1940 Act File No. 811-06073
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 11 .............................. X
CASH MANAGEMENT PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
Jay S. Neuman, Esq. Copies to: Burton M. Leibert, Esq.
Federated Investors Tower Willkie Farr & Gallagher
Pittsburgh, Pennsylvania 15222-3779 One Citicorp Center
(Name and Address of Agent for Service) 153 East 53rd Street
New York, New York 10022
CASH MANAGEMENT PORTFOLIO
PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.
Cash Management Portfolio (the "Portfolio") is a no-load, diversified,
open-end management investment company which was organized as a trust under
the laws of the State of New York on March 26, 1990. Beneficial interests
in the Portfolio are issued solely in private placement transactions that
do not involve any "public offering" within the meaning of Section 4(2) of
the Securities Act of 1933, as amended (the "1933 Act"). Investments in the
Portfolio may only be made by investment companies, insurance company
separate accounts, common or commingled trust funds or similar
organizations or entities that are "accredited investors" within the
meaning of Regulation D under the 1933 Act. This registration statement
does not constitute an offer to sell, or the solicitation of an offer to
buy, any "security" within the meaning of the 1933 Act.
The investment objectives of the Portfolio are to provide its investors
with a high level of current income consistent with liquidity and the
preservation of capital. The Portfolio seeks to achieve its investment
objectives by investing in the high quality money market instruments
described below.
The Portfolio will maintain a dollar-weighted average maturity of 90 days
or less and utilize the amortized cost method for valuing its portfolio
securities pursuant to a rule adopted by the Securities and Exchange
Commission. All securities in which the Portfolio invests will have or be
deemed to have remaining maturities of 397 days or less on the date of
their purchase, will be denominated in U.S. dollars and will have been
granted the required ratings established herein by two nationally
recognized statistical rating organizations ("NRSRO") (or one such NRSRO if
that NRSRO is the only such NRSRO which rates the security) or, if unrated,
are believed by Bankers Trust Company ("Bankers Trust" or the "Adviser"),
under the supervision of the Board of Trustees, to be of comparable
quality. Bankers Trust Company, acting under the supervision of and
procedures adopted by the Board of Trustees, will also determine that all
securities purchased by the Portfolio are "eligible" securities and present
minimal credit risk. Bankers Trust will cause the Portfolio to dispose of
any security as soon as practicable if the security is no longer of the
requisite quality, unless such action would not be in the best interest of
the Portfolio. High quality short-term instruments may result in a lower
yield than instruments with a lower quality or a longer term.
BANK OBLIGATIONS. The Portfolio may invest in fixed rate or variable rate
obligations of U.S. or foreign banks which have total assets at the time of
purchase in excess of $1 billion and are rated Prime-1 by Moody's Investors
Service, Inc. ("Moody's") or A-1 or higher by Standard & Poor's Ratings
Group ("S&P") or, if not rated, are believed by Bankers Trust, acting under
the supervision of the Board of Trustees, to be of comparable quality. Bank
obligations in which the Portfolio invests include certificates of deposit,
bankers' acceptances, time deposits and other U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or foreign banks. If
Bankers Trust, acting under the supervision of the Board of Trustees, deems
the instruments to present minimal credit risk, the Portfolio may invest in
obligations of foreign banks or foreign branches of U.S. banks, including,
but not limited to, subsidiaries of U.S. banks located in the United
Kingdom, Grand Cayman Island, Nassau, Japan and Canada. Investments in
these obligations may entail risks that are different from those of
investments in obligations of U.S. domestic banks because of differences in
political, regulatory and economic systems and conditions. These risks
include future political and economic developments, currency blockage, the
possible imposition of withholding taxes on interest payments, differing
reserve requirements, reporting and recordkeeping requirements and
accounting standards, possible seizure or nationalization of foreign
deposits, difficulty or inability of pursuing legal remedies and obtaining
judgments in foreign courts, possible establishment of exchange controls or
the adoption of other foreign governmental restrictions that might affect
adversely the payment of principal and interest on bank obligations. Under
normal market conditions the Portfolio will invest more than 25% of its
assets in the foreign and domestic bank obligations described above. The
Portfolio's concentration of its investments in bank obligations will cause
the Portfolio to be subject to the risks peculiar to the domestic and
foreign banking industries to a greater extent than if its investment were
not so concentrated.
COMMERCIAL PAPER. The Portfolio may invest in fixed rate or variable rate
commercial paper, including variable rate master demand notes, issued by
U.S. or foreign corporations. Commercial paper when purchased by the
Portfolio must be rated Prime-1 by Moody's or A-1 or higher by S&P or, if
not rated, must be believed by Bankers Trust, acting under the supervision
of the Board of Trustees, to be of comparable quality. Any commercial paper
issued by a foreign corporation and purchased by the Portfolio must be U.S.
dollar-denominated and must not be subject to foreign withholding tax at
the time of purchase. Investing in foreign commercial paper generally
involves risks similar to those described above relating to obligations of
foreign banks or foreign branches of U.S. banks.
Variable rate master demand notes are unsecured instruments that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate. Because variable rate master demand notes are direct lending
arrangements between the Portfolio and the issuer, they are not normally
traded. Although no active secondary market may exist for these notes, the
Portfolio will purchase only those notes under which it may demand and
receive payment of principal and accrued interest daily or receive payment
upon demand or may resell the note to a third party. While the notes are
not typically rated by credit rating agencies, issuers of variable rate
master demand notes must satisfy Bankers Trust, acting under the
supervision of the Board of Trustees, that the same criteria as set forth
above for issuers of commercial paper are met. In the event an issuer of a
variable rate master demand note defaulted on its payment obligation, the
Portfolio might be unable to dispose of the note because of the absence of
a secondary market and could, for this reason or other reasons, suffer a
loss to the extent of the default.
OTHER DEBT OBLIGATIONS. The Portfolio may invest in bonds, notes and
debentures issued that at the time of purchase have outstanding short-term
ratings meeting the above rating requirements, or if such commercial paper
is unrated or if no such commercial paper is outstanding, are rated at
least AA by S&P or Aa by Moody's. Such obligations, at the time of
investment, must have or be deemed to have less than 397 days to maturity.
U.S. GOVERNMENT OBLIGATIONS. The Portfolio may invest in obligations issued
or guaranteed by the U.S. Treasury or by agencies or instrumentalities of
the U.S. government ("U.S. Government Obligations"). Obligations of certain
agencies and instrumentalities of the U.S. government, such as the
Government National Mortgage Association, are supported by the "full faith
and credit" of the U.S. government; others, such as those of the Export-
Import Bank of the United States, are supported by the right of the issuer
to borrow from the U.S. Treasury; others, such as those of the Federal
National Mortgage Association, are supported by the discretionary authority
of the U.S. government to purchase the agency's obligations; and still
others, such as those of the Student Loan Marketing Association, are
supported only by the credit of the instrumentality. No assurance can be
given that the U.S. government would provide financial support to U.S.
government-sponsored instrumentalities if it is not obligated to do so by
law.
REPURCHASE AGREEMENTS. The Portfolio may engage in repurchase agreement
transactions with counterparties approved by the Board of Trustees. Under
the terms of a typical repurchase agreement, the Portfolio would acquire an
underlying debt obligation of a kind in which the Portfolio could invest
for a relatively short period (usually not more than one week), subject to
an obligation of the seller to repurchase, and the Portfolio to resell, the
obligation at an agreed price and time, thereby determining the yield
during the Portfolio's holding period. This arrangement results in a fixed
rate of return that is not subject to market fluctuations during the
Portfolio's holding period. The value of the underlying securities will be
at least equal at all times to the total amount of the repurchase
obligations, including interest. The Portfolio bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its
obligations and the Portfolio is delayed in or prevented from exercising
its rights to dispose of the collateral securities, including the risk of a
possible decline in the value of the underlying securities during the
period in which the Portfolio seeks to assert these rights. The Adviser,
acting under the supervision of the Board of Trustees, reviews the
creditworthiness of those counterparties with which the Portfolio enters
into repurchase agreements and monitors on an ongoing basis the value of
the securities subject to repurchase agreements to ensure that the value is
maintained at the required level.
SECURITIES LENDING. The Portfolio is permitted to lend up to 20% of the
total value of its securities. These loans must be secured continuously by
cash or equivalent collateral or by a letter of credit at least equal to
the market value of the securities loaned plus accrued income. By lending
its securities, the Portfolio can increase its income by continuing to
receive income on the loaned securities as well as by the opportunity to
receive interest on the collateral. During the term of the loan, the
Portfolio continues to bear the risk of fluctuations in the price of the
loaned securities.. There may be risks of delay in receiving additional
collateral or risks of delay in recovery of the securities or even loss of
rights in the securities lent should the borrower of the securities fail
financially. See "Lending of Portfolio Securities" in Part B for additional
information.
ADDITIONAL INVESTMENT TECHNIQUES. The Portfolio may enter into reverse
repurchase agreements and lend securities held by it to brokers, dealers
and other financial organizations. Loans of securities by a Portfolio, if
and when made, may not exceed 20% of the Portfolio's total assets and will
be collateralized by cash, letters of credit or U.S. Government Obligations
that are maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities.
Credit Enhancement. Certain of the Portfolio's acceptable investments may
be credit-enhanced by a guaranty, letter of credit, or insurance. Any
bankruptcy, receivership, default, or change in the credit quality of the
party providing the credit enhancement will adversely affect the quality
and marketability of the underlying security and could cause losses to the
Portfolio. The Portfolio may have more than 25% of its total assets
invested in securities credit-enhanced by banks.
INVESTMENT RESTRICTIONS. The Portfolio's investment objectives, together
with the investment restrictions, described in this paragraph and Part B in
more detail, are "fundamental policies," which means that they may not be
changed without the approval of investors in the Portfolio. The Portfolio
may not invest more than 25% of its total assets in the securities of
issuers in any single industry, except that, under normal market
conditions, more than 25% of the total assets of the Portfolio will be
invested in foreign and domestic bank obligations. As an operating policy,
the Portfolio may not invest more than 5% of its total assets in the
obligations of any one issuer except for U.S. Government Obligations and
repurchase agreements, which may be purchased without limitation. The
Portfolio is also authorized to borrow, including entering into reverse
repurchase transactions, in an amount up to 5% of its total assets for
temporary purposes, but not for leverage, and to pledge its assets to the
same extent in connection with these borrowings. See Part B for additional
information with respect to reverse repurchase transactions. At the time of
an investment, the Portfolio's aggregate holdings of repurchase agreements
having remaining maturities of more than seven calendar days (or which may
not be terminated within seven calendar days upon notice by the Portfolio),
time deposits having remaining maturities of more than seven calendar days,
illiquid securities, restricted securities and securities lacking readily
available market quotations will not exceed 10% of the Portfolio's net
assets. If changes in the liquidity of certain securities cause a Portfolio
to exceed such 10% limit, the Portfolio will take steps to bring the
aggregate amount of its illiquid securities back below 10% of its net
assets as soon as practicable, unless such action would not be in the best
interest of the Portfolio.
ITEM 5. MANAGEMENT OF THE FUND.
The Board of Trustees provides broad supervision over the affairs of the
Portfolio. Bankers Trust is the Portfolio's Investment Adviser. A majority
of the Portfolio's Trustees are not affiliated with the Adviser. Bankers
Trust, the Portfolio's administrator (the "Administrator"), supervises the
overall administration of the Portfolio. The Portfolio's fund accountant,
transfer agent, custodian and dividend paying agent is also Bankers Trust.
Bankers Trust, a New York banking corporation with principal offices at 280
Park Avenue, New York, New York 10017, is a wholly-owned subsidiary of
Bankers Trust New York Corporation. Bankers Trust conducts a variety of
general banking and trust activities and is a major wholesale supplier of
financial services to the international and domestic institutional market.
As of December 31, 1996, Bankers Trust New York Corporation was the seventh
largest bank holding company in the United States with total assets of
approximately $120 billion. Bankers Trust is a worldwide merchant bank
dedicated to servicing the needs of corporations, governments, financial
institutions and private clients through a global network of over 120
offices in more than 40 countries. Investment management is a core business
of Bankers Trust, built on a tradition of excellence from its roots as a
trust bank founded in 1903. The scope of Bankers Trust's investment
management capability is unique due to its leadership positions in both
active and passive quantitative management and its presence in major equity
and fixed income markets around the world. Bankers Trust is one of the
nation's largest and most experienced investment managers, with
approximately $227 billion in assets under management globally. Of that
total, approximately $45 billion are in cash assets alone. This makes
Bankers Trust one of the nation's leading managers of cash funds.
Bankers Trust has more than 50 years of experience managing retirement
assets for the nation's largest corporations and institutions. In the past,
these clients have been serviced through separate account and commingled
fund structures. Now, the BT Family of Funds brings Bankers Trust's
extensive investment management expertise, once available to only the
largest institutions in the U.S., to individual investors. Bankers Trust's
officers have had extensive experience in managing investment portfolios
having objectives similar to those of the Portfolio.
Bankers Trust, subject to the supervision and direction of the Board of
Trustees, manages the Portfolio in accordance with the Portfolio's
investment objectives and stated investment policies, makes investment
decisions for the Portfolio, places orders to purchase and sell securities
and other financial instruments on behalf of the Portfolio and employs
professional investment managers and securities analysts who provide
research services to the Portfolio. Bankers Trust may utilize the expertise
of any of its worldwide subsidiaries and affiliates to assist in its role
as an investment adviser. All orders for investment transactions on behalf
of the Portfolio are placed by Bankers Trust with broker-dealers and other
financial intermediaries that it selects, including those affiliated with
Bankers Trust. A Bankers Trust affiliate will be used in connection with a
purchase or sale of an investment for the Portfolio only if Bankers Trust
believes that the affiliate's charge for the transaction does not exceed
usual and customary levels. The Portfolio will not invest in obligations
for which Bankers Trust or any of its affiliates is the ultimate obligor or
accepting bank. The Portfolio may, however, invest in the obligations of
correspondents and customers of Bankers Trust. As compensation for its
investment advisory services, the Portfolio will pay Bankers Trust a fee
computed daily and paid monthly at the annual rate of 0.15% of the average
daily net assets of the Portfolio pursuant to an investment advisory
agreement.
Bankers Trust has been advised by its counsel that, in counsel's opinion,
Bankers Trust currently may perform the services for the Portfolio
described in this Registration Statement without violation of the Glass-
Steagall Act or other applicable banking laws or regulations.
Under the administration and services agreement with the Portfolio (the
"Administration and Services Agreement"), Bankers Trust calculates the
value of the assets of the Portfolio and generally assists the Board of
Trustees in all aspects of the administration and operation of the
Portfolio. The Administration and Services Agreement provides for the
Portfolio to pay Bankers Trust a fee computed daily and paid monthly at the
annual rate of 0.05% of the average daily net assets of the Portfolio.
Under the Administration and Services Agreement, Bankers Trust may delegate
one or more of its responsibilities to others at Bankers Trust's expense.
The Portfolio bears its own expenses. Operating expenses for the Portfolio
generally consist of all costs not specifically borne by Bankers Trust or
Edgewood Services, Inc. ("Edgewood"), the Portfolio's placement agent,
including investment advisory and administration and services fees, fees
for necessary professional services, amortization of organizational
expenses, the costs associated with regulatory compliance and maintaining
legal existence and investor relations.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
The Portfolio is organized as a trust under the laws of the State of New
York. Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Each investor is entitled to a vote
in proportion to the amount of its investment in the Portfolio. Investments
in the Portfolio may not be transferred, but an investor may withdraw all
or any portion of his investment at any time at net asset value (`NAV'').
Investors in the Portfolio (e.g., investment companies, insurance company
separate accounts and common and commingled trust funds) will each be
liable for all obligations of the Portfolio. However, the risk of an
investor in the Portfolio incurring financial loss on account of such
liability is limited to circumstances in which both inadequate insurance
existed and the Portfolio itself was unable to meet its obligations.
The Portfolio reserves the right to create and issue a number of series, in
which case investments in each series would participate equally in the
earnings, dividends and assets of the particular series. Currently, the
Portfolio has only one series.
Investments in the Portfolio have no pre-emptive or conversion rights and
are fully paid and non-assessable, except as set forth below. The Portfolio
is not required and has no current intention to hold annual meetings of
investors, but the Portfolio will hold special meetings of investors when
in the judgment of the Trustees it is necessary or desirable to submit
matters for an investor vote. Changes in fundamental policies will be
submitted to investors for approval. Investors have under certain
circumstances (e.g., upon application and submission of certain specified
documents to the Trustees by a specified number of investors) the right to
communicate with other investors in connection with requesting a meeting of
investors for the purpose of removing one or more Trustees. Investors also
have the right to remove one or more Trustees without a meeting by a
declaration in writing by a specified number of investors. Upon liquidation
of the Portfolio, investors would be entitled to share pro rata in the net
assets of the Portfolio available for distribution to investors.
The NAV of the Portfolio is determined each day on which the Portfolio is
open ("Portfolio Business Day") (and on such other days as are deemed
necessary in order to comply with Rule 22c-1 under the Investment Company
Act of 1940, as amended (the "1940 Act")). This determination is made twice
during each such day as of 12:00 noon, Eastern time and as of the close of
regular trading on the New York Stock Exchange Inc. (the "NYSE") which is
currently 4:00 p.m., Eastern time (or in the event that the NYSE closes
early, at the time of such early closing) (each a "Valuation Time").
Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each Portfolio Business Day. At each Valuation Time, on each
such business day, the value of each investor's beneficial interest in the
Portfolio will be determined by multiplying the NAV of the Portfolio by the
percentage, effective for that day, that represents that investor's share
of the aggregate beneficial interests in the Portfolio. Any additions or
withdrawals, which are to be effected on that day, will then be effected.
The investor's percentage of the aggregate beneficial interests in the
Portfolio will then be re-computed as the percentage equal to the fraction
(i) the numerator of which is the value of such investor's investment in
the Portfolio as of the Valuation Time, on such day plus or minus, as the
case may be, the amount of any additions to or withdrawals from the
investor's investment in the Portfolio effected on such day, and (ii) the
denominator of which is the aggregate NAV of the Portfolio as of the
Valuation Time on such day plus or minus, as the case may be, the amount of
the net additions to or withdrawals from the aggregate investments in the
Portfolio by all investors in the Portfolio. The percentage so determined
will then be applied to determine the value of the investor's interest in
the Portfolio as of the Valuation Time, on the following business day of
the Portfolio.
The Net Income of the Portfolio shall consist of (i) all income accrued,
less the amortization of any premium, on the assets of the Portfolio, less
(ii) all actual and accrued expenses of the Portfolio determined in
accordance with generally accepted accounting principles. Interest income
includes discount earned (including both original issue and market
discount) on discount paper accrued ratably to the date of maturity and any
net realized gains or losses on the assets of the Portfolio. All the Net
Income of the Portfolio is allocated pro rata among the investors in the
Portfolio. The Net Income is accrued daily and distributed monthly to the
investors in the Portfolio.
Under the anticipated method of operation of the Portfolio, the Portfolio
will not be subject to any income tax. However, each investor in the
Portfolio will be taxable on its share (as determined in accordance with
the governing instruments of the Portfolio) of the Portfolio's ordinary
income and capital gain in determining its income tax liability. The
determination of such share will be made in accordance with the Internal
Revenue Code of 1986, as amended, and regulations promulgated thereunder.
It is intended that the Portfolio's assets, income and distributions will
be managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended, assuming that the investor invested all of its assets in
the Portfolio.
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. See "General Description of
Registrant" above.
An investment in the Portfolio may be made without a sales load. All
investments are made at NAV next determined if an order is received by the
Portfolio by the designated cutoff time for each accredited investor. The
NAV of the Portfolio is determined on each Portfolio Business Day.
Securities are valued at amortized cost, which the Trustees of the
Portfolio have determined in good faith constitutes fair value for the
purposes of complying with the 1940 Act. This valuation method will
continue to be used until such time as the Trustees of the Portfolio
determine that it does not constitute fair value for such purposes.
There is no minimum initial or subsequent investment in the Portfolio.
However, because the Portfolio intends to be as fully invested at all times
as is reasonably practicable in order to enhance the yield on its assets,
investments must be made in Federal funds (i.e., monies credited to the
account of the Portfolio's custodian bank by a Federal Reserve Bank).
The Portfolio and Edgewood reserve the right to cease accepting investments
at any time or to reject any investment order.
The placement agent for the Portfolio is Edgewood. The principal business
address of Edgewood and its affiliates is Clearing Operations, P.O. Box
897, Pittsburgh, Pennsylvania 15230-0897. Edgewood receives no additional
compensation for serving as the placement agent for the Portfolio.
ITEM 8. REDEMPTION OR REPURCHASE.
An investor in the Portfolio may withdraw all or any portion of its
investment at the NAV next determined if a withdrawal request in proper
form is furnished by the investor to the Portfolio by the designated cutoff
time for each accredited investor. The proceeds of a withdrawal will be
paid by the Portfolio in Federal funds normally on the Portfolio Business
Day the withdrawal is effected, but in any event within seven days. The
Portfolio reserves the right to pay redemptions in kind. Investments in the
Portfolio may not be transferred.
The right of any investor to receive payment with respect to any withdrawal
may be suspended or the payment of the withdrawal proceeds postponed during
any period in which the NYSE is closed (other than weekends or holidays) or
trading on such Exchange is restricted, or, to the extent otherwise
permitted by the 1940 Act, if an emergency exists.
ITEM 9. PENDING LEGAL PROCEEDINGS.
Not applicable.
CASH MANAGEMENT PORTFOLIO
PART B
ITEM 10. COVER PAGE.
Not applicable.
ITEM 11. TABLE OF CONTENTS.
General Information and History.......................1
Investment Objectives and Policies....................1
Management of the Fund................................4
Control Persons and Principal Holders of Securities...6
Investment Advisory and Other Services................6
Brokerage Allocation and Other Practices..............7
Capital Stock and Other Securities....................7
Purchase, Redemption and Pricing of Securities Being Offered 8
Tax Status............................................9
Underwriters..........................................9
Calculation of Performance Data.......................9
Financial Statements..............................9
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.
Part A contains additional information about the investment objectives and
policies of Cash Management Portfolio (the "Portfolio"). This Part B should
only be read in conjunction with Part A.
LENDING OF PORTFOLIO SECURITIES. The Portfolio has the authority to lend
portfolio securities to brokers, dealers and other financial organizations.
The Portfolio will not lend securities to brokers, dealers and other
financial organizations. The Portfolio will not lend securities to Bankers
Trust, Edgewood Services, Inc. (`Edgewood'') or their affiliates. By
lending its securities, the Portfolio can increase its income by continuing
to receive interest on the loaned securities as well as by either investing
the cash collateral in short-term securities or obtaining yield in the form
of interest paid by the borrower when U.S. Government Obligations are used
as collateral. The Portfolio will adhere to the following conditions
whenever its securities are loaned: (i) the Portfolio must receive at least
100% cash collateral or equivalent securities from the borrower; (ii) the
borrower must increase this collateral whenever the market value of the
securities including accrued interest rises above the level of the
collateral; (iii) the Portfolio must be able to terminate the loan at any
time; (iv) the Portfolio must receive reasonable interest on the loan, as
well as any dividends, interest or other distributions on the loaned
securities, and any increase in market value; (v) the Portfolio may pay
only reasonable custodian fees in connection with the loan; and (vi)
voting rights on the loaned securities may pass to the borrower; provided,
however, that if a material event adversely affecting the investment
occurs, the Board of Trustees must terminate the loan and regain the right
to vote the securities.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow funds for temporary
or emergency purposes, such as meeting larger than anticipated redemption
requests, and not for leverage, by among other things, agreeing to sell its
securities to financial institutions such as banks and broker-dealers and
to repurchase them at a mutually agreed date and price (a "reverse
repurchase agreement"). At the time the Portfolio enters into a reverse
repurchase agreement it will place in a segregated custodial account cash,
U.S. Government Obligations or high-grade debt obligations having a value
equal to the repurchase price, including accrued interest. Reverse
repurchase agreements involve the risk that the market value of the
securities sold by the Portfolio may decline below the repurchase price of
those securities. Reverse repurchase agreements are considered to be
borrowing by the Portfolio.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. To secure prices deemed
advantageous at a particular time, the Portfolio may purchase securities on
a when-issued or delayed-delivery basis, in which case delivery of the
securities occurs beyond the normal settlement period; payment for or
delivery of the securities would be made at the same time as the reciprocal
delivery or payment by the other party to the transaction. The Portfolio
will enter into when-issued or delayed-delivery transactions for the
purpose of acquiring securities and not for the purpose of leverage. When-
issued securities purchased by the Portfolio may include securities
purchased on a `when, as, and if issued'' basis under which the issuance
of the securities depends on the occurrence of a subsequent event.
Securities purchased on a when-issued or delayed-delivery basis may expose
the Portfolio to risk because the securities may experience fluctuations in
value prior to their actual delivery. The Portfolio does not accrue income
with respect to a when-issued or delayed-delivery security prior to its
stated delivery date. Purchasing securities on a when-issued or delayed-
delivery basis can involve the additional risk that the yield available in
the market when the delivery takes place may be higher than that obtained
in the transaction itself. Upon purchasing a security on a when-issued or
delayed-delivery basis, the Portfolio will segregate with the Portfolio's
custodian liquid instruments in an amount at least equal to the when-issued
or delayed-delivery commitment.
ASSET-BACKED SECURITIES. The Portfolio may also invest in securities
generally referred to as asset-backed securities, which directly or
indirectly represent a participation interest in, or are secured by and
payable from, a stream of payments generated by particular assets such as
motor vehicle or credit card receivables. Asset-backed securities may
provide periodic payments that consist of interest and/or principal
payments. Consequently, the life of an asset-backed security varies with
the prepayment and loss experience of the underlying assets.
INVESTMENT RESTRICTIONS
The Portfolio has adopted its investment objectives and the following
investment restrictions as "fundamental policies," which may not be changed
without approval by holders of a "majority of the outstanding shares" of
the Portfolio, which as used in this Registration Statement means the vote
of the lesser of (i) 67% or more of the outstanding "voting securities" of
the Portfolio present at a meeting, if the holders of more than 50% of the
outstanding "voting securities" of the Portfolio are present or represented
by proxy, or (ii) more than 50% of the outstanding "voting securities" of
the Portfolio. The term "voting securities" as used in this paragraph has
the same meaning as in the Investment Company Act of 1940, as amended (the
"1940 Act").
The Portfolio may not:
1. Borrow money, except for temporary or emergency (not leveraging)
purposes in an amount not exceeding 5% of the value of the Portfolio's
total assets (including the amount borrowed), calculated at the lower
of cost or market.
2. Pledge, hypothecate, mortgage or otherwise encumber more than 5%
of its total assets and only to secure borrowing for temporary or
emergency purposes.
3. Invest more than 5% of its total assets in any one issuer (other
than U.S. Government Obligations) or purchase more than 10% of any
class of securities of any one issuer; provided, however, that up to
25% of the assets of the Portfolio may be invested without regard to
this restriction.
4. Invest more than 25% of the total assets of the Portfolio in the
securities of issuers in any single industry; provided that (i) this
limitation shall not apply to the purchase of U.S. Government
Obligations, and (ii) under normal market conditions more than 25% of
the total assets of the Portfolio will be invested in obligations of
foreign and U.S. banks.
5. Make short sales of securities, maintain a short position or
purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions.
6. Underwrite the securities issued by others (except to the extent
the Portfolio may be deemed to be an underwriter under the Federal
securities laws in connection with the disposition of its portfolio
securities) or knowingly purchase restricted securities.
7. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil, gas or mineral
interests, but this shall not prevent the Portfolio from investing in
obligations secured by real estate or interests therein.
8. Make loans to others, except through the purchase of qualified
debt obligations, the entry into repurchase agreements and the lending
of portfolio securities.
9. Invest more than an aggregate of 10% of its net assets (taken at
current value) in (i) securities that cannot be readily resold to the
public because of legal or contractual restrictions or because there
are no market quotations readily available or (ii) other "illiquid"
securities (including time deposits and repurchase agreements maturing
in more than seven calendar days).
10. Purchase more than 10% of the voting securities of any issuer or
invest in companies for the purpose of exercising control or
management.
11. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act or in connection with a merger,
consolidation, reorganization, acquisition of assets or an offer of
exchange.
12. Issue any senior securities, except insofar as it may be deemed
to have issued a senior security by reason of (i) entering into a
repurchase agreement or (ii) borrowing in accordance with terms
described herein.
13. Purchase or retain the securities of any issuer if any of the
officers or trustees of the Portfolio or its investment adviser owns
individually more than 1/2 of 1% of the securities of such issuer, and
together such officers and trustees own more than 5% of the securities
of such issuer.
14. Invest in warrants, except that the Portfolio may invest in
warrants if, as a result, the investments (valued at the lower of cost
or market) would not exceed 5% of the value of the Portfolio's net
assets, of which not more than 2% of the Portfolio's net assets may be
invested in warrants not listed on a recognized domestic stock
exchange. Warrants acquired by the Portfolio as part of a unit or
attached to securities at the time of acquisition are not subject to
this limitation.
ADDITIONAL RESTRICTIONS. In order to comply with certain statutes and
policies the Portfolio will not as a matter of operating policy:
(i) borrow money (including through dollar roll transactions) for any
purpose in excess of 10% of the Portfolio's assets (taken at cost),
except that the Portfolio may borrow for temporary or emergency
purposes up to 1/3 of its assets;
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10%
of the Portfolio's net assets (taken at market value), provided that
collateral arrangements with respect to options and futures, including
deposits of initial deposit and variation margin, and reverse
repurchase agreements are not considered a pledge of assets for
purposes of this restriction;
(iii) purchase any security or evidence of interest therein on
margin, except that such short-term credit as may be necessary for the
clearance of purchases and sales of securities may be obtained and
except that deposits of initial deposit and variation margin may be
made in connection with the purchase, ownership, holding or sale of
futures;
(iv) sell any security which it does not own unless by virtue of its
ownership of other securities it has at the time of sale a right to
obtain securities, without payment of further consideration,
equivalent in kind and amount to the securities sold and provided that
if such right is conditional the sale is made upon the same
conditions;
(v) invest for the purpose of exercising control or management;
(vi) purchase securities issued by any investment company except by
purchase in the open market where no commission or profit to a sponsor
or dealer results from such purchase other than the customary broker's
commission, or except when such purchase, though not made in the open
market, is part of a plan of merger or consolidation; provided,
however, that securities of any investment company will not be
purchased for the Portfolio if such purchase at the time thereof would
cause (a) more than 10% of the Portfolio's total assets (taken at the
greater of cost or market value) to be invested in the securities of
such issuers; (b) more than 5% of the Portfolio's total assets (taken
at the greater of cost or market value) to be invested in any one
investment company; or (c) more than 3% of the outstanding voting
securities of any such issuer to be held for the Portfolio; provided
further that, except in the case of a merger or consolidation, the
Portfolio shall not purchase any securities of any open-end investment
company unless the Portfolio (1) waives the investment advisory fee
with respect to assets invested in other open-end investment companies
and (2) incurs no sales charge in connection with the investment (as
an operating policy the Portfolio will not invest in another open-end
registered investment company);
(vii) invest more than 15% of the Portfolio's net assets (taken at
the greater of cost or market value) in securities that are illiquid
or not readily marketable not including (a) Rule 144A securities that
have been determined to be liquid by the Board of Trustees; and (b)
commercial paper that is sold under section 4(2) of the 1933 Act
which: (i) is not traded flat or in default as to interest or
principal; and (ii) is rated in one of the two highest categories by
at least two nationally recognized statistical rating organizations
and the Portfolio's (Fund's) Board of Trustees have determined the
commercial paper to be liquid; or (iii) is rated in one of the two
highest categories by one nationally recognized statistical rating
agency and the Portfolio's (Fund's) Board of Trustees have determined
that the commercial paper is equivalent quality and is liquid;
(viii) invest more than 10% of the Portfolio's total assets (taken
at the greater of cost or market value) in securities that are
restricted as to resale under the 1933 Act (other than Rule 144A
securities deemed liquid by the Portfolio's Board of Trustees);
(ix) no more than 5% of the Portfolio's total assets are invested in
securities issued by issuers which (including predecessors) have been
in operation less than three years;
(x) with respect to 75% of the Portfolio's total assets, purchase
securities of any issuer if such purchase at the time thereof would
cause the Portfolio to hold more than 10% of any class of securities
of such issuer, for which purposes all indebtedness of an issuer shall
be deemed a single class and all preferred stock of an issuer shall be
deemed a single class, except that futures or option contracts shall
not be subject to this restriction;
(xi) because the Portfolio is a "diversified" fund with respect to 75%
of its assets, invest more than 5% of its total assets in the
securities (excluding U.S. government securities) of any one issuer;
(xii) purchase or retain in the Portfolio's portfolio securities
any securities issued by an issuer any of whose officers, directors,
trustees or security holders is an officer or Trustee of the
Portfolio, or is an officer or partner of the Adviser, if after the
purchase of the securities of such issuer for the Portfolio one or
more of such persons owns beneficially more than 1/2 of 1% of the
shares or securities, or both, all taken at market value, of such
issuer, and such persons owning more than 1/2 of 1% of such shares or
securities together own beneficially more than 5% of such shares or
securities, or both, all taken at market value;
(xiii) invest more than 5% of the Portfolio's net assets in
warrants (valued at the lower of cost or market), but not more than 2%
of the Portfolio's net assets may be invested in warrants not listed
on the New York Stock Exchange Inc. ("NYSE") or the American Stock
Exchange;
(xiv) make short sales of securities or maintain a short position,
unless at all times when a short position is open it owns an equal
amount of such securities or securities convertible into or
exchangeable, without payment of any further consideration, for
securities of the same issue and equal in amount to, the securities
sold short, and unless not more than 10% of the Portfolio's net assets
(taken at market value) is represented by such securities, or
securities convertible into or exchangeable for such securities, at
any one time (the Portfolio has no current intention to engage in
short selling);
The Portfolio will comply with the securities laws and regulations of all
states in which any investor in the Portfolio is registered. The Portfolio
will comply with the permitted investments and investment limitations in
the securities laws and regulations of all states in which any registered
investment company investing in the Portfolio is registered.
ITEM 14. MANAGEMENT OF THE FUND.
The Board of Trustees is composed of persons experienced in financial
matters who meet throughout the year to oversee the activities of the
Portfolio. In addition, the Trustees review contractual arrangements with
companies that provide services to the Portfolio.
The Trustees and officers of the Portfolio, their birthdates, and their
principal occupations during the past five years are set forth below. Their
titles may have varied during that period. Unless otherwise indicated
below, the address of each Trustee and officer is Clearing Operations, P.O.
Box 897, Pittsburgh, Pennsylvania 15230-0897.
TRUSTEES
PHILIP W. COOLIDGE* (birthdate: September 2, 1951) -- Trustee; Chairman,
Chief Executive Officer and President, Signature Financial Group, Inc.
("SFG") (since December, 1988) and Signature Broker-Dealer Services, Inc.
(`Signature'') (since April, 1989). His address is 6 St. James Avenue,
Boston, Massachusetts 02116.
CHARLES P. BIGGAR (birthdate: October 13, 1930) -- Trustee; Retired;
Director of Chase/NBW Bank Advisory Board; Director Batemen, Eichler, Hill
Richards Inc.; Formerly Vice President of International Business Machines
and President of the National Services and the Field Engineering Divisions
of IBM. His address is 12 Hitching Post Lane, Chappaqua, New York 10514.
S. LELAND DILL (birthdate: March 28, 1930) -- Trustee; Retired; Director,
Coutts Group and Coutts. (U.S.A.) International; Coutts Trust Holdings Ltd;
Director, Zweig Series Trust; formerly Partner of KPMG Peat Marwick;
Director, Vinters International Company Inc.; General Partner of Pemco (an
investment company registered under the 1940 Act). His address is 5070
North Ocean Drive, Singer Island, Florida 33404.
PHILIP SAUNDERS, JR. (birthdate: October 11, 1935) -- Trustee; Principal,
Philip Saunders Associates (Consulting); former Director of Financial
Industry Consulting, Wolf & Company; President, John Hancock Home Mortgage
Corporation; and Senior Vice President of Treasury and Financial Services,
John Hancock Mutual Life Insurance Company, Inc. His address is 445 Glen
Road, Weston, Massachusetts 02193.
* Indicates an `interested person'' (as defined by the 1940 Act) of the
Portfolio.
OFFICERS
RONALD M. PETNUCH (birthdate: February 27, 1960) - President and Treasurer;
Senior Vice President, Federated Services Company (`FSC''); formerly,
Director of Proprietary Client Services, Federated Administrative Services
(`FAS''), and Associate Corporate Counsel, Federated Investors (``FI'').
CHARLES L. DAVIS, JR. (birthdate: March 23, 1960) - Vice President and
Assistant Treasurer; Vice President, FAS.
JAY S. NEUMAN (birthdate: April 22, 1950) - Secretary; Corporate Counsel,
FI.
Messrs. Coolidge, Petnuch, Davis, and Neuman also hold similar positions
for other investment companies for which Signature, Edgewood or an
affiliate serves as the principal underwriter.
No person who is an officer or director of Bankers Trust is an officer or
Trustee of the Portfolio. No director, officer or employee of Edgewood or
any of its affiliates will receive any compensation from the Portfolio for
serving as an officer or Trustee of the Portfolio.
The Trustees of the Portfolio received the following remuneration from the
Portfolio for the fiscal year ended December 31, 1996:
TRUSTEE COMPENSATION TABLE
Name, Aggregate Total
Position With Compensation Compensation From
Trust/Portfolio From Portfolio Fund Complex*
Philip W. Coolidge $23 $1,250
Trustee of Trust
and Portfolio
Charles P. Biggar $765 $28,750
Trustee of Portfolio
S. Leland Dill $705 $28,750
Trustee of Portfolio
Philip Saunders, Jr. $705 $28,750
Trustee of the Portfolio
*Aggregated information is furnished for the BT Family of Funds which
consists of the following: BT Investment Funds, BT Institutional Funds, BT
Pyramid Funds, BT Advisor Funds, BT Investment Portfolios, Cash Management
Portfolio, Treasury Money Portfolio, Tax Free Money Portfolio, NY Tax Free
Money Portfolio, International Equity Portfolio, Utility Portfolio, Short
Intermediate US Government Securities Portfolio, Intermediate Tax Free
Portfolio, Asset Management Portfolio, Equity 500 Index Portfolio, and
Capital Appreciation Portfolio.
The Portfolio's Declaration of Trust provides that it will indemnify its
Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Portfolio, unless, as to liability to the Portfolio or its
investors, it is finally adjudicated that they engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in their offices, or unless with respect to any other
matter it is finally adjudicated that they did not act in good faith in the
reasonable belief that their actions were in the best interests of the
Portfolio. In the case of settlement, such indemnification will not be
provided unless it has been determined by a court or other body approving
the settlement or other disposition, or by a reasonable determination,
based upon a review of readily available facts, by vote of a majority of
disinterested Trustees or in a written opinion of independent counsel, that
such officers or Trustees have not engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of their duties.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of March 1, 1997, Institutional Cash Reserves, BT Investment Money
Market Fund, Institutional Cash Management and Cash Management Fund (each a
"Fund") (series of shares of BT Institutional Funds, BT Pyramid Mutual
Funds, BT Institutional Funds and BT Investment Funds, respectively)
together owned approximately 100% of the value of the outstanding interests
in the Portfolio.
