in any Agreement
related to this Plan (the "Disinterested Trustees"), pursuant to a vote cast in
person at a meeting called for the purpose of voting on the approval of this
Plan (and form of Agreement).
SECTION 5. Unless sooner terminated, this Plan shall continue until
March 31, 1996 and thereafter shall continue automatically for successive
annual periods provided such continuance is approved at least annually in the
manner set forth in Section 4.
SECTION 6. This Plan may be amended at any time with respect to any
class of Service Shares by the Fund's Board of Trustees, provided that any
material amendment of the terms of this Plan shall become effective only upon
the approvals set forth in Section 4.
SECTION 7. This Plan is terminable at any time with respect to any
class of Service Shares by vote of a majority of the Disinterested Trustees.
SECTION 8. While this Plan is in effect, the selection and nomination
of those trustees who are not "interested persons" (as defined in the Act) of
the Fund shall be committed to the discretion of such non-interested trustees.
SECTION 9. The Fund adopted this Plan as of April 21, 1989 and
amended it effective June 24, 1993.
<PAGE> 3
THE PNC(R) FUND
SERVICING AGREEMENT
To Whom it May Concern:
We wish to enter into this Servicing Agreement with you concerning the
provision of support services to your clients ("Clients") who may from time to
time beneficially own Service Shares of our Money Market, Government Money
Market, Municipal Money Market, Ohio Municipal Money Market, Pennsylvania
Municipal Money Market, North Carolina Municipal Money Market, Value Equity,
Growth Equity, Index Equity, Small Cap Value Equity, International Equity,
Balanced, Small Cap Growth Equity, Core Equity, Managed Income, Tax-Free
Income, Intermediate Government, Ohio Tax-Free Income, Pennsylvania Tax-Free
Income, Short-Term Bond and Intermediate-Term Bond Portfolios and such other
investment portfolios of The PNC(R) Fund set forth in Appendix B (collectively,
the "Portfolios").
The terms and conditions of this Servicing Agreement are as follows:
Section 1. You agree to provide the following support services(1) to
clients who may from time to time beneficially own Service Shares: (i)
establishing and maintaining accounts and records relating to Clients that
invest in Service Shares; (ii) processing dividend and distribution payments
from us on behalf of Clients; (iii) arranging for bank wires; (iv) providing
subaccounting with respect to Service Shares beneficially owned by Clients or
the information to us necessary for subaccounting; (v) if required by law,
forwarding shareholder communications from us (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend, distribution
and tax notices) to Clients; (vi) assisting in processing purchase, exchange
and redemption requests from Clients and in placing such orders with our
service contractors; (vii) assisting Clients in changing dividend options,
account designations and addresses; (viii) providing Clients with a service
that invests the assets of their accounts in Service Shares pursuant to
specific or pre-authorized instructions; and (ix) providing such other similar
services as we may reasonably request to the extent you are permitted to do so
under applicable statutes, rules and regulations.
- -------------------
(1) Services may be modified or omitted in the particular case and items
relettered or renumbered.
<PAGE> 4
Section 2. You agree to provide the following services(2) to Clients
who may from time to time beneficially own Service Shares: (i) providing
information periodically to Clients showing their positions in Service Shares
and integrating such statements with those of other transactions and balances
in Clients' other accounts serviced by you; (ii) responding to Client inquiries
relating to the services performed by you; (iii) responding to Client inquiries
concerning their investments in Service Shares; and (iv) providing such other
similar shareholder liaison services as we may reasonably request to the extent
you are permitted to do so under applicable statutes, rules and regulations.
Section 3. The services provided by you under this Agreement will in
no event be primarily intended to result in the sale of Service Shares.
Section 4. You will provide such office space and equipment,
telephone facilities and personnel (which may be any part of the space,
equipment and facilities currently used in your business, or any personnel
employed by you) as may be reasonably necessary or beneficial in order to
provide the aforementioned services and assistance to Clients.
Section 5. Neither you nor any of your officers, employees or agents
are authorized to make any representations concerning us or the Service Shares
except those contained in our then current prospectuses and Statement of
Additional Information for Service Shares, copies of which will be supplied by
us to you, or in such supplemental literature or advertising as may be
authorized by us in writing.
Section 6. For all purposes of this Agreement you will be deemed to
be an independent contractor, and will have no authority to act as agent for us
in any matter or in any respect. By your written acceptance of this Agreement,
you agree to and do release, indemnify and hold us harmless from and against
any and all direct or indirect liabilities or losses resulting from requests,
directions, actions or inactions of or by you or your officers, employees or
agents regarding your responsibilities hereunder or the purchase, redemption,
transfer or registration of Service Shares (or orders relating to the same) by
or on behalf of Clients. You and your employees will, upon request, be
available during normal business hours to consult with us or our
- -------------------
(2) Services may be modified or omitted in the particular case and items
relettered or renumbered.
-4-
<PAGE> 5
designees concerning the performance of your responsibilities under this
Agreement.
Section 7. In consideration of the services and facilities provided
by you pursuant to Section 1 hereof, we will pay to you, and you will accept as
full payment therefor, a fee set forth in Appendix A to this Agreement at an
annual rate of up to .15% of the average daily net asset value of the Service
Shares beneficially owned by your Clients for whom you are the dealer of record
or holder of record or with whom you have a servicing relationship (the
"Clients' Shares"), which fee will be computed daily and payable monthly. In
consideration of the additional services and facilities provided by you
pursuant to Section 2 hereof, we will pay to you, and you will accept as full
payment therefor, a fee set forth in Appendix A to this Agreement at an annual
rate of up to .15% of the average daily net asset value of the Client's Shares,
which fee will be computed daily and payable monthly. In consideration for the
services provided by you under this Agreement, you will receive the aggregate
servicing fee rate set forth in Appendix A hereto. The fee rate set forth in
Appendix A to this Agreement shall be equally allocable between the services
provided in Section 1 and Section 2, respectively, unless otherwise noted in
Appendix A. For purposes of determining the fees payable under this Section 7,
the average daily net asset value of the Clients' Shares will be computed in
the manner specified in our Registration Statement (as the same is in effect
from time to time) in connection with the computation of the net asset value of
Service Shares for purposes of purchases and redemptions. The fee rate(s) set
forth in Appendix A to this Agreement may be prospectively increased or
decreased by us, in our sole discretion, at any time upon notice to you.
Further, we may, in our discretion and without notice, suspend or withdraw the
sale of Service Shares, including the sale of Service Shares to you for the
account of any Client or Clients.
Section 8. Any person authorized to direct the disposition of monies
paid or payable by us pursuant to this Agreement will provide to our Board of
Trustees, and our trustees will review, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
In addition, you will furnish us or our designees with such information as we
or they may reasonably request (including, without limitation, periodic
certifications confirming the provision to Clients of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors designated by us), in connection with the
preparation of reports to our Board of Trustees concerning
-5-
<PAGE> 6
this Agreement and the monies paid or payable by us pursuant hereto, as well as
any other reports or filings that may be required by law.
Section 9. We may enter into other similar Servicing Agreements with
any other person or persons without your consent.
Section 10. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee. Unless
sooner terminated, this Agreement will continue until March 31 of the year in
which this Agreement is executed, and thereafter will continue automatically
for successive annual periods provided such continuance is specifically
approved at least annually by us in the manner described in Section 13. This
Agreement will automatically terminate in the event of its assignment. This
Agreement is terminable with respect to any class of the Service Shares,
without penalty, at any time by us (which termination may be by a vote of a
majority of the Disinterested Trustees as defined in Section 13) or by you upon
written notice to the other party hereto.
Section 11. All notices and other communications to either you or us
will be duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address stated herein, or to such
other address as either party shall so provide the other.
Section 12. This Agreement will be construed in accordance with the
laws of the State of Delaware, and is non-assignable by the parties hereto.
Section 13. This Agreement has been approved by vote of a majority of
(i) our Board of Trustees and (ii) those Trustees who are not "interested
persons" (as defined in the Investment Company Act of 1940) of us and have no
direct or indirect financial interest in the operation of the Service Plan
adopted by us regarding the provision of support services to the beneficial
owners of Service Shares or in any agreement related thereto cast in person at
a meeting called for the purpose of voting on such approval ("Disinterested
Trustees").
Section 14. The names "The PNC Fund" and "Trustees of The PNC Fund"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated December 22, 1988 which is hereby referred to and a copy of which
is on file at the office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of The PNC Fund (the
-6-
<PAGE> 7
"Fund"). The obligations of "The PNC Fund" entered into in the name or on
behalf thereof by any of the Trustees, officers, representatives or agents are
made not individually, but in such capacities, and are not binding upon any of
the Trustees, Shareholders, officers, representatives or agents of the Trust
personally, but bind only the Trust Property (as defined in the Declaration of
Trust), and all persons dealing with any class of Shares of the Fund must look
solely to the Trust Property belonging to such class for the enforcement of any
claims against the Fund.
-7-
<PAGE> 8
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, c/o Provident Distributors, Inc., 259 Radnor-Chester Road, Suite 120,
Radnor, Pennsylvania 19087.
Very truly yours,
THE PNC(R) FUND
By:
----------------------------
(Authorized Officer)
Accepted and Agreed to:
--------------------------------
By:
-----------------------------
(Authorized Officer)
Date:
------------------
-8-
<PAGE> 9
Date:______________ APPENDIX A
THE PNC(R) FUND
APPENDIX A TO
SERVICING AGREEMENT
FEE SCHEDULE
Pursuant to the terms and conditions set forth in the attached
Servicing Agreement (including Section 7 of that Agreement), we will
pay to you, and you will accept as payment for services provided under
Section 1 and Section 2 of the Servicing Agreement, an aggregate
servicing fee at the annual rate of .__% of the average daily net
asset value of the Service Shares beneficially owned by your Clients.
<PAGE> 10
Date:______________ APPENDIX B
THE PNC(R) FUND
APPENDIX B TO
SERVICING AGREEMENT
The additional Portfolios covered by this Servicing Agreement
are listed below:
o Virginia Municipal Money Market Portfolio
o Government Income Portfolio
o International Fixed Income Portfolio
o International Emerging Markets Portfolio
o New Jersey Municipal Money Market Portfolio
<PAGE> 1
EXHIBIT (9)(l)
THE PNC(R) FUND
SERIES B SERVICE PLAN
SECTION 1. Upon the recommendation of Provident Distributors, Inc.
("PDI"), the distributor of The PNC Fund (the "Fund"), any officer of the Fund
is authorized to execute and deliver, in the name and on behalf of the Fund,
written agreements based on the form attached hereto as Attachment A or any
other form duly approved by the Fund's Board of Trustees ("Agreements") with
PDI and/or with securities dealers, financial institutions and other industry
professionals that are not affiliated with PDI ("Service Organizations") which
are shareholders or dealers of record or which have a servicing relationship
with the beneficial owners of Series B Investor Shares ("Shares") in the Fund's
Value Equity, Growth Equity, Index Equity, Small Cap Value Equity,
International Equity, Balanced, Small Cap Growth Equity, Core Equity,
International Emerging Markets, Managed Income, Tax-Free Income, Intermediate
Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income, Short-Term
Bond, Intermediate-Term Bond, International Fixed Income, Government Income and
Money Market Portfolios, and any other current or future investment portfolio
of the Fund. Pursuant to such Agreements, PDI and Service Organizations shall
provide support services as set forth therein to their clients who beneficially
own Shares in consideration of fees, computed daily and payable monthly in the
manner set forth in the Agreements, at annual rates aggregating up to .25% of
the average daily net asset value of the Shares beneficially owned by such
clients.
SECTION 2. PDI shall monitor the arrangements pertaining to the
Fund's Agreements with Service Organizations. PDI shall not, however, be
obligated by this Plan to recommend, and the Fund shall not be obligated to
execute, any Agreement with any qualifying Service Organization.
SECTION 3. So long as this Plan is in effect, PDI shall provide to
the Fund's Board of Trustees, and the trustees shall review, at least
quarterly, a written report of the amounts expended pursuant to this Plan and
the purposes for which such expenditures were made.
SECTION 4. This Plan shall become effective immediately with respect
to each class of Shares upon the approval of the Plan (and the form of
Agreement attached hereto) by a majority of the Fund's Board of Trustees,
including a majority of the trustees who are not "interested persons," as
defined in the Investment Company Act of 1940 (the "Act"), of the Fund and have
no direct or indirect financial interest in the operation of this Plan or in
any Agreement related to this Plan (the "Disinterested
<PAGE> 2
Trustees"), pursuant to a vote cast in person at a meeting called for the
purpose of voting on the approval of this Plan (and form of Agreement).
SECTION 5. Unless sooner terminated, this Plan shall continue until
March 31, 1995 and thereafter shall continue automatically for successive
annual periods provided such continuance is approved at least annually in the
manner set forth in Section 4.
SECTION 6. This Plan may be amended at any time with respect to any
class of Shares by the Fund's Board of Trustees, provided that any material
amendment of the terms of this Plan shall become effective only upon the
approvals set forth in Section 4.
SECTION 7. This Plan is terminable at any time with respect to any
class of Shares by vote of a majority of the Disinterested Trustees.
SECTION 8. While this Plan is in effect, the selection and nomination
of those trustees who are not "interested persons" (as defined in the Act) of
the Fund shall be committed to the discretion of such non-interested trustees.
SECTION 9. The Fund adopted this Plan as of September 23, 1994.
<PAGE> 3
THE PNC(R) FUND ATTACHMENT A
SERIES B SERVICING AGREEMENT
THE PNC(R) FUND
C/O PROVIDENT DISTRIBUTORS, INC.
259 RADNOR-CHESTER ROAD, SUITE 120
RADNOR, PENNSYLVANIA 19087
Provident Distributors, Inc. ("PDI")(1) and the service organization
named below ("Service Organization") wish to enter into this Servicing
Agreement with you concerning the provision of support services to the clients
of Service Organization ("Clients") who may from time to time beneficially own
Series B Investor Shares ("Shares") of the Value Equity, Growth Equity, Index
Equity, Small Cap Value Equity, International Equity, Balanced, Small Cap
Growth Equity, Core Equity, International Emerging Markets, Managed Income,
Tax-Free Income, Intermediate Government, Ohio Tax-Free Income, Pennsylvania
Tax-Free Income, Short-Term Bond, Intermediate-Term Bond, International Fixed
Income, Government Income and Money Market Portfolios and such other investment
portfolios of The PNC(R) Fund (the "Fund") set forth in Appendix B
(collectively, the "Portfolios").
The terms and conditions of this Servicing Agreement are as follows:
Section 1. Service Organization agrees to provide services to Clients
who may from time to time beneficially own Shares. Such services may include:
(i) establishing and maintaining accounts and records relating to Clients that
invest in Shares; (ii) processing dividend and distribution payments from you
on behalf of Clients; (iii) arranging for bank wires; (iv) providing
subaccounting with respect to Shares beneficially owned by Clients or the
information to you necessary for subaccounting; (v) if required by law,
forwarding shareholder communications from you (such as proxies, shareholder
reports, annual and semi-annual financial statements and dividend, distribution
and tax notices) to Clients; (vi) assisting in processing purchase, exchange
and redemption requests from Clients and in placing such orders with your
service contractors; (vii) assisting Clients in changing dividend options,
account designations and addresses; (viii) providing Clients with a service
that invests the assets
- ---------------------
(1) This Agreement is not to be executed by PDI if PDI provides none of the
services set forth in Appendix A hereto and receives no portion of the fees
payable hereunder.
-3-
<PAGE> 4
of their accounts in Shares pursuant to specific or pre-authorized
instructions; (ix) providing information periodically to Clients showing their
positions in Shares and integrating such statements with those of other
transactions and balances in Clients' other accounts serviced by them; (x)
responding to Client inquiries relating to the services performed by them; (xi)
responding to Client inquiries concerning their investments in Shares; and
(xii) providing such other similar services as you may reasonably request to
the extent they are permitted to do so under applicable statutes, rules and
regulations. Some of the aforementioned services may be performed by PDI as
specified in Appendix A to this Agreement.
Section 2. PDI and Service Organization will provide such office
space and equipment, telephone facilities and personnel (which may be any part
of the space, equipment and facilities currently used in their businesses, or
any personnel employed by them) as may be reasonably necessary or beneficial in
order to provide the aforementioned services and assistance to Clients.
Section 3. Neither PDI and Service Organization nor any of their
respective officers, employees or agents are authorized to make any
representations concerning you or the Shares except those contained in the then
current prospectuses and Statement of Additional Information for Shares, copies
of which will be supplied by you, or in such supplemental literature or
advertising as may be authorized by you in writing.
Section 4. For all purposes of this Agreement, PDI and Service
Organization will be deemed to be independent contractors, and will have no
authority to act as agent for you in any matter or in any respect. PDI and
Service Organization each agrees to and does release, indemnify and hold you
harmless from and against any and all direct or indirect liabilities or losses
resulting from requests, directions, actions or inactions of or by each of them
or their respective officers, employees or agents regarding the
responsibilities of each of them hereunder or the purchase, redemption,
transfer or registration of Shares (or orders relating to the same) by or on
behalf of Clients to whom each provides the services specified in Appendix A.
PDI agrees to release, indemnify and hold Service Organization, and Service
Organization agrees to release, indemnify and hold PDI, harmless from and
against any and all liabilities or losses arising out of the services performed
by it under this Agreement. PDI, Service Organization and their respective
employees will, upon request, be available during normal business hours to
consult with you or your designees concerning the performance of their
responsibilities under this Agreement.
<PAGE> 5
Section 5. In consideration of the services and facilities provided
by PDI and Service Organization pursuant to Section 1 hereof, you will pay to
them, and they will accept as full payment therefor, fees set forth in Appendix
A to this Agreement at annual rates aggregating up to .25% of the average daily
net asset value of the Shares beneficially owned by Clients for whom Service
Organization is the dealer of record or holder of record or with whom Service
Organization has a servicing relationship (the "Clients' Shares"), which fees
will be computed daily and payable periodically at intervals specified in
Appendix A. For purposes of determining the fees payable under this Section 5,
the average daily net asset value of the Clients' Shares will be computed in
the manner specified in the Fund's Registration Statement (as the same is in
effect from time to time) in connection with the computation of the net asset
value of Shares for purposes of purchases and redemptions. The fee rate(s) set
forth in Appendix A to this Agreement may be prospectively increased or
decreased by you, in your sole discretion, at any time upon notice to PDI and
Service Organization. Further, you may, in your discretion and without notice,
suspend or withdraw the sale of Shares, including the sale of Shares to PDI and
Service Organization for the account of any Client or Clients.
Section 6. Any person authorized to direct the disposition of monies
paid or payable by you pursuant to this Agreement will provide to the Fund's
Board of Trustees, and the trustees will review, at least quarterly, a written
report of the amounts so expended and the purposes for which such expenditures
were made. In addition, PDI and Service Organization will furnish you or your
designees with such information as you or they may reasonably request
(including, without limitation, periodic certifications confirming the
provision to Clients of the services described herein), and will otherwise
cooperate with you and your designees (including, without limitation, any
auditors designated by you), in connection with the preparation of reports to
the Board of Trustees concerning this Agreement and the monies paid or payable
by you pursuant hereto, as well as any other reports or filings that may be
required by law.
Section 7. You may enter into other similar Servicing Agreements with
any other person or persons without our consent.
