1940 Act File No. 811-06074
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 7 ............................... X
TAX FREE MONEY PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
Jay S. Neuman, Esq. Copies to: Burton M. Leibert, Esq.
Federated Investors Tower Willkie Farr & Gallagher
Pittsburgh, Pennsylvania 15222-3779 One Citicorp Center
(Name and Address of Agent for Service) 153 East 53rd Street
New York, New York 10022
Explanatory Note
This Amendment to the Registrant's Registration Statement on Form N-1A
(the `Registration Statement'') has been filed by the Registrant pursuant
to Section 8(b) of the Investment Company Act of 1940. However, beneficial
interests in the Registrant are not being registered under the Securