AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 24, 1996
FILE NO. 811-06075
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 6
NY TAX FREE MONEY PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
6 St. James Avenue, Boston, Massachusetts 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 617-423-0800
Philip W. Coolidge, 6 St. James Avenue, Boston, Massachusetts 02116
(Name and Address of Agent for Service)
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BT0070D
EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant pursuant to
Section 8(b) of the Investment Company Act of 1940, as amended. However,
beneficial interests in the Registrant are not being registered under the
Securities Act of 1933, as amended (the "1933 Act"), because such interests will
be issued solely in private placement transactions that do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act.
Investments in the Registrant 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 beneficial
interests in the Registrant.
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BT0070D
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.
NY Tax Free Money Portfolio (the "Portfolio") is a no-load, 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 will attempt to achieve its investment
objectives by investing, under normal market conditions, no less than 80% of its
net assets in obligations issued by states and their authorities, agencies,
instrumentalities, and political subdivisions which are exempt from Federal
income taxes ("Municipal Obligations") and no less than 65% of its net assets in
Municipal Obligations of the State of New York and its authorities, agencies,
instrumentalities and political subdivisions, as well as of certain other
governmental issuers, such as Puerto Rico, which are also exempt from New York
State and City income taxes ("New York Municipal Obligations"). While the
Portfolio is authorized to invest up to 20% of its net assets in taxable
securities, it is anticipated that ordinarily the Portfolio's assets will be
substantially fully invested in tax exempt New York Municipal Obligations.
Dividends paid by the Portfolio that are derived from interest attributable to
New York Municipal Obligations will be excluded from gross income taxes.
Dividends derived from interest on Municipal Obligations other than New York
Municipal Obligations will be exempt from Federal income tax, but will be
subject to New York State and New York City income taxes.
The Portfolio may invest in securities of other investment companies
that invest in high quality, short-term securities in which the Portfolio could
itself invest and that determine their net assets value per share based on the
amortized cost method, provided that the investments are within the limits
prescribed by the Investment Company Act of 1940, as amended (the "1940 Act").
Under the 1940 Act, the Portfolio may not invest in securities of other
investment companies, except in connection with a merger, consolidation,
acquisition or reorganization, if: (a) more than 10% of the market value of the
Portfolio's total assets would be invested in securities of other investment
companies; (b) more than 5% of the market value of the Portfolio's total assets
would be
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invested in the securities of any one investment company; or (c) the Portfolio
would own more than 3% of any other investment company's voting securities.
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
(the "SEC"). 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, acting under the
supervision of and procedures adopted by the Board of Trustees, will also
determine that all securities purchased by the Portfolio present minimal credit
risks. 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.
NY Tax Free Money Portfolio is classified as a non-diversified
investment company under the 1940 Act, which means that the Portfolio is not
limited by the 1940 Act in the proportion of its assets that it may invest in
obligations of a single issuer. However, the Portfolio intends to conduct its
operations so that each of its Investors may qualify as a "regulated investment
company" for purposes of the Internal Revenue Code of 1986 (the "Code"), which
will relieve each investor of any liability for Federal income tax to the extent
its earnings are distributed to its investors. To permit such qualification,
among other requirements, the Portfolio will limit its investments so that, at
the close of each quarter of the taxable year, (i) not more than 25% of the
market value of the Portfolio's total assets will be invested in the securities
of a single issuer, and (ii) with respect to 50% of the market value of its
total assets, not more than 5% of the market value of its total assets will be
invested in the securities of a single issuer. The Portfolio's assumption of
large positions in the obligations of a small number of issuers may cause the
Portfolio's yield to fluctuate to a greater extent than that of a diversified
company, such as NY Tax Free Money Portfolio, as a result of changes in the
financial condition or in the market's assessment of the issuers.
MUNICIPAL OBLIGATIONS. The two principal classifications of Municipal
Obligations consist of "notes" and "bonds". Municipal Obligations are further
classified as "general obligation" and "revenue" issues and the securities held
by the Portfolio may include "moral obligation" issues, which are normally
issued by special purpose authorities. General obligation bonds are secured by
the issuer's pledge of its full faith, credit and taxing power for the payment
of principal and interest. Revenue bonds are payable only from the revenues
derived from a particular facility or class of facilities or in some cases, from
the proceeds of a special excise tax or other specific revenue source, such as
the
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user of the facility being financed. The Portfolio may invest in "private
activity" bonds, described above, which as a general rule will be revenue bonds
and, accordingly, are not payable from the unrestricted revenues of the issuer.
Among other instruments, the Portfolio may purchase tax-exempt commercial paper
and short-term municipal notes, such as tax anticipation notes, bond
anticipation notes, revenue anticipation notes, construction loan notes and
other forms of short-term loans. These notes are issued with a short-term
maturity in anticipation of the receipt of tax funds, the proceeds of bond
placements or other revenues. The Portfolio may also acquire participations in
privately negotiated loans to municipal borrowers. The types, forms and
offerings of Municipal Obligations are continually changing and the Portfolio
will invest in instruments that may be developed and offered in the market place
in the future, provided they meet the Portfolio's investment quality and Federal
income tax criteria.
Interest income on certain types of private activity bonds issued after
August 7, 1986 to finance non-governmental activities is a specific tax
preference item for purposes of the Federal individual and corporate alternative
minimum taxes. Individual and corporate holders of interests in the Portfolio
may be subject to a Federal alternative minimum tax to the extent the
Portfolio's income is derived from interest on these bonds. Accordingly, these
private activity bonds are not included in the term "Municipal Obligations" for
purposes of determining compliance with the 80% test described above. However,
while up to 20% of the Portfolio's net assets may be invested in these private
activity bonds, it is anticipated that they will ordinarily not constitute a
significant portion of the securities held by the Portfolio. Dividends paid by
the Fund which are derived from interest income on Municipal Obligations are a
"current earnings" adjustment item for purposes of the Federal corporate
alternative minimum tax.
Certain Municipal Obligations bear interest at rates that are not fixed,
but that vary with changes in specified market rates or indices. Certain of
these obligations may carry a demand feature that permits the Portfolio to
tender them back to the issuer or remarketing agent at part value prior to
maturity. The Portfolio may invest in floating rate and variable rate
obligations carrying stated maturities in excess of one year at the date of
purchase by the Portfolio if the obligations carry demand features that comply
with conditions established by the SEC or its staff. The Portfolio will limit
its purchases of floating rate and variable rate Municipal Obligations to those
meeting the quality standards set forth above. Frequently these obligations are
secured by letters of credit or other credit support arrangements provided by
banks. The quality of the underlying credit or of the bank, as the case may be,
must also be equivalent to the quality standards set forth above, as determined
by Bankers Trust under the supervision of the Board of Trustees.
The Portfolio may invest in the following Municipal Obligations: (i)
notes rated MIG-1 or VMIG-1 by Moody's Investors Service, Inc. ("Moody's") or
SP-1 or higher by Standard & Poor's Corporation ("S&P") (or an equivalent rating
by another NRSRO) or which are considered to be of comparable quality by Bankers
Trust pursuant to guidelines established and maintained in good faith by the
Board of Trustees or (ii) other Municipal Obligations issued by issuers with
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municipal notes outstanding, comparable in priority and security, meeting the
rating criteria described herein or, if no such notes are outstanding or if they
are unrated, are rated at least AA by S&P or Aa by Moody's. The Portfolio may
also invest in municipal notes rated MIG-2 or VMIG-2 by Moody's or SP-2 by S&P
when Bankers Trust deems it advisable.
The Portfolio may invest in Municipal Obligations the income on which
may be derived from economically related projects or projects of a similar type.
In addition, the Portfolio may invest in private activity bonds the interest on
which is not subject to an alternative minimum tax, as described above, and may
invest without limitation in Municipal Obligations backed by letters of credit
or guarantees issued by banks or other financial institutions.
The Portfolio's ability to achieve its investment objectives is
dependent upon the ability of the issuers of New York Municipal Obligations to
meet their continuing obligations for the payment of principal and interest. New
York State and New York City face long-term economic problems that could
seriously affect their ability and that of other issuers of New York Municipal
Obligations to meet their financial obligations.
Certain substantial issuers of New York Municipal Obligations (including
issuers whose obligations may be acquired by the Portfolio) have experienced
serious financial difficulties in recent years. These difficulties have at times
jeopardized the credit standing and impaired the borrowing abilities of all New
York issuers and have generally contributed to higher interest costs for their
borrowings and fewer markets for their outstanding debt obligations. In recent
years, several different issues of municipal securities of New York State and
its agencies and instrumentalities and of New York City have been downgraded by
S&P and Moody's. On the other hand, strong demand for New York Municipal
Obligations has more recently had the effect of permitting New York Municipal
Obligations to be issued with yields relatively lower, and after issuance, to
trade in the market at prices relatively higher, than comparably rated municipal
obligations issued by other jurisdictions. A recurrence of the financial
difficulties previously experienced by certain issuers of New York Municipal
Obligations could result in defaults or declines in the market values of those
issuers' existing obligations and, possibly, in the obligations of other issuers
of New York Municipal Obligations. Although as of the date of this Prospectus,
no issuers of New York Municipal Obligations are in default with respect to the
payment of their municipal obligations, the occurrence of any such default could
affect adversely the market values and marketability of all New York Municipal
Obligations and, consequently, the net asset value of the Portfolio's portfolio.
Other considerations affecting the Portfolio's investments in New York
Municipal Obligations are summarized in Part B.
TAXABLE INVESTMENTS. When, in the opinion of Bankers Trust, adverse
market conditions exist for Municipal Obligations and a "defensive" investment
posture is warranted, the Portfolio may temporarily invest more than 20% of its
total assets in "Taxable Investments," which are money market instruments having
maturity and quality characteristics comparable to those discussed above for
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Municipal Obligations, but that produce interest not exempt from Federal income
taxation. Periods when a defensive posture is warranted include those periods
when the Portfolio's monies available for investment exceed the Municipal
Obligations available for purchase that meet the Portfolio's rating, maturity
and other investment criteria. The Portfolio may invest in Taxable Investments
in anticipation of withdrawals or pending the investment in Municipal
Obligations of proceeds from additional investments in the Portfolio or from the
sale of securities held by the Portfolio. The Portfolio also has the right to
hold cash reserves as it deems necessary for temporary defensive purposes. While
the Portfolio is authorized to invest up to 20% of its net assets under normal
market conditions in Taxable Investments, it is anticipated that they will not
ordinarily constitute a significant portion of the assets held by the Portfolio.
Taxable Investments will be limited to: (i) U.S. Government securities;
(ii) commercial paper and certificates of deposit, bankers' acceptances and
short-term obligations of foreign and domestic banks with total assets of $1
billion or more, in each case rated A-1 or higher by S&P, Prime-1 by Moody's,
or, if not rated, believed to be of equivalent investment quality by Bankers
Trust acting under the supervision of the Board of Trustees; (iii) short-term
corporate debt obligations of issuers which have commercial paper outstanding
meeting the rating requirements described herein or, if such commercial paper is
unrated or if no such commercial paper is outstanding, are rated at least AA by
S&P and Aa by Moody's; and (iv) repurchase agreements with an underlying
security that would otherwise qualify for investment by the Portfolio.
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 will invest at
least 80% of its net assets in Municipal Obligations under normal market
conditions. 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 (including floating and variable rate Municipal Obligations having a
demand feature of not more than seven calendar days), 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.
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Additional Investment Techniques -- The Portfolio may also purchase
reverse repurchase agreements, participation interests and standby commitments.
See Part B for a more detailed description of reverse repurchase agreements,
participation interests and standby commitments.
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 ("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, 1995, Bankers Trust New York Corporation was the ninth largest bank holding
company in the United States with total assets of approximately $104 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
$200 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.
All orders for investment transactions on behalf of the Portfolio are placed by
Bankers Trust with broker-dealers and other financial intermediaries that it
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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. State laws on this issue
may differ from the interpretations of relevant Federal law and banks and
financial institutions may be required to register as dealers pursuant to state
securities law.
Under an 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 Signature Broker-Dealer Services, Inc. ("Signature"), the Portfolio's
placement agent and sub-administrator, including investment advisory and
administration and service fees, fees for necessary professional services, 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. 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
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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
percentage of the aggregate value of the Portfolio's outstanding interests) 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 net asset value 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 1940 Act). This
determination is made twice during each such day as of 12:00 noon, New York 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., New York 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 net asset value 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 net asset value 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
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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 the net asset value next determined if an order is
received by the Portfolio by the designated cutoff time for each accredited
investor. The net asset value 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 Signature reserve the right to cease accepting
investments at any time or to reject any investment order.
The placement agent for the Portfolio is Signature. The principal
business address of Signature is 6 St. James Avenue, Boston, Massachusetts
02116. Signature receives no additional compensation for serving as the
placement agent for the Portfolio.
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ITEM 8. REDEMPTION OR REPURCHASE.
An investor in the Portfolio may withdraw all or any portion of its
investment at the net asset value 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.
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BT0070D
PART B
ITEM 10. COVER PAGE.
Not applicable.
ITEM 11. TABLE OF CONTENTS. PAGE
General Information and History . . . . . . . . . . . B-1
Investment Objectives and Policies . . . . . . . . . B-1
Management of the Fund . . . . . . . . . . . . . . . B-21
Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . . . B-24
Investment Advisory and Other Services . . . . . . . B-24
Brokerage Allocation and Other Practices . . . . . . B-26
Capital Stock and Other Securities . . . . . . . . . B-27
Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . . B-28
Tax Status . . . . . . . . . . . . . . . . . . . . . B-29
Underwriters . . . . . . . . . . . . . . . . . . . . B-30
Calculation of Performance Data . . . . . . . . . . . B-30
Financial Statements . . . . . . . . . . . . . . . . B-30
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 NY Tax Free Money Portfolio. This Part B should only be read in
conjunction with Part A.
Municipal Obligations. The two principal classifications of Municipal
Obligations are "notes" and "bonds."
MUNICIPAL NOTES. Municipal notes generally fund short-term capital needs
and have maturities of one year or less. The Portfolio may invest in Municipal
Notes, which include:
TAX ANTICIPATION NOTES. Tax anticipation notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenue, such as income, sales, use and
business taxes, and are payable from these specific future taxes.
REVENUE ANTICIPATION NOTES. Revenue anticipation notes are issued in
expectation of receipt of other types of revenue, such as Federal revenues
available under Federal revenue sharing programs.
<PAGE>
B-2
BOND ANTICIPATION NOTES. Bond anticipation notes are issued to provide
interim financing until long-term financing can be arranged. In most cases, the
long-term Bonds provide funds for the repayment of these Notes.
MISCELLANEOUS, TEMPORARY AND ANTICIPATORY INSTRUMENTS. These instruments
may include notes issued to obtain interim financing pending entering into
alternate financial arrangements, such as receipt of anticipated Federal, state
or other grants or aid, passage of increased legislative authority to issue
longer-term instruments or obtaining other refinancing.
CONSTRUCTION LOAN NOTES. Construction loan notes are sold to provide
construction financing. Permanent financing, the proceeds of which are applied
to the payment of construction loan notes, is sometimes provided by a commitment
of the GNMA to purchase the loan, accompanied by a commitment by the Federal
Housing Administration to insure mortgage advances thereunder. In other
instances, permanent financing is provided by commitments of banks to purchase
the loan. The Portfolio will only purchase construction loan notes that are
subject to permanent GNMA or bank purchase commitments.
TAX-EXEMPT COMMERCIAL PAPER. Tax-exempt commercial paper is a short-term
obligation with a stated maturity of 365 days or less. It is issued by agencies
of state and local governments to finance seasonal working capital needs or as
short-term financing in anticipation of longer-term financing.
MUNICIPAL BONDS. Municipal bonds generally fund longer-term capital
needs than municipal notes and have maturities exceeding one year when issued.
The Portfolio may invest in municipal bonds, but only to the extent that their
remaining maturities are determined not to exceed thirteen months under rules
promulgated under the Investment Company Act of 1940, as amended (the "1940
Act"). Municipal bonds include:
GENERAL OBLIGATION BONDS. Issuers of general obligation bonds include
states, counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind general obligation bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.
REVENUE BONDS. The principal security for a revenue bond is generally
the net revenues derived from a particular facility, group of facilities or, in
some cases, the proceeds of a special excise tax or other specific revenue
source. Revenue bonds are issued to finance a wide variety of capital projects,
including electric, gas, water and sewer systems; highways, bridges, and
tunnels; port and airport facilities; colleges and universities; and hospitals.
Although the principal security behind these bonds may vary, many provide
additional security in the form of a debt service reserve fund that may be used
to make principal and interest payments on the issuer's obligations. Housing
finance authorities have a wide range of security, including partially or fully
insured mortgages, rent
<PAGE>
B-3
subsidized and/or collateralized mortgages, certificates of deposit and/or the
net revenues from housing or other public projects. Some authorities provide
further security in the form of a state's ability (without obligation) to make
up deficiencies in the debt service reserve fund.