Section 8. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by you or your designee. Unless
sooner terminated, this Agreement will continue until March 31 of the year in
which this Agreement is executed, and thereafter will continue automatically
for successive annual periods, provided such continuance is
-5-
<PAGE> 6
specifically approved at least annually by you in the manner described in
Section 11. This Agreement will automatically terminate in the event of its
assignment. This Agreement is terminable with respect to any class of Shares,
without penalty, at any time by you (which termination may be by a vote of a
majority of the Disinterested Trustees as defined in Section 11) or by either
PDI or Service Organization upon written notice to all other parties hereto.
Section 9. All notices and other communications to you, PDI or
Service Organization will be duly given if mailed, telegraphed, telexed or
transmitted by similar telecommunications device to the appropriate address
stated herein, or to such other address as either party shall so provide the
other.
Section 10. This Agreement will be construed in accordance with the
laws of the State of Delaware, and is non-assignable by the parties hereto.
Section 11. This Agreement has been approved by vote of a majority of
(i) the Board of Trustees and (ii) those trustees who are not "interested
persons" (as defined in the Investment Company Act of 1940) of you and have no
direct or indirect financial interest in the operation of the Series B Service
Plan adopted by you regarding the provision of support services to the
beneficial owners of Shares or in any agreement related thereto cast in person
at a meeting called for the purpose of voting on such approval ("Disinterested
Trustees").
Section 12. The names "The PNC Fund" and "Trustees of The PNC Fund"
refer respectively to the Trust created and the trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated December 22, 1988 which is hereby referred to and a copy of which
is on file at the office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of the Fund. The obligations of "The
PNC Fund" entered into in the name or on behalf thereof by any of the trustees,
officers, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the trustees, shareholders,
officers, representatives or agents of the Trust personally, but bind only the
Trust Property (as defined in the Declaration of Trust), and all persons
dealing with any class of Shares of the Fund must
-6-
<PAGE> 7
look solely to the Trust Property belonging to such class for the enforcement
of any claims against the Fund.
Very truly yours,
-------------------------------
Service Organization Name
(Please Print or Type)
-------------------------------
Address
-------------------------------
City State Zip Code
-------------------
Date
By:
----------------------------
-------------------------------
PROVIDENT DISTRIBUTORS, INC.
By:
----------------------------
(Authorized Officer)
-------------------
Date
Accepted and Agreed to:
THE PNC(R) FUND
By:
-----------------------------
(Authorized Officer)
-------------------
Date
-7-
<PAGE> 8
Date:______________ APPENDIX A
THE PNC(R) FUND
APPENDIX A TO
SERIES B SERVICING AGREEMENT
FEE SCHEDULE
Pursuant to the terms and conditions set forth in the attached
Series B Servicing Agreement (the "Agreement"), we agree to provide
the services indicated below (PDI and Service Organization must
indicate with an "X" those services, if any, to be provided under this
Agreement):
<TABLE>
<CAPTION>
==================================================================================================
SERVICE
SERVICES TO BE PROVIDED BY: PDI ORGANIZATION
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
(i) establishing and maintaining accounts and records
relating to Clients that invest in Shares / / / /
- --------------------------------------------------------------------------------------------------
(ii) processing dividend and distribution payments from / / / /
you on behalf of Clients
- --------------------------------------------------------------------------------------------------
(iii) arranging for bank wires / / / /
- --------------------------------------------------------------------------------------------------
(iv) providing subaccounting with respect to Shares
beneficially owned by Clients or the information to you / / / /
necessary for subaccounting
- --------------------------------------------------------------------------------------------------
(v) if required by law, forwarding shareholder
communications from you (such as proxies, shareholder
reports, annual and semi-annual financial statements and / / / /
dividend, distribution and tax notices) to Clients
- --------------------------------------------------------------------------------------------------
(vi) assisting in processing purchase, exchange and
redemption requests from Clients and in placing such / / / /
orders with your service contractors
(vii) assisting Clients in changing dividend options, / / / /
account designations and addresses
- --------------------------------------------------------------------------------------------------
(viii) providing Clients with a service that invests the / / / /
assets of their accounts in Shares pursuant to specific or
pre-authorized instructions
- --------------------------------------------------------------------------------------------------
(ix) providing information periodically to Clients showing
their positions in Shares and integrating such statements
with those of other transactions and balances in Clients' / / / /
other accounts serviced by us
- --------------------------------------------------------------------------------------------------
(x) responding to Client inquiries relating to the / / / /
services performed by us;
- --------------------------------------------------------------------------------------------------
(xi) responding to Client inquiries concerning their / / / /
investments in Shares
==================================================================================================
</TABLE>
Pursuant to the terms and conditions set forth in the
Agreement (including Section 5 thereof), you will pay to us, and we will accept
as
<PAGE> 9
full payment for the services provided by us as specified above, servicing fees
(calculated daily and payable __________) set forth below at annual rates
aggregating not more than .25% of the average daily net asset value of the
Shares owned by our Clients:
<TABLE>
<CAPTION>
Service Fee
-----------
<S> <C>
PDI .............................. BP
----
Service Organization ............. BP
----
</TABLE>
<PAGE> 10
Date:______________ APPENDIX B
THE PNC(R) FUND
APPENDIX B TO
SERIES B SERVICING AGREEMENT
The additional Portfolios covered by this Series B Servicing
Agreement are listed below:
<PAGE> 1
EXHIBIT (9)(m)
TRADEMARK LICENSE AGREEMENT
Agreement made this 4th day of October, 1989, between PNC
FINANCIAL CORP, a Pennsylvania Corporation having a principal place of business
at 5th and Wood Streets, Pittsburgh, Pennsylvania (hereinafter called
"LICENSOR") and THE PNC FUND, a Massachusetts business trust having a principal
place of business at 3411 Silverside Road, Wilmington, Delaware (hereinafter
called "LICENSEE").
WHEREAS, LICENSOR owns and is using in its business service
mark PNC, U.S. Service Mark Registration 1,416,896, the PNC trade name element
and the good will of the business appurtenant thereto (hereinafter collectively
referred to as the "PNC Trade Indicia"), which are well-known and recognized by
the general public and favorably associated in the public mind with LICENSOR;
and
WHEREAS, LICENSEE desires to utilize the aforementioned PNC
Trade Indicia in connection with its Mutual Fund Services;
NOW THEREFORE, in consideration of the mutual promises herein
contained, it is hereby agreed:
1. LICENSOR hereby grants to LICENSEE the non-exclusive,
royalty-free right and license to use the aforementioned PNC Trade Indicia as a
service mark, but only in connection with LICENSEE's mutual fund services.
2. LICENSEE shall use the PNC Trade Indicia in a manner
consistent with the use of the same by LICENSOR both in terms of depiction and
in regard to the quality of the services which the PNC Trade Indicia identify.
LICENSOR shall have the right to monitor all materials containing the PNC Trade
Indicia and copies of such items shall be furnished to LICENSOR by LICENSEE
prior to release and without cost. If LICENSOR objects to the content or
format of any such material, LICENSEE shall immediately take necessary steps to
make such changes as LICENSOR shall require to assure that said materials are
acceptable to LICENSOR.
3. LICENSEE agrees that LICENSOR is the sole owner of
the PNC Trade Indicia, that LICENSEE's use of the PNC Trade Indicia is licensed
use and inures to LICENSOR's benefit and that the LICENSEE shall under no
circumstance claim any interest to the PNC Trade Indicia except under this
Agreement, and the LICENSEE acquires no rights in the PNC Trade Indicia by
virtue of its use thereof.
<PAGE> 2
4. This license may be unilaterally terminated by
LICENSOR at any time upon the breach of this Agreement by LICENSEE. In
addition, this license shall terminate immediately in the event that at any
time hereafter neither LICENSOR's subsidiary, Provident Institutional
Management Corporation, nor any of LICENSOR's other affiliates is then serving
as LICENSEE's investment advisor or investment manager.
5. LICENSEE shall immediately notify LICENSOR of any
apparent infringement of, or interference with, or challenge to LICENSEE's use
of the licensed PNC Trade Indicia, and LICENSOR shall have sole discretion to
take such action as it deems appropriate.
6. LICENSEE agrees that, immediately upon termination of
this Agreement, it will not thereafter use the aforementioned PNC Trade Indicia
or any word or words deemed by LICENSOR to be similar to any of the PNC Trade
Indicia.
7. This instrument may not be released, discharged,
abandoned, changed or modified in any manner, orally or otherwise, except by an
instrument in writing signed by duly authorized officers or representatives of
the parties hereto.
8. LICENSOR reserves the right to change unilaterally
from time to time the licensed marks and terms of this Agreement.
9. Release. The names "The PNC Fund" and "Trustees of
The PNC Fund" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated December 22, 1988 which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "The PNC Fund" entered into in the name or on behalf thereof by
any of the Trustees, officers, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, Shareholders, officers, representatives or agents of the Trust
personally, but bind only the Trust Property (as defined in the Declaration of
Trust), and all persons dealing with any class of Shares of the Trust must look
solely to the Trust Property belonging to such class for the enforcement of any
claims against the Trust.
10. This Agreement shall be construed and the legal
relations between the parties hereto shall be governed by the law of the
Commonwealth of Pennsylvania, United States of America.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
LICENSOR has caused this instrument to be executed, in duplicate, at
Wilmington, DE by its duly authorized
-2-
<PAGE> 3
representative this 4th day of October, 1989; and LICENSEE has caused this
instrument to be executed, in duplicate, at Wilmington, DE by its duly
authorized representative this 4th day of October, 1989.
[SEAL] THE PNC FUND
BY: /s/ Edward J. Roach
---------------------------
Name: Edward J. Roach
Title: Treasurer
[SEAL] PNC FINANCIAL CORP
BY: /s/ J. Richard Carnall
----------------------------
Name: J. Richard
Title:
-3-
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation in this Post-Effective Amendment No. 15 to the
Registration Statement on Form N-1A (File No. 33-26305) under the Securities
Act of 1933 of the PNC Fund of each of our reports dated November 23, 1994 on
our audits of the financial statements and financial highlights as of September
30, 1994 and for the respective periods then ended.
We also consent to the reference to our Firm under the captions "Financial
Highlights" in the applicable prospectuses and "Miscellaneous--Independent
Accountants" and "Financial Statements" in the Statement of Additional
Information.
/s/ COOPERS & LYBRAND L.L.P.
- ----------------------------
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
May 10, 1995
<PAGE> 1
EXHIBIT (11)(b)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the reference
to our firm under the caption "Counsel" in the Statement of Additional
Information that is included in Post-Effective Amendment No. 15 to the
Registration Statement (File No. 33-26305) on Form N-1A of The PNC(R) Fund
under the Securities Act of 1933 and the Investment Company Act of 1940,
respectively. This consent does not constitute a consent under Section 7 of
the Securities Act of 1933, and in consenting to the use of our name and the
reference to our Firm under such caption we have not certified any part of the
Registration Statement and do not otherwise come within the categories of
persons whose consent is required under Section 7 or the rules and regulations
of the Securities and Exchange Commission thereunder.
/s/ DRINKER BIDDLE & REATH
---------------------------
DRINKER BIDDLE & REATH
Philadelphia, Pennsylvania
May 11, 1995
<PAGE> 1
EXHIBIT (13)(a)
PURCHASE AGREEMENT
NCP Funds (the "Fund"), a Massachusetts business trust, and
Shearson Lehman Hutton Inc., a Delaware corporation ("Shearson"), hereby agree
with each other as follows:
1. The Fund hereby offers Shearson and Shearson hereby
purchases 33,200 Class A-1 shares, 33,200 Class B-1 shares and 33,200 Class C-1
shares, at a price of $1.00 per Share, and 10 Class D-1 shares, 10 Class E-1
shares, 10 Class F-1 shares and 10 Class G-1 shares, at a price of $10.00 per
share, aggregating to 99,640 shares of beneficial interest in the Fund (such
shares of beneficial interest in the Fund be hereinafter collectively known as
"Shares"). Shearson here acknowledges purchase of the Shares and the Fund
hereby acknowledges receipt from Shearson of funds in the amount of $100,000 in
full payment for the Shares.
2. Shearson represents and warrants to the Fund that the
Shares are being acquired for investment purposes and not with a view to the
distribution thereof.
3. Costs incurred by the Fund in connection with its
organization, registration and the initial public offer of Shares have been
deferred and will be amortized over a period of sixty months from commencement
of operations. In the event that any of the initial Class A-1 Shares, Class
B-1 Shares, Class C-1 Shares, Class D-1 Shares, Class E-1 Shares, Class F-1
Shares or Class G-1 Shares purchased by Shearson hereunder are redeemed by any
holder thereof during the period that the costs incurred by the Fund in
connection with its organization, registration and initial public offering are
amortized by the Fund, the Fund is authorized to reduce the redemption proceeds
to cover any unamortized organizational expenses in the same proportion as the
number of initial Shares being redeemed bears to the number of initial Shares
outstanding at the time of redemption. If, for any reason, said reduction of
redemption proceeds is not in fact made by the Fund in the event of such a
redemption, Shearson agrees to reimburse the Fund immediately for any
unamortized organizational expenses in the proportion stated above.
4. The names "NCP Funds" and "Trustees of NCP Funds"
refer respectively to the trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated December 22, 1988 which is hereby referred to and a copy of which
is on file at the office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of the Fund. The obligations of "NCP
Funds" entered into in the name or on behalf thereof by any of the trustees,
representatives or agents are made not individually, but in such capacities,
and are not binding upon any of the trustees, shareholders or representatives
of the Fund personally, but bind only the Trust Property (as
<PAGE> 2
defined in the Declaration of Trust), and all persons dealing with any class
of shares of the Fund must look solely to the Trust Property belonging to such
class for the enforcement of any claims against the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the 24th day of April, 1989.
(SEAL)
Attest: NCP FUNDS
/s/ Morgan R. Jones By:/s/ Edward J. Roach
- -------------------------- -------------------------
Secretary Treasurer
(SEAL)
Attest: SHEARSON LEHMAN HUTTON INC.
/s/ Maureen Boyan By:/s/ J. Smythe
- -------------------------- ------------------------
Vice President
<PAGE> 1
EXHIBIT (13)(b)
PURCHASE AGREEMENT
The PNC(R) Fund (the "Fund"), a Massachusetts business trust, and
Shearson Lehman Hutton Inc. ("Shearson"), a Delaware corporation, hereby agree
with each other as follows:
1. The Fund hereby offers Shearson and Shearson hereby purchases
ten shares (the "Shares") of the Fund's Tax-Free Income
Portfolio at a price of $10 per share for a total of $100.
The Fund hereby acknowledges receipt from Shearson of funds in
the total amount of $100 in full payment for the Shares.
2. Shearson represents and warrants to the Fund that the Shares
are being acquired for investment purposes and not with a view
to the distribution thereof.
IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the
parties hereto have executed this Agreement as of the 29th day of December,
1989.
THE PNC(R) FUND
By:/s/ Edward J. Roach
-------------------
Its:Treasurer
SHEARSON LEHMAN HUTTON INC.
By:/s/ J. Smythe
-------------
Its:Vice President
<PAGE> 1
EXHIBIT (13)(c)
PURCHASE AGREEMENT
The PNC(R) Fund (the "Fund"), a Massachusetts business trust, and
Shearson Lehman Brothers Inc. ("Shearson"), a Delaware corporation, hereby
agree with each other as follows:
1. The Fund hereby offers Shearson and Shearson hereby purchases
ten shares of each of the Fund's Ohio Tax-Free Money Market
and Pennsylvania Tax-Free Money Market Portfolios (the "Money
Market Shares") for $1 per share. The Fund hereby
acknowledges receipt from Shearson of funds in the total
amount of $20 in full payment for the Money Market Shares.
2. The Fund hereby offers Shearson and Shearson hereby purchases
ten shares of the Fund's Intermediate Government, Ohio
Tax-Free Income, Pennsylvania Tax-Free Income, Value Equity,
Index Equity and Special Equity Portfolios (the "Non-Money
Market Shares") for $10 per share. The Fund hereby
acknowledges receipt from Shearson of funds in the total
amount of $600 for the Non-Money Market Shares.
3. Shearson represents and warrants to the Fund that the Money
Market and Non-Money Market Shares are being acquired for
investment purposes and not with a view to the distribution
thereof.
IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the
parties hereto have executed this Agreement as of the fifth day of February
1992.
THE PNC(R) FUND
By:/s/ Edward J. Roach
-------------------------
its: Treasurer
SHEARSON LEHMAN BROTHERS INC.
By:/s/ Jeff Howard
-------------------------
its:
<PAGE> 1
EXHIBIT (13)(d)
PURCHASE AGREEMENT
The PNC(R) Fund (the "Fund"), a Massachusetts business trust, and
Shearson Lehman Brothers Inc. ("Shearson"), a Delaware corporation, hereby
agree with each other as follows:
1. The Fund hereby offers Shearson and Shearson hereby purchases
ten Investor Shares of each of the Fund's Money Market,
Government Money Market, Tax-Free Money Market, Ohio Tax-Free
Money Market and Pennsylvania Tax-Free Money Market Portfolios
(the "Investor Money Market Shares") for $1 per share. The
Fund hereby acknowledges receipt from Shearson of funds in the
total amount of $50 in full payment for the Investor Money
Market Shares.
2. The Fund hereby offers Shearson and Shearson hereby purchases
ten Institutional Shares of each of the Fund's Money Market,
Government Money Market, Tax-Free Money Market, Ohio Tax-Free
Money Market and Pennsylvania Tax-Free Money Market Portfolios
(the "Institutional Money Market Shares") for $1 per share.
The Fund hereby acknowledges receipt from Shearson of funds in
the total amount of $50 in full payment for the Institutional
Money Market Shares.
3. The Fund hereby offers Shearson and Shearson hereby purchases
ten Service Shares of the Fund's Managed Income, Tax-Free
Income, Intermediate Government, Ohio Tax-Free Income,
Pennsylvania Tax-Free Income, Value Equity, Growth Equity,
Index Equity, Special Equity, International Equity and
Balanced Portfolios (the "Service Non-Money Market Shares")
for $10 per share. The Fund hereby acknowledges receipt from
Shearson of funds in the total amount of $1,100 for the
Service Non-Money Market Shares.
4. The Fund hereby offers Shearson and Shearson hereby purchases
ten Institutional Shares of the Fund's Managed Income,
Tax-Free Income, Intermediate Government, Ohio Tax-Free
Income, Pennsylvania Tax-Free Income, Value Equity, Growth
Equity, Index Equity, Special Equity, International Equity and
Balanced Portfolios (the "Institutional Non-Money Market
Shares") for $10 per share. The Fund hereby acknowledges
receipt from Shearson of funds in the total amount of $1,100
for the Institutional Non-Money Market Shares.
5. Shearson represents and warrants to the Fund that the Investor
Money Market, Institutional Money Market, Service Non-Money
Market and Institutional Non-Money
<PAGE> 2
Market Shares are being acquired for investment purposes and
not with a view to the distribution thereof.
IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the
parties hereto have executed this Agreement as of the seventh day of July,
1992.
THE PNC(R) FUND
By:/s/ Edward J. Roach
-------------------------
its: Treasurer
SHEARSON LEHMAN BROTHERS INC.