Each Fund has informed the Portfolio that whenever it is requested to vote
on matters pertaining to the fundamental policies of the Portfolio, the
Fund will hold a meeting of shareholders and will cast its votes as
instructed by the Fund's shareholders. It is anticipated that other
registered investment companies investing in the Portfolio will follow the
same or a similar practice.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
Bankers Trust manages the assets of the Portfolio pursuant to an investment
advisory agreement (the "Advisory Agreement"). Subject to such policies as
the Board of Trustees may determine, the Adviser makes investment decisions
for the Portfolio. Bankers Trust will: (i) act in strict conformity with
the Portfolio's Declaration of Trust, the 1940 Act and the Investment
Advisors Act of 1940, as the same may from time to time be amended; (ii)
manage the Portfolio in accordance with the Portfolio's investment
objectives, restrictions and policies as stated herein; (iii) make
investment decisions for the Portfolio; and (iv) place purchase and sale
orders for securities and other financial instruments on behalf of the
Portfolio.
The Adviser furnishes at its own expense all services, facilities and
personnel necessary in connection with managing the Portfolio's investments
and effecting securities transactions for the Portfolio. The Advisory
Agreement will continue in effect if such continuance is specifically
approved at least annually by the Board of Trustees or by a majority vote
of the investors in the Portfolio (with the vote of each being in
proportion to the amount of their investment), and, in either case, by a
majority of the Portfolio's Trustees who are not parties to the Advisory
Agreement or interested persons of any such party, at a meeting called for
the purpose of voting on the Advisory Agreement.
The Advisory Agreement is terminable without penalty on 60 days' written
notice by the Portfolio when authorized either by majority vote of the
investors in the Portfolio (with the vote of each being in proportion to
the amount of their investment) or by a vote of a majority of its Board of
Trustees, or by the Adviser, and will automatically terminate in the event
of its assignment. The Advisory Agreement provides that neither the Adviser
nor its personnel shall be liable for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or
omission in the execution of security transactions for the Portfolio,
except for willful misfeasance, bad faith or gross negligence or of
reckless disregard of its or their obligations and duties under the
Advisory Agreement.
For the fiscal years ended December 31, 1996, 1995, and 1994, Bankers Trust
earned $4,935,288, $3,847,729, and $3,807,085, respectively, in
compensation for investment advisory services provided to the Portfolio.
During the same periods, Bankers Trust reimbursed $761,230, $578,251, and
$537,651, respectively, to the Portfolio to cover expenses.
Pursuant to an administration and services agreement (the "Administration
Agreement"), Bankers Trust provides administration services to the
Portfolio. Under the Administration Agreement, Bankers Trust is obligated
on a continuous basis to provide such administrative services as the Board
of Trustees reasonably deems necessary for the proper administration of the
Portfolio. Bankers Trust will generally assist in all aspects of the
Portfolio's operations; supply and maintain the Portfolio with office
facilities, statistical and research data, data processing services,
clerical, accounting, bookkeeping and recordkeeping services (including
without limitation the maintenance of such books and records as are
required under the 1940 Act and the rules thereunder, except as maintained
by other agents of the Portfolio), internal auditing, executive and
administrative services, and stationery and office supplies; prepare
reports to investors; prepare and file tax returns; supply financial
information and supporting data for reports to and filings with the
Securities and Exchange Commission (the "SEC"); supply supporting
documentation for meetings of the Board of Trustees; provide monitoring
reports and assistance regarding compliance with the Portfolio's
Declaration of Trust, by-laws, investment objectives and policies and with
Federal and state securities laws; arrange for appropriate insurance
coverage; calculate the net asset value, net income and realized capital
gains or losses of the Portfolio; and negotiate arrangements with, and
supervise and coordinate the activities of, agents and others retained by
the Portfolio to supply services to the Portfolio and/or its investors.
Pursuant to a sub-administration agreement (the "Sub-Administration
Agreement"), FSC performs such sub-administration duties for the Portfolio
as from time to time may be agreed upon by Bankers Trust and FSC. The Sub-
Administration Agreement provides that FSC will receive such compensation
as from time to time may be agreed upon by FSC and Bankers Trust. All such
compensation will be paid by Bankers Trust.
Bankers Trust also provides fund accounting, transfer agency and custodian
services to the Portfolio pursuant to the Administration Agreement.
For the fiscal years ended December 31, 1996, 1995, and 1994, Bankers Trust
earned compensation of $1,645,096, $1,282,576, and $1,269,028,
respectively, for administrative and other services to the Portfolio.
Bankers Trust reimbursed the Portfolio for a portion of its administrative
and services fees for the periods above. See "Investment Advisory and Other
Services" above.
Coopers & Lybrand L.L.P. are the Independent Accountants for the Portfolio,
providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the SEC. The
principal business address of Coopers & Lybrand L.L.P. is 1100 Main, Suite
900, Kansas City, Missouri 64105.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
Decisions to buy and sell securities and other financial instruments for
the Portfolio are made by Bankers Trust, which also is responsible for
placing these transactions, subject to the overall review of the Board of
Trustees. Although investment requirements for the Portfolio are reviewed
independently from those of the other accounts managed by Bankers Trust,
investments of the type the Portfolio may make may also be made by these
other accounts. When the Portfolio or accounts managed by Bankers Trust are
prepared to invest in, or desire to dispose of, the same security or other
financial instrument, available investments or opportunities for sales will
be allocated in a manner believed by Bankers Trust to be equitable to each.
In some cases, this procedure may affect adversely the price paid or
received by the Portfolio or the size of the position obtained or disposed
of by the Portfolio.
Purchases and sales of securities on behalf of the Portfolio usually are
principal transactions. These securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
The cost of securities purchased from underwriters includes an underwriting
commission or concession and the prices at which securities are purchased
from and sold to dealers include a dealer's mark-up or mark-down. U.S.
Government Obligations are generally purchased from underwriters or
dealers, although certain newly issued U.S. Government Obligations may be
purchased directly from the U.S. Treasury or from the issuing agency or
instrumentality.
Over-the-counter purchases and sales are transacted directly with principal
market makers except in those cases in which better prices and executions
may be obtained elsewhere and principal transactions are not entered into
with persons affiliated with the Portfolio except pursuant to exemptive
rules or orders adopted by the SEC. Under rules adopted by the SEC, broker-
dealers may not execute transactions on the floor of any national
securities exchange for the accounts of affiliated persons, but may effect
transactions by transmitting orders for execution.
In selecting brokers or dealers to execute portfolio transactions on behalf
of the Portfolio, Bankers Trust seeks the best overall terms available. In
assessing the best overall terms available for any transaction, Bankers
Trust will consider the factors it deems relevant, including the breadth of
the market in the investment, the price of the investment, the financial
condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and
on a continuing basis. In addition, Bankers Trust is authorized, in
selecting parties to execute a particular transaction and in evaluating the
best overall terms available, to consider the brokerage, but not research
services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided to the Portfolio, and/or the
other accounts over which Bankers Trust or its affiliates exercise
investment discretion. Bankers Trust's fees under its agreements with the
Portfolio are not reduced by reason of its receiving brokerage services.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Investors are entitled to
participate pro rata in distributions of taxable income, loss, gain and
credit of the Portfolio. Upon liquidation or dissolution of the Portfolio,
investors are entitled to share pro rata in the Portfolio's net assets
available for distribution to its investors. Investments in the Portfolio
have no preference, preemptive, conversion or similar rights and are fully
paid and nonassessable, except as set forth below. Investments in the
Portfolio may not be transferred. Certificates representing an investor's
beneficial interest in the Portfolio are issued only upon the written
request of an investor.
Each investor is entitled to a vote in proportion to the amount of its
investment in the Portfolio. Investors in the Portfolio do not have
cumulative voting rights, and investors holding more than 50% of the
aggregate beneficial interest in the Portfolio may elect all of the
Trustees of the Portfolio if they choose to do so and in such event the
other investors in the Portfolio would not be able to elect any Trustee.
The Portfolio is not required and has no current intention to hold annual
meetings of investors but the Portfolio will hold special meetings of
investors when in the judgment of the Portfolio's Trustees it is necessary
or desirable to submit matters for an investor vote. No material amendment
may be made to the Portfolio's Declaration of Trust without the affirmative
majority vote of investors (with the vote of each being in proportion to
the amount of their investment).
The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two-thirds of
its investors (with the vote of each being in proportion to their
respective percentages of the beneficial interests in the Portfolio),
except that if the Trustees of the Portfolio recommend such sale of assets,
the approval by vote of a majority of the investors (with the vote of each
being in proportion to their respective percentages of the beneficial
interests of the Portfolio) will be sufficient. The Portfolio may also be
terminated (i) upon liquidation and distribution of its assets, if approved
by the vote of two-thirds of its investors (with the vote of each being in
proportion to the amount of their investment), or (ii) by the Trustees of
the Portfolio by written notice to its investors.
The Portfolio is organized as a trust under the laws of the State of New
York. Investors in the Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by the
Portfolio in the event that there is imposed upon an investor a greater
portion of the liabilities and obligations of the Portfolio than its
proportionate beneficial interest in the Portfolio. The Declaration of
Trust also provides that the Portfolio shall maintain appropriate insurance
(for example, fidelity bonding and errors and omissions insurance) for the
protection of the Portfolio, its investors, Trustees, officers, employees
and agents covering possible tort and other liabilities. Thus, the risk of
an investor incurring financial loss on account of investor liability is
limited to circumstances in which both inadequate insurance existed and the
Portfolio itself was unable to meet its obligations.
The Declaration of Trust further provides that obligations of the Portfolio
are not binding upon the Trustees individually but only upon the property
of the Portfolio and that the Trustees will not be liable for any action or
failure to act, but nothing in the Declaration of Trust protects a Trustee
against any liability 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.
The Portfolio reserves the right to create and issue a number of series, in
which case investments in each series would participate equally in the
earnings and assets of the particular series. Investors in each series
would be entitled to vote separately to approve advisory agreements or
changes in investment policy, but investors of all series may vote together
in the election or selection of Trustees, principal underwriters and
accountants for the Portfolio. Upon liquidation or dissolution of the
Portfolio, the investors in each series would be entitled to share PRO RATA
in the net assets of their respective series available for distribution to
investors.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the Securities Act of 1933, as amended. See
"General Description of Registrant," "Purchase of Securities Being Offered"
and "Redemption or Repurchase" in Part A.
The Portfolio determines its net asset value as of 12:00 noon and 4:00
p.m., Eastern time, on each day on which the Portfolio is open ("Portfolio
Business Day"), by dividing the value of the Portfolio's net assets (i.e.,
the value of its securities and other assets less its liabilities,
including expenses payable or accrued) by the value of the investment of
the investors in the Portfolio at the time the determination is made. (As
of the date of this Registration Statement, the New York Stock Exchange is
open for trading every weekday except for: (a) the following holidays: New
Year's Day, Martin Luther King's Birthday, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, November 11,
Thanksgiving Day and Christmas and (b) the preceding Friday of the
subsequent Monday when one of the calendar-determined holidays falls on a
Saturday or Sunday, respectively. Purchases and withdrawals will be
effected at the time of determination of net asset value next following the
receipt of any purchase or withdrawal order.
The securities held by the Portfolio are valued at their amortized cost.
Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium. If fluctuating interest rates cause the market value of the
securities held by the Portfolio to deviate more than 1/2 of 1% from their
value determined on the basis of amortized cost, the Board of Trustees will
consider whether any action should be initiated, as described in the
following paragraph. Although the amortized cost method provides certainty
in valuation, it may result in periods during which the stated value of an
instrument is higher or lower than the price an investment company would
receive if the instrument were sold.
Pursuant to rules of the SEC, the Board of Trustees has established
procedures to stabilize the value of the Portfolio's net assets within 1/2
of 1% of the value determined on the basis of amortized cost. These
procedures include a review of the extent of any such deviation of net
asset value, based on available market rates. Should that deviation exceed
1/2 of 1%, the Board of Trustees will consider whether any action should be
initiated to eliminate or reduce material dilution or other unfair results
to the investors in the Portfolio. Such action may include withdrawal in
kind, selling its securities prior to maturity and utilizing a portfolio
valuation as determined by using available market quotations. The Portfolio
will maintain a dollar-weighted average maturity of 90 days or less, will
not purchase any instrument that under applicable SEC rules would be deemed
to have a remaining maturity greater than one year or subject to a
repurchase agreement having a duration of greater than one year, will limit
its investments, including repurchase agreements, to U.S. dollar-
denominated instruments that are issued or guaranteed by the U.S. Treasury,
by an agency of the U.S. government or an instrumentality established or
sponsored by the U.S. government, including repurchase agreements backed by
such obligations, and will comply with certain reporting and recordkeeping
procedures.
ITEM 20. TAX STATUS.
The Portfolio is organized as a trust under New York law. Under the
anticipated method of operation of the Portfolio, the Portfolio will not be
subject to any income tax. However each investor in the Portfolio will be
taxable on its share (as determined in accordance with the governing
instruments of the Portfolio) of the Portfolio's ordinary income and
capital gain in determining its income tax liability. The determination of
such share will be made in accordance with the Internal Revenue Code of
1986, as amended, and regulations promulgated thereunder.
The Portfolio's taxable year-end is December 31. Although, as described
above, the Portfolio will not be subject to Federal income tax, it will
file appropriate income tax returns.
It is intended that the Portfolio's assets, income and distributions will
be managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended, assuming that the investor invested all of its assets in
the Portfolio.
There are certain tax issues that will be relevant to only certain of the
investors, specifically investors that are segregated asset accounts and
investors who contribute assets rather than cash to the Portfolio. It is
intended that such segregated asset accounts will be able to satisfy
diversification requirements applicable to them and that such contributions
of assets will not be taxable provided certain requirements are met. Such
investors are advised to consult their own tax advisors as to the tax
consequences of an investment in the Portfolio.
ITEM 21. UNDERWRITERS.
The placement agent for the Portfolio is Edgewood, which receives no
additional compensation for serving in this capacity. Investment companies,
insurance company separate accounts, common and commingled trust funds and
similar organizations and entities may continuously invest in the
Portfolio.
ITEM 22. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 23. FINANCIAL STATEMENTS.
The following financial statements, contained in the Annual Report of BT
Investment Funds dated December 31, 1996, (File No. 811-04760) for the
fiscal year ended December 31, 1996, are incorporated by reference into
this Part B:
Statement of Assets and Liabilities, December 31, 1996
Statement of Operations for the fiscal year ended December 31, 1996
Statement of Changes in Net Assets for the fiscal years ended December 31,
1996 and 1995
Financial Highlights: Selected ratios and supplemental data for the
periods indicated
Schedule of Portfolio Investments, December 31, 1996
Notes to Financial Statements
Report of Independent Accountants
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a)Financial Statements:
Incorporated by reference to the Annual Report of BT
Investment Funds dated December 31, 1996, pursuant to Rule
411 under the Securities Act of 1933. (File Nos. 33-07404
and 811-04760)
(b)Exhibits:
(1) Conformed copy of Amended and Restated Declaration of
Trust of the Registrant; (3)
(2) Copy of By-Laws of the Registrant; (3)
(3) Not applicable;
(4) Not applicable;
(5) Conformed copy of Investment Advisory Agreement between
the Registrant and Bankers Trust Company; (3)
(6) Not applicable;
(7) Not applicable;
(8) Conformed copy of Custodian Agreement between Registrant
and Bankers Trust; +
(9) (i) Conformed copy of Administration and Services
Agreement between the Registrant and Bankers Trust;
(2)
(ii) Conformed copy of Exclusive Placement Agent
Agreement and Amended Exhibit thereto; 4
(10) Not applicable;
(11) Not applicable;
(12) Not applicable;
(13) Investment representation letters of initial investors;
(1)
(14) Not applicable;
(15) Not applicable;
(16) Not applicable;
(17) Copy of Financial Data Schedule; 4
(18) Not applicable;
(19) Conformed copy of Power of Attorney. 4
+ All exhibits been filed electronically.
1.Previously filed on July 20, 1990.
2.Previously filed on April 30, 1993.
3.Response is incorporated by reference to Registrant's Amendment No. 9 on
Form N-1A filed April 24, 1996.
4.Response is incorporated by reference to Registrant's Amendment No. 10
on Form N-1A filed March 19, 1997.
Item 25. Persons Controlled by or under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of May 1, 1997
Beneficial Interests 4
Item 27. Indemnification: (3)
Item 28. Business and Other Connections of Investment Adviser:
Bankers Trust serves as investment adviser to the Portfolio. Bankers Trust,
a New York banking corporation, is a wholly owned subsidiary of Bankers
Trust New York Corporation. Bankers Trust conducts a variety of commercial
banking and trust activities and is a major wholesale supplier of financial
services to the international institutional market.
To the knowledge of the Trust, none of the directors or officers of Bankers
Trust, except those set forth below, is engaged in any other business,
profession, vocation or employment of a substantial nature, except that
certain directors and officers also hold various positions with and engage
in business for Bankers Trust New York Corporation. Set forth below are the
names and principal businesses of the directors and officers of Bankers
Trust who are engaged in any other business, profession, vocation or
employment of a substantial nature.
George B. Beitzel, International Business Machines Corporation, Old Orchard
Road, Armonk, NY 10504. Director, Bankers Trust Company; Retired senior
vice president and Director, International Business machines Corporation;
Director, Computer Task Group; Director, Phillips Petroleum Company;
Director, Caliber Systems, Inc. (formerly, Roadway Services Inc.);
Director, Rohm and Haas Company; Director, TIG Holdings; Chairman emeritus
of Amherst College; and Chairman of the Colonial Willimsburg Foundation.
Richard H. Daniel, Bankers Trust Company, 130 Liberty Street, New York, New
York 10006. Vice chairman and chief financial officer, Bankers Trust
Company and Bankers Trust New York Corporation; Beneficial owner, general
partner, Daniel Brothers, Daniel Lingo & Assoc., Daniel Pelt & Assoc.;
Beneficial owner, Rhea C. Daniel Trust.
Philip A. Griffiths, Bankers Trust Company, 130 Liberty Street, New York,
New York 10006. Director, Institute for Advanced Study; Director, Bankers
Trust Company; Chairman, Committee on Science, Engineering and Public
Policy of the National Academies of Sciences and Engineering & the
Institute of Medicine; and Chairman and member, Nominations Committee and
Committee on Science and Engineering Indicators, National Science Board;
Trustee, North Carolina School of Science and Mathematics and the Woodward
Academy.
William R. Howell, J.C. Penney Company, Inc., P.O. Box 10001, Plano, TX
75301-0001. Chairman Emeritus, J.C. Penney Company, Inc.; Director, Bankers
Trust Company; Director, Exxon Corporation; Director, Halliburton Company;
Director, Warner-Lambert Corporation; Director, The Williams Companies,
Inc.; and Director, National Retail Federation.
3.Response is incorporated by reference to Registrant's Amendment No. 9 on
Form N-1A filed April 24, 1996.
Vernon E. Jordan, Jr., Akin, Gump, Strauss, Hauer & Feld, LLP, 1333 New
Hampshire Ave., N.W., Washington, DC 20036. Senior Partner, Akin, Gump,
Strauss, Hauer & Feld, LLP; Director, Bankers Trust Company; Director,
American Express Company; Director, Dow-Jones, Inc.; Director, J.C. Penney
Company, Inc.; Director, Revlon Group Incorporated; Director, Ryder System,
Inc.; Director, Sara Lee Corporation; Director, Union Carbide Corporation;
Director, Xerox Corporation; Trustee, Brookings Institution; Trustee, The
Ford Foundation; and Trustee, Howard University.
David Marshall, 130 Liberty Street, New York, New York 10006. Chief
Information Officer and Executive Vice President, Bankers Trust New York
Corporation; Senior Managing Director, Bankers Trust Company.
Hamish Maxwell, Philip Morris Companies Inc., 120 Park Avenue, New York, NY
10006. Retired Chairman and Chief Executive Officer, Philip Morris
Companies Inc.; Director, Bankers Trust Company; Director, The News
Corporation Limited; Director, Sola International Inc.; and Chairman, WWP
Group pic.
Frank N. Newman, Bankers Trust Company, 130 Liberty Street, New York, New
York 10006. Chairman of the Board, Chief Executive Officer and President,
Bankers Trust New York Corporation and Bankers Trust Company; Director,
Bankers Trust Company; Director, Dow-Jones, Inc.; and Director, Carnegie
Hall.
N.J. Nicholas Jr., 745 Fifth Avenue, New York, NY 10020. Director, Bankers
Trust Company; Director, Boston Scientific Corporation; and Director, Xerox
Corporation.
Russell E. Palmer, The Palmer Group, 3600 Market Street, Suite 530,
Philadelphia, PA 19104. Chairman and Chief Executive Officer of The Palmer
Group; Director, Bankers Trust Company; Director, Allied-Signal Inc.;
Director, Federal Home Loan Mortgage Corporation; Director, GTE
Corporation; Director, The May Department Stores Company; Director,
Safeguard Scientifics, Inc.; and Trustee, University of Pennsylvania.
Donald L. Staheli, Bankers Trust Company, 130 Liberty Street, New York, New
York 10006. Chairman of the Board and Chief Executive Officer, Continental
Grain Company; Director, Bankers Trust Company; Director, ContiFinancial
Corporation; Director, Prudential Life Insurance Company of America;
Director, Fresenius Medical Care, A.g.; Director, America-China Society;
Director, National Committee on United States-China Relations; Director,
New York City Partnership; Chairman, U.S.-China Business Council; Chairman,
Council on Foreign Relations; Chairman, National Advisor Council of Brigham
Young University's Marriott School of Management; Vice Chairman, The Points
of Light Foundation; and Trustee, American Graduate School of International
Management.
Patricia Carry Stewart, c/o Office of the Secretary, 130 Liberty Street,
New York, NY 10006. Director, Bankers Trust Company; Director, CVS
Corporation; Director, Community Foundation for Palm Beach and Martin
Counties; Trustee Emerita, Cornell University.
George J. Vojta, Bankers Trust Company, 130 Liberty Street, New York, NY
10006. Vice Chairman, Bankers Trust New York Corporation and Bankers Trust
Company; Director, bankers Trust Company; Director; Alicorp S.A.; Director;
Northwest Airlines; Director, Private Export Funding Corp.; Director, New
York State Banking Board; Director, St. Lukes-Roosevelt Hospital Center;
Partner, New York City Partnership; and Chairman, Wharton Financial
Services Center.
Paul A. Volcker, Bankers Trust Company, 130 Liberty Street, New York, New
York 10006. Director, Bankers Trust Company; Director, American Stock
Exchange; Director, Nestle S.A.; Director, Prudential Insurance Company;
Director, UAL Corporation; Chairman, Group of 30; North American Chairman,
Trilateral Commission; Co-Chairman, Bretton Woods Committee; Co-Chairman,
U.S./Hong Kong Economic Cooperation Committee; Director, American Council
on Germany; Director, Aspen Institute; Director, Council on Foreign
Relations; Director, The Japan Society; and Trustee, The American Assembly.
Melvin A. Yellin, Bankers Trust Company, 130 Liberty Street, New York, New
York 10006. Senior Managing Director and General Counsel of Bankers Trust
New York Corporation and Bankers Trust Company; Director, 1136 Tenants
Corporation; and Director, ABA Securities Association.
Item 29. Principal Underwriters:
Not applicable.
ITEM 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one of the
following locations:
Registrant: Federated Investor Tower, Pittsburgh, PA
15222-3779.
Bankers Trust Company: 130 Liberty Street, New York, NY
10006.
Investors Fiduciary Trust Company: 127 West 10th Street, Kansas City, MO
64105.
Edgewood Services, Inc.: Clearing Operations, P.O. Box 897,
Pittsburgh, PA 15230-0897.
Item 31. Management Services:
Not applicable.
Item 32. Undertakings:
Not applicable.
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant, CASH MANAGEMENT PORTFOLIO, has duly caused this Amendment to
its Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Pittsburgh and
Commonwealth of Pennsylvania on the 8th day of May, 1997.
CASH MANAGEMENT PORTFOLIO
By: /s/ Jay S. Neuman
Jay S. Neuman, Secretary
May 8, 1997
EXHIBIT 8 UNDER FORM N-1A
EXHIBIT 10 UNDER ITEM 601/REG. S-K
BANKERS TRUST COMPANY
One Bankers Trust Plaza, New York, New York 10006
Mailing Address:
P.O. Box 318, Church Street Station
New York, New York 10008
Mutual Fund/Business Trust/Non-Series
CUSTODIAN AGREEMENT
AGREEMENT dated as of July 1, 1996 between BANKERS TRUST COMPANY (the
`Custodian'') and SHORT/INTERMEDIATE U.S. GOVERNMENT SECURITIES PORTFOLIO
(the `Customer'').
WHEREAS, the Customer desires to appoint the Custodian as custodian on
behalf of the Customer under the terms and conditions set forth in this
Agreement, and the Custodian has agreed to so act as custodian.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. Employment of Custodian. The Customer hereby employs the
Custodian as custodian of all assets of the Customer which are delivered to
and accepted by the Custodian or any Subcustodian (as that term is defined
in Section 4) (the `Property'') pursuant to the terms and conditions set
forth herein. Without limitation, such Property shall include stocks and
other equity interests of every type, evidences of indebtedness, other
instruments representing same or rights or obligations to receive,
purchase, deliver or sell same and other non-cash investment property of
the Customer which is acceptable for deposit (`Securities'') and cash from
any source and in any currency (`Cash''). The Custodian shall not be
responsible for any property of the Customer held or received by the
Customer or others and not delivered to the Custodian or any Subcustodian.
2. Maintenance of Securities and Cash at Custodian and Subcustodian
Locations. Pursuant to Instructions, the Customer shall direct the
Custodian to (a) settle Securities transactions and maintain cash in the
country or other jurisdiction in which the principal trading market for
such Securities is located, where such Securities are to be presented for
payment or where such Securities are acquired and (b) maintain cash and
cash equivalents in such countries in amounts reasonably necessary to
effect the Customer's transactions in such Securities. Instructions to
settle Securities transactions in any country shall be deemed to authorize
the holding of such Securities and Cash in that country.
3. Custody Account. The Custodian agrees to establish and maintain
custody account or accounts on its books in the name of the Customer (the
`Account'') for any and all Property from time to time received and
accepted by the Custodian or any Subcustodian for the Account of the
Customer. The Custodian shall have the right, in its sole discretion, to
refuse to accept any Property that is not in proper form for deposit for
any reason. The Customer acknowledges its responsibility as a principal
for all of its obligations to the Custodian arising under or in connection
with this Agreement, warrants its authority to deposit in the Account any
Property received therefor by the Custodian or a Subcustodian and to give,
and authorize others to give, instructions relative thereto. The
Custodian may deliver securities of the same class in place of those
deposited in the Account.