PRIVATE ACTIVITY BONDS. Private activity bonds, which are considered
Municipal Obligations if the interest paid thereon is excluded from gross income
for Federal income tax purposes and is not a specific tax preference item for
Federal individual and corporate alternative minimum tax purposes, are issued by
or on behalf of public authorities to raise money to finance various
privately-operated facilities such as manufacturing facilities, certain hospital
and university facilities and housing projects. These bonds are also used to
finance public facilities such as airports, mass transit systems and ports. The
payment of the principal and interest on these bonds is dependent solely on the
ability of the facility's user to meet its financial obligations and generally
the pledge, if any, of real and personal property so financed as security for
payment.
REPURCHASE AGREEMENTS. The Portfolio may engage in repurchase agreement
transactions with banks and government securities dealers 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 banks and dealers 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 it is maintained
at the required level.
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
<PAGE>
B-4
below the repurchase price of those securities. Reverse repurchase agreements
are considered to be borrowings by the Portfolio.
PARTICIPATION INTERESTS. The Portfolio may purchase from financial
institutions participation interests in Municipal Obligations. A participation
interest gives the Portfolio an undivided interest in the Municipal Obligation
in the proportion that the Portfolio's participation interest bears to the total
principal amount of the Municipal Obligation. These instruments may be variable
rate or fixed rate with remaining maturities of one year or less. If the
participation interest is unrated or has been given a rating below that which
otherwise is permissible for purchase by the Portfolio, the participation
interest will be backed by an irrevocable letter of credit or guarantee of a
bank that the Board of Trustees has determined meets the prescribed quality
standards for the Portfolio, or the payment obligation otherwise will be
collateralized by U.S. Government securities or other securities deemed
appropriate by the Board of Trustees, or, in the case of an unrated
participation interest that is not backed or collateralized as described above,
but that otherwise meets the Trustees' procedures and standards for
creditworthiness and high quality, the underlying Municipal Obligation must be a
permissible investment for the Portfolio. For certain participation interests,
the Portfolio will have the right to demand payment, on seven days' notice, for
all or any part of the Portfolio's participation interest in the Municipal
Obligation, plus accrued interest. As to these instruments, the Portfolio
intends to exercise its right to demand payment from the issuer of the demand
feature only upon a default under the terms of the Municipal Obligation, as
needed to provide liquidity to meet redemptions or to maintain a high quality
investment portfolio. In the event an issuer of a demand feature defaulted on
its payment obligation, the Portfolio might be unable to dispose of the
participation interest because of the absence of a secondary market and could,
for this or other reasons, suffer a loss to the extent of the default. The
Portfolio does not currently intend to invest more than 5% of its total assets
in participation interests.
STANDBY COMMITMENTS. The Portfolio may acquire standby commitments or
"puts" solely to facilitate portfolio liquidity; the Portfolio does not intend
to exercise its rights thereunder for trading purposes. The maturity of a
Municipal Obligation is not to be considered shortened by any standby commitment
to which the obligation is subject. Thus, standby commitments do not affect the
dollar-weighted average maturity of the Portfolio.
When Municipal Obligations are subject to puts separate from the
underlying securities, no value is assigned to the put. Because of the
difficulty of evaluating the likelihood of exercise or the potential benefit of
a put, the Board of Trustees has determined that puts shall have a fair market
value of zero, regardless of whether any direct or indirect consideration was
paid.
Since the value of the put is partly dependent on the ability of the put
writer to meet its obligation to repurchase, the Portfolio's policy is to enter
into put transactions only with put writers who are approved by Bankers Trust.
It is the Portfolio's general policy to enter into put transactions only with
those put writers which are determined to present minimal credit risks. In
connection with this determination, the Board of Trustees will review regularly
<PAGE>
B-5
Bankers Trust's list of approved put writers, taking into consideration, among
other things, the ratings, if available, of their equity and debt securities,
their reputation in the municipal securities markets, their net worth, their
efficiency in consummating transactions and any collateral arrangements, such as
letters of credit securing the puts written by them. Commercial banks normally
will be members of the Federal Reserve System, and other dealers will be members
of the National Association of Securities Dealers, Inc. or members of a national
securities exchange. Other put writers will have outstanding debt rated Aa or
better by Moody's or AA or better by S&P, or will be of comparable quality in
Bankers Trust's opinion, or such put writers' obligations will be collateralized
and of comparable quality in Bankers Trust's opinion. The Board of Trustees has
directed Bankers Trust not to enter into put transactions with any put writer
that, in the judgment of Bankers Trust using the above-described criteria, is or
becomes a recognizable credit risk. The Trust is unable to predict whether all
or any portion of any loss sustained could subsequently be recovered from a put
writer in the event that a put writer should default on its obligation to
repurchase an underlying security.
The Portfolio does not currently intend to invest more than 5% of its
net assets in standby commitments.
SPECIAL CONSIDERATIONS RELATING TO NEW YORK MUNICIPAL OBLIGATIONS. Some
of the significant financial considerations relating to the Portfolio's
investment in New York Municipal Obligations are summarized below. This summary
information is not intended to be a complete description and is principally
derived from official statements relating to issues of New York Municipal
Obligations that were available prior to the date of this Statement of
Additional Information. The accuracy and completeness of the information
contained in those official statements have not been independently verified.
STATE ECONOMY. New York is the third most populous state in the nation
and has a relatively high level of personal wealth. The State's economy is
diverse with a comparatively large share of the nation's finance, insurance,
transportation, communications and services employment, and a very small share
of the nation's farming and mining activity. The State has a declining
proportion of its workforce engaged in manufacturing, and an increasing
proportion engaged in service industries. New York City (the "City"), which is
the most populous city in the State and nation and is the center of the nation's
largest metropolitan area, accounts for a large portion of the State's
population and personal income.
The State has historically been one of the wealthiest states in the
nation. For decades, however, the State has grown more slowly than the nation as
a whole, gradually eroding its relative economic position. The recession has
been more severe in the State, owing to a significant retrenchment in the
financial services industry, cutbacks in defense spending, and an overbuilt real
estate market. There can be no assurance that the State economy will not
experience worse-than-predicted results in the 1995-96 fiscal year, with
corresponding material and adverse effects on the State's projections of
receipts and disbursements.
<PAGE>
B-6
The unemployment rate in the State dipped below the national rate in the
second half of 1981 and remained lower until 1991. It stood at 6.9% in 1994. The
total employment growth rate in the State has been below the national average
since 1984 and is expected to slow to less than 0.5% in 1995. State per capita
personal income remains above the national average. State per capita income for
1994 was estimated at $25,999, which is 19.2% above the 1994 estimated national
average of $21,809. During the past ten years, total personal income in the
State rose slightly faster than the national average only in 1986 through 1989.
STATE BUDGET. The State Constitution requires the governor (the
"Governor") to submit to the State legislature (the "Legislature") a balanced
executive budget which contains a complete plan of expenditures for the ensuing
fiscal year and all moneys and revenues estimated to be available therefor,
accompanied by bills containing all proposed appropriations or reappropriations
and any new or modified revenue measures to be enacted in connection with the
executive budget. The entire plan constitutes the proposed State financial plan
for that fiscal year. The Governor is required to submit to the Legislature
quarterly budget updates which include a revised cash-basis state financial
plan, and an explanation of any changes from the previous state financial plan.
The State's budget for the 1995-96 fiscal year was enacted by the
Legislature on June 7, 1995, more than two months after the start of the fiscal
year. Prior to adoption of the budget, the Legislature enacted appropriations
for disbursements considered to be necessary for State operations and other
purposes, including all necessary appropriations for debt service. The State
financial plan for the 1995-96 fiscal year was formulated on June 20, 1995 and
was based upon the State's budget as enacted by the Legislature and signed into
law by the Governor (the "1995-96 State Financial Plan").
The 1995-96 State Financial Plan was the first to be enacted in the
administration of the Governor, who assumed office on January 1. It was the
first budget in over half a century which proposed and, as enacted, projected an
absolute year-over-year decline in disbursements in the General Fund, the
State's principal operating fund. Spending for State operations was projected to
drop even more sharply, by 4.6%. Nominal spending from all State spending
sources (I.E., excluding Federal aid) was proposed to increase by only 2.5% from
the prior fiscal year, in contrast to the prior decade when such spending growth
averaged more than 6.0% annually.
The 1995-96 State Financial Plan included actions that will have an
effect on the budget outlook for State fiscal year 1996-97 and beyond. The
Division of the Budget estimated that the 1995-96 State Financial Plan contained
actions that provide nonrecurring resources or savings totaling approximately
$900 million while the State comptroller (the "Comptroller") believed that such
amount exceeded $1 billion. In addition to this use of nonrecurring resources,
the 1995-96 State Financial Plan reflected actions that will directly affect the
State's 1996-97 fiscal year baseline receipts and disbursements. The three-year
plan to reduce State personal income taxes will decrease State tax receipts by
an estimated $1.7 billion in State fiscal year 1996-97 in addition to the amount
of reduction in State fiscal year 1995-96. Further significant reductions in the
<PAGE>
B-7
personal income tax are scheduled for the 1997-98 State fiscal year. Other tax
reductions enacted in 1994 and 1995 are estimated to cause an additional
reduction in receipts of over $500 million in 1996-97, as compared to the level
of receipts in 1995-96. Similarly, many actions taken to reduce disbursements in
the State's 1995-96 fiscal year are expected to provide greater reductions in
the State's fiscal year 1996-97. These include actions to reduce the State
workforce, reduce Medicaid and welfare expenditures and slow community mental
hygiene program development.
The State issued the first of the three required quarterly updates (the
"First Quarter Update") to the 1995-96 State Financial Plan on July 28, 1995.
The First Quarter Update projected continued balance in the State's 1995-96
State Financial Plan. Actual cash receipts and disbursements during the first
quarter of the fiscal year were impacted by the late adoption of the budget, and
fell somewhat short of original monthly cashflow estimates. Receipt variances
were mainly related to timing issues rather than changes in the forecast.
Disbursement variances were also ascribed to timing factors.
On October 2, 1995, the State Comptroller released a report on the
State's financial condition. The report identified several risks to the 1995-96
State Financial Plan and also estimated a potential imbalance in receipts and
disbursements in the 1996-97 fiscal year of at least $2.7 billion and in the
1997-98 fiscal year of at least $3.9 billion. The Governor is required to submit
a balanced budget to the State Legislature and has indicated that he will close
any potential imbalance primarily through General Fund expenditure reductions
and without increases in taxes or deferrals of scheduled tax reductions.
The State issued its second quarterly update to the 1995-96 State
Financial Plan on October 26, 1995. The Mid-Year Update projected continued
balance in the 1995-96 State Financial Plan, with estimated receipts reduced by
a net $71 million and estimated disbursements reduced by a net $30 million as
compared to the First Quarter Update. The resulting General Fund balance
decreased from $213 million in the First Quarter Update to $172 million in the
Mid-Year Update, reflecting the use of $41 million from the contingency reserve
fund for payments of litigation and disallowance expenses.
The Division of the Budget revised the cash-basis 1995-96 State
Financial Plan on December 15, 1995, in conjunction with the release of the
Executive Budget for the 1996-97 fiscal year (the "December Update" and together
with the First Quarter Update and the Mid-Year Update, the "Financial Plan
Updates"). These projections show continued balance in the State's 1995-96
Financial Plan, with estimated receipts reduced by a net $73 million and
estimated disbursements reduced by a net $73 million as compared to the Mid-Year
Update. Reductions in receipts reflect delays in estimated receipts from the
sale of State assets, and other revisions based upon operating results through
November 1995. Disbursement estimates were reduced to reflect
lower-than-expected spending through November, savings from debt refundings, and
other items which more than offset projected increases in disbursements for
school aid and tuition assistance. The resulting General Fund balance of $172
million was unchanged from the Mid-Year Update.
<PAGE>
B-8
The Governor presented his 1996-97 Executive Budget to the Legislature
on December 15, 1995, one month before the legal deadline. There can be no
assurance that the Legislature will enact the Executive Budget into law or that
the projections set forth in the Executive Budget will not differ materially and
adversely from actual results.
The Governor's Executive Budget projected balance on a cash basis in the
General Fund. It reflected a continuing strategy of substantially reduced State
spending, including programming restructurings, reductions in social welfare
spending, and efficiency and productivity initiatives. In his 1996-97 Executive
Budget, the Governor indicated that the 1996-97 General Fund financial plan
(based on current law governing spending and revenues) would have been out of
balance by almost $3.9 billion as a result of the underlying disparity between
receipts and disbursements caused by anticipated spending demands, the effect of
current and prior-year tax changes, and the use of one-time revenues to fund
recurring spending in the 1995-96 State Financial Plan. The Executive Budget
proposes to close this gap primarily through a series of spending reductions and
cost containment measures.
To make progress toward addressing recurring budgetary imbalances, the
1996-97 Executive Budget proposes significant actions to align recurring
receipts and disbursements in future fiscal years. The Governor has proposed
closing the 1996-97 fiscal year imbalance primarily through General Fund
expenditure reductions and without increases in taxes or deferrals of scheduled
tax reductions. However, there can be no assurance that the Legislature will
enact the Governor's proposals or that the State's actions will be sufficient to
preserve budgetary balance or to align recurring receipts and disbursements in
future fiscal years. The 1996-97 Executive Budget includes action that will have
an effect on the budget outlook for the State fiscal year 1997-98 and beyond.
The net impact of these and other factors is expected to produce a potential
imbalance in receipts and disbursements in State fiscal year 1997-98, which the
Governor proposes to close with further spending reductions. The Executive
Budget contains projections of a potential imbalance in the 1997-98 fiscal year
of $1.4 billion and in the 1998-99 fiscal year of $2.5 billion, assuming
implementation of the 1996-97 Executive Budget recommendations.
The 1995-96 State Financial Plan and the Financial Plan Updates were
based on a number of assumptions and projections. Because it is not possible to
predict accurately the occurrence of all factors that may affect the 1995-96
State Financial Plan or the Financial Plan Updates, actual results could differ
materially and adversely from projections made at the outset of a fiscal year.
There can be no assurance that the State will not face substantial potential
budget gaps in future years resulting from a significant disparity between tax
revenues projected from a lower recurring receipts base and the spending
required to maintain State programs at current levels. To address any potential
budgetary imbalance, the State may need to take significant actions to align
recurring receipts and disbursements in future fiscal years.
A significant risk to the 1995-96 State Financial Plan projections arise
from tax legislation under consideration by Congress and the President.
Congressionally-adopted retroactive changes to federal tax treatment of capital
<PAGE>
B-9
gains would flow through automatically to the State personal income tax. Such
changes, if ultimately enacted, could produce revenue losses in both the 1995-96
fiscal year and the 1996-97 fiscal year.
RECENT FINANCIAL RESULTS. The General Fund is the principal operating fund of
the State and is used to account for all financial transactions, except those
required to be accounted for in another fund. It is the State's largest fund and
receives almost all State taxes and other resources not dedicated to particular
purposes.
The State reported a General Fund operating deficit of $1.426 billion
for the 1994-95 fiscal year, as compared to an operating surplus of $914 million
for the prior fiscal year. The 1994-95 fiscal year deficit was caused by several
factors, including the use of $1.026 billion of the 1993-94 cash-based surplus
to fund operating expenses in 1994-95 and the adoption of changes in accounting
methodologies by the State Comptroller. These factors were offset by net
proceeds of $315 million in bonds issued by the Local Government Assistance
Corporation. The General Fund is projected to be balanced on a cash basis for
the 1995-96 fiscal year.
Total revenues for 1994-95 were $31.455 billion. Revenues decreased by
$173 million over the prior fiscal year, a decrease of less than one percent.
Total expenditures for 1994-95 totaled $33.079 billion, an increase of $2.083
billion, or 6.7 percent over the prior fiscal year.
The State's financial position on a GAAP (generally accepted accounting
principles) basis as of March 31, 1995 showed an accumulated deficit in its
combined governmental funds of $1.666 billion, reflecting liabilities of $14.778
billion and assets of $13.112 billion.
DEBT LIMITS AND OUTSTANDING DEBT. There are a number of methods by which
the State of New York may incur debt. Under the State Constitution, the State
may not, with limited exceptions for emergencies, undertake long-term general
obligation borrowing (I.E., borrowing for more than one year) unless the
borrowing is authorized in a specific amount for a single work or purpose by the
Legislature and approved by the voters. There is no limitation on the amount of
long-term general obligation debt that may be so authorized and subsequently
incurred by the State.
The State may undertake short-term borrowings without voter approval (i)
in anticipation of the receipt of taxes and revenues, by issuing tax and revenue
anticipation notes, and (ii) in anticipation of the receipt of proceeds from the
sale of duly authorized but unissued general obligation bonds, by issuing bond
anticipation notes. The State may also, pursuant to specific constitutional
authorization, directly guarantee certain obligations of the State of New York's
authorities and public benefit corporations ("Authorities"). Payments of debt
service on New York State general obligation and New York State-guaranteed bonds
and notes are legally enforceable obligations of the State of New York.