By:/s/ Jeff Howard
-------------------------
its:
<PAGE> 1
EXHIBIT (13)(e)
PURCHASE AGREEMENT
The PNC(R) Fund (the "Fund"), a Massachusetts business trust, and
Pennsylvania Merchant Group Ltd ("PMG"), a Delaware corporation, hereby agree
with each other as follows:
1. The Fund hereby offers PMG and PMG hereby purchases ten Service,
Investor and Institutional Shares of the Fund's North Carolina
municipal Money Market Portfolio (the "Money Market Shares") for $1
per share. The Fund hereby acknowledges receipt from PMG of funds
in the total amount of $30 in full payment for the Money Market
Shares.
2. The Fund hereby offers PMG and PMG hereby purchase ten Service,
Investor and Institutional Shares of each of the Fund's Short-Term
Bond, Intermediate-Term Bond, Small Cap Growth Equity and Core
Equity Portfolios (the "Non-Money Market Shares") for $10 per
share. The Fund hereby acknowledges receipt from PMG of funds in
the total amount of $1,200 for the Non-Money Market Shares.
3. PMG represents and warrants to the Fund that the Money Market
Shares are being acquired for investment purposes and not with a
view to the distribution thereof.
IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the
parties hereto have executed this Agreement as of the 23 day of March, 1993.
THE PNC(R) FUND
By:/s/ Edward J. Roach
---------------------------
its: Vice Pres. & Secretary
PENNSYLVANIA MERCHANT GROUP LTD
By:/s/ Nancy A. Wolfe
----------------------------
its: Corporate Secretary
<PAGE> 1
EXHIBIT (13)(f)
PURCHASE AGREEMENT
The PNC(R) Fund (the "Fund"), a Massachusetts business trust, and
Provident Distributors, Inc. ("PDI"), a Delaware corporation, hereby agree as
follows:
1. The Fund hereby offers PDI and PDI hereby purchases ten Series B
Investor Shares of the Fund's Money Market Portfolio (the "Series B
Investor Money Market Shares") for $1 per share. The Fund hereby
acknowledges receipt from PDI of funds in the total amount of $10
in full payment for the Series B Investor Money Market Shares.
2. The Fund hereby offers PDI and PDI hereby purchases one Series B
Investor Share of each of the Fund's Managed Income, Tax-Free
Income, Intermediate Government, Ohio Tax-Free Income, Pennsylvania
Tax-Free Income, Value Equity, Growth Equity, Index Equity, Small
Cap Value Equity, Short-Term Bond, Intermediate-Term Bond, Small
Cap Growth Equity, Core Equity, International Fixed Income,
Government Income, International Emerging Markets, International
Equity and Balanced Portfolios (the "Series B Investor Non-Money
Market Shares") at the prices per share set forth in Appendix A
hereto. The Fund hereby acknowledges receipt from PDI of funds in
the total amount of $186.78 for the Series B Investor Non-Money
Market Shares.
3. PDI represents and warrants to the Fund that the Series B Investor
Money Market Shares and the Series B Investor Non-Money Market
Shares are being acquired for investment purposes and not with a
view to the distribution thereof.
IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the
parties hereto have executed this Agreement as of September 30, 1994.
THE PNC(R) FUND
By:/s/ Morgan R. Jones
------------------------
its: Secretary
PROVIDENT DISTRIBUTORS, INC.
By:/s/ John P. Moran
-------------------------
its: Vice-President
<PAGE> 2
APPENDIX A
<TABLE>
<CAPTION>
PORTFOLIO PRICE PER SERIES B INVESTOR SHARE(1)
--------- ---------------------------------
<S> <C>
MANAGED INCOME $ 9.79
TAX-FREE INCOME $10.04
INTERMEDIATE GOVERNMENT $ 9.64
OHIO TAX-FREE INCOME $ 9.60
PENNSYLVANIA TAX-FREE INCOME $ 9.83
VALUE EQUITY $11.62
GROWTH EQUITY $10.16
INDEX EQUITY $10.93
SMALL CAP VALUE EQUITY $13.58
SHORT-TERM BOND $ 9.58
INTERMEDIATE-TERM BOND $ 9.05
SMALL CAP GROWTH EQUITY $10.12
CORE EQUITY $ 9.92
INTERNATIONAL FIXED INCOME $10.00
GOVERNMENT INCOME $10.00
INTERNATIONAL EMERGING MARKETS $10.54
INTERNATIONAL EQUITY $10.40
BALANCED $11.98
</TABLE>
- --------------------
(1) equal to the net asset value per Series B Investor Share on
September 30, 1994
<PAGE> 1
EXHIBIT (13)(g)
PURCHASE AGREEMENT
The PNC(R) Fund (the "Fund"), a Massachusetts business trust, and
Pennsylvania Merchant Group Ltd ("PMG"), a Delaware corporation, hereby agree
with each other as follows:
1. The Fund hereby offers PMG and PMG hereby purchases ten
Service, Investor and Institutional Shares of the Fund's
Virginia Municipal Money Market Portfolio (the "Money Market
Shares") for $1 per share. The Fund hereby acknowledges
receipt from PMG of funds in the total amount of $30 in full
payment for the Money Market Shares.
2. The Fund hereby offers PMG and PMG hereby purchases ten
Service, Investor and Institutional Shares of each of the
Fund's Government Income, International Emerging Markets and
International Fixed Income Portfolios (the "Non-Money Market
Shares") for $10 per share. The Fund hereby acknowledges
receipt from PMG of funds in the total amount of $900 for the
Non-Money Market Shares.
3. PMG represents and warrants to the Fund that the Money Market
and Non-Money Market Shares are being acquired for investment
purchases and not with a view to the distribution thereof.
equal to the net asset value per Series B Investor Share at September ___, 1994
<PAGE> 2
IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the
parties hereto have executed this Agreement as of the 1st day of February, 1994.
THE PNC(R) FUND
By: /s/ Edward J. Roach
-------------------
its: Treasurer
PENNSYLVANIA MERCHANT
GROUP LTD
By: /s/ Nancy A. Wolfe
--------------------
its: Corporate
Secretary
equal to the net asset value per Series B Investor Share at September ___, 1994
<PAGE> 1
EXHIBIT (13)(h)
PURCHASE AGREEMENT
The PNC(R) Fund, a Massachusetts business trust, and Provident
Distributors, Inc. ("PDI"), a Delaware corporation, hereby agree as follows:
1. The Fund hereby offers PDI and PDI hereby purchases ten
Service, Series A Investor and Institutional Shares of the
Fund's New Jersey Municipal Money Market Portfolio (the "New
Jersey Municipal Money Market Shares") for $1 per share. The
Fund hereby acknowledges receipt from PDI of funds in the
total amount of $30 in full payment for the New Jersey
Municipal Money Market Shares.
2. PDI represents and warrants to the Fund that the New Jersey
Municipal Money Market Shares are being acquired for
investment purposes and not with a view to the distribution
thereof.
IN AGREEMENT WHEREOF, and intending to be legally bound
hereby, the parties hereto have executed this Agreement as of ___________ 1995.
THE PNC(R) FUND
By:
----------------------
its:
PROVIDENT DISTRIBUTORS, INC.
By:
--------------------------
its:
<PAGE> 1
EXHIBIT (15)(a)
THE PNC(R) FUND
AMENDED AND RESTATED
SERIES A DISTRIBUTION AND SERVICE PLAN
January 21, 1993
This Distribution and Service Plan (the "Plan") has been adopted by
the Board of Trustees of The PNC Fund (the "Fund") in conformance with Rule
12b-1 under the Investment Company Act of 1940 (the "Act").
Section 1. Payments. The Fund may reimburse its Distributor (or any
other person) for certain expenses that are incurred in connection with the
offering and sale of Series A Investor Shares of the Fund's Managed Income,
Tax-Free Income, Intermediate Government, Ohio Tax-Free Income, Pennsylvania
Tax-Free Income, Short-Term Bond, Intermediate-Term Bond, Value Equity, Growth
Equity, Index Equity, Small Cap Value Equity, International Equity, Balanced,
Small Cap Growth Equity, Core Equity, Money Market, Government Money Market,
Municipal Money Market, Ohio Municipal Money Market, Pennsylvania Municipal
Money Market and North Carolina Municipal Money Market Portfolios and any
future investment portfolio of the Fund (all such Series A Investor Shares
hereinafter called "Shares" and all such portfolios hereinafter called
"Portfolios"). Reimbursements by the Fund under the Plan will be calculated
daily and paid periodically at intervals specified in the Distribution and
Servicing Agreement up to a rate or rates set from time to time by the Fund's
Board of Trustees, provided that no rate set by the Board for any Portfolio may
exceed the annual rate of .55% of the average daily net asset value of Shares
of such Portfolio. For purposes of determining reimbursements payable under
the Plan, the net asset value of the outstanding Shares of the respective
Portfolios shall be computed in the manner specified in the Fund's prospectuses
and statement of additional information for such Shares.
Section 2. Expenses Covered by Plan. Payments to the Distributor
under Section 1 of the Plan will be used to reimburse the Distributor for its
expenses relating to services intended to result in the sale of the Shares
and/or shareholder servicing. Such expenses and services may include but are
not limited to: (a) direct out-of-pocket promotional expenses incurred by the
Distributor in connection with the advertising and marketing of Shares and (b)
payments to one or more securities dealers, financial institutions or other
industry professionals, such as investment advisers, accountants and estate
planning firms that are not affiliated with the Distributor (severally, a
"Service Organization") for distribution assistance and/or support services
provided with respect to Shares owned by shareholders for whom the Service
Organization is the dealer of record or holder of record, or owned by
shareholders with whom the Service Organization has a servicing relationship.