The Custodian shall hold, keep safe and protect as custodian for the
Account, on behalf of the Customer, all Property in such Account. All
transactions, including, but not limited to, foreign exchange transactions,
involving the Property shall be executed or settled solely in accordance
with Instructions, except that until the Custodian receives Instructions to
the contrary, the Custodian will:
(a) collect all interest and dividends and all other income and
payments, whether paid in cash or in kind, on the Property, as
the same become payable and credit the same to the Account;
(b) present for payment all Securities held in the 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 Custodian or Subcustodian is
actually aware of such opportunities and hold the cash received
in the Account pursuant to this Agreement;
(c) (i) exchange Securities where the exchange is purely ministerial
(including, without limitation, the exchange of temporary
securities for those in definitive form and the exchange of
warrants, or other documents of entitlement to securities, for
the Securities themselves) and (ii) when notification of a tender
or exchange offer (other than ministerial exchanges described in
(i) above is received for the Account, endeavor to receive
Instructions, provided that if such Instructions are not received
in time for the Custodian to take timely action, no action shall
be taken with respect thereto;
(d) whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or stock
split is received for the Account and such rights entitlement or
fractional interest bears an expiration date, if after
endeavoring to obtain Instructions such Instructions are not
received in time for the Custodian to take timely action or if
actual notice of such actions was received too late to seek
Instructions, sell in the discretion of the Custodian (which sale
the Customer hereby authorizes the Custodian to make) such rights
entitlement or fractional interest and credit the Account with
the net proceeds of such sale;
(e) execute in the Customer's name for the Account, whenever the
Custodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of income
from the Property in the Account;
(f) pay for the Account, any and all taxes and levies in the nature
of taxes imposed on interest, dividends or other similar income
on the Property in the Account by any governmental authority. In
the event there is insufficient Cash available in the Account to
pay such taxes and levies, the Custodian shall notify the
Customer of the amount of the shortfall and the Customer, at its
option, may deposit additional Cash in the Account or take steps
to have sufficient Cash available. The Customer agrees, when
and if requested by the Custodian and required in connection with
the payment of any such taxes to cooperate with the Custodian in
furnishing information, executing documents or otherwise; and
(g) appoint brokers and agents for any of the ministerial
transactions involving the Securities described in (a) - (f),
including, without limitation, affiliates of the Custodian or any
Subcustodian.
4. Subcustodians and Securities Systems. The Customer authorizes and
instructs the Custodian to hold the Property in the Account in custody
accounts which have been established by the Custodian with (a) one of its
U.S. branches or another U.S. bank or trust company or branch thereof
located in the U.S. which is itself qualified under the Investment Company
Act of 1940, as amended (`1940 Act''), to act as custodian (individually,
a `U.S. Subcustodian''), or a U.S. securities depository or clearing agent
or system in which the Custodian or a U.S. Subcustodian participates
(individually, a `U.S. Securities System'') or (b) one of its non-U.S.
branches or majority-owned non-U.S. subsidiaries, a non-U.S. branch or
majority-owned subsidiary of a U.S. bank or a non-U.S. bank or trust
company, acting as custodian (individually, a `non- U.S. Subcustodian'';
U.S. Subcustodians and non-U.S. Subcustodians, collectively,
`Subcustodians''), or a non-U.S. depository or clearing agency or system
in which the Custodian or any Subcustodian participates (individually, a
`non-U.S. Securities System''; U.S. Securities System and non-U.S.
Securities System, collectively, `Securities System''), provided that in
each case in which a U.S. Subcustodian or U.S. Securities System is
employed, each such Sub-Custodian or Securities System shall have been
approved by Instructions; provided further that in each case in which a
non-U.S. Subcustodian or non-U.S. Securities System is employed, (a) such
Subcustodian or Securities System either (i) a `qualified U.S. bank'' as
defined by Rule 17f-5 under the 1940 Act (`Rule 17f-5'') or (ii) an
`eligible foreign custodian'' within the meaning of rule 17f-5 or such
Subcustodian or Securities System is the subject of an order granted by the
U.S. Securities and Exchange Commission (`SEC'') exempting such agent or
the subcustody arrangements thereto from all or part of the provisions of
Rule 17f-5 and (b) the agreement between the Custodian and such non-U.S.
Subcustodian has been approved by Instructions; it being understood that
the Custodian shall have no liability or responsibility for determining
whether the approval by the Customer of any Subcustodian or Securities
System has been proper under the 1940 Act or any rule or regulations
thereunder.
Upon receipt of Instructions, the Custodian agrees to cease the
employment of any Subcustodian or Securities System with respect to the
Customer, and if desirable and practicable, appoint a replacement
subcustodian or securities system in accordance with the provisions of this
Section. In addition, the Custodian may, at any time in its discretion,
upon written notification to the Customer, terminate the employment of any
Subcustodian or Securities System.
Upon request of the Customer, the Custodian shall deliver to the
Customer annually a certificate stating: (a) the identity of each non-U.S.
Subcustodian and non-U.S. Securities System then acting on behalf of the
Custodian and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such non-U.S.
Subcustodian and non-U.S. Securities System; (b) the countries in which
each non-U.S. Subcustodian or non-U.S. Securities System is located; and
(c) so long as Rule 17f-5 requires the Customer's Board of Trustees to
directly approve its foreign custody arrangements, such other information
relating to such non-U.S. Subcustodians and non-U.S. Securities Systems as
may reasonably be requested by the Customer to ensure compliance with Rule
17f-5. So long as Rule 17f-5 requires the Customer's Board of Trustees to
directly approve its foreign custody arrangements, the Custodian also shall
furnish annually to the Customer information concerning such non-U.S.
Subcustodians and non-U.S. Securities Systems similar in kind and scope as
that furnished to the Customer in connection with the initial approval of
this Agreement. Custodian agrees to promptly notify the Customer, if in
the normal course of its custodian activities, the Custodian has reason to
believe that any non-U.S. Subcustodian or non-U.S. Securities System has
ceased to be a qualified U.S. bank or an eligible foreign custodian each
within the meaning of Rule 17f-5 or has ceased to be subject to an
exemptive order from the SEC.
5. Use of Subcustodian. With respect to Property in the Account
which is maintained by the Custodian in the custody of a Subcustodian
employed pursuant to Section 4:
(a) The Custodian will identify on its books as belonging to the
Customer any Property held by such Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be
subject only to the instructions of the Custodian or its agents.
(c) Property deposited with a Subcustodian will be maintained in an
account holding only assets for customers of the Custodian.
(d) Any agreement the Custodian shall enter into with a non-U.S.
Subcustodian with respect to the holding of Property shall
require that (i) the Account will be adequately indemnified or
its losses adequately insured; (ii) the Securities are not
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 in accordance with such agreement for their
safe custody or administration and expenses related thereto,
(iii) beneficial ownership of such Securities be freely
transferable without the payment of money or value other than for
safe custody or administration and expenses related thereto, (iv)
adequate records will be maintained identifying the Property held
pursuant to such Agreement as belonging to the Custodian, on
behalf of its customers and (v) to the extent permitted by
applicable law, officers of or auditors employed by, or other
representatives of or designated by, the Custodian, including the
independent public accountants of or designated by, the Customer
be given access to the books and records of such Subcustodian
relating to its actions under its agreement pertaining to any
Property by it thereunder or confirmation of or pertinent
information contained in such books and records be furnished to
such persons designated by the Custodian.
6. Use of Securities System. With respect to Property in the
Account which are maintained by the Custodian or any Subcustodian in the
custody of a Securities System employed pursuant to Section 4:
(a) The Custodian shall, and the Subcustodian will be required by its
agreement with the Custodian to, identify on its books such
Property as being held for the account of the Custodian or
Subcustodian for its customers.
(b) Any Property held in a Securities System for the account of the
Custodian or a Subcustodian will be subject only to the
instructions of the Custodian or such Subcustodian, as the case
may be.
(c) Property deposited with a Securities System will be maintained in
an account holding only assets for customers of the Custodian or
Subcustodian, as the case may be, unless precluded by applicable
law, rule, or regulation.
(d) The Custodian shall provide the Customer with any report obtained
by the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System.
7. Agents. The Custodian may at any time or times in its sole
discretion appoint (or remove) any other U. S. bank or trust company which
is itself qualified under the 1940 Act to act as custodian, as its agent to
carry out such of the provisions of this Agreement as the Custodian may
from time to time direct; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities or
liabilities hereunder.
8. Records, Ownership of Property, Statements, Opinions of
Independent Certified Public Accountants.
(a) The ownership of the Property whether Securities, Cash and/or
other property, and whether held by the Custodian or a Subcustodian or in a
Securities System as authorized herein, shall be clearly recorded on the
Custodian's books as belonging to the Account and not for the Custodian's
own interest. The Custodian shall keep accurate and detailed accounts of
all investments, receipts, disbursements and other transactions for the
Account. All accounts, books and records of the Custodian relating thereto
shall be open to inspection and audit at all reasonable times during normal
business hours by any person designated by the Customer. All such accounts
shall be maintained and preserved in the form reasonably requested by the
Customer. The Custodian will supply to the Customer from time to time, as
mutually agreed upon, a statement in respect to any Property in the Account
held by the Custodian or by a Subcustodian. In the absence of the filing
in writing with the Custodian by the Customer of exceptions or objections
to any such statement within sixty (60) days of the mailing thereof, the
Customer shall be deemed to have approved such statement within sixty (60)
days of the mailing thereof, the Customer shall be deemed to have approved
such statement and in such case or upon written approval of the Customer of
any such statement, such statement shall be presumed to be for all purposes
correct with respect to all information set forth therein.
(b) The Custodian shall take all reasonable action as the Customer
may request to obtain from year to year favorable opinions from the
Customer's independent certified public accountants with respect to the
Custodian's activities hereunder in connection with the preparation of the
Customer's Form N-1A and the Customer's Form N-SAR or other periodic
reports to the SEC and with respect to any other requirements of the SEC.
(c) At the request of the Customer, the Custodian shall deliver to
the Customer a written report prepared by the Custodian's independent
certified public accountants with respect to the services provided by the
Custodian under this Agreement, including, without limitation, the
Custodian's accounting system, internal accounting control and procedures
for safeguarding Cash and Securities, including Cash and Securities
deposited and/or maintained in a securities system or with a Subcustodian.
Such report shall be of sufficient scope and in sufficient detail as may
reasonably be required by the Customer and as may reasonably be obtained by
the Custodian.
(d) The Customer may elect to participate in any of the electronic
on-line service and communications systems offered by the Custodian which
can provide the Customer, on a daily basis, with the ability to view on-
line or to print on hard copy various reports of Account activity and of
Securities and/or Cash being held in the Account. To the extent that such
service shall include market values in Securities in the Account, the
Customer hereby acknowledges that the Custodian now obtains and may in the
future obtain information on such values from outside sources that the
Custodian considers to be reliable and the Customer agrees that the
Custodian (i) does not verify or represent or warrant either the
reliability of such service nor the accuracy or completeness of any such
information furnished or obtained by or through such service and (ii) shall
be without liability in selecting and utilizing such service or furnishing
any information derived therefrom.
9. Holding of Securities, Nominees, etc. Securities in the Account
which are held by the Custodian or any Subcustodian may be held by such
entity in the name of the Customer in the Custodian's or Subcustodian's
name, in the name of the Custodian's or Subcustodian's nominee, or in
bearer form. Securities that are held by a Subcustodian or which are
eligible for deposit in a Securities System as provided above may be
maintained in the Subcustodian or the Securities System in an account for
the Customer's or Subcustodian's customers, unless prohibited by law, rule,
or regulation. The Custodian or Subcustodian, as the case may be, may
combine certificates representing Securities held in the Account with
certificates of the same issue held by it as fiduciary or as a custodian.
In the event that any Securities in the name of the Custodian or its
nominee or held by a Subcustodian and registered in the name of such
Subcustodian or its nominee are called for partial redemption by the issuer
of such Security, the Custodian may, subject to the rules or regulations
pertaining to allocation of any Securities System in which such Securities
have been deposited, allot, or cause to be allotted, the called portion of
the respective beneficial holders of such class of security in any manner
the Custodian deems to be fair and equitable.
10. Proxies, etc. With respect to any proxies, notices, reports or
other communications relative to any of the Securities in the Account, the
Custodian shall perform such services and only such services relative
thereto as are (i) set forth in Section 3 of this Agreement, (ii) described
in Exhibit A attached hereto (as such service therein described may be in
effect from time to time) (the `Proxy Service'') and (iii) as may
otherwise be agreed upon between the Custodian and the Customer. The
liability and responsibility of the Custodian in connection with the Proxy
Service referred to in (ii) of the immediately preceding sentence and in
connection with any additional services which the Custodian and the
Customer may agree upon as provided in (iii) of the immediately preceding
sentence shall be as set forth in the description of the Proxy Service and
as may be agreed upon by the Custodian and the Customer in connection with
the furnishing of any such additional service and shall not be affected by
any other term of this Agreement. Neither the Custodian nor its nominees
or agents shall vote upon or in respect of any of the Securities in the
Account, execute any form of proxy to vote thereon, or give any consent or
take any action (except as provided in Section 3) with respect thereto
except upon the receipt of Instructions relative thereto.
11. Segregated Account. To assist the Customer in complying with the
requirements of the 1940 Act and the rules and regulations thereunder, the
Custodian shall, upon receipt of Instructions, establish and maintain a
segregated account or accounts on its books for and on behalf of the
Customer.
12. Settlement Procedures. Securities will be transferred, exchanged
or delivered by the Custodian or a Subcustodian upon receipt by the
Custodian of Instructions which include all information required by the
Custodian. Settlement and payment for Securities received for the Account
and delivery of Securities out of the 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,
as such practices and procedures may be modified or supplemented in
accordance with the standard operating procedures of the Custodian in
effect from time to time for that jurisdiction or market. Provided that
the Custodian effects transactions in accordance with the customary or
established securities trading or securities processing practice or
procedures in the applicable jurisdiction or market, it shall not be
responsible for any loss arising therefrom. Subject to the exercise of
reasonable care, the Custodian may elect to effect transactions otherwise
in a jurisdiction or market.