<PAGE>
B-10
The State employs additional long-term financing mechanisms,
lease-purchase and contractual-obligation financings, which involve obligations
of public authorities or municipalities that are State-supported but are not
general obligations of the State. Under these financing arrangements, certain
public authorities and municipalities have issued obligations to finance the
construction and rehabilitation of facilities or the acquisition and
rehabilitation of equipment, and expect to meet their debt service requirements
through the receipt of rental or other contractual payments made by the State.
Although these financing arrangements involve a contractual agreement by the
State to make payments to a public authority, municipality or other entity, the
State's obligation to make such payments is generally expressly made subject to
appropriation by the Legislature and the actual availability of money to the
State for making the payments. The State has also entered into a
contractual-obligation financing arrangement with the Local Government
Assistance Corporation ("LGAC") in an effort to restructure the way the State
makes certain local aid payments.
In 1990, as part of a State fiscal reform program, legislation was
enacted creating LGAC, a public benefit corporation empowered to issue long-term
obligations to fund certain payments to local governments traditionally funded
through New York State's annual seasonal borrowing. The legislation empowered
LGAC to issue its bonds and notes in an amount not in excess of $4.7 billion
(exclusive of certain refunding bonds) plus certain other amounts. Over a period
of years, the issuance of these long-term obligations, which are to be amortized
over no more than 30 years, was expected to eliminate the need for continued
short-term seasonal borrowing. The legislation also dedicated revenues equal to
one-quarter of the four cent State sales and use tax to pay debt service on
these bonds. The legislation also imposed a cap on the annual seasonal borrowing
of the State at $4.7 billion, less net proceeds of bonds issued by LGAC and
bonds issued to provide for capitalized interest, except in cases where the
Governor and the legislative leaders have certified the need for additional
borrowing and provided a schedule for reducing it to the cap. If borrowing above
the cap is thus permitted in any fiscal year, it is required by law to be
reduced to the cap by the fourth fiscal year after the limit was first exceeded.
As of June 1995, LGAC had issued bonds to provide net proceeds of $4.7 billion,
completing the cash flow needs in the first quarter of the fiscal year without
relying on short-term seasonal borrowings. The 1995-96 State Financial Plan
includes no spring borrowings nor did the 1994-95 State Financial Plan, which
was the first time in 35 years there was no short-term seasonal borrowing.
In June 1994, the Legislature passed a proposed constitutional amendment
that would significantly change the long-term financing practices of the State
and its public authorities. The proposed amendment would permit the State,
within a formula-based cap, to issue revenue bonds, which would be debt of the
State secured solely by a pledge of certain State tax receipts (including those
allocated to State funds dedicated for transportation purposes), and not by the
full faith and credit of the State. In addition, the proposed amendment would
(i) permit multiple purpose general obligation bond proposals to be proposed on
the same ballot, (ii) require that State debt be incurred only for capital
projects included in a multi-year capital financing plan, and (iii) prohibit,
<PAGE>
B-11
after its effective date, lease-purchase and contractual-obligation financing
mechanisms for State facilities.
Before the approved constitutional amendment can be presented to the
voters for their consideration, it must be passed by a separately elected
legislature. The amendment must therefore be passed by the newly elected
Legislature in 1995 prior to presentation to the voters in November 1995. The
amendment was passed by the Senate in June 1995, and the Assembly is expected to
pass the amendement shortly. If approved by the voters, the amendment would
become effective January 1, 1996.
On January 13, 1992, Standard & Poor's Corporation ("Standard & Poor's")
reduced its ratings on the State's general obligation bonds from A to A- and, in
addition, reduced its ratings on the State's moral obligation, lease purchase,
guaranteed and contractual obligation debt. Standard & Poor's also continued its
negative rating outlook assessment on State general obligation debt. On April
26, 1993, Standard & Poor's revised the rating outlook assessment to stable. On
February 14, 1994, Standard & Poor's raised its outlook to positive and, on
February 28, 1994, confirmed its A- rating. On January 6, 1992, Moody's
Investors Service, Inc. ("Moody's") reduced its ratings on outstanding
limitedliability State lease purchase and contractual obligations from A to
Baa1. On February 28, 1994, Moody's reconfirmed its A rating on the State's
general obligation long-term indebtedness.
The State anticipates that its capital programs will be financed, in
part, by State and public authorities borrowings in 1995-96. The State expects
to issue $248 million in general obligation bonds (including $170 million for
purposes of redeeming outstanding bond anticipation notes) and $186 million in
general obligation commercial paper. The Legislature has also authorized the
issuance of up to $33 million in certificates of participation during the
State's 1995-96 fiscal year for equipment purchases and $14 million for capital
purposes. These projections are subject to change if circumstances require.
Principal and interest payments on general obligation bonds and interest
payments on bond anticipation notes and on tax and revenue anticipation notes
were $793.3 million for the 1994-95 fiscal year, and are estimated to be $774.4
million for the 1995-96 fiscal year. These figures do not include interest
payable on State General Obligation Refunding Bonds issued in July 1992
("Refunding Bonds") to the extent that such interest was paid from an escrow
fund established with the proceeds of such Refunding Bonds. Principal and
interest payments on fixed rate and variable rate bonds issued by LGAC were
$239.4 million for the 1994-95 fiscal year, and are estimated to be $328.2.9
million for 1995-96. State lease-purchase rental and contractual obligation
payments for 1994-95, including State installment payments relating to
certificates of participation, were $1.607 billion and are estimated to be
$1.641 billion in 1995-96.
New York State has never defaulted on any of its general obligation
indebtedness or its obligations under lease-purchase or contractual-obligation
financing arrangements and has never been called upon to make any direct
payments pursuant to its guarantees.
<PAGE>
B-12
LITIGATION. Certain litigation pending against New York State or its
officers or employees could have a substantial or long-term adverse effect on
New York State finances. Among the more significant of these cases are those
that involve (1) the validity of agreements and treaties by which various Indian
tribes transferred title to New York State of certain land in central and
upstate New York; (2) certain aspects of New York State's Medicaid policies,
including its rates, regulations and procedures; (3) action against New York
State and New York City officials alleging inadequate shelter allowances to
maintain proper housing; (4) challenges to the practice of reimbursing certain
Office of Mental Health patient care expenses from the client's Social Security
benefits; (5) alleged responsibility of New York State officials to assist in
remedying racial segregation in the City of Yonkers; (6) challenges by
commercial insurers, employee welfare benefit plans, and health maintenance
organizations to the imposition of 13%, 11% and 9% surcharges on inpatient
hospital bills; (7) challenges to certain aspects of petroleum business taxes;
(8) action alleging damages resulting from the failure by the State's Department
of Environmental Conservation to timely provide certain data; (9) a challenge to
the constitutionality of the treatment of certain moneys held in a Supplemental
Reserve Fund; and (10) a challenge to the constitutionality of a State lottery
game.
Several actions challenging the constitutionality of legislation enacted
during the 1990 legislative session which changed actuarial funding methods for
determining state and local contributions to state employee retirement systems
have been decided against the State. As a result, the State's Comptroller has
developed a plan to restore the State's retirement systems to prior funding
levels. Such funding is expected to exceed prior levels by $30 million in fiscal
1994-95, $63 million in fiscal 1995-96, $116 million in fiscal 1996-97, $193
million in fiscal 1997-98, peaking at $241 million in fiscal 1998-99. Beginning
in fiscal 2001-02, State contributions required under the Comptroller's plan are
projected to be less than that required under the prior funding method. As a
result of the United States Supreme Court decision in the case of STATE OF
DELAWARE v. STATE OF NEW YORK, on January 21, 1994, the State entered into a
settlement agreement with various parties. Pursuant to all agreements executed
in connection with the action, the State is required to make aggregate payments
of $351.4 million, of which $90.3 million have been made. Annual payments to the
various parties will continue through the State's 2002-03 fiscal year in amounts
which will not exceed $48.4 million in any fiscal year subsequent to the State's
1994-95 fiscal year.
The legal proceedings noted above involve State finances, State programs
and miscellaneous tort, real property and contract claims in which the State is
a defendant and the monetary damages sought are substantial. These proceedings
could affect adversely the financial condition of the State. Adverse
developments in these proceedings or the initiation of new proceedings could
affect the ability of the State to maintain a balanced 1995-96 State Financial
Plan. An adverse decision in any of these proceedings could exceed the amount of
the 1995-96 State Financial Plan reserve for the payment of judgments and,
therefore, could affect the ability of the State to maintain a balanced 1995-96
State Financial Plan. In its audited financial statements for the fiscal year
<PAGE>
B-13
ended March 31, 1995, the State reported its estimated liability for awarded and
anticipated unfavorable judgments to be $676 million.
Although other litigation is pending against New York State, except as
described above, no current litigation involves New York State's authority, as a
matter of law, to contract indebtedness, issue its obligations, or pay such
indebtedness when it matures, or affects New York State's power or ability, as a
matter of law, to impose or collect significant amounts of taxes and revenues.
AUTHORITIES. The fiscal stability of New York State is related, in part,
to the fiscal stability of its Authorities, which generally have responsibility
for financing, constructing and operating revenue- producing public benefit
facilities. Authorities are not subject to the constitutional restrictions on
the incurrence of debt which apply to the State itself, and may issue bonds and
notes within the amounts of, and as otherwise restricted by, their legislative
authorization. The State's access to the public credit markets could be
impaired, and the market price of its outstanding debt may be materially and
adversely affected, if any of the Authorities were to default on their
respective obligations, particularly with respect to debt that are
State-supported or State-related. As of September 30, 1994, date of the latest
data available, there were 18 Authorities that had outstanding debt of $100
million or more. The aggregate outstanding debt, including refunding bonds, of
these 18 Authorities was $70.3 billion. As of March 31, 1995, aggregate public
authority debt outstanding as State-supported debt was $27.9 billion and as
State-related debt was $36.1 billion.
Authorities are generally supported by revenues generated by the
projects financed or operated, such as fares, user fees on bridges, highway
tolls and rentals for dormitory rooms and housing. In recent years, however, New
York State has provided financial assistance through appropriations, in some
cases of a recurring nature, to certain of the 18 Authorities for operating and
other expenses and, in fulfillment of its commitments on moral obligation
indebtedness or otherwise, for debt service. This operating assistance is
expected to continue to be required in future years. In addition, certain
statutory arrangements provide for State local assistance payments otherwise
payable to localities to be made under certain circumstances to certain
Authorities. The State has no obligation to provide additional assistance to
localities whose local assistance payments have been paid to Authorities under
these arrangements. However, in the event that such local assistance payments
are so diverted, the affected localities could seek additional State funds.
NEW YORK CITY AND OTHER LOCALITIES. The fiscal health of the State of
New York may also be impacted by the fiscal health of its localities,
particularly the City of New York, which has required and continues to require
significant financial assistance from New York State. The City depends on State
aid both to enable the City to balance its budget and to meet its cash
requirements. The City has achieved balanced operating results for each of its
fiscal years since 1981 as reported in accordance with the then-applicable GAAP.
<PAGE>
B-14
In 1975, New York City suffered a fiscal crisis that impaired the
borrowing ability of both the City and New York State. In that year the City
lost access to public credit markets. The City was not able to sell short-term
notes to the public again until 1979.
In 1975, Standard & Poor's suspended its A rating of City bonds. This
suspension remained in effect until March 1981, at which time the City received
an investment grade rating of BBB from Standard & Poor's. On July 2, 1985,
Standard & Poor's revised its rating of City bonds upward to BBB+ and on
November 19, 1987, to A-. On July 2, 1993, Standard & Poor's reconfirmed its A-
rating of City bonds, continued its negative rating outlook assessment and
stated that maintenance of such rating depended upon the City's making further
progress towards reducing budget gaps in the outlying years. Moody's ratings of
City bonds were revised in November 1981 from B (in effect since 1977) to Ba1,
in November 1983 to Baa, in December 1985 to Baa1, in May 1988 to A and again in
February 1991 to Baa1. On July 10, 1995, Standard & Poor's downgraded its rating
on the City's $23 billion of outstanding general obligation bonds to "BBB+" from
"A-", citing to the City's chronic structural budget problems and weak economic
outlook. Standard & Poor's stated that New York City's reliance on one-time
revenue measures to close annual budget gaps, a dependence on unrealized labor
savings, overly optimistic estimates of revenues and state and federal aid and
the City's continued high debt levels also contributed to its decision to lower
the rating.
New York City is heavily dependent on New York State and federal
assistance to cover insufficiencies in its revenues. There can be no assurance
that in the future federal and State assistance will enable the City to make up
its budget deficits. To help alleviate the City's financial difficulties, the
Legislature created the Municipal Assistance Corporation ("MAC") in 1975. MAC is
authorized to issue bonds and notes payable from certain stock transfer tax
revenues, from the City's portion of the State sales tax derived in the City
and, subject to certain prior claims, from State per capita aid otherwise
payable by the State to the City. Failure by the State to continue the
imposition of such taxes, the reduction of the rate of such taxes to rates less
than those in effect on July 2, 1975, failure by the State to pay such aid
revenues and the reduction of such aid revenues below a specified level are
included among the events of default in the resolutions authorizing MAC's
long-term debt. The occurrence of an event of default may result in the
acceleration of the maturity of all or a portion of MAC's debt. MAC bonds and
notes constitute general obligations of MAC and do not constitute an enforceable
obligation or debt of either the State or the City. As of June 30, 1995, MAC had
outstanding an aggregate of approximately $4.882 billion of its bonds. MAC is
authorized to issue bonds and notes to refunds its outstanding bonds and notes
and to fund certain reserves, without limitation as to principal amount, and to
finance certain capital commitments to certain authorities in the event the City
fails to provide such financing.
Since 1975, the City's financial condition has been subject to oversight
and review by the New York State Financial Control Board (the "Control Board")
and since 1978 the City's financial statements have been audited by independent
accounting firms. To be eligible for guarantees and assistance, the City is
required during a "control period" to submit annually for Control Board
approval,
<PAGE>
B-15
and when a control period is not in effect for Control Board review, a financial
plan for the next four fiscal years covering the City and certain agencies
showing balanced budgets determined in accordance with GAAP. New York State also
established the Office of the State Deputy Comptroller for New York City
("OSDC") to assist the Control Board in exercising its powers and
responsibilities. On June 30, 1986, the City satisfied the statutory
requirements for termination of the control period. This means that the Control
Board's powers of approval are suspended, but the Board continues to have
oversight responsibilities.
From time to time, the Control Board staff, OSDC, the City comptroller
and others issue reports and make public statements regarding the City's
financial condition, commenting on, among other matters, the City's financial
plans, projected revenues and expenditures and actions by the City to eliminate
projected operating deficits. Some of these reports and statements have warned
that the City may have underestimated certain expenditures and overestimated
certain revenues and have suggested that the City may not have adequately
provided for future contingencies. Certain of these reports have analyzed the
City's future economic and social conditions and have questioned whether the
City has the capacity to generate sufficient revenues in the future to meet the
costs of its expenditure increases and to provide necessary services.
The City submitted to the Control Board on July 21, 1995 a fourth
quarter modification to the City's financial plan for the 1995 fiscal year (the
"1995 Modification"), which projects a balanced budget in accordance with GAAP
for the 1995 fiscal year, after taking into account a discretionary transfer of
$75 million. On July 11, 1995, the City submitted to the Control Board the
Financial Plan for the 1996 through 1999 fiscal years (the "1996-1999 Financial
Plan").
The 1996-1999 Financial Plan projected revenues and expenditures for the
1996 fiscal year balanced in accordance with GAAP. The projections for the 1996
fiscal year reflected proposed actions to close a previously projected gap of
approximately $3.1 billion for the 1996 fiscal year. The proposed actions in the
1996-1999 Financial Plan for the 1996 fiscal year included (i) a reduction in
spending of $400 million, primarily affecting public assistance and Medicaid
payment to the City; (ii) expenditure reductions in agencies, totaling $1.2
billion; (iii) transitional labor savings, totaling $600 million; and (iv) the
phase-in of the increased annual pension funding cost due to revisions resulting
from an actuarial audit of the City's pension systems, which would reduce such
costs in the 1996 fiscal year.
The proposed agency spending reductions included the reduction of City
personnel through attrition, government efficiency initiatives, procurement
initiatives and labor productivity initiatives. The substantial agency
expenditure reductions proposed in the 1996-1999 Financial Plan may be difficult
to implement, and the 1996-1999 Financial Plan is subject to the ability of the
City to implement proposed reductions in City personnel and other cost reduction
initiatives. In addition, certain initiatives are subject to negotiation with
the City's municipal unions, and various actions, including proposed anticipated
State aid totaling $50 million are subject to approval by the Governor and the
Legislature.
<PAGE>
B-16
The 1996-1999 Financial Plan also set forth projections for the 1997
through 1999 fiscal years and outlined a proposed gap-closing program to
eliminate projected gaps of $888 million, $1.5 billion and $1.4 billion for the
1997, 1998 and 1999 fiscal years, respectively, after successful implementation
of the $3.1 billion gap-closing program for the 1996 fiscal year. These actions,
a substantial number of which were not specified in detail, include additional
agency spending reductions, reduction in entitlements, government procurement
initiatives, revenue initiatives and the availability of the general reserve.
Contracts with all of the City's municipal unions either expired in the
1995 fiscal year or will expire in the 1996 fiscal years. The 1996-1999
Financial Plan provided no additional wage increases for City employees after
the 1995 fiscal year. Each 1% wage increase for all union contracts commencing
in the 1995 or 1996 fiscal year would cost the City an additional $141 million
for the 1996 fiscal year and $161 million each year thereafter above the amounts
provided for in the 1996-1999 Financial Plan.
Although the City has balanced its budget since 1981, estimates of the
City's revenues and expenditures, which are based on numerous assumptions, are
subject to various uncertainties. If expected federal or State aid is not
forthcoming, if unforeseen developments in the economy significantly reduce
revenues derived from economically sensitive taxes or necessitate increased
expenditures for public assistance, if the City should negotiate wage increases
for its employees greater than the amounts provided for in the City's financial
plan or if other uncertainties materialize that reduce expected revenues or
increase projected expenditures, then, to avoid operating deficits, the City may
be required to implement additional actions, including increases in taxes and
reductions in essential City services. The City might also seek additional
assistance from New York State.
The City requires certain amounts of financing for seasonal and capital
spending purposes. The City's current monthly cash flow forecast for the 1996
fiscal year shows a need of $2.4 billion of seasonal financing for the 1996
fiscal year. Seasonal financing requirements for the 1995 fiscal year increased
to $2.2 billion from $1.75 billion and $1.4 billion in the 1994 and 1993 fiscal
years, respectively.
Certain localities, in addition to the City, could have financial
problems leading to requests for additional New York State assistance. The
potential impact on the State of such requests by localities was not included in
the projections of the State's receipts and disbursements in the State's 1995-96
fiscal year.
Fiscal difficulties experienced by the City of Yonkers ("Yonkers")
resulted in the creation of the Financial Control Board for the City of Yonkers
(the "Yonkers Board") by New York State in 1984. The Yonkers Board is charged
with oversight of the fiscal affairs of Yonkers. Future actions taken by the
Governor or the Legislature to assist Yonkers could result in allocation of New
York State resources in amounts that cannot yet be determined.
<PAGE>
B-17
Municipalities and school districts have engaged in substantial
short-term and long-term borrowings. In 1993, the total indebtedness of all
localities in New York State other than New York City was approximately $17.7
billion. A small portion (approximately $105 million) of that indebtedness
represented borrowing to finance budgetary deficits and was issued pursuant to
enabling New York State legislation. State law requires the comptroller to
review and make recommendations concerning the budgets of those local government
units other than New York City authorized by State law to issue debt to finance
deficits during the period that such deficit financing is outstanding. Fifteen
localities had outstanding indebtedness for deficit financing at the close of
their fiscal year ending in 1993.
From time to time, federal expenditure reductions could reduce, or in
some cases eliminate, federal funding of some local programs and accordingly
might impose substantial increased expenditure requirements on affected
localities. If New York State, New York City or any of the Authorities were to
suffer serious financial difficulties jeopardizing their respective access to
the public credit markets, the marketability of notes and bonds issued by
localities within New York State could be adversely affected. Localities also
face anticipated and potential problems resulting from certain pending
litigation, judicial decisions and long-range economic trends. Long-range
potential problems of declining urban population, increasing expenditures and
other economic trends could adversely affect localities and require increasing
New York State assistance in the future.
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 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 borrowings for temporary or emergency
purposes.
(3) 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
<PAGE>
B-18
shall not apply to the purchase of U.S. Government obligations and (ii) this
limitation will not apply to the purchase of Municipal Obligations or letters of
credit or guarantees of banks or other financial institutions that support
Municipal Obligations.
(4) 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.
(5) 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 except that the Portfolio may bid, separately or
as part of a group, for the purchase of Municipal Obligations directly from an
issuer for its own portfolio in order to take advantage of any lower purchase
price available. To the extent these securities are illiquid, they will be
subject to the Portfolio's 10% limitation on investments in illiquid securities.
(6) 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.
(7) Make loans to others, except through the purchase of qualified debt
obligations and the entry into repurchase agreements.
(8) 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).
(9) Purchase more than 10% of the voting securities of any issuer or
invest in companies for the purpose of exercising control or management.
(10) 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.
(11) 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.
(12) 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.
(13) 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
<PAGE>
B-19
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.
(14) The Portfolio will invest at least 80% of its net assets in
Municipal Obligations under normal market conditions.
For purposes of diversification under the 1940 Act, identification of
the "issuer" of a Municipal Obligation depends on the terms and conditions of
the obligation. If the assets and revenues of an agency, authority,
instrumentality or other political subdivision are separate from those of the
government creating the subdivision, and the obligation is backed only by the
assets and revenues of the subdivision, the subdivision will be regarded as the
sole issuer. Similarly, if a private activity bond is backed only by the assets
and revenues of the nongovernmental user, the nongovernmental user will be
deemed to be the sole issuer. If in either case the creating government or
another entity guarantees an obligation or issues a letter of credit to secure
the obligation, the guarantee or letter of credit will be considered a separate
security issued by the government or entity and would be separately valued.
.
STATE AND FEDERAL RESTRICTIONS. In order to comply with certain state
and Federal statutes and policies each 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 total assets (taken
at cost), except that the Portfolio may borrow for temporary or
emergency purposes up to 1/3 of its total assets;
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10%
of the Portfolio's total assets (taken at market value), provided
that collateral arrangements with respect to options and futures,
including deposits of initial deposit and variation margin, 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;
<PAGE>
B-20
(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; and,
PROVIDED FURTHER, that the Portfolio shall not invest in any
other 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
<PAGE>
B-21
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) 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 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 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);
Each Portfolio will comply with the permitted investments and investment
limitations in the securities laws and regulations of all states in which the
corresponding Fund, or any other 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 and their principal
occupations during the past five years are set forth below. Their titles may
have varied during that period. Asterisks indicate that those Trustees and
officers are "interested persons" (as defined in the 1940 Act) of the Portfolio.
Unless
<PAGE>
B-22
otherwise indicated below, the address of each Trustee and officer is 6 St.
James Avenue, Boston, Massachusetts.
TRUSTEES
PHILIP W. COOLIDGE* (age 44) -- Trustee and President; Chairman, Chief
Executive Officer and President, Signature Financial Group, Inc. ("SFG") (since
December, 1988) and Signature (since April, 1989).
CHARLES P. BIGGAR (age 65) -- 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 (age 65) -- Trustee; Retired; Director, Coutts & Company
Group and Coutts & Co. (U.S.A.) International; 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. (age 60) -- 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.
OFFICERS
JOHN R. ELDER (age 47) -- Treasurer; Vice President, SFG (since April,
1995); Treasurer, Phoenix Family of Mutual Funds (prior to April, 1995).
DAVID G. DANIELSON (age 31) -- Assistant Treasurer; Assistant Manager,
SFG (since May, 1991); Graduate Student, Northeastern University (from April,
1990 to March, 1991); Tax Accountant & Systems Analyst, Putnam Companies (prior
to March, 1990).
BARBARA M. O'DETTE (age 36) -- Assistant Treasurer; Assistant Treasurer,
SFG (since December, 1988); Assistant Treasurer, Signature (since April, 1989).
DANIEL E. SHEA (age 33) -- Assistant Treasurer; Assistant Manager, SFG
(since November 1993); Supervisor and Senior Technical Advisor, Putnam
Investments (prior to November 1993).
LINDA T. GIBSON (age 30) -- Assistant Secretary; Vice President, Global
Product Management and Assistant Secretary, SFG (since May, 1992); Assistant
Secretary, Signature (since October, 1992); student, Boston University School of
Law (September, 1989 to May, 1992).
<PAGE>
B-23
THOMAS M. LENZ (age 37) -- Secretary; Senior Vice President and
Associate General Counsel, SFG (since November, 1989); Assistant Secretary,
Signature (since February, 1991); Attorney, Ropes & Gray (prior to November,
1989).
MOLLY S. MUGLER (age 44) -- Assistant Secretary; Legal Counsel and
Assistant Secretary, SFG (since December, 1988); Assistant Secretary, Signature
(since April, 1989).
ANDRES E. SALDANA (age 33) -- Assistant Secretary; Legal Counsel, SFG
(since November, 1992); Assistant Secretary, Signature (since September, 1993);
Attorney, Ropes & Gray (September, 1990 to November, 1992).
Messrs. Coolidge, Elder, Danielson, Lenz, Saldana and Shea and Mss.
Gibson, Mugler and O'Dette also hold similar positions for other investment
companies for which Signature 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 Signature or
any of its affiliates will receive any compensation from the Trust or any
Portfolio for serving as an officer or Trustee of the Portfolio. The Portfolio,
Cash Management, Treasury Money, Tax Free Money, International Equity, Utility,
Equity 500 Index, Short/Intermediate U.S. Government Securities, Intermediate
Tax Free, Capital Appreciation, Asset Management and BT Investment Portfolios
(the "Fund Complex") collectively, pay each Trustee who is not a director,
officer or employee of the Adviser, the Administrator or any of their affiliates
an annual fee of $10,000, respectively, per annum plus $1,250, respectively, per
meeting attended and reimburses them for travel and out-of-pocket expenses.
For the year ended December 31, 1995, the Portfolio incurred Trustees
fees equal to $1,918. Bankers Trust reimbursed the Portfolio for a portion of
its Trustees fees for the periods above. See "Investment Advisory and Other
Services" below.
The Trustees of the Portfolio received the following remuneration from the
Portfolios for the year ended December 31, 1995:
<TABLE>
<CAPTION>
TOTAL COMPENSATION
NAME OF PERSON, AGGREGATE COMPENSATION FROM FUND COMPLEX
POSITION FROM PORTFOLIO PAID TO TRUSTEES
<S> <C> <C>
Charles P. Biggar, $1,042 $12,500
Trustee of Portfolio
S. Leland Dill, $1,042 $12,500
Trustee of Portfolio
Philip Saunders, Jr. none none
Trustee of Portfolio
</TABLE>
<PAGE>
B-24
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 wilful 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 wilful misfeasance, bad faith, gross
negligence or reckless disregard of their duties.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of April 15, 1996, NY Tax Free Money Fund (the "Fund") (a series of
shares of BT Investment Funds) owned approximately 100% of the value of the
outstanding interests in the Portfolio. Because the Fund controls the Portfolio,
it may take actions without the approval of any other investor in the Portfolio.
The 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.
<PAGE>
B-25
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 not 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 wilful misfeasance, bad faith or
gross negligence or of reckless disregard of its or their obligations and duties
under the Advisory Agreement.
For the years ended December 31, 1995, 1994 and 1993, Bankers Trust
earned $125,340, $140,928 and $160,781, respectively, in compensation for
investment advisory services provided to the Portfolio. During the same periods,
Bankers Trust reimbursed $29,751, $30,759 and $35,080, 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"), Signature performs such sub-administration duties for the Portfolio
as from time to time may be agreed upon by Bankers Trust and Signature. The Sub-
Administration Agreement provides that Signature will receive such compensation
as from time to time may be agreed upon by Signature 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.
<PAGE>
B-26
For the years ended December 31, 1995, 1994 and 1993, Bankers Trust
earned $41,780, $46,976 and $53,594, respectively, for administrative and other
services to NY Tax Free Money 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 certified public
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
<PAGE>
B-27
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
<PAGE>
B-28
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 Portfolio 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 wilful 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., New York 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 Portfolio is open every weekday except for: (a) the
following holidays: New Year's Day, Martin Luther King's Birthday, Presidents'
Day, 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
<PAGE>
B-29
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
<PAGE>
B-30
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 Signature, 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 financial statements of the Portfolio dated December 31, 1995 have
been filed with the SEC pursuant to Section 30(b) of the 1940 Act and Rule
30b2-1 thereunder and are hereby incorporated herein by reference.
Statement of Assets and Liabilities, December 31, 1995 Statement of
Operations for the year ended December 31, 1995 Statements of Changes in
Net Assets for the years ended December 31, 1995 and 1994 Financial
Highlights: Selected ratios and supplemental data for each of the
periods presented Schedule of Portfolio Investments, December 31, 1995
Notes to Financial Statements Report of Independent Accountants
<PAGE>
BT0070D
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS
The financial statements called for by this Item are incorporated
by reference to Part B and listed in Item 23 hereof.
(B) EXHIBITS
1. Amended and Restated Declaration of Trust of the
Registrant.1
2. By-Laws of the Registrant.1
5. Advisory Agreement between the Registrant and Bankers
Trust Company ("Bankers Trust").1
9. Administration and Services Agreement between the
Registrant and Bankers Trust.3
13. Investment representation letters of initial investors.2
17. Financial Data Schedule.1
1 Filed herewith.
2 Previously filed on February 15, 1992.
3 Previously filed on April 30, 1993.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
(AS OF APRIL 15, 1996)
Beneficial Interests 2
ITEM 27. INDEMNIFICATION.
Reference is hereby made to Article V of the Registrant's Declaration of
Trust, filed as an Exhibit herewith.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
<PAGE>
C-2
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
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 or has been at any time during
the past two fiscal years engaged in any other business, profession, vocation or
employment of a substantial nature, except that certain 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 or during the past two fiscal
years have been engaged in any other business, profession, vocation or
employment of a substantial nature. These persons may be contacted c/o Bankers
Trust Company, 280 Park Avenue, New York, New York 10015.
NAME AND PRINCIPAL BUSINESS ADDRESS, PRINCIPAL OCCUPATION AND OTHER INFORMATION
George B. Beitzel, International Business Machines Corporation, Old Orchard
Road, Armonk, NY 10504. Retired Senior Vice President and Director, Member
of Advisory Board of International Business Machines Corporation. Director of
Bankers Trust and Bankers Trust New York Corporation. Director of
FlightSafety International, Inc. Director of Phillips Petroleum Company.
Director of Roadway Services, Inc. Director of Rohm and Hass Company.
William R. Howell, J.C. Penney Company, Inc., P.O. Box 10001, Plano, TX
75301-0001. Chairman of the Board and Chief Executive Officer, J.C. Penney
Company, Inc. Director of Bankers Trust and Bankers Trust New York
Corporation. Also a Director of Exxon Corporation, Halliburton Company and
Warner-Lambert Corporation.
Jon M. Huntsman, Huntsman Chemical Corporation, 2000 Eagle Gate Tower, Salt
Lake City, UT 84111. Chairman and Chief Executive Officer, Huntsman Chemical
Corporation, Director of Bankers Trust and Bankers Trust New York
Corporation. Chairman of Constar Corporation, Huntsman Corporation, Huntsman
Holdings Corporation and Petrostar Corporation. President of Autostar
Corporation, Huntsman Polypropylene Corporation and Restar Corporation.
Director of Razzleberry Foods Corporation and Thiokol Corporation. General
Partner of Huntsman Group Ltd., McLeod Creek Partnership and Trustar Ltd.
Vernon E. Jordan, Jr., Akin, Gump, Strauss, Hauer & Feld, LLP, 1333 New
Hampshire Ave., N.W., Washington, DC 20036. Partner, Akin, Gump, Strauss,
Hauer & Feld, LLP. Director of Bankers Trust and Bankers Trust New York
Corporation. Also a Director of American Express Company, Corning
Incorporated, Dow Jones, Inc., J.C. Penney Company, Inc., RJR Nabisco Inc.,
<PAGE>
C-3
Revlon Group Incorporated, Ryder System, Inc., Sara Lee Corporation, Union
Carbide Corporation and Xerox Corporation.
Hamish Maxwell, Philip Morris Companies Inc., 120 Park Avenue, New York, NY
10017. Chairman of the Executive Committee, Philip Morris Companies Inc.
Director of Bankers Trust and Bankers Trust New York Corporation. Director of
The News Corporation Limited.
Donald F. McCullough, Collins & Aikman Corporation, 210 Madison Avenue, New
York, NY 10016. Chairman Emeritus, Collins & Aikman Corporation. Director
of Bankers Trust and Bankers Trust New York Corporation. Director of
Massachusetts Mutual Life Insurance Co. and Melville Corporation.
N.J. Nicholas Jr., 745 Fifth Avenue, New York, NY 10020. Former President,
Co-Chief Executive Officer and Director of Time Warner Inc. Director of
Bankers Trust and Bankers Trust New York Corporation. Also a Director of
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 of Bankers Trust and Bankers Trust New York Corporation. Also
Director of Allied-Signal Inc., Contel Cellular, Inc., Federal Home Loan
Mortgage Corporation, GTE Corporation, Goodyear Tire & Rubber Company, Imasco
Limited, May Department Stores Company and Safeguard Scientifics, Inc.
Member, Radnor Venture Partners Advisory Board.
Didier Pineau-Valencienne, Schneider S.A., 4 Rue de Longchamp, 75116 Paris,
France. Chairman and Chief Executive Officer, Schneider S.A. Director and member
of the European Advisory Board of Bankers Trust and Director of Bankers Trust
New York Corporation. Director of AXA (France) and Equitable Life Assurance
Society of America, Arbed (Luxembourg), Banque Paribas (France), Ciments
Francais (France), Cofibel (Belgique), Compagnie Industrielle de Paris (France),
SIAPAP, Schneider USA, Sema Group PLC (Great Britain), Spie- Batignolles,
Tractebel (Belgique) and Whirlpool. Chairman and Chief Executive Officer of
Societe Parisienne d'Entreprises et de Participations.
Charles S. Sanford, Jr., Bankers Trust Company, 280 Park Avenue, New York, NY
10017. Chairman of the Board of Bankers Trust and Bankers Trust New York
Corporation. Also a Director of Mobil Corporation and J.C. Penney Company,
Inc.
Eugene B. Shanks, Jr., Bankers Trust Company, 280 Park Avenue, New York, NY
10017. President of Bankers Trust and Bankers Trust New York Corporation.
Patricia Carry Stewart, c/o Office of the Secretary, 280 Park Avenue, New
York, NY 10017. Former Vice President, The Edna McConnell Clark Foundation.
Director of Bankers Trust and Bankers Trust New York Corporation. Director,
Borden Inc., Continental Corp. and Melville Corporation.
<PAGE>
C-4
George J. Vojta, Bankers Trust Company, 280 Park Avenue, New York, NY 10017.
Vice Chairman of the Board of Bankers Trust and Bankers Trust New York
Corporation. Director of Northwest Airlines and Private Export Funding Corp.
ITEM 29. PRINCIPAL UNDERWRITERS.
Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
NAME ADDRESS
Signature Broker-Dealer 6 St. James Avenue
Services, Inc. Boston, MA 02116
(placement agent)
Bankers Trust Company 280 Park Avenue
(investment adviser, administrator, New York, NY 10017
custodian, transfer agent)
Investors Fiduciary Trust Company 127 West 10th Street
Kansas City, MO 64105
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Registration Statement on Form N-1A
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of Boston and Commonwealth of Massachusetts on the 22nd day of April, 1996.
NY TAX FREE MONEY PORTFOLIO
By /S/ THOMAS M. LENZ
Thomas M. Lenz
Secretary
<PAGE>
INDEX TO EXHIBITS
1. Amended and Restated Declaration of Trust of the Registrant
2. By-Laws of the Registrant
5. Advisory Agreement between the Registrant and Bankers Trust Company
17. Financial Data Schedule
SEA1NYP
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
NY TAX FREE MONEY PORTFOLIO
This is an AMENDED AND RESTATED DECLARATION OF TRUST of New York Tax-
Free Money Portfolio made on the 1st day of April, 1990 by the parties signatory
hereto, as trustees (such persons, so long as they shall continue in office in
accordance with the terms of this Declaration of Trust, and all other persons
who at the time in question have been duly elected or appointed as trustees in
accordance with the provisions of this Declaration of Trust and are then in
office, being hereinafter called the "Trustees").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Trustees desire to form a trust fund under the law of New
York for the investment and reinvestment of its assets; and
WHEREAS, it is proposed that the trust assets be composed of funds
contributed thereto by the holders of interests in the trust entitled to
ownership rights in the trust;
NOW, THEREFORE, the Trustees hereby declare that they will hold in
trust all money and property contributed to the trust fund to manage and dispose
of the same for the benefit of the holders of interests in the Trust and subject
to the provisions hereof, to wit:
ARTICLE I
The Trust
---------
1.1. NAME. The name of the trust created hereby (the "Trust") shall be
"New York Tax Free Money Portfolio," and so far as may be practicable the
Trustees shall conduct the Trust's activities, execute all documents and sue or
be sued under that name, which name (and the word "Trust" wherever hereinafter
used) shall refer to the Trustees as Trustees, and not individually, and shall
not refer to the officers, agents, employees or holders of interests in the
Trust. However, should the Trustees determine that the use of the name of the
Trust is not advisable, they may select such other name for the Trust as they
deem proper and the Trust may hold its property and conduct its activities under
such other name. Any name change shall become effective upon the execution by a
majority of the then Trustees of an instrument setting forth the new name. Any
such instrument shall have the status of an amendment to this Declaration.
<PAGE>
1.2. DEFINITIONS. As used in this Declaration, the following terms
shall have the following meanings:
The terms "Affiliated Person", "Assignment" and "Interested Person"
shall have the meanings given them in the 1940 Act, as amended from time to
time.
"ADMINISTRATOR" shall mean any party furnishing services to the Trust
pursuant to any administrative services contract described in Section 4.1
hereof.
"BOOK CAPITAL ACCOUNT" shall mean, for any Holder at any time, the Book
Capital Account of the Holder for such day, determined in accordance with
generally accepted accounting principles and the provisions of the 1940 Act.
"COMMISSION" shall mean the Securities and Exchange Commission.
"DECLARATION" shall mean this Declaration of Trust as amended from time
to time. References in this Declaration to "DECLARATION", "HEREOF", "HEREIN" and
"HEREUNDER" shall be deemed to refer to the Declaration rather than the article
or section in which such words appear.
"FISCAL YEAR" shall mean an annual period as determined by the
Trustees.
"HOLDERS" shall mean as of any particular time all holders of record of
Interests of the Trust at such time.
"INSTITUTIONAL INVESTOR(S)" shall mean any regulated investment
company, segregated asset account, foreign investment company, common trust
fund, group trust or similar investment arrangement other than an individual, S
corporation, partnership or grantor trust beneficially owned by any individual,
S corporation or partnership.
"INTEREST(S)" shall mean the interest of a Holder in the Trust,
including all rights, powers and privileges accorded to Holders in this
Declaration, which interest may be expressed as a percentage, determined by
calculating, at such times and on such basis, as the Trustees shall from time to
time determine, the ratio of each Holders' Book Capital Account balance to the
total of all Holders' Book Capital Account balances. Reference herein to a
specified percentage in, or fraction of, Interests of the Holders, means Holders
whose combined Book Capital Accounts represent such specified percentage or
fraction of the Book Capital Accounts of all Holders.
"INVESTMENT ADVISER" shall mean any party furnishing services to the
Trust pursuant to any investment advisory contract described in Section 4.1
hereof.
"MAJORITY INTERESTS VOTE" shall mean the vote, at a meeting of the
Holders of the Trust, of (A) 67% or more of the Interests present or represented
at such meeting, if the Holders of more than 50% of the Interests of the Trust
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are present or represented by proxy or (B) more than 50% of the Interests of the
Trust, whichever is less.
"PERSON" shall mean and include individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
"REGISTRATION STATEMENT" shall mean the currently effective
Registration Statement of the Trust under the 1940 Act.
"TRUSTEES" shall mean the signatories to this Declaration, so long as
they shall continue in office in accordance with the terms hereof, and all other
persons who at the time in question have been duly elected or appointed and have
qualified as trustees in accordance with the provisions hereof and are then in
office, who are herein referred to as the "Trustees", and reference in this
Declaration to a Trustee or Trustees shall refer to such person or persons in
their capacity as trustees hereunder.
"TRUST PROPERTY" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time is owned
or held by or for the account of the Trust or the Trustees.
The "1940 ACT" refers to the Investment Company Act of 1940, as amended
from time to time, and the rules and regulations thereunder.
ARTICLE II
Trustees
--------
2.1. NUMBER AND QUALIFICATION. The number of Trustees shall be fixed
from time to time by written instrument signed by a majority of the Trustees so
fixed then in office, provided, however, that the number of Trustees shall in no
event be less than three or more than fifteen. Any vacancy created by an
increase in Trustees may be filled by the appointment of an individual having
the qualifications described in this Article made by a written instrument signed
by a majority of the Trustees then in office. Any such appointment shall not
become effective, however, until the individual named in the written instrument
of appointment shall have accepted in writing such appointment and agreed in
writing to be bound by the terms of this Declaration. No reduction in the number
of Trustees shall have the effect of removing any Trustee from office. Whenever
a vacancy in the number of Trustees shall occur, until such vacancy is filled as
provided in Section 2.4 hereof, the Trustees in office, regardless of their
number, shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by this Declaration. A Trustee shall be
an individual at least 21 years of age who is not under legal disability.
2.2. TERM AND ELECTION. Each Trustee named herein, or elected or
appointed prior to the first meeting of the Holders, shall (except in the event
of resignations or removals or vacancies pursuant to Section 2.3 or 2.4 hereof)
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hold office until his successor has been elected at such meeting and has
qualified to serve as Trustee, as required under the 1940 Act. Beginning with
the Trustees elected at the first meeting of Holders, each Trustee shall hold
office during the lifetime of this Trust and until its termination as
hereinafter provided unless such Trustee resigns or is removed as provided in
Section 2.3 below.
2.3. RESIGNATION AND REMOVAL. Any Trustee may resign his trust (without
need for prior or subsequent accounting) by an instrument in writing signed by
him and delivered or mailed to the Chairman, if any, the President or the
Secretary and such resignation shall be effective upon such delivery, or at a
later date according to the terms of the instrument. Any of the Trustees may be
removed by the affirmative vote of the Holders of two-thirds (2/3) of the
Interests or (provided the aggregate number of Trustees, after such removal and
after giving effect to any appointment made to fill the vacancy created by such
removal, shall not be less than the number required by Section 2.1 hereof) with
cause, by the action of two-thirds of the remaining Trustees. Removal with cause
includes, but is not limited to, the removal of a Trustee due to physical or
mental incapacity. Upon the resignation or removal of a Trustee, or his
otherwise ceasing to be a Trustee, he shall execute and deliver such documents
as the remaining Trustees shall require for the purpose of conveying to the
Trust or the remaining Trustees any Trust Property held in the name of the
resigning or removed Trustee. Upon the death of any Trustee or upon removal or
resignation due to any Trustee's incapacity to serve as trustee, his legal
representative shall execute and deliver on his behalf such documents as the
remaining Trustees shall require as provided in the preceding sentence.
2.4. VACANCIES. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of the death, resignation, adjudicated
incompetence or other incapacity to perform the duties of the office, or
removal, of a Trustee. No such vacancy shall operate to annul this Declaration
or to revoke any existing agency created pursuant to the terms of this
Declaration. In the case of a vacancy, the Holders of at least a majority of the
Interests entitled to vote, acting at any meeting of the Holders held in
accordance with Section 9.1 hereof, or, to the extent permitted by the 1940 Act,
a majority vote of the Trustees continuing in office acting by written
instrument or instruments, may fill such vacancy, and any Trustee so elected by
the Trustees or the Holders shall hold office as provided in this Declaration.
2.5. MEETINGS. Meetings of the Trustees shall be held from time to time
upon the call of the Chairman, if any, the President, the Secretary, an
Assistant Secretary or any two Trustees. Regular meetings of the Trustees may be
held without call or notice at a time and place fixed by the By-Laws or by
resolution of the Trustees. Notice of any other meeting shall be mailed or
otherwise given not less than 24 hours before the meeting but may be waived in
writing by any Trustee either before or after such meeting. The attendance of a
Trustee at a meeting shall constitute a waiver of notice of such meeting except
where a Trustee attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened. The Trustees may act with or without a meeting. A quorum for
all meetings of the Trustees shall be a majority of the Trustees. Unless
provided otherwise in this Declaration, any action of the Trustees may be taken
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at a meeting by vote of a majority of the Trustees present (a quorum being
present) or without a meeting by written consent of a majority of the Trustees.
Any committee of the Trustees, including an executive committee, if
any, may act with or without a meeting. A quorum for all meetings of any such
committee shall be a majority of the members thereof. Unless provided otherwise
in this Declaration, any action of any such committee may be taken at a meeting
by vote of a majority of the members present (a quorum being present) or without
a meeting by written consent of a majority of the members.
With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons of the Trust within the meaning of
Section 1.2 hereof or otherwise interested in any action to be taken may be
counted for quorum purposes under this Section 2.5 and shall be entitled to vote
to the extent permitted by the 1940 Act.
All or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and participation in a meeting pursuant to such
communications system shall constitute presence in person at such meeting.
2.6. OFFICERS; CHAIRMAN OF THE BOARD. The Trustees shall, from time to
time, elect a President, a Secretary and a Treasurer. The Trustees may elect or
appoint, from time to time, a Chairman of the Board who shall preside at all
meetings of the Trustees and carry out such other duties as the Trustees shall
designate. The Trustees may elect or appoint or authorize the President to
appoint such other officers or agents with such powers as the Trustees may deem
to be advisable. The President shall be and the Secretary and Treasurer may, but
need not, be a Trustee.
2.7. BY-LAWS. The Trustees may adopt and, from time to time, amend or
repeal the By-Laws for the conduct of the business of the Trust.
ARTICLE III
Powers of Trustees
------------------
3.1. GENERAL. The Trustees shall have exclusive and absolute control
over the Trust Property and over the business of the Trust to the same extent as
if the Trustees were the sole owners of the Trust Property and business in their
own right, but with such powers of delegation as may be permitted by this
Declaration. The Trustees may perform such acts as in their sole discretion are
proper for conducting the business of the Trust. The enumeration of any specific
power herein shall not be construed as limiting the aforesaid power. Such powers
of the Trustees may be exercised without order of or resort to any court.
3.2. INVESTMENTS. The Trustees shall have power to:
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(a) conduct, operate and carry on the business of an
investment company;
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange,
distribute or otherwise deal in or dispose of United States and foreign
currencies and related instruments including forward contracts, and
securities, including, common and preferred stock, warrants, bonds,
debentures, time notes and all other evidences of indebtedness,
negotiable or non-negotiable instruments, obligations, certificates of
deposit or indebtedness, commercial paper, repurchase agreements,
reverse repurchase agreements, convertible securities, forward
contracts, options, futures contracts, and other securities, including,
without limitation, those issued, guaranteed or sponsored by any state,
territory or possession of the United States and the District of
Columbia and their political subdivisions, agencies and
instrumentalities, or by the United States Government, any foreign
government, or any agency, instrumentality or political subdivision of
the United States Government or any foreign government, or
international instrumentalities, or by any bank, savings institution,
corporation or other business entity organized under the laws of the
United States or under foreign laws; and to exercise any and all
rights, powers and privileges of ownership or interest in respect of
any and all such investments of every kind and description, including,
without limitation, the right to consent and otherwise act with respect
thereto, with power to designate one or more persons, firms,
associations, or corporations to exercise any of said rights, powers
and privileges in respect of any of said instruments; and the Trustees
shall be deemed to have the foregoing powers with respect to any
additional securities in which the Trustees may determine to invest.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
3.3. LEGAL TITLE. Legal title to all the Trust Property shall be vested
in the Trustees as joint tenants except that the Trustees shall have the power
to cause legal title to any Trust Property to be held by or in the name of one
or more of the Trustees, or in the name of the Trust, or in the name of any
other Person on behalf of the Trust, on such terms as the Trustees may
determine.
The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each person who may hereafter become a Trustee upon
his due election and qualification. Upon the resignation, removal or death of a
Trustee he shall automatically cease to have any right, title or interest in any
of the Trust Property, and the right, title and interest of such Trustee in the
Trust Property shall vest automatically in the remaining Trustees. Such vesting
and cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.
3.4. SALE OF INTERESTS. Subject to the more detailed provisions set
forth in Articles VII and VIII, the Trustees shall have the power to permit
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persons to purchase Interests and to add to or reduce, in whole or in part,
their Interest in the Trust.
3.5. BORROW MONEY. The Trustees shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, including the lending
of portfolio securities, and to endorse, guarantee, or undertake the performance
of any obligation, contract or engagement of any other person, firm, association
or corporation.
3.6. DELEGATION; COMMITTEES. The Trustees shall have power, consistent
with their continuing exclusive authority over the management of the Trust and
the Trust Property, to delegate from time to time to such of their number or to
officers, employees or agents of the Trust the doing of such things and the
execution of such instruments either in the name of the Trust or the names of
the Trustees or otherwise as the Trustees may deem expedient.
3.7. COLLECTION AND PAYMENT. The Trustees shall have power to collect
all property due to the Trust; and to pay all claims, including taxes, against
the Trust Property; to prosecute, defend, compromise or abandon any claims
relating to the Trust Property; to foreclose any security interest securing any
obligations, by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.
3.8. EXPENSES. The Trustees shall have power to incur and pay any
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees. The Trustees
may pay themselves such compensation for special services, including legal and
brokerage services, as they in good faith may deem reasonable, and reimbursement
for expenses reasonably incurred by themselves on behalf of the Trust.