As used herein, "direct
<PAGE> 2
out-of-pocket promotional expenses" include amounts spent by the Distributor in
connection with advertising via radio, television, newspapers, magazines and
otherwise; preparing, printing and mailing sales materials, brochures and
prospectuses (except for prospectuses used for regulatory purposes or for
distribution to existing shareholders); and other out-of-pocket expenses
incurred in connection with the promotion of the Shares of the Portfolios.
Payments made by a particular Portfolio must be for distribution
and/or other services rendered for or on behalf of such Portfolio. However,
joint distribution financing with respect to Shares of the Portfolios (which
financing may also involve other investment portfolios or companies that are
affiliated persons of such a person, or affiliated persons of the Distributor)
shall be permitted in accordance with applicable regulations of the Securities
and Exchange Commission as in effect from time to time.
Upon proper authorization by the Fund's Trustees in accordance with
Rule 12b-1 under the Act, expenses covered by the Plan may also include other
expenses the Distributor (or any other person) may incur in connection with the
distribution of the Fund's Shares including, without limitation, expenditures
for telephone facilities and in-house telemarketing, or in connection with
shareholder servicing.
Section 3. Reports of Distributor. So long as the Plan is in effect,
the Distributor shall provide to the Fund's Board of Trustees, and the Trustees
shall review, at least quarterly, a written report of the amounts to be
reimbursed to the Distributor under the Plan and the purposes for which such
expenditures were made.
Section 4. Approval of Plan. The Plan will become effective
immediately, as to any class of Shares, upon its approval by (a) a majority of
the outstanding Shares of such class, and (b) a majority of the Board of
Trustees, including a majority of the trustees who are not "interested persons"
(as defined in the Act) of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or in any agreements entered
into in connection with the Plan, pursuant to a vote cast in person at a
meeting called for the purpose of voting on the approval of the Plan.
Section 5. Continuance of the Plan. The Plan shall continue in
effect for so long as its continuance is specifically approved at least
annually by the Fund's Board of Trustees in the manner described in Section 4.
Section 6. Amendments. The Plan may be amended at any time by the
Board of Trustees provided that (a) any amendment to increase materially the
costs which any class of Shares may bear for distribution pursuant to the Plan
shall be effective only upon approval by a vote of a majority of the
outstanding Shares of such class, and (b) any material amendments of the terms
of the Plan shall become effective only upon approval as provided in paragraph
4(b) hereof.
<PAGE> 3
Section 7. Termination. The Plan is terminable, as to any class of
Shares, without penalty at any time by (a) a vote of a majority of the Trustees
who are not "interested persons" (as defined in the Act) of the Fund and who
have no direct or indirect financial interest in the operation of the Plan or
in any agreements entered into in connection with the Plan, or (b) a vote of a
majority of the outstanding Shares of such class.
Section 8. Selection/Nomination of Trustees. While this Plan is in
effect, the selection and nomination of those Trustees who are not "interested
persons" (as defined in the Act) of the Fund shall be committed to the
discretion of such non-interested Trustees.
Section 9. Limitation of Liability. The names "The PNC Fund" and
"Trustees of The PNC Fund" refer respectively to the trust created and the
Trustees, as trustees but not individually or personally, acting from time to
time under a Declaration of Trust dated December 22, 1988 which is hereby
referred to and a copy of which is on file at the office of the State Secretary
of the Commonwealth of Massachusetts and at the principal office of the Fund.
The obligations of "The PNC Fund" entered into in the name or on behalf thereof
by any of the Trustees, officers, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, Shareholders, officers, representatives or agents of the Fund
personally, but bind only the Trust Property (as defined in the Declaration of
Trust), and all persons dealing with any class of shares of the Fund must look
solely to the Trust Property belonging to such class for the enforcement of any
claims against the Fund.
Section 10. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the Fund has executed the Plan as of January 21,
1993 on behalf of each of the Portfolios.
THE PNC FUND
By:
------------------------------
-3-
<PAGE> 4
THE PNC(R) FUND
SERIES A DISTRIBUTION AND SERVICING AGREEMENT
To Whom it May Concern:
We wish to enter into this Distribution and Servicing Agreement
("Agreement") with you concerning the provision of distribution services and,
to the extent provided below, support services to your clients ("Clients") who
may from time to time beneficially own Series A Investor Shares of the Managed
Income, Tax-Free Income, Intermediate Government, Ohio Tax-Free Income,
Pennsylvania Tax-Free Income, Short-Term Bond, Intermediate-Term Bond, Value
Equity, Growth Equity, Index Equity, Small Cap Value Equity, International
Equity, Balanced, Small Cap Growth Equity, Core Equity, Money Market,
Government Money Market, Municipal Money Market, Ohio Municipal Money Market,
Pennsylvania Municipal Money Market and North Carolina Municipal Money Market
Portfolios and such other investment portfolios set forth in Appendix B
(collectively, the "Portfolios") offered by The PNC(R) Fund (the "Fund"), of
which we are or will be the principal underwriter as defined in the Investment
Company Act of 1940 (the "Act") and the exclusive agent for the continuous
distribution of said Shares. Series A Investor Shares of the Portfolios are
hereinafter referred to collectively as "Shares."
The terms and conditions of this Agreement are as follows:
Section 1. You agree to provide: (x) reasonable assistance in
connection with the distribution of Shares to Clients as requested from time to
time by us, which assistance may include forwarding sales literature and
advertising provided by us for Clients; and (y) the following support services
to Clients who may from time to time acquire and beneficially own Shares: (i)
establishing and maintaining accounts and records relating to Clients that
invest in Shares; (ii) processing dividend and distribution payments from the
Fund on behalf of Clients; (iii) providing information periodically to Clients
showing their positions in Shares; (iv) arranging for bank wires; (v)
responding to Client inquiries relating to the services performed by you; (vi)
responding to routine inquiries from Clients concerning their investments in
Shares; (vii) providing subaccounting with respect to Shares beneficially owned
by Clients or the information to the Fund necessary for subaccounting; (viii)
if required by law, forwarding shareholder communications from the Fund (such
as proxies, shareholder reports, annual and semi-annual financial statements
and dividend, distribution and tax notices) to Clients; (ix) assisting in
processing purchase, exchange and redemption requests from Clients and in
placing such orders with our service contractors; (x) assisting Clients in
changing dividend options, account designations and addresses; (xi) providing
Clients with a service that invests the assets of their accounts in Shares
pursuant to specific or pre-authorized instructions; and (xii) providing such
other similar
-4-
<PAGE> 5
services as we may reasonably request to the extent you are permitted to do so
under applicable statutes, rules and regulations.
Section 2. You will provide such office space and equipment,
telephone facilities and personnel (which may be any part of the space,
equipment and facilities currently used in your business, or any personnel
employed by you) as may be reasonably necessary or beneficial in order to
provide the aforementioned services and assistance to Clients.
Section 3. Neither you nor any of your officers, employees or agents
are authorized to make any representations concerning us or the Shares except
those contained in the Fund's applicable prospectuses and statements of
additional information for the Shares, copies of which will be supplied by us
to you, or in such supplemental literature or advertising as may be authorized
by us in writing.
Section 4. For all purposes of this Agreement you will be deemed to
be an independent contractor, and will have no authority to act as agent for us
or the Fund in any matter or in any respect. By your written acceptance of
this Agreement, you agree to and do release, indemnify and hold us harmless and
the Fund harmless from and against any and all direct or indirect liabilities
or losses resulting from requests, directions, actions or inactions of or by
you or your officers, employees or agents regarding your responsibilities
hereunder or the purchase, redemption, transfer or registration of Shares (or
orders relating to the same) by or on behalf of Clients. You and your
employees will, upon request, be available during normal business hours to
consult with us or our designees concerning the performance of your
responsibilities under this Agreement.
Section 5. In consideration of the services and facilities provided
by you hereunder, we will pay to you, and you will accept as full payment
therefor, a fee set forth in Appendix A to this Agreement at an annual rate of
up to .55% of the average daily net asset value of the Shares beneficially
owned by your Clients for whom you are the dealer of record or holder of record
or with whom you have a servicing relationship (the "Clients' Shares"), which
fee will be computed daily and payable periodically at intervals specified in
Appendix A. For purposes of determining the fees payable under this Section 5,
the average daily net asset value of the Clients' Shares will be computed in
the manner specified in the Fund's Registration Statement (as the same is in
effect from time to time) in connection with the computation of the net asset
value of the particular Shares involved for purposes of purchases and
redemptions. The fee rate stated above may be prospectively increased or
decreased by us, in our sole discretion, at any time upon notice to you.
Further, we may, in our discretion and without notice, suspend or withdraw the
sale of Shares, including the sale of Shares for the account of any Client or
Clients.
Section 6. Any person authorized to direct the disposition of monies
paid or payable by us pursuant to this Agreement will
-5-
<PAGE> 6
provide to us and the Fund, and the Fund's trustees will review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made. In addition, you will furnish us or our
designees with such information as we or they may reasonably request
(including, without limitation, periodic certifications confirming the
provision to Clients of the services described herein), and will otherwise
cooperate with us and our designees (including, without limitation, any
auditors designated by us), in connection with the preparation of reports to
the Fund's Board of Trustees concerning this Agreement and the monies paid or
payable by us pursuant hereto, as well as any other reports or filings that may
be required by law.
Section 7. We may enter into other similar Agreements with any other
person or persons without your consent.
Section 8. This Agreement has been entered into pursuant to Rule
12b-1 under the Act, and is subject to the provisions of said Rule, as well as
any other applicable rules or regulations promulgated by the Securities and
Exchange Commission.
Section 9. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee. Unless
sooner terminated, this Agreement will continue until October 1 of the year in
which this Agreement is executed and thereafter will continue automatically for
successive annual periods provided such continuance is specifically approved at
least annually by the Fund in the manner described in Section 12. This
Agreement is terminable with respect to any class of Shares, without penalty,
at any time by the Fund (which termination may be by a vote of a majority of
the Disinterested Trustees as defined in Section 12 or by vote of the holders
of a majority of the outstanding Shares of such Class) or by us or you upon
notice to the other party hereto. This Agreement will also terminate
automatically in the event of its assignment (as defined in the Act).