Notwithstanding that the Custodian may settle purchases and sales
against, or credit income to, the Account, on a contractual basis, as
outlined in the Investment Manager User Guide provided to the Customer by
the Custodian, the Custodian may, at its sole option, reverse such credits
or debits to the Account in the event that the transaction does not settle,
or the income is not received in a timely manner, and the Customer agrees
to hold the Custodian harmless from any losses which may result therefrom.
Except as otherwise may be agreed upon by the parties hereto, the
Custodian shall not be required to comply with Instructions to settle the
purchase of any Securities for the Account unless there is sufficient Cash
in the Account at the time or to settle the sale of any Securities in the
Account unless such Securities are in deliverable form. Notwithstanding
the foregoing, if the purchase price of such securities exceeds the amount
of Cash in the Account at the time of settlement of such purchase, the
Custodian may, in its sole discretion, but in no way shall have any
obligation to, permit an overdraft in the Account in the amount of the
difference solely for the purpose of facilitating the settlement of such
purchase of securities for prompt delivery to the Account. The Customer
agrees to immediately repay the amount of any such overdraft in the
ordinary course of business and further agrees to indemnify and hold the
Custodian harmless from and against any and all losses, costs, including,
without limitation the cost of funds, and expenses incurred in connection
with such overdraft. The Customer agrees that it will not use the Account
to facilitate the purchase of securities without sufficient funds in the
Account (which funds shall not include the proceeds of the sale of the
purchased securities).
13. Permitted Transactions. The Customer agrees that it will cause
transactions to be made pursuant to this Agreement only upon Instructions
in accordance Section 14 and only for the purposes listed below.
(a) In connection with the purchase or sale of Securities at prices
as confirmed by Instructions.
(b) When 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 or merger, consolidation,
reorganization, recapitalization or readjustment.
(d) Upon conversion of Securities pursuant to their terms into other
securities.
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities.
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses.
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed.
(h) In connection with any loans, but only against receipt of
collateral as specified in Instructions which shall reflect any
restrictions applicable to the Customer.
(i) For the purpose of redeeming shares of the capital stock of the
Customer against delivery of the shares to be redeemed to the Custodian, a
Subcustodian or the Customer's transfer agent.
(j) For the purpose of redeeming in kind shares of the Customer
against delivery of the shares to be redeemed to the Custodian, a
Subcustodian or the Customer's transfer agent.
(k) For delivery in accordance with the provisions of any agreement
among the Customer, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc., relating to compliance with the rules of The
Options Clearing Corporation, the Commodities Futures Trading Commission
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.
(l) For release of Securities to designated brokers under covered
call options, provided, however, that such Securities shall be released
only upon payment to the Custodian 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, the Custodian will receive the Securities
previously deposited from broker. The Custodian 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.
(m) For spot or forward foreign exchange transactions to facilitate
security trading or receipt of income from Securities related transactions.
(n) Upon the termination of this Agreement as set forth in Section
20.
(o) For other proper purposes.
The Customer agrees that the Custodian shall have no obligation to
verify the purpose for which a transaction is being effected.
14. Instructions. The term `Instructions'' means instructions from
the Customer in respect of any of the Custodian's duties hereunder which
have been received by the Custodian at its address set forth in Section 21
below (i) in writing (including, without limitation, facsimile
transmission) or by tested telex signed or given by such one or more person
or persons as the Customer shall have from time to time authorized in
writing to give the particular class of Instructions in question and whose
name and (if applicable) signature and office address have been filed with
the Custodian, or (ii) which have been transmitted electronically through
an electronic on-line service and communications system offered by the
Custodian or other electronic instruction system acceptable to the
Custodian, or (iii) a telephonic or oral communication by one or more
persons as the Customer shall have from time to time authorized to give the
particular class of Instructions in question and whose name has been filed
with the Custodian; or (iv) upon receipt of such other form of instructions
as the Customer may from time to time authorize in writing and which the
Custodian has agreed in writing to accept. Instructions in the form of
oral communications shall be confirmed by the Customer by tested telex or
writing in the manner set forth in clause (i) above, but the lack of such
confirmation shall in no way affect any action taken by the Custodian in
reasonable reliance upon such oral instructions prior to the Custodian's
receipt of such confirmation. Instructions may relate to specific
transactions or to types or classes of transactions, and may be in the form
of standing instructions.
The Custodian shall have the right to assume in the absence of notice
to the contrary from the Customer that any person whose name is on file
with the Custodian pursuant to this Section has been authorized by the
Customer to give the Instructions in question and that such authorization
has not been revoked. The Custodian may act upon and conclusively rely on,
without any liability to the Customer or any other person or entity for any
losses resulting therefrom, any Instructions reasonably believed by it to
be furnished by the proper person or persons as provided above.
15. Standard of Care. The Custodian shall be responsible for the
performance of only such duties as are set forth herein or contained in
Instructions given to the Custodian which are not contrary to the
provisions of this Agreement. The Custodian will use reasonable care with
respect to the safekeeping of Property in the Account and, except as
otherwise expressly provided herein, in carrying out its obligations under
this Agreement. So long as and to the extent that it has exercised
reasonable care, the Custodian shall not be responsible for the title,
validity or genuineness of any Property or other property or evidence of
title thereto received by it or delivered by it pursuant to this Agreement
and shall be held harmless in acting upon, and may conclusively rely on,
without liability for any loss resulting therefrom, any notice, request,
consent, certificate or other instrument reasonably believed by it to be
genuine and to be signed or furnished by the proper party or parties,
including, without limitation, Instructions, and shall be indemnified by
the Customer for any losses, damages, costs and expenses (including,
without limitation, the fees and expenses of counsel) incurred by the
Custodian and arising out of action taken or omitted with reasonable care
by the Custodian hereunder or under any Instructions. The Custodian shall
be liable to the Customer for any act or omission to act of any
Subcustodian to the same extent as if the Custodian committed such act
itself. Where, under applicable law, regulation, or practice (in order to
facilitate the settlement of transactions related thereto), or where the
Customer otherwise elects, Securities are held in a Securities System in a
particular market, the Custodian shall only be responsible or liable for
losses arising from employment of such Securities System caused by the
Custodian's own failure to exercise reasonable care. Where the Custodian
otherwise elects to employ a Securities System for holding Securities in a
particular market, the Custodian shall be liable to the Customer for any
act or omission of any Securities System to the same extent as if the
Custodian committed such act itself. In the event of any loss to the
Customer by reason of the failure of the Custodian or a Subcustodian to
utilize reasonable care, the Custodian shall be liable to the Customer to
the extent of the Customer's actual damages at the time such loss was
discovered without reference to any special conditions or circumstances.
In no event shall the Custodian be liable for any consequential or special
damages. The Custodian shall be entitled to rely, and may act, on advice
of counsel (who may be counsel for the Customer) on all matters and shall
be without liability for any action reasonably taken or omitted pursuant to
such advice.
In the event the Customer subscribes to an electronic on-line service
and communications system offered by the Custodian, the Customer shall be
fully responsible for the security of the Customer's connecting terminal,
access thereto and the proper and authorized use thereof and the initiation
and application of continuing effective safeguards with respect thereto and
agree to defend and indemnify the Custodian and hold the Custodian harmless
from and against any and all losses, damages, costs and expenses (including
the fees and expenses of counsel) incurred by the Custodian as a result of
any improper or unauthorized use of such terminal by the Customer or by any
others.
All collections of funds or other property paid or distributed in
respect of Securities in the Account, including funds involved in third-
party foreign exchange transactions, shall be made at the risk of the
Customer.
Subject to the exercise of reasonable care, the Custodian shall have
no liability for any loss occasioned by delay in the actual receipt of
notice by the Custodian or by a Subcustodian of any payment, redemption or
other transaction regarding Securities in the Account in respect of which
the Custodian has agreed to take action as provided in Section 3 hereof.
The Custodian shall not be liable for any loss resulting from, or caused
by, or resulting from acts of governmental authorities (whether de jure or
de facto), including, without limitation, nationalization, expropriation,
and the imposition of currency restrictions; devaluations of or
fluctuations in the value of currencies; changes in laws and regulations
applicable to the banking or securities industry; market conditions that
prevent the orderly execution of securities transactions or affect the
value of Property; acts of war, terrorism, insurrection or revolution;
strikes or work stoppages; the inability of a local clearing and settlement
system to settle transactions for reasons beyond the control of the
Custodian; hurricane, cyclone, earthquake, volcanic eruption, nuclear
fusion, fission or radioactivity, or other acts of God.
The Custodian shall have no liability in respect of any loss, damage
or expense suffered by the Customer, insofar as such loss, damage or
expense arises from the performance of the Custodian's duties hereunder by
reason of the Custodian's reliance upon records that were maintained for
the Customer by entities other than the Custodian prior to the Custodian's
employment under this Agreement.
The provisions of this Section shall survive termination of this
Agreement.
16. Investment Limitations and Legal or Contractual Restrictions or
Regulations. The Custodian shall not be liable to the Customer and the
Customer agrees to indemnify the Custodian and its nominees, for any loss,
damage or expense suffered or incurred by the Custodian or its nominees
arising out of any violation of any investment restriction or other
restriction or limitation applicable to the Customer pursuant to any
contract or any law or regulation. The provisions of this Section shall
survive termination of this Agreement.
17. Fees and Expenses. The Customer agrees to pay to the Custodian
such compensation for its services pursuant to this Agreement as may be
mutually agreed upon in writing from time to time and the Custodian's
reasonable out-of-pocket or incidental expenses in connection with the
performance of this Agreement, including (but without limitation) legal
fees as described herein and/or deemed necessary in the judgment of the
Custodian to keep safe or protect the Property in the Account. The initial
fee schedule is attached hereto as Exhibit B. The Customer hereby agrees
to hold the Custodian harmless from any liability or loss resulting from
any taxes or other governmental charges, and any expense related thereto,
which may be imposed, or assessed with respect to any Property in the
Account and also agrees to hold the Custodian, its Subcustodians, and their
respective nominees harmless from any liability as a record holder of
Property in the Account. The Custodian is authorized to charge the Account
for such items and the Custodian shall have a lien on the Property in the
Account for any amount payable to the Custodian under this Agreement,
including but not limited to amounts payable pursuant to the last paragraph
of Section 12 and pursuant to indemnities granted by the Customer under
this Agreement. The provisions of this Section shall survive the
termination of this Agreement.
18. Tax Reclaims. With respect to withholding taxes deducted and
which may be deducted from any income received from any Property in the
Account, the Custodian shall perform such services with respect thereto as
are described in Exhibit C attached hereto and shall in connection
therewith be subject to the standard of care set forth in such Exhibit C.
Such standard of care shall not be affected by any other term of this
Agreement.
19. Amendment, Modifications, etc. No provision of this Agreement
may be amended, modified or waived except in a writing signed by the
parties hereto. No waiver of any provision hereto shall be deemed a
continuing waiver unless it is so designated. No failure or delay on the
part of either party in exercising any power or right under this Agreement
operates as a waiver, nor does any single or partial exercise of any power
or right preclude any other or further exercise thereof or the exercise of
any other power or right.
20. Termination. This Agreement may be terminated by the Customer or
the Custodian by ninety (90) days' written notice to the other; provided
that notice by the Customer shall specify the names of the persons to whom
the Customer shall deliver the Securities in the Account and to whom the
Cash in the Account shall be paid. If notice of termination is given by
the Custodian, the Customer shall, within ninety (90) days following the
giving of such notice, deliver to the Custodian a written notice specifying
the names of the persons to whom the Custodian shall deliver the Securities
in the Account and to whom the Cash in the Account shall be paid. In
either case, the Custodian shall deliver such Securities and Cash to the
persons so specified, after deducting therefrom any amounts which the
Custodian determines to be owed to it under Sections 12, 17, and 22. In
addition, the Custodian may in its discretion withhold from such delivery
such Cash and Securities as may be necessary to settle transactions pending
at the time of such delivery. The Customer grants to the Custodian a lien
and right of setoff against the Account and all Property held therein from
time to time in the full amount of the foregoing obligations. If within
ninety (90) days following the giving of a notice of termination by the
Custodian, the Custodian does not receive from the Customer a written
notice specifying the names of the persons to whom the Custodian shall
deliver the Securities in the Account and to whom the Cash in the Account
shall be paid, the Custodian, 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 may continue to hold such Securities and Cash until a written
notice as aforesaid is delivered to the Custodian, provided that the
Custodian's obligations shall be limited to safekeeping.
21. Notices. Except as otherwise provided in this Agreement, all
requests, demands or other communications between the parties or notices in
connection herewith (a) shall be in writing, hand delivered to sent by
telex, cable, facsimile or other means of electronic communication agreed
upon by the parties hereto addressed, if to the Customer, to:
Short/Intermediate U.S. Government Securities Portfolio
Signature Financial
6 St. James Avenue
Boston, MA 02116
Attention: Thomas M. Lenz
Phone: (617) 423-0800
Fax: (617) 542-5815
with a copy to:
Bankers Trust Company
4 Albany Street, 2nd Floor
New York, NY 10006
Attention: William O'Dell
Phone: (212) 250-2838
Fax: (212) 250-4462
if to the Custodian, to:
Bankers Trust Company
16 Wall Street, 4th Floor
New York, NY 10005
Attention: Vince Fiordimondo
Phone: (212) 618-3602
Fax: (212) 618-3823
or in either case to such other address as shall have been furnished to the
receiving party pursuant to the provisions hereof and (b) shall be deemed
effective when received, or, in the case of a telex, when sent to the
proper number and acknowledged by a proper answerback.