3.9. MISCELLANEOUS POWERS. The Trustees shall have the power to: (a)
employ or contract with such Persons as the Trustees may deem desirable for the
transaction of the business of the Trust and terminate such employees or
contractual relationships as they consider appropriate; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c) purchase,
and pay for out of Trust Property, insurance policies insuring the Investment
Adviser, Administrator, placement agent, Holders, Trustees, officers, employees,
agents, or independent contractors of the Trust against all claims arising by
reason of holding any such position or by reason of any action taken or omitted
by any such Person in such capacity, whether or not the Trust would have the
power to indemnify such Person against such liability; (d) establish pension,
profit-sharing and other retirement, incentive and benefit plans for any
Trustees, officers, employees and agents of the Trust; (e) make donations,
irrespective of benefit to the Trust, for charitable, religious, educational,
scientific, civic or similar purposes; (f) to the extent permitted by law,
indemnify any Person with whom the Trust has dealings, including the Investment
Adviser, Administrator, placement agent, Holders, Trustees, officers, employees,
agents or independent contractors of the Trust, to such extent as the Trustees
shall determine; (g) guarantee indebtedness or contractual obligations of
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others; (h) determine and change the Fiscal Year of the Trust and the method in
which its accounts shall be kept; and (i) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
3.10. FURTHER POWERS. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices, whether within or without the State of New York, in any
and all states of the United States of America, in the District of Columbia, and
in any and all commonwealths, territories, dependencies, colonies, possessions,
agencies or instrumentalities of the United States of America and of foreign
governments, and to do all such other things and execute all such instruments as
they deem necessary, proper or desirable in order to promote the interests of
the Trust although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. In construing the provisions of this
Declaration, the presumption shall be in favor of a grant of power to the
Trustees. The Trustees will not be required to obtain any court order to deal
with Trust Property.
ARTICLE IV
Investment Advisory, Administrative Services
and Placement Agent Arrangements
--------------------------------------------
4.1. INVESTMENT ADVISORY AND OTHER ARRANGEMENTS. The Trustees may in
their discretion, from time to time, enter into investment advisory and
administrative services contracts or placement agent agreements whereby the
other party to such contract or agreement shall undertake to furnish the
Trustees such investment advisory, administrative, placement agent and/or other
services as the Trustees shall, from time to time, consider desirable and all
upon such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provisions of this Declaration, the Trustees may
authorize any Investment Adviser (subject to such general or specific
instructions as the Trustees may, from time to time, adopt) to effect purchases,
sales, loans or exchanges of Trust Property on behalf of the Trustees or may
authorize any officer, employee or Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of any such Investment Adviser
(and all without further action by the Trustees). Any such purchases, sales,
loans and exchanges shall be deemed to have been authorized by all of the
Trustees.
4.2. PARTIES TO CONTRACT. Any contract of the character described in
Section 4.1 of this Article IV or in the By-Laws of the Trust may be entered
into with any corporation, firm, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, Trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
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reasonable and fair and not inconsistent with the provisions of this Article IV
or the By-Laws. The same person (including a firm, corporation, trust, or
association) may be the other party to contracts entered into pursuant to
Section 4.1 above or the By-Laws of the Trust, and any individual may be
financially interested or otherwise affiliated with persons who are parties to
any or all of the contracts mentioned in this Section 4.2.
ARTICLE V
Limitations of Liability
------------------------
5.1. NO PERSONAL LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES, AGENTS;
LIABILITY OF HOLDERS; INDEMNIFICATION. No Trustee, officer, employee or agent of
the Trust shall be subject to any personal liability whatsoever to any Person,
other than the Trust or its Holders, in connection with Trust Property or the
affairs of the Trust, save only that arising from his bad faith, willful
misfeasance, gross negligence or reckless disregard of his duty to such Person;
and all such Persons shall look solely to the Trust Property for satisfaction of
claims of any nature against a Trustee, officer, employee or agent of the Trust
arising in connection with the affairs of the Trust. Each Holder shall be
jointly and severally liable (with rights of contribution INTER SE in proportion
to their respective Interests in the Trust) for the liabilities and obligations
of the Trust in the event that the Trust fails to satisfy such liabilities and
obligations; provided, however, that, to the extent assets are available in the
Trust, the Trust shall indemnify and hold each Holder harmless from and against
any claim or liability to which such Holder may become subject by reason of his
being or having been a Holder to the extent that such claim or liability imposes
on the Holder an obligation or liability which, when compared to the obligations
and liabilities imposed on other Holders, is greater than his Interest
(proportionate share), and shall reimburse such Holder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability. The rights accruing to a Holder under this Section 5.1 shall not
exclude any other right to which such Holder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to indemnify or
reimburse a Holder in any appropriate situation even though not specifically
provided herein. Notwithstanding the indemnification procedure described above,
it is intended that each Holder shall remain jointly and severally liable to the
Trust's creditors as a legal matter.
5.2. NON-LIABILITY OF TRUSTEES, ETC. No Trustee, officer, employee or
agent of the Trust shall be liable to the Trust, its Holders, or to any Trustee,
officer, employee, or agent thereof for any action or failure to act (including,
without limitation, the failure to compel in any way any former or acting
Trustee to redress any breach of trust) except for his own bad faith, willful
misfeasance, gross negligence or reckless disregard of his duties.
5.3. MANDATORY INDEMNIFICATION. The Trust shall indemnify each of its
Trustees, officers, employees, and agents (including persons who serve at its
request as directors, officers or trustees of another organization in which it
has any interest, as a shareholder, creditor or otherwise) against all
liabilities and expenses (including amounts paid in satisfaction of judgments,
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in compromise, as fines and penalties, and as counsel fees) reasonably incurred
by him in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, in which he may be involved or with
which he may be threatened, while in office or thereafter, by reason of his
being or having been such a Trustee, officer, employee or agent, except with
respect to any matter as to which he shall have been adjudicated to have acted
in bad faith, willful misfeasance, gross negligence or reckless disregard of his
duties; provided, however, that as to any matter disposed of by a compromise
payment by such Person, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other expenses shall be
provided unless there has been a determination that such Person did not engage
in willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office by the court or other body
approving the settlement or other disposition or by a reasonable determination,
based upon a review of readily available facts (as opposed to a full trial-type
inquiry), that he did not engage in such conduct by written opinion from
independent legal counsel approved by the Trustees. The rights accruing to any
Person under these provisions shall not exclude any other right to which he may
be lawfully entitled; provided that no Person may satisfy any right of indemnity
or reimbursement granted herein or in Section 5.1 or to which he may be
otherwise entitled except out of the Trust Property. The Trustees may make
advance payments in connection with indemnification under this Section 5.3,
provided that the indemnified Person shall have given a written undertaking to
reimburse the Trust in the event it is subsequently determined that he is not
entitled to such indemnification.
5.4. NO BOND REQUIRED OF TRUSTEES. No Trustee shall, as such, be
obligated to give any bond or surety or other security for the performance of
any of his duties hereunder.
5.5. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC. No
purchaser, lender, or other person dealing with the Trustees or any officer,
employee or agent of the Trust shall be bound to make any inquiry concerning the
validity of any transaction purporting to be made by the Trustees or by said
officer, employee or agent or be liable for the application of money or property
paid, loaned, or delivered to or on the order of the Trustees or of said
officer, employee or agent. Every obligation, contract, instrument, certificate
or other interest or undertaking of the Trust, and every other act or thing
whatsoever executed in connection with the Trust shall be conclusively taken to
have been executed or done by the executors thereof only in their capacity as
Trustees, officers, employees or agents of the Trust. Every written obligation,
contract, instrument, certificate or other interest or undertaking of the Trust
made or sold by the Trustees or by any officer, employee or agent of the Trust,
in his capacity as such, shall contain an appropriate recital to the effect that
the Trustee, officer, employee and agent of the Trust shall not personally be
bound by or liable thereunder, nor shall resort be had to their private property
for the satisfaction of any obligation or claim thereunder, and appropriate
references shall be made therein to the Declaration, and may contain any further
recital which they may deem appropriate, but the omission of such recital shall
not operate to impose personal liability on any of the Trustees, officers,
employees or agents of the Trust. The Trustees may maintain insurance for the
protection of the Trust Property, its Holders, Trustees, officers, employees and
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agents in such amount as the Trustees shall deem adequate to cover possible tort
liability, and such other insurance as the Trustees in their sole judgment shall
deem advisable.
5.6. RELIANCE ON EXPERTS, ETC. Each Trustee and officer or employee of
the Trust shall, in the performance of his duties, be fully and completely
justified and protected with regard to any act or any failure to act resulting
from reliance in good faith upon the books of account or other records of the
Trust, upon an opinion of counsel, or upon reports made to the Trust by any of
its officers or employees or by any Investment Adviser, Administrator,
accountant, appraiser or other experts or consultants selected with reasonable
care by the Trustees, officers or employees of the Trust, regardless of whether
such counsel or expert may also be a Trustee.
ARTICLE VI
Interests of the Trust
----------------------
6.1. INTERESTS. The beneficial interest in the property of the Trust
shall consist of non-transferable Interests. The Trustees may permit the
purchase of Interests but only if the purchaser is an Institutional Investor.
Individuals, S corporations, partnerships and grantor trusts that are
beneficially owned by any individual, S corporation or partnership may not
purchase Interests. Subject to applicable law and to such restrictions as may be
adopted by the Trustees, a Holder may increase or decrease its Interest without
limitation.
6.2. RIGHTS OF HOLDERS. The ownership of the Trust Property of every
description and the right to conduct any business hereinbefore described are
vested exclusively in the Trustees, and the Holders shall have no right or title
therein other than the beneficial interest conferred by their Interests and they
shall have no right to call for any partition or division of any property,
profits or rights of the Trust. The Interests shall be personal property giving
only the rights in this Declaration specifically set forth.
6.3. PURCHASE OF OR INCREASE IN INTERESTS. The Trustees, in their
discretion, may, from time to time, without a vote of the Holders, permit the
purchase of Interests by such party or parties (or increase in the Interest of a
Holder) and for such type of consideration, including cash or property, at such
time or times (including, without limitation, each business day), and on such
terms as the Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of, liabilities) and businesses.
6.4. REGISTER OF INTERESTS. A register shall be kept at the Trust under
the direction of the Trustees which shall contain the names and addresses of the
Holders and the Book Capital Account balances of each Holder. Each such register
shall be conclusive as to who are the Holders of the Trust and who shall be
entitled to payments of distributions or otherwise to exercise or enjoy the
rights of Holders. No Holder shall be entitled to receive payment of any
distribution, nor to have notice given to it as herein provided, until it has
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given its address to such officer or agent of the Trustees as shall keep the
said register for entry thereon.
6.5. NON-TRANSFERABILITY. Interests shall not be transferable.
6.6. NOTICES. Any and all notices to which any Holder hereunder
may be entitled and any and all communications shall be deemed duly served or
given if mailed, postage prepaid, addressed to any Holder of record at its last
known address as recorded on the register of the Trust.
ARTICLE VII
Decreases And Withdrawals
-------------------------
7.1. DECREASES AND WITHDRAWALS. A Holder shall have the authority to
decrease or withdraw its Interest in the Trust, at such Holder's option, subject
to the terms and conditions provided in this Article VII. The Trust shall, upon
application of any Holder or pursuant to authorization from any Holder, and
subject to this Article 7.1, decrease or withdraw such Holder's Interest for an
amount determined by the application of a formula adopted for such purpose by
resolution of the Trustees; provided that (a) such amount shall not exceed the
reduction in a Holder's Book Capital Account effected by such decrease or
withdrawal of its Interest and (b) if so authorized by the Trustees, the Trust
may, at any time and from time to time, charge fees for effecting such decrease
or withdrawal, at such rates as the Trustees may establish, and may, at any time
and from time to time, suspend such right of decrease or withdrawal. The
procedures for effecting decreases or withdrawals shall be as determined by the
Trustees from time to time.
ARTICLE VIII
Determination of Book Capital Account
Balances, Net Income and Distributions
--------------------------------------
8.1. BOOK CAPITAL ACCOUNT BALANCES. The Book Capital Account balances
of Holders of the Trust shall be determined daily at such time or times as the
Trustees may determine. The Trustees shall adopt resolutions setting forth the
method of determining the Book Capital Account balances for each Holder. The
power and duty to make calculations pursuant to such resolutions may be
delegated by the Trustees to the Investment Adviser, Administrator, custodian,
or such other person as the Trustees may determine.
8.2. DISTRIBUTIONS AND ALLOCATIONS TO HOLDERS. The Trustees shall, in
compliance with the regulations promulgated under applicable provisions of the
Internal Revenue Code of 1986, as amended (herein the "Code"), agree to (i) the
daily allocation of income or loss to each Holder of the Trust, (ii) the payment
of distributions to Holders and (iii) upon liquidation, the final distribution
of items of taxable income and expense. Such agreement shall be set forth in
written instructions directed to the Trust's accountants specifying the method
by which the Trust will comply with the Code. The Trustees may amend the
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instructions adopted pursuant to this Section 8.2 from time to time to the
extent necessary to comply with the Code or any regulations promulgated
thereunder. The Trustees may always retain from the net profits such amount as
they may deem necessary to pay the debts or expenses of the Trust or to meet
obligations of the Trust, or as they may deem desirable to use in the conduct of
its affairs or to retain for future requirements or extensions of the business.
8.3. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any of the
foregoing provisions of this Article VIII, the Trustees may prescribe, in their
absolute discretion, such other bases and times for determining the net income
and net assets of the Trust, the allocation of income or the payment of
distributions to the Holders of the Trust as they may deem necessary or
desirable to enable the Trust to comply with any provision of the 1940 Act, any
rule or regulation thereunder, or any order of exemption issued by said
Commission, all as in effect now or hereafter amended or modified.
ARTICLE IX
Holders
-------
9.1. MEETINGS OF HOLDERS. Meetings of the Holders may be called at any
time by a majority of the Trustees and shall be called by any Trustee upon
written request of Holders holding, in the aggregate, not less than 10% of the
Interests of the Trust, such request specifying the purpose or purposes for
which such meeting is to be called. Any such meeting shall be held within or
without the State of New York on such day and at such time as the Trustees shall
designate. Holders of one-third of the Interests of the Trust, present in person
or by proxy, shall constitute a quorum for the transaction of any business,
except as may otherwise be required by the 1940 Act or other applicable law or
by this Declaration or the By-Laws of the Trust. If a quorum is present at a
meeting, an affirmative vote by the Holders present, in person or by proxy,
holding more than 50% of the total Interests of the Holders present, either in
person or by proxy, at such meeting constitutes the action of the Holders,
unless the 1940 Act, other applicable law, this Declaration or the By-Laws of
the Trust requires a greater number of affirmative votes.
9.2. NOTICE OF MEETINGS. Notice of all meetings of the Holders, stating
the time, place and purposes of the meeting, shall be given by the Trustees by
mail to each Holder, at his registered address, mailed at least 10 days and not
more than 60 days before the meeting. At any such meeting, any business properly
before the meeting may be considered whether or not stated in the notice of the
meeting. Any adjourned meeting may be held as adjourned without further notice.
9.3. RECORD DATE FOR MEETINGS. For the purpose of determining the
Holders who are entitled to notice of and to vote at any meeting, or to
participate in any distribution, or for the purpose of any other action, the
Trustees may from time to time fix a date, not more than 90 days prior to the
date of any meeting of the Holders or payment of distributions or other action,
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as the case may be, as a record date for the determination of the Persons to be
treated as Holders of record for such purposes.
9.4. PROXIES, ETC. At any meeting of Holders, any Holder entitled to
vote thereat may vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the Secretary, or with
such other officer or agent of the Trust as the Secretary may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of a majority of the Trustees, proxies may be solicited in the name
of one or more Trustees or one or more of the officers of the Trust. Only
Holders of record shall be entitled to vote. Each Holder shall be entitled to a
vote proportionate to its Interest in the Trust. When Interests are held jointly
by several persons, any one of them may vote at any meeting in person or by
proxy in respect of such Interest, but if more than one of them shall be present
at such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Interest. A proxy purporting to be executed by or on behalf of a
Holder shall be deemed valid unless challenged at or prior to its exercise, and
the burden of proving invalidity shall rest on the challenger. If the Holder is
a minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of its Interest,
he may vote by his guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy.
9.5. REPORTS. The Trustees shall cause to be prepared, at least
annually, a report of operations containing a balance sheet and statement of
income and undistributed income of the Trust prepared in conformity with
generally accepted accounting principles and an opinion of an independent public
accountant on such financial statements. The Trustees shall, in addition,
furnish to the Holders at least semi-annually interim reports containing an
unaudited balance sheet as of the end of such period and an unaudited statement
of income and surplus for the period from the beginning of the current Fiscal
Year to the end of such period.
9.6. INSPECTION OF RECORDS. The records of the Trust shall be open to
inspection by Holders during normal business hours for any purpose not harmful
to the Trust.