Section 10. All notices and other communications to either you or us
will be duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address stated herein, or to such
other address as either party shall so provide the other.
Section 11. This Agreement will be construed in accordance with the
laws of the State of Delaware.
Section 12. This Agreement has been approved by vote of a majority of
(i) the Fund's Board of Trustees and (ii) those Trustees of the Fund who are
not "interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in the operation of the Distribution and Service
Plan adopted by the Fund regarding the provision of distribution and support
services in connection with the Shares or in any agreement related thereto cast
in
-6-
<PAGE> 7
person at a meeting called for the purpose of voting on such approval
("Disinterested Trustees").
If you agree to be legally bound by the provisions of this
Agreement, please sign a copy of this letter where indicated below and promptly
return it to us, at the following address: 259 Radnor-Chester Road, Suite 120,
Radnor, Pennsylvania 19087.
Very truly yours,
PROVIDENT DISTRIBUTORS, INC.
By:
----------------------
(Authorized Officer)
Accepted and Agreed to:
--------------------------
By:
----------------------
(Authorized Officer)
Date:
----------------
-7-
<PAGE> 8
Date:_______________ APPENDIX A
THE PNC(R) FUND
APPENDIX A TO
SERIES A DISTRIBUTION AND SERVICING AGREEMENT
FEE SCHEDULE
Pursuant to the terms and conditions set forth in the attached
Distribution and Servicing Agreement (including Section 5 of that
Agreement), we will pay to you, and you will accept as payment for
services provided under Section 1 of the Distribution and Servicing
Agreement, a fee, calculated daily and payable quarterly, as set forth
below:
<TABLE>
<CAPTION>
===============================================================================
PORTFOLIO DISTRIBUTION AND
SERVICING FEE
- -------------------------------------------------------------------------------
<S> <C>
Money Market 50 BP
Municipal Money Market 50 BP
Government Money Market 50 BP
Ohio Municipal Money Market 50 BP
Pennsylvania Municipal Money Market 50 BP
North Carolina Municipal Money Market 50 BP
Virginia Municipal Money Market __ BP
- -------------------------------------------------------------------------------
Short-Term Bond 25 BP
Intermediate Government 25 BP
Intermediate-Term Bond 25 BP
Managed Income 45 BP
New Jersey Municipal Money Market __ BP
Ohio Tax-Free Income 45 BP
Pennsylvania Tax-Free Income __ BP
Tax-Free Income __ BP
Government Income
International Fixed Income
- -------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE> 9
<TABLE>
<CAPTION>
===============================================================================
PORTFOLIO DISTRIBUTION AND
SERVICING FEE
- -------------------------------------------------------------------------------
<S> <C>
Balanced 40 BP
Core Equity 40 BP
Growth Equity 40 BP
Value Equity 40 BP
Small Cap Growth Equity 40 BP
Small Cap Value Equity 40 BP
International Equity 40 BP
Index Equity 40 BP
International Emerging Markets __ BP
===============================================================================
</TABLE>
-9-
<PAGE> 10
APPENDIX B
THE PNC(R) FUND
APPENDIX B TO
SERIES A DISTRIBUTION AND SERVICING AGREEMENT
The additional Portfolios covered by this Distribution and Servicing
Agreement are listed below:
- Virginia Municipal Money Market Portfolio
- Government Income Portfolio
- International Fixed Income Portfolio
- International Emerging Markets Portfolio
- New Jersey Municipal Money Market Portfolio
-10-
<PAGE> 1
EXHIBIT (15)(b)
THE PNC(R) FUND
SERIES B DISTRIBUTION PLAN
September 23, 1994
This Series B Distribution Plan (the "Plan") has been adopted by the
Board of Trustees of The PNC Fund (the "Fund") in conformance with Rule 12b-1
under the Investment Company Act of 1940 (the "Act").
Section 1. Payments. The Fund will make payments to its Distributor,
its successors and assigns for certain expenses that are incurred in connection
with the offering and sale of Series B Investor Shares of the Fund's Managed
Income, Tax-Free Income, Intermediate Government, Ohio Tax-Free Income,
Pennsylvania Tax-Free Income, Short-Term Bond, Intermediate-Term Bond,
International Fixed Income, Government Income, Value Equity, Growth Equity,
Index Equity, Small Cap Value Equity, International Equity, Balanced, Small Cap
Growth Equity, Core Equity, International Emerging Markets and Money Market
Portfolios and any other current or future investment portfolio of the Fund
(all such Series B Investor Shares hereinafter called "Shares" and all such
portfolios hereinafter called "Portfolios"). Payments by the Fund under the
Plan will be calculated daily and paid to the Distributor on a monthly basis up
to a rate or rates set from time to time by the Fund's Board of Trustees,
provided that no rate set by the Board for any Portfolio may exceed the annual
rate of .75% of the average daily net asset value of Shares of such Portfolio.
For purposes of determining payments payable under the Plan, the net asset
value of the outstanding Shares of the respective Portfolios shall be computed
in the manner specified in the Fund's prospectuses and statement of additional
information for such Shares.
Section 2. Expenses Covered by Plan. Payments to the Distributor
under Section 1 of the Plan will be used to pay for expenses and services
intended to result in the sale of the Shares. Such expenses and services may
include but are not limited to: (a) direct out-of-pocket promotional expenses
incurred by the Distributor in connection with the advertising and marketing of
Shares; (b) payments and commissions to one or more securities dealers,
financial institutions and other industry professionals that are not affiliated
with the Distributor for distribution assistance; and (c) the direct or
indirect cost of financing the payments or expenses included in (a) and (b)
above. As used herein, "direct out-of-pocket promotional expenses" include
amounts spent by the Distributor in connection with advertising via radio,
television, newspapers, magazines and otherwise; preparing, printing and
mailing sales materials, brochures and prospectuses (except for prospectuses
used for regulatory purposes or for distribution to existing shareholders); and
other out-of-pocket expenses incurred in connection with the promotion of the
Shares of the Portfolios.
<PAGE> 2
Joint distribution financing with respect to Shares of the Portfolios
(which financing may also involve other investment portfolios or companies that
are affiliated persons of such a person, or affiliated persons of the
Distributor) shall be permitted in accordance with applicable regulations of
the Securities and Exchange Commission as in effect from time to time.
Section 3. Reports of Distributor. So long as the Plan is in effect,
the Distributor shall provide to the Fund's Board of Trustees, and the trustees
shall review, at least quarterly, a written report of the amounts to be paid to
the Distributor under the Plan and the purposes for which such expenditures
were made.
Section 4. Approval of Plan. The Plan will become effective
immediately, as to any class of Shares, upon its approval by (a) a majority of
the outstanding Shares of such class, and (b) a majority of the Board of
Trustees, including a majority of the trustees who are not "interested persons"
(as defined in the Act) of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or in any agreements entered
into in connection with the Plan, pursuant to a vote cast in person at a
meeting called for the purpose of voting on the approval of the Plan.
Section 5. Continuance of the Plan. The Plan shall continue in
effect for so long as its continuance is specifically approved at least
annually by the Fund's Board of Trustees in the manner described in Section 4.
Section 6. Amendments. The Plan may be amended at any time by the
Board of Trustees provided that (a) any amendment to increase materially the
costs which any class of Shares may bear for distribution pursuant to the Plan
shall be effective only upon approval by a vote of a majority of the
outstanding Shares of such class, and (b) any material amendments of the terms
of the Plan shall become effective only upon approval as provided in paragraph
4(b) hereof.
Section 7. Termination. The Plan is terminable, as to any class of
Shares, without penalty at any time by (a) a vote of a majority of the trustees
who are not "interested persons"(as defined in the Act) of the Fund and who
have no direct or indirect financial interest in the operation of the Plan or
in any agreements entered into in connection with the Plan, or (b) a vote of a
majority of the outstanding Shares of such class.
Section 8. Selection/Nomination of Trustees. While this Plan is in
effect, the selection and nomination of those trustees who are not "interested
persons" (as defined in the Act) of the Fund shall be committed to the
discretion of such non-interested trustees.
Section 9. Limitation of Liability. The names "The PNC Fund" and
"Trustees of The PNC Fund" refer respectively to the trust
-2-
<PAGE> 3
created and the trustees, as trustees but not individually or personally,
acting from time to time under a Declaration of Trust dated December 23, 1988
which is hereby referred to and a copy of which is on file at the office of the
State Secretary of the Commonwealth of Massachusetts and at the principal
office of the Fund. The obligations of "The PNC Fund" entered into in the name
or on behalf thereof by any of the trustees, officers, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the trustees, shareholders, officers, representatives or agents of
the Fund personally, but bind only the Trust Property (as defined in the
Declaration of Trust), and all persons dealing with any class of shares of the
Fund must look solely to the Trust Property belonging to such class for the
enforcement of any claims against the Fund.
Section 10. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the Fund has executed the Plan as of September 23,
1994 on behalf of each of the Portfolios.
THE PNC FUND
By:
------------------------------
-3-
<PAGE> 1
EXHIBIT 16
AVERAGE ANNUAL TOTAL RETURN COMPUTATION
PORTFOLIO: PNC MANAGED INCOME
n
FORMULA: P(1+T) = ERV
WHERE: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical
$1,000 payment made at the beginning of the
1, 5, or 10 year (or other) periods at the
end of the 1, 5, or 10 year (or other)
periods (or fractional portion thereof).