22. Security for Payment. To secure payment of all obligations due
hereunder, the Customer hereby grants to Custodian a continuing security
interest in and right of setoff against the Account and all Property held
therein from time to time in the full amount of such obligations. Should
the Customer fail to pay promptly any amounts owed hereunder, Custodian
shall be entitled to use available Cash in the Account and to dispose of
Securities in the Account as is necessary. In any such case and without
limiting the foregoing, Custodian shall be entitled to take such other
action(s) or exercise such other options, powers and rights as Custodian
now or hereafter has a secured creditor under the New York Uniform
Commercial Code or any other applicable law.
23. Representations and Warranties.
(a) The Customer hereby represents and warrants to the Custodian that:
(i) the employment of the Custodian and the terms of this
Agreement do not violate any obligation by which the Customer is bound,
whether arising by contract, operation of law or otherwise;
(ii) this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding upon the Customer in
accordance with its terms; and
(iii) the Customer will deliver to the Custodian such
evidence of such authorization as the Custodian may reasonably require,
whether by way of a certified resolution or otherwise.
(b) The Custodian hereby represents and warrants to the Customer that:
(i) its employment as Custodian and the terms of this Agreement
do not violate any obligation by which the Custodian is bound, whether
arising by contract, operation of law or otherwise;
(ii) this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding upon the Custodian
in accordance with its terms;
(iii) the Custodian will deliver to the Customer such
evidence of such authorization as the Customer may reasonably require,
whether by way of a certified resolution or otherwise; and
(iv) Custodian is qualified as a custodian under Section 26(a) of
the 1940 Act and warrants that it will remain so qualified or upon ceasing
to be so qualified shall promptly notify the Customer in writing.
24. 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 either party, but shall bind the successors in interest of the Customer
and the Custodian.
25. Publicity. Customer shall furnish to Custodian at its office
referred to in Section 21 above, prior to any distribution thereof, copies
of any material prepared for distribution to any persons who are not
parties hereto that refer in any way to the Custodian, provided that the
Customer may refer in its prospectus and other documents to the Custodian
in the manner set forth in Exhibit D attached to this contract. Customer
shall not distribute or permit the distribution of such materials if
Custodian reasonably objects in writing within ten (10) business days of
receipt thereof (or such other time as may be mutually agreed) after
receipt thereof. The provisions of this Section shall survive the
termination of this Agreement.
26. Representative Capacity and Binding Obligation. Notice is hereby
given that this Agreement is not executed on behalf of the Trustees of the
Customer as individuals, and the obligations of this Agreement are not
binding upon any of the Trustees, officers or shareholders of the Customer
individually but are biding only upon the assets and property of the
Customer.
The Custodian agrees that no shareholder, trustee or officer of the
Customer may be held personally liable or responsible for any obligations
of the Customer arising out of this Agreement.
27. Affiliation Between Custodian and Adviser and Customer. It is
understood that the trustees, officers, employees, agents and shareholders
of the Customer, and the officers, directors, employees, agents and
shareholders of the Customer's Investment Adviser, Bankers Trust Company
(`Adviser''), are or may be interested in Custodian as directors,
officers, employees, agents, stockholders, or otherwise, and that the
directors, officers, employees, agents or stockholders of Custodian may be
interested in the Customer as trustees, officers, employees, agents,
shareholders, or otherwise, or in Adviser as officers, directors,
employees, agents, shareholders or otherwise.
(i) No trustee, officer, employee or agent of the Customer, and no
officer, director, employee or agent of the Adviser acting pursuant to
any provision of the Investment Advisory Agreement (the `Advisory
Agreement') between the Customer and Adviser, shall have physical
access to the assets of the Customer held by Custodian or be
authorized or permitted to withdraw any investments of the Customer,
nor shall Custodian deliver any assets of the Customer to any such
person. No officer, director, employee or agent of Custodian who
holds any similar position with the Customer or who performs duties
under the Advisory Agreement shall have access to the assets of the
Trust.
(ii) Subject to Section 14 hereof, nothing in this Section 27 shall
prohibit any officer, employee or agent of the Customer, or any
officer, employee or agent of the Adviser, from giving Instructions to
Custodian as long as no such Instruction results in delivery or of
access to assets of the Customer prohibited by subclause (i) of this
Section 27.
28. Submission to Jurisdiction. Any suit, action or proceeding
arising out of this Agreement may be instituted in any State or Federal
court sitting in the City of New York, State of New York, United States of
America, and the Customer irrevocably submits to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding and
waives, to the fullest extent permitted by law, any objection which it may
now or hereafter have to the laying of venue of any such suit, action or
proceeding brought in such a court and any claim that such suit, action or
proceeding was brought in an inconvenient forum.
29. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement
shall become effective when one or more counterparts have been signed and
delivered by each of the parties hereto.
30. Confidentiality. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all
information provided by each party to the other regarding its business and
operations. All confidential information provided by a party hereto shall
be used by any other party hereto solely for the purpose of rendering
services pursuant to this Agreement and, except as may be required in
carrying out this Agreement, shall not be disclosed to any third party
without the prior consent of such providing party. The foregoing shall not
be applicable to any information that is publicly available when provided
or theraeafter becomes publicly available other than through a breach of
this Agreement, or that is required or requested to be disclosed by any
bank or other regulatory examiner of the Custodian, Customer, or any
Subcustodian, any auditor of the parties hereto, by judicial or
administrative process or otherwise by applicable law or regulation.
31. Severability. If any provision of this Agreement is determined
to be invalid or unenforceable, such determination shall not affect the
validity or enforceability of any other provision of this Agreement.
32. Headings. The heading of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
SHORT/INTERMEDIATE U.S.
GOVERNMENT SECURITIES PORTFOLIO
By: /s/ Thomas M. Lenz
Name: Thomas M. Lenz
Title: Secretary
BANKERS TRUST COMPANY
By: /s/ John P. Zori
Name: John P. Zori
Title: Vice President
EXHIBIT A
To Custodian Agreement dated as of July 1, 1996 between Bankers Trust
Company and Short/Intermediate U.S. Government Securities Portfolio
PROXY SERVICE
The following is a description of the Proxy Service referred to in
Section 10 of the above referred to Custodian Agreement. Terms used herein
as defined terms shall have the meanings ascribed to them therein unless
otherwise defined below.
The Custodian provides a service, described below, for the
transmission of corporate communications in connection with shareholder
meetings relating to Securities held in Argentina, Australia, Austria,
Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Indonesia,
Ireland, Italy, Japan, Korea, Malaysia, Mexico, Netherlands, New Zealand,
Pakistan, Poland, Singapore, South Africa, Spain, Sri Lanka, Sweden, United
Kingdom, United States, and Venezuela. For the United States and Canada,
the term `corporate communications'' means the proxy statements or meeting
agenda, proxy cards, annual reports and any other meeting materials
received by the Custodian. For countries other than the United States and
Canada, the term `corporate communications'' means the meeting agenda only
and does not include any meeting circulars, proxy statements or any other
corporate communications furnished by the issuer in connection with such
meeting. Non-meeting related corporate communications are not included in
the transmission service to be provided by the Custodian except upon
request as provided below.
The Custodian's process for transmitting and translating meeting
agendas will be as follows:
1) If the meeting agenda is not provided by the issuer in the
English language, and if the language of such agenda is in the
official language of the country in which the related security is
held, the Custodian will as soon as practicable after receipt of
the original meeting agenda by a Subcustodian provide an English
translation prepared by that Subcustodian.
2) If an English translation of the meeting agenda is furnished, the
local language agenda will not be furnished unless requested.
Translations will be free translations and neither the Custodian nor
any Subcustodian will be liable or held responsible for the accuracy
thereof or any direct or indirect consequences arising therefrom, including
without limitation arising out of any action taken or omitted to be taken
based thereon.
If requested, the Custodian will, on a reasonable efforts basis,
endeavor to obtain any additional corporate communication such as annual or
interim reports, proxy statements, meeting circulars, or local language
agenda, and provide them in the form obtained.
Timing in the voting process is important and, in that regard, upon
receipt by the Custodian of notice from a Subcustodian, the Custodian will
provide a notice to the Customer indicating the deadline for receipt of its
instructions to enable the voting process to take place effectively and
efficiently. As voting procedures will vary from market to market,
attention to any required procedures will be very important. Upon timely
receipt of voting instructions, the Custodian will promptly forward such
instructions to the applicable Subcustodian. If voting instructions are
not timely received, the Custodian shall have no liability or obligation to
take any action.
For Securities held in markets other than those set forth in the first
paragraph, the Custodian will not furnish the material described above or
seek voting instructions. However, if requested to exercise voting rights
at a specific meeting, the Custodian will endeavor to do so on a reasonable
efforts basis without any assurance that such rights will be so exercised
at such meeting.
If the Custodian or any Subcustodian incurs extraordinary expenses in
exercising voting rights related to any Securities pursuant to appropriate
instructions or directions (e.g., by way of illustration only and not by
way of limitation, physical presence is required at a meeting and/or travel
expenses are incurred), such expenses will be reimbursed out of the Account
unless other arrangements have been made for such reimbursement.
It is the intent of the Custodian to expand the Proxy Service to
include jurisdictions which are not currently included as set forth in the
second paragraph hereof. The Custodian will notify the Customer as to the
inclusion of additional countries or deletion of existing countries after
their inclusion or deletion and this Exhibit A will be deemed to be
automatically amended to include or delete such countries as the case may
be.
Dated as of: July 1, 1996 SHORT/INTERMEDIATE U.S.
GOVERNMENT SECURITIES PORTFOLIO
By: /s/ Thomas M. Lenz
Name: Thomas M. Lenz
Title: Secretary
BANKERS TRUST COMPANY
By: /s/ John P. Zori
Name: John P. Zori
Title: Vice President
EXHIBIT B
To Custodian Agreement dated as of July 1, 1996 between Bankers Trust
Company and Short/Intermediate U.S. Government Securities Portfolio.
CUSTODY FEE SCHEDULE
This Exhibit B shall be amended upon delivery by the Custodian of a new
Exhibit B to the Customer and acceptance thereof by the Customer and shall
be effective as of the date of acceptance by the Customer or a date agreed
upon between the Custodian and the Customer.
EXHIBIT C
To Custodian Agreement dated as of July 1, 1996 between Bankers Trust
Company and Short/Intermediate U.S. Government Securities Portfolio.
TAX RECLAIMS
Pursuant to Section 18 of the above referred to Custodian Agreement,
the Custodian shall perform the following services with respect to
withholding taxes imposed or which may be imposed on income from Property
in the Account. Terms used herein as defined terms shall unless otherwise
defined have the meanings ascribed to them in the above referred to
Custodian Agreement.
When withholding tax has been deducted with respect to income from any
Property in an Account, the Customer will actively pursue on a reasonable
efforts basis the reclaim process, provided that the Custodian shall not be
required to institute any legal or administrative proceeding against any
Subcustodian or other person. The Custodian will provide fully detailed
advices/vouchers to support reclaims submitted to the local authorities by
the Custodian or its designee. In all cases of withholding, the Custodian
will provide full details to the Customer. If exemption from withholding
at the source can be obtained in the future, the Custodian will notify the
Customer and advise what documentation, if any, is required to obtain the
exemption. Upon receipt of such documentation from the Customer, the
Custodian will file for exemption on the Customer's behalf and notify the
Customer when it has been obtained.
In connection with providing the foregoing service, the Custodian
shall be entitled to apply categorical treatment of the Customer according
to the Customer's nationality, the particulars of its organization and
other relevant details that shall be supplied by the Customer. It shall be
the duty of the Customer to inform the Customer of any change in the
organization, domicile or other relevant fact concerning tax treatment of
the Customer and further to inform the Custodian if the customer is or
becomes the beneficiary of any special ruling or treatment not applicable
to the general nationality and category or entity of which the Customer is
a part under general laws and treaty provisions. The Custodian may rely on
any such information provided by the Customer.
In connection with providing the foregoing service, the Custodian may
also rely on professional tax services published by a major international
accounting firm and/or advice received from a Subcustodian in the
jurisdictions in question. In addition, the Custodian may seek the advice
of counsel or other professional tax advisers in such jurisdictions. The
Custodian is entitled to rely, and may act, on information set forth in
such services and on advice received from a Subcustodian, counsel or other
professional tax advisers and shall be without liability to the Customer
for any action reasonably taken or omitted pursuant to information
contained in such services or such advice.
Dated as of: July 1, 1996SHORT/INTERMEDIATE U.S.
GOVERNMENT SECURITIES PORTFOLIO
By: /s/ Thomas M. Lenz
Name: Thomas M. Lenz
Title: Secretary
BANKERS TRUST COMPANY
By: /s/ John P. Zori
Name: John P. Zori
Title: Vice President
EXHIBIT D
To Custodian Agreement dated as of July 1, 1996 between Bankers Trust
Company and Short/Intermediate U.S. Government Securities Portfolio.
APPROVED REFERENCE TO CUSTODIAN
`Bankers Trust acts as Custodian of the assets of the Trust and the
Portfolio..."