9.7. HOLDER ACTION BY WRITTEN CONSENT. Any action which may be taken by
Holders may be taken without a meeting if Holders holding more than 50% of the
total Interests entitled to vote (or such larger proportion thereof as shall be
required by any express provision of this Declaration) shall consent to the
action in writing and the written consents are filed with the records of the
meetings of Holders. Such consent shall be treated for all purposes as a vote
taken at a meeting of Holders.
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ARTICLE X
Duration; Termination of Trust;
Amendment; Mergers; Etc.
------------------------
10.1. DURATION. Subject to possible termination or dissolution in
accordance with the provisions of Sections 10.2 and 10.3 respectively, the Trust
created hereby shall continue until the expiration of 20 years after the death
of the last survivor of the initial Trustees named herein and the following
named persons:
Date of
Name Address Birth
---- ------- -----
Amanda Jehan Sher Coolidge 236 West Newton Street August 16, 1989
Boston, MA 02116
David Cornelius Johnson 752 West End Avenue, May 2, 1989
Apt. 10J
New York, NY 10025
Conner Leahy McCabe 100 Parkway Road, Apt. 3C February 22, 1989
Bronxville, NY 10708
Andrea Hellegers 530 E. 84th St., 5H December 22, 1988
New York, NY 10028
Emilie Blair Ruble 30 Fifth Avenue, Apt. 11F February 24, 1989
New York, NY 10011
Brian Patrick Lyons 152-48 Jewel Avenue January 20, 1989
Flushing, NY 11367
Caroline Bolger Cima 11 Beechwood Lane December 23, 1988
Scarsdale, NY 10583
10.2. TERMINATION OF TRUST.
(a) The Trust may be terminated (i) by the affirmative vote of
the Holders of not less than two-thirds of the Interests of the Trust
at any meeting of the Holders or by an instrument in writing, without a
meeting, signed by a majority of the Trustees and consented to by the
Holders of not less than two-thirds of such Interests, or (ii) by the
Trustees by written notice to the Holders. Upon any such termination,
(i) The Trust shall carry on no business except for
the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the
affairs of the Trust and all of the powers of the Trustees
under this Declaration shall continue until the affairs of the
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Trust shall have been wound up, including the power to fulfill
or discharge the contracts of the Trust, collect its assets,
sell, convey, assign, exchange, or otherwise dispose of all or
any part of the remaining Trust Property to one or more
persons at public or private sale for consideration which may
consist in whole or in part of cash, securities or other
property of any kind, discharge or pay its liabilities, and do
all other acts appropriate to liquidate its business; provided
that any sale, conveyance, assignment, exchange, or other
disposition of all or substantially all the Trust Property
shall require approval of the principal terms of the
transaction and the nature and amount of the consideration by
the vote of Holders holding more than 50% of the total
Interests entitled to vote.
(iii) After paying or adequately providing for the
payment of all liabilities, and upon receipt of such releases,
indemnities and refunding agreements, as they deem necessary
for their protection, the Trustees may distribute the
remaining Trust Property, in cash or in kind or partly each,
among the Holders according to their respective rights.
(b) Upon termination of the Trust and distribution to the
Holders as herein provided, a majority of the Trustees shall execute
and lodge among the records of the Trust an instrument in writing
setting forth the fact of such termination. Upon termination of the
Trust, the Trustees shall thereupon be discharged from all further
liabilities and duties hereunder, and the rights and interests of all
Holders shall thereupon cease.
10.3 DISSOLUTION. Upon the withdrawal, resignation, retirement,
bankruptcy or expulsion of any Holder, the Trust shall be dissolved effective
120 days after the event. However, the Holders may, by a unanimous affirmative
vote at any meeting of the Holders or by an instrument in writing without a
meeting signed by a majority of the Trustees and consented to by all of the
Holders, agree to continue the business of the Trust even if there has been a
prior dissolution and termination.
10.4. AMENDMENT PROCEDURE.
(a) This Declaration may be amended by the vote of Holders
holding more than 50% of the total Interests entitled to vote or by an
instrument in writing, without a meeting, signed by a majority of the
Trustees and consented to by the vote of Holders holding more than 50%
of the total Interests entitled to vote. The Trustees may also amend
this Declaration without the vote or consent of Holders to change the
name of the Trust, to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof,
or to conform this Declaration to the requirements of applicable
federal laws or regulations or the requirements of the applicable
provisions of the Internal Revenue Code of 1986, as amended, but the
Trustees shall not be liable for failing so to do.
16
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(b) No amendment may be made, under Section 10.4(a) above,
which would change any rights with respect to any Interest in the Trust
by reducing the amount payable thereon upon liquidation of the Trust or
by diminishing or eliminating any voting rights pertaining thereto,
except with the vote or consent of the Holders of two-thirds of the
Interests of the Trust.
(c) A certification in recordable form signed by a majority of
the Trustees setting forth an amendment and reciting that it was duly
adopted by the Holders or by the Trustees as aforesaid or a copy of the
Declaration, as amended, in recordable form, and executed by a majority
of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as
Interests are first sold, this Declaration may be terminated or amended in any
respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees.
10.5. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust, or any
series thereof, may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all or
substantially all of its property, including its good will, upon such terms and
conditions and for such consideration when and as authorized at any meeting of
Holders called for the purpose by the affirmative vote of the Holders of not
less than two-thirds of the Interests of the Trust, or by an instrument or
instruments in writing without a meeting, consented to by the Holders of not
less than two-thirds of such Interests, and any such merger, consolidation,
sale, lease or exchange shall be deemed for all purposes to have been
accomplished under and pursuant to the statutes of the State of New York.
10.6. INCORPORATION. Upon a Majority Interests Vote, the Trustees may
cause to be organized or assist in organizing a corporation or corporations
under the laws of any jurisdiction or any other trust, partnership, association
or other organization to take over all of the Trust Property or to carry on any
business in which the Trust shall directly or indirectly have any interest, and
to sell, convey and transfer the Trust Property to any such corporation, trust,
association or organization in exchange for the equity interests thereof or
otherwise, and to lend money to, subscribe for the equity interests of, and
enter into any contracts with any such corporation, trust, partnership,
association or organization, or any corporation, partnership, trust, association
or organization in which the Trust holds or is about to acquire equity
interests. The Trustees may also cause a merger or consolidation between the
Trust or any successor thereto and any such corporation, trust, partnership,
association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of the Holders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organizations or entities.
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ARTICLE XI
Miscellaneous
-------------
11.1. CERTIFICATE OF DESIGNATION; AGENT FOR SERVICE OF PROCESS. The
Trust shall file, in the Department of State of New York, a certificate, in the
Trust name and signed by an officer of the Trust, designating the Secretary of
the State of New York as an agent upon whom process in any action or proceeding
against the Trust may be served.
11.2. GOVERNING LAW. This Declaration is executed by the Trustees and
delivered in the State of New York and with reference to the laws thereof, and
the rights of all parties and the validity and construction of every provision
hereof shall be subject to and construed according to the laws of the State of
New York and reference shall be specifically made to the trust law of the State
of New York as to the construction of matters not specifically covered herein or
as to which an ambiguity exists.
11.3. COUNTERPARTS. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
11.4. RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records of the Trusts or of any recording
office in which this Declaration may be recorded, appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or Holders, (b)
the due authorization of the execution of any instrument or writing, (c) the
form of any vote passed at a meeting of Trustees or Holders, (d) the fact that
the number of Trustees or Holders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration, (e) the form
of any By-Laws adopted by or the identity of any officers elected by the
Trustees, or (f) the existence of any fact or facts which in any manner relate
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any person dealing with the Trustees and their successors.
11.5. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of this Declaration are severable, and if
the Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with the 1940 Act, or with other
applicable laws and regulations, the conflicting provision shall be
deemed never to have constituted a part of his Declaration; provided,
however, that such determination shall not affect any of the remaining
provisions of this Declaration or render invalid or improper any action
taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid
or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in any
other jurisdiction or any other provision of this Declaration in any
jurisdiction.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
/s/Philip W. Coolidge April 1, 1990
- ------------------------------ -------------
Philip W. Coolidge Date
Trustee
/s/Gail E. McHugh April 1, 1990
- ------------------------------ -------------
Gail E. McHugh Date
Trustee
/s/Cynthia J. Colitti April 1, 1990
- ------------------------------ -------------
Cynthia J. Colitti Date
Trustee
19
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NY TAX FREE MONEY PORTFOLIO
Amendment of Amended and Restated
Declaration of Trust
---------------------------------
The undersigned, being a majority of the Trustees of NY Tax Free Money
Portfolio, a trust established under the laws of the State of New York pursuant
to an Amended and Restated Declaration of Trust dated as of April 1, 1990 (the
"Declaration of Trust"), pursuant to Section 10.4(a) of the Declaration of
Trust, hereby cure an omission and ambiguity in the Declaration of Trust by
adding the words "and terminated" into the first sentence of Section 10.3 of the
Declaration of Trust such that the sentence reads in its entirety:
"Upon the withdrawal, resignation, retirement, bankruptcy or
expulsion of any Holder, the Trust shall be dissolved and
terminated effective 120 days after the event."
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of November 30, 1990.
/s/S. Leland Dill
--------------------------------
As Trustee, and not individually
/s/Philip W. Coolidge
--------------------------------
As Trustee, and not individually
BT0066
NY TAX FREE MONEY PORTFOLIO
---------------------------
BY-LAWS
These By-Laws are made as of the 26th day of March, 1990 and adopted
pursuant to Section 2.7 of the Declaration of Trust establishing the NY TAX FREE
MONEY PORTFOLIO, dated as of the 26th day of March, 1990, as from time to time
amended (hereinafter called the "Declaration"). All words and terms capitalized
in these By-Laws shall have the meaning or meanings set forth for such words or
terms in the Declaration.
ARTICLE I
---------
Holders Meetings
----------------
Section 1.1. CHAIRMAN. The President shall act as chairman at all
meetings of the Holders and, in his absence, the Trustee or Trustees present at
each meeting may elect a temporary chairman for the meeting, who may be one of
themselves.
Section 1.2. PROXIES; VOTING. Holders may vote either in person or by
duly executed proxy and each Holder shall be entitled to a vote proportionate to
his Interest in the Trust, all as provided in Article IX of the Declaration. No
proxy shall be valid after eleven (11) months from the date of its execution,
unless a longer period is expressly stated in such proxy.
Section 1.3. FIXING RECORD DATES. For the purpose of determining the
Holders who are entitled to notice of or to vote or act at a meeting, including
<PAGE>
any adjournment thereof, or who are entitled to participate in any
distributions, or for any other proper purpose, the Trustees may from time to
time fix a record date in the manner provided in Section 9.3 of the Declaration.
If the Trustees do not, prior to any meeting of the Holders, so fix a record
date, then the date of mailing notice of the meeting shall be the record date.
Section 1.4. INSPECTORS OF ELECTION. In advance of any meeting of the
Holders, the Trustees may appoint Inspectors of Election to act at the meeting
or any adjournment thereof. If Inspectors of Election are not so appointed, the
chairman, if any, of any meeting of the Holders may, and on the request of any
Holder or his proxy shall, appoint Inspectors of Election of the meeting. The
number of Inspectors shall be either one or three. If appointed at the meeting
on the request of one or more Holders or proxies, a Majority Interests Vote
shall determine whether one or three Inspectors are to be appointed, but failure
to allow such determination by the Holders shall not affect the validity of the
appointment of Inspectors of Election. In case any person appointed as Inspector
fails to appear or fails or refuses to act, the vacancy may be filled by
appointment made by the Trustees in advance of the convening of the meeting or
at the meeting by the person acting as chairman. The Inspectors of Election
2
<PAGE>
shall determine the Interests owned by Holders, the Interests represented at the
meeting, the existence of a quorum, the authenticity, validity and effect of
proxies, shall receive votes, ballots or consents, shall hear and determine all
challenges and questions in any way arising in connection with the right to
vote, shall count and tabulate all votes or consents, determine the results, and
do such other acts as may be proper to conduct the election or vote with
fairness to all Holders. If there are three or more Inspectors of Election, the
decision, act or certificate of a majority is effective in all respects as the
decision, act or certificate of all. On request of the chairman, if any, of the
meeting, or of any Holder or his proxy, the Inspectors of Election shall make a
report in writing of any challenge or question or matter determined by them and
shall execute a certificate of any facts found by them.
Section 1.5. RECORDS AT HOLDER MEETINGS. At each meeting of the Holders
there shall be open for inspection the minutes of the last previous meeting of
Holders of the Trust and a list of the Holders of the Trust, certified to be
true and correct by the Secretary or other proper agent of the Trust, as of the
record date of the meeting. Such list of Holders shall contain the name of each
Holder in alphabetical order and the address and Interests owned by such Holder.
Holders shall have the right to inspect books and records of the Trust during
3
<PAGE>
normal business hours and for any purpose not harmful to the Trust.
ARTICLE II
----------
Trustees
--------
Section 2.1. ANNUAL AND REGULAR MEETINGS. The Trustees shall hold an
annual meeting for the election of officers and the transaction of other
business which may come before such meeting. Regular meetings of the Trustees
may be held without call or notice at such place or places and times as the
Trustees may by resolution provide from time to time.
Section 2.2. SPECIAL MEETINGS. Special Meetings of the Trustees shall
be held upon the call of the chairman, if any, the President, the Secretary or
any two Trustees, at such time, on such day and at such place, as shall be
designated in the notice of the meeting.
Section 2.3. NOTICE. Notice of a meeting shall be given by mail or by
telegram (which term shall include a cablegram or telecopier) or delivered
personally. If notice is given by mail, it shall be mailed not later than 48
hours preceding the meeting and if given by telegram, telecopier or personally,
such notice shall be sent or delivery made not later than 24 hours preceding the
meeting. Notice by telephone shall constitute personal delivery for these
4
<PAGE>
purposes. Notice of a meeting of Trustees may be waived before or after any
meeting by signed written waiver. Neither the business to be transacted at, nor
the purpose of, any meeting of the Board of Trustees need be stated in the
notice or waiver of notice of such meeting, and no notice need be given of
action proposed to be taken by written consent. The attendance of a Trustee at a
meeting shall constitute a waiver of notice of such meeting except where a
Trustee attends a meeting for the express purpose of objecting, at the
commencement of such meeting, to the transaction of any business on the ground
that the meeting has not been lawfully called or convened.
Section 2.4. CHAIRMAN; RECORDS. The Trustees may appoint a Chairman of
the Board from among their number. Such Chairman of the Board, if any, shall act
as chairman at all meetings of the Trustees; in his absence the President shall
act as chairman; and, in the absence of the Chairman of the Board and the
President, the Trustees present shall elect one of their number to act as
temporary chairman. The results of all actions taken at a meeting of the
Trustees, or by written consent of the Trustees, shall be recorded by the
Secretary.
ARTICLE III
-----------
Officers
--------
Section 3.1. OFFICERS OF THE TRUST. The officers of the Trust shall
consist of a President, a Secretary, a Treasurer and such other officers or
5
<PAGE>
assistant officers, including Vice Presidents, as may be elected by the
Trustees. Any two or more of the offices may be held by the same person, except
that the same person may not be both President and Secretary. The Trustees may
designate a Vice President as an Executive Vice President and may designate the
order in which the other Vice Presidents may act. The President shall be a
Trustee, but no other officer of the Trust need be a Trustee.
Section 3.2. ELECTION AND TENURE. At the initial organization meeting
and thereafter at each annual meeting of the Trustees, the Trustees shall elect
the President, Secretary, Treasurer and such other officers as the Trustees
shall deem necessary or appropriate in order to carry out the business of the
Trust. Such officers shall hold office until the next annual meeting of the
Trustees and until their successors have been duly elected and qualified. The
Trustees may fill any vacancy in office or add any additional officers at any
time.
Section 3.3. REMOVAL OF OFFICERS. Any officer may be removed at any
time, with or without cause, by action of a majority of the Trustees. This
provision shall not prevent the making of a contract of employment for a
definite term with any officer and shall have no effect upon any cause of action
which any officer may have as a result of removal in breach of a contract of
employment. Any officer may resign at any time by notice in writing signed by
6
<PAGE>
such officer and delivered or mailed to the President, or Secretary, and such
resignation shall take effect immediately, or at a later date according to the
terms of such notice in writing.
Section 3.4. BONDS AND SURETY. Any officer may be required by the
Trustees to be bonded for the faithful performance of his duties in such amount
and with such sureties as the Trustees may determine.
Section 3.5. PRESIDENTS AND VICE-PRESIDENTS. The President shall be the
chief executive officer of the Trust and, subject to the control of the
Trustees, shall have general supervision, direction and control of the business
of the Trust and of its employees and shall exercise such general powers of
management as are usually vested in the office of President of a corporation.