<TABLE>
<CAPTION>
AVERAGE
DATES ENDING ANNUAL RATE
PERIOD COVERED REDEEMABLE VALUE OF RETURN *FORMULA
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year 10/01/90 $1,095.46 9.55% @RATE(1,095.46,1,000,1.00)
to 09/30/91
FROM FUND 11/01/89 $1,137.54 6.96% @RATE(1,137.54,1,000,1.92)
INCEPTION** to 09/30/91
</TABLE>
** Period = 1.92 Years
* LOTUS 123 @RATE function:
@RATE(fv,pv,term) The periodic interest rate
necessary for present value
"pv", to grow to future value
"fv", over the number of
compounding periods in
"term".
1/n
fv = 1
--
pv
<PAGE> 2
EXHIBIT 16
AVERAGE ANNUAL TOTAL RETURN COMPUTATION
PORTFOLIO: TAX-FREE INCOME
n
FORMULA: P(1+T) = ERV
WHERE: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical
$1,000 payment made at the beginning of the
1, 5, or 10 year (or other) periods at the
end of the 1, 5, or 10 year (or other)
periods (or fractional portion thereof).
<TABLE>
<CAPTION>
AVERAGE
DATES ENDING ANNUAL RATE
PERIOD COVERED REDEEMABLE VALUE OF RETURN *FORMULA
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year 10/01/90 $1,063.59 6.36% @RATE(1,063.59,1,000,1.00)
to 09/30/91
FROM FUND 05/14/90 $1,078.89 5.64% @RATE(1,078.89,1,000,1.38)
INCEPTION** to 09/30/91
</TABLE>
** Period = 1.38 Years
* LOTUS 123 @RATE function:
@RATE(fv,pv,term) The periodic interest rate
necessary for present value
"pv", to grow to future value
"fv", over the number of
compounding periods in
"term".
1/n
fv = 1
--
pv
<PAGE> 3
EXHIBIT 16
AVERAGE ANNUAL TOTAL RETURN COMPUTATION
PORTFOLIO: PNC GROWTH EQUITY
n
FORMULA: P(1+T) = ERV
WHERE: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical
$1,000 payment made at the beginning of the
1, 5, or 10 year (or other) periods at the
end of the 1, 5, or 10 year (or other)
periods (or fractional portion thereof).
<TABLE>
<CAPTION>
AVERAGE
DATES ENDING ANNUAL RATE
PERIOD COVERED REDEEMABLE VALUE OF RETURN *FORMULA
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year 10/01/90 $1,140.60 14.06% @RATE(1,140.60,1,000,1.00)
to 09/30/91
FROM FUND 11/01/89 $1,145.29 7.34% @RATE(1,145.29,1,000,1.92)
INCEPTION** to 09/30/91
</TABLE>
** Period = 1.92 Years
* LOTUS 123 @RATE function:
@RATE(fv,pv,term) The periodic interest rate
necessary for present value
"pv", to grow to future value
"fv", over the number of
compounding periods in
"term".
1/n
fv = 1
--
pv
<PAGE> 4
EXHIBIT 16
AVERAGE ANNUAL TOTAL RETURN COMPUTATION
PORTFOLIO: PNC BALANCED
n
FORMULA: P(1+T) = ERV
WHERE: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical
$1,000 payment made at the beginning of the
1, 5, or 10 year (or other) periods at the
end of the 1, 5, or 10 year (or other)
periods (or fractional portion thereof).
<TABLE>
<CAPTION>
AVERAGE
DATES ENDING ANNUAL RATE
PERIOD COVERED REDEEMABLE VALUE OF RETURN *FORMULA
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year 10/01/90 $1,184.63 18.46% @RATE(1,184.63,1,000,1.00)
to 09/30/91
FROM FUND 05/14/90 $1,094.24 6.73% @RATE(1,094.24,1,000,1.38)
INCEPTION** to 09/30/91
</TABLE>
** Period = 1.38 Years
* LOTUS 123 @RATE function:
@RATE(fv,pv,term) The periodic interest rate
necessary for present value
"pv", to grow to future value
"fv", over the number of
compounding periods in
"term".
1/n
fv = 1
--
pv
<PAGE> 5
EXHIBIT 16
THE PNC(R) FUNDS
CALCULATION OF YIELDS ON MONEY MARKET PORTFOLIOS
AS OF SEPTEMBER, 1991
<TABLE>
<CAPTION>
GOVERNMENT TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET
------------ ------------ ------------
<S> <C> <C> <C>
Total Dividends for
7 Day Period . . . . . . . . . . . . . . . . $.001011331 $.001018633 $.000821078
Dividend by Number of
Days in Period . . . . . . . . . . . . . . . 7 7 7
Multiplied by: Number
of Days in Year . . . . . . . . . . . . . . 365 365 365
Dividend by Offering
Price per Share . . . . . . . . . . . . . . $1.00 $1.00 $1.00
----------- ------------ ------------
7 Day Yield . . . . . . . . . . . . . . . . 5.27% 5.32% 4.28%
===== ===== =====
7 Day Yield . . . . . . . . . . . . . . . . 5.27% 5.32% 4.28%
Divided by Number of 7
Day Period in Year . . . . . . . . . . . . . 52.142857 52.142857 52.142857
Plus 1 . . . . . . . . . . . . . . . . 1 1 1
--------- --------- ---------
. . . . . . . . . 1.0010107 1.0010203 1.0008208
Raised to the Power of the
Number of 7 Day Periods
in a Year . . . . . . . . . . . . . . . . 52.142857 52.142857 52.142857
--------- --------- ---------
. . . . . . . . . 1.05407 1.054613 1.043210
--------- --------- ---------
Effective 7 Day Yield . . . . . . . . . . . . . . . . 5.41% 5.46% 4.37%
===== ===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000844779
<NAME> PNC FUND
<SERIES>
<NUMBER> 1
<NAME> PNC MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 1207209226
<INVESTMENTS-AT-VALUE> 1207209226
<RECEIVABLES> 5476185
<ASSETS-OTHER> 264518
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1212949929
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6480126
<TOTAL-LIABILITIES> 6480126
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1206451058
<SHARES-COMMON-STOCK> 1206451058
<SHARES-COMMON-PRIOR> 1083262284
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 18745
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1206469803
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 36312611
<OTHER-INCOME> 0
<EXPENSES-NET> 2514928
<NET-INVESTMENT-INCOME> 33797683
<REALIZED-GAINS-CURRENT> 19382
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 33817065
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 33797683
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2636869510
<NUMBER-OF-SHARES-REDEEMED> 2516251873
<SHARES-REINVESTED> 2571136
<NET-CHANGE-IN-ASSETS> 123208155
<ACCUMULATED-NII-PRIOR> 33422550
<ACCUMULATED-GAINS-PRIOR> (637)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2775547
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4876010
<AVERAGE-NET-ASSETS> 1266585871
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .027
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .027
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000844779
<NAME> PNC FUND
<SERIES>
<NUMBER> 2
<NAME> PNC MUNICIPAL MONEY MARKET
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 224892411
<INVESTMENTS-AT-VALUE> 224892411
<RECEIVABLES> 1527894
<ASSETS-OTHER> 5960
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 226426265
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 861667
<TOTAL-LIABILITIES> 861667
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 225599914
<SHARES-COMMON-STOCK> 225599914
<SHARES-COMMON-PRIOR> 164029715
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (35316)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 225564598
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3959375
<OTHER-INCOME> 0
<EXPENSES-NET> 521605
<NET-INVESTMENT-INCOME> 3437770
<REALIZED-GAINS-CURRENT> (12356)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3425414
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3437770
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 556243028
<NUMBER-OF-SHARES-REDEEMED> (494947084)
<SHARES-REINVESTED> 274255
<NET-CHANGE-IN-ASSETS> 61557843
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (22960)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 469233
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 979429
<AVERAGE-NET-ASSETS> 209120737
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .018
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .018
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000844779
<NAME> PNC FUND
<SERIES>
<NUMBER> 3
<NAME> PNC GOVERNMENT MONEY MARKET
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 622750248
<INVESTMENTS-AT-VALUE> 622750248
<RECEIVABLES> 1746487
<ASSETS-OTHER> 84735
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 624581470
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3118382
<TOTAL-LIABILITIES> 3118382
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 621451943
<SHARES-COMMON-STOCK> 621451943
<SHARES-COMMON-PRIOR> 412002635
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11144
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 621463088
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16188882
<OTHER-INCOME> 0
<EXPENSES-NET> 1476814
<NET-INVESTMENT-INCOME> 14712068
<REALIZED-GAINS-CURRENT> 6023
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 14718091
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14712068
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1811739540
<NUMBER-OF-SHARES-REDEEMED> 1604296802
<SHARES-REINVESTED> 2006571
<NET-CHANGE-IN-ASSETS> 209455332
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5121
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1278894
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2649619
<AVERAGE-NET-ASSETS> 569958888
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .027
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .027
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000844779
<NAME> PNC FUND
<SERIES>
<NUMBER> 9
<NAME> PNC OHIO MUNICIPAL MONEY MARKET
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 60124230
<INVESTMENTS-AT-VALUE> 60124230
<RECEIVABLES> 288788
<ASSETS-OTHER> 1642
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 60414660
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 225861
<TOTAL-LIABILITIES> 225861
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60191084
<SHARES-COMMON-STOCK> 60191084
<SHARES-COMMON-PRIOR> 54616811
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2285)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 60188799
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1097216
<OTHER-INCOME> 0
<EXPENSES-NET> 139868
<NET-INVESTMENT-INCOME> 957348
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 957348
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 957348
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 119496734
<NUMBER-OF-SHARES-REDEEMED> 114094312
<SHARES-REINVESTED> 171851
<NET-CHANGE-IN-ASSETS> 5574273
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2285)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 131086
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 278294
<AVERAGE-NET-ASSETS> 58420374
<PER-SHARE-NAV-BEGIN> 1.00
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