The President shall preside at all meetings of the Holders and, in the absence
of the Chairman of the Board, the President shall preside at all meetings of the
Trustees. The President shall be, ex officio, a member of all standing
committees. Subject to direction of the Trustees, the President shall have the
power, in the name and on behalf of the Trust, to execute any and all loan
documents, contracts, agreements, deeds, mortgages, and other instruments in
writing, and to employ and discharge employees and agents of the Trust. Unless
otherwise directed by the Trustees, the President shall have full authority and
7
<PAGE>
power, on behalf of all of the Trustees, to attend and to act and to vote, on
behalf of the Trust at any meetings of business organizations in which the Trust
holds an interest, or to confer such powers upon any other persons, by executing
any proxies duly authorizing such persons. The President shall have such further
authorities and duties as the Trustees shall from time to time determine. In the
absence or disability of the President, the Vice Presidents in order of their
rank or the Vice President designated by the Trustees, shall perform all of the
duties of President, and when so acting shall have all the powers of and be
subject to all of the restrictions upon the President. Subject to the direction
of the President, each Vice President shall have the power in the name and on
behalf of the Trust to execute any and all loan documents, contracts,
agreements, deeds, mortgages and other instruments in writing, and, in addition,
shall have such other duties and powers as shall be designated from time to time
by the Trustees or by the President.
Section 3.6. SECRETARY. The Secretary shall keep the minutes of all
meetings of, and record all votes of, Holders, Trustees and the Executive
Committee, if any. He shall be custodian of the seal of the Trust, if any, and
he (and any other person so authorized by the Trustees) shall affix the seal or,
if permitted, a facsimile thereof, to any instrument executed by the Trust which
8
<PAGE>
would be sealed by a New York corporation executing the same or a similar
instrument and shall attest the seal and the signature or signatures of the
officer or officers executing such instrument on behalf of the Trust. The
Secretary shall also perform any other duties commonly incident to such office
in a New York corporation, and shall have such other authorities and duties as
the Trustees shall from time to time determine.
Section 3.7. TREASURER. Except as otherwise directed by the Trustees,
the Treasurer shall have the general supervision of the monies, funds,
securities, notes receivable and other valuable papers and documents of the
Trust, and shall have and exercise under the supervision of the Trustees and of
the President all powers and duties normally incident to his office. He may
endorse for deposit or collection all notes, checks and other instruments
payable to the Trust or to its order. He shall deposit all funds of the Trust as
may be ordered by the Trustees or the President. He shall keep accurate account
of the books of the Trust's transactions which shall be the property of the
Trust, and which together with all other property of the Trust in his
possession, shall be subject at all times to the inspection and control of the
Trustees. Unless the Trustees shall otherwise determine, the Treasurer shall be
the principal accounting officer of the Trust and shall also be the principal
9
<PAGE>
financial officer of the Trust. He shall have such other duties and authorities
as the Trustees shall from time to time determine. Notwithstanding anything to
the contrary herein contained, the Trustees may authorize any adviser,
administrator or manager to maintain bank accounts and deposit and disburse
funds on behalf of the Trust.
Section 3.8. OTHER OFFICERS AND DUTIES. The Trustees may elect such
other officers and assistant officers as they shall from time to time determine
to be necessary or desirable in order to conduct the business of the Trust.
Assistant officers shall act generally in the absence of the officer whom they
assist and shall assist that officer in the duties of his office. Each officer,
employee and agent of the Trust shall have such other duties and authority as
may be conferred upon him by the Trustees or delegated to him by the President.
ARTICLE IV
----------
Custodian
---------
Section 4.1. APPOINTMENT AND DUTIES. The Trustees shall at all times
employ a custodian or custodians with authority as its agent, but subject to
such restrictions, limitations and other requirements, if any, as may be
contained in these By-Laws:
(1) to hold the securities owned by the Trust and deliver the
same upon written order;
10
<PAGE>
(2) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books and
accounts of the Trust and furnish clerical and accounting services; and
(5) if authorized to do so by the Trustees, to compute the net
income and net assets of the Trust;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian.
The Trustees may also authorize the custodian to employ one or more
sub-custodians, from to time to time, to perform such of the acts and services
of the custodian and upon such terms and conditions as may be agreed upon
between the custodian and such sub-custodian and approved by the Trustee.
Section 4.2. CENTRAL CERTIFICATE SYSTEM. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust in a
system, for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, any such other person or
11
<PAGE>
entity with which the Trustees may authorize deposit in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible. All such
deposits shall be subject to withdrawal only upon the order of the Trust.
ARTICLE V
---------
Miscellaneous
-------------
Section 5.1. DEPOSITORIES. In accordance with Article IV of these
By-Laws, the funds of the Trust shall be deposited in such depositories as the
Trustees shall designate and shall be drawn out on checks, drafts or other
orders signed by such officer, officers, agent or agents (including any adviser,
administrator or manager), as the Trustees may from tine to time authorize.
Section 5.2. SIGNATURES. All contracts and other instruments shall be
executed on behalf of the Trust by such officer, officers, agent or agents, as
provided in these By-Laws or as the Trustees ray from tine to time by resolution
provide.
Section 5.3. SEAL. The seal of the Trust, if any, may be affixed to any
document, and the seal and its attestation may be lithographed, engraved or
otherwise printed on any document with the same force and effect as if it had
been imprinted and attested manually in the same manner and with the same effect
as if done by a New York corporation.
12
<PAGE>
ARTICLE VI
----------
Non-Transferability of Interests
--------------------------------
Section 6.1. NON-TRANSFERABILITY OF INTERESTS. Interests shall not be
transferable. Except as otherwise provided by law, the Trust shall be entitled
to recognize the exclusive right of a person in whose name Interests stand on
the record of Holders as the owner of such Interests for all purposes,
including, without limitation, the rights to receive distributions, and to vote
as such owner, and the Trust shall not be bound to recognize any equitable or
legal claim to or interest in any such Interests on the part of any other
person.
Section 6.2. REGULATIONS. The Trustees may make such additional rules
and regulations, not inconsistent with these By-Laws, as they may deem expedient
concerning the sale and purchase of Interests of the Trust.
Section 6.3. DISTRIBUTION DISBURSING AGENTS AND THE LIKE. The Trustees
shall have the power to employ and compensate such distribution disbursing
agents, warrant agents and agents for the reinvestment of distributions as they
shall deem necessary or desirable. Any of such agents shall have such power and
authority as is delegated to any of them by the Trustee.
ARTICLE VII
-----------
Amendment of By-Laws
--------------------
Section 7.1. AMENDMENT AND REPEAL OF BY-LAWS. In accordance with
Section 2.7 of the Declaration, the Trustees shall have the power to alter,
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<PAGE>
amend or repeal the By-Laws or adopt new By-Laws at any time. Action by the
Trustees with respect to the By-Laws shall be taken by an affirmative vote of a
majority of the Trustees. The Trustees shall in no event adopt By-Laws which are
in conflict with the Declaration.
The Declaration establishing the NY Tax Free Money Portfolio provides
that the name NY Tax Free Money Portfolio refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, officer, employee or agent of the NY Tax Free Money Portfolio shall
be held to any personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of said NY Tax Free Money Portfolio.
8524K-5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of April 23, 1990 by and between NY TAX FREE MONEY
PORTFOLIO, a New York trust (herein called the "Portfolio"), and BANKERS TRUST
COMPANY (herein called the "Investment Adviser").
WHEREAS, the Portfolio is registered as an open-end, non-diversified,
management investment company under the Investment Company Act of 1940;
WHEREAS, the Portfolio desires to retain the Investment Adviser to
render investment advisory and other services, and the Investment Adviser is
willing to so render such services on the terms hereinafter set forth;
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
- - - - - - - - - -
In consideration of the promises and mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Portfolio hereby appoints the Investment Adviser to
act as investment adviser to the Portfolio for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such appointment and
agrees to render the services herein set forth for the compensation herein
provided.
2. MANAGEMENT. Subject to the supervision of the Board of Trustees of
the Portfolio, the Investment Adviser will provide a continuous investment
program for the Portfolio, including investment research and management with
respect to all securities, investments, cash and cash equivalents in the
Portfolio. The Investment Adviser will determine from time to time what
securities and other investments will be purchased, retained or sold by the
Portfolio. The Investment Adviser will provide the services rendered by it
hereunder in accordance with the Portfolio's investment objectives and policies
as stated in the then-current Prospectus and Statement of Additional
Information. The Investment Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission (herein called the "Rules") and with the
Securities Act of 1933, the Securities Exchange Act of 1934, the Investment
Company Act of 1940 (the "1940 Act") and the Investment Advisers Act of 1940,
all as amended, and will in addition conduct its activities under this Agreement
in accordance with regulations of the Board of Governors of the Federal Reserve
System pertaining to the investment advisory activities of bank holding
companies and their subsidiaries;
(b) will place orders pursuant to its investment determinations
for the Portfolio either directly with the issuer or with any broker or dealer
selected by it. In placing orders with brokers and dealers, the Investment
Adviser will use its reasonable best efforts to obtain the best net price and
<PAGE>
the most favorable execution of its orders, after taking into account all
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. Consistent with this
obligation, the Investment Adviser may, to the extent permitted by law, purchase
and sell portfolio securities to and from brokers and dealers who provide
brokerage and research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934) to or for the benefit of any fund and/or other
accounts over which the Investment Adviser or any of its affiliates exercises
investment discretion. Subject to the review of the Portfolio's Board of
Trustees from time to time with respect to the extent and continuation of the
policy, the Investment Adviser is authorized to pay to a broker or dealer who
provides such brokerage and research services a commission for effecting a
securities transaction which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if the
Investment Adviser determines in good faith that such commission was reasonable
in relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
overall responsibilities of the Investment Adviser with respect to the accounts
as to which it exercises investment discretion; and
(c) will maintain books and records with respect to the
Portfolio's securities transactions and will render to the Portfolio's Board of
Trustees such periodic and special reports as the Board may request.
3. SERVICES NOT EXCLUSIVE. The investment management services rendered
by the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to render similar services to others so long as
its services under this Agreement are not impaired thereby.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
of the Rules under the 1940 Act, the Investment Adviser hereby agrees that all
records which it maintains for the Portfolio are the property of the Portfolio
and further agrees to surrender promptly to the Portfolio any of such records
upon the Portfolio's request. The Investment Adviser further agrees to preserve
for the periods prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-1 under the 1940 Act and to comply in full with the
requirements of Rule 204-2 under the Investment Advisers Act of 1940 pertaining
to the maintenance of books and records.
5. EXPENSES. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Portfolio.
In addition, if the expenses borne by the Portfolio in any fiscal year
of the Portfolio exceed the applicable expense limitations imposed by the
securities regulations of any state in which the beneficial interest in the
Portfolio are registered or qualified for sale to the public, the Investment
Adviser shall reimburse the Portfolio for the excess expense to the extent
required by state law.
2
<PAGE>
6. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Portfolio will pay the Investment Adviser and
the Investment Adviser will accept as full compensation therefor a fee, computed
daily and payable monthly, an amount equal to the annual rate of 0.15% of the
Portfolio's average daily net assets.
7. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER; INDEMNIFICATION.
(a) The Investment Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Portfolio in connection with the
matters to which this Agreement relates, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Investment Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
(b) Subject to the exceptions and limitations contained in Section
7(c) below:
(i) the Investment Adviser (hereinafter referred to as a
"Covered Person") shall be indemnified by the Portfolio to the fullest extent
permitted by law, against liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit or proceeding in which
he becomes involved, as a party or otherwise, by virtue of his being or having
been the Investment Adviser of the Portfolio, and against amounts paid or
incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil , criminal or
other, including appeals), actual or threatened while in office or thereafter,
and the words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.
(c) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Portfolio or its
investors by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office or (B)
not to have acted in good faith in the reasonable belief that his action was in
the best interest of the Portfolio; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office,
(A) by the court or other body approving the settlement;
or
3
<PAGE>
(B) by at least a majority of those Trustees who are
neither Interested Persons of the Portfolio nor are parties to the matter based
upon a review of readily available facts (as opposed to a full trial-type
inquiry); or
(C) by written opinion of independent legal counsel
based upon a review of readily available facts (as opposed to a full trial-type
inquiry);
provided, however, that any shareholder of the Portfolio may, by appropriate
legal proceedings, challenge any such determination by the Trustees or by
independent counsel.
(d) The rights of indemnification herein provided may be insured
against by policies maintained by the Portfolio, shall be severable, shall not
be exclusive of or affect any other rights to which any Covered Person may now
or hereafter be entitled, shall continue as to a person who has ceased to be a
Covered Person and shall inure to the benefit of the successors and assigns of
such person. Nothing contained herein shall affect any rights to indemnification
to which Portfolio personnel and any other persons, other than a Covered Person,
may be entitled by contract or otherwise under law.
(e) Expenses in connection with the preparation and presentation
of a defense to any claim, suit or proceeding of the character described in
subsection (b) of this Section 7 may be paid by the Portfolio from time to time
prior to final disposition thereof, upon receipt of an undertaking by or on
behalf of such Covered Person that such amount will be paid over by him to the
Portfolio if it is ultimately determined that he is not entitled to
indemnification under this Section 7; provided, however, that either (i) such
Covered Person shall have provided appropriate security for such Undertaking, or
(ii) the Portfolio shall be insured against losses arising out of any such
advance payments, or (iii) either a majority of the Trustees who are neither
Interested Persons of the Portfolio nor parties to the matter, or independent
legal counsel in a written opinion, shall have determined, based upon a review
of readily available facts as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
entitled to indemnification under this Section 7.
8. DURATION AND TERMINATION. This Agreement shall be effective as to
the Portfolio as of the date the Portfolio commences investment operations after
this Agreement shall have been approved by the Board of Trustees of the
Portfolio and the investor(s) in the Portfolio in the manner contemplated by
Section 15 of the 1940 Act and, unless sooner terminated as provided herein,
shall continue until the second anniversary of such date. Thereafter, if not
terminated, this Agreement shall continue in effect as to the Portfolio for
successive periods of 12 months each, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Board of Trustees of the Portfolio who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
Portfolio by vote of a majority of the outstanding voting securities of the
4
<PAGE>
Portfolio; provided, however, that this Agreement may be terminated by the
Portfolio at any time, without the payment of any penalty, by the Board of
Trustees of the Portfolio or by vote of a majority of the outstanding voting
securities of the Portfolio on 60 days' written notice to the Investment
Adviser, or by the Investment Adviser as to the Portfolio at any time, without
payment of any penalty, on 90 days' written notice to the Portfolio. This
Agreement will immediately terminate in the event of its assignment. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meanings as such terms
have in the 1940 Act and the rules and regulatory constructions thereunder.)
9. AMENDMENT OF THIS AGREEMENT. No material term of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of a material term of this
Agreement shall be effective until approved by vote of a majority of the
Portfolio's outstanding voting securities.
10. (A) REPRESENTATIONS AND WARRANTIES. The Investment Adviser hereby
represents and warrants as follows:
(1) The Investment Adviser is exempt from registration under the
Investment Advisers Act of 1940;
(2) The Investment Adviser has all requisite authority to enter
into, execute, deliver and perform its obligations under,
this Agreement;
(3) This Agreement is legal, valid and binding, and enforceable
in accordance with its terms; and
(4) The performance by the Investment Adviser of its obligations
under this Agreement does not conflict with any law to which
it is subject.
(B) COVENANTS. The Investment Adviser hereby covenants and agrees
that, so long as this Agreement shall remain in effect,
(1) The Investment Adviser shall remain either exempt from, or
registered under, the registration provisions of the
Investment Advisers Act of 1940; and
(2) The performance by the Investment Adviser of its obligations
under this Agreement shall not conflict with any law to
which it is then subject.
11. NOTICES. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, (1) to the Investment Adviser at 280 Park Avenue, New York, New York
10015, or (2) to the Portfolio at 6 St. James Avenue, Boston, Massachusetts
02116.
5
<PAGE>
12. WAIVER. With full knowledge of the circumstances and the effect of
its action, the Investment Adviser hereby waives any and all rights which it may
acquire in the future against the property of any investor in the Portfolio,
other than beneficial interests in the Portfolio at their then net asset value,
which arise out of any action or inaction of the Portfolio under this Agreement.
13. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by the
laws of the State of New York, without reference to principles of conflicts of
law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
Attest: NY TAX FREE MONEY PORTFOLIO
/s/Thomas M. Lenz By: /s/Philip W. Coolidge
- ------------------------ ------------------------
Philip W. Coolidge
President
Attest: BANKERS TRUST COMPANY
/s/Grace Torres By: /s/George B. Jackson
- ------------------------ ------------------------
George B. Jackson
Vice President
8524K-5
6
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the NY Tax
Free Money Portfolio Annual Report dated December 31, 1995, and is qualified in
its entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0000862065
<NAME> NY TAX FREE MONEY PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 70326852
<INVESTMENTS-AT-VALUE> 70326852
<RECEIVABLES> 663987
<ASSETS-OTHER> 570
<OTHER-ITEMS-ASSETS> 0
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<TOTAL-LIABILITIES> 58573
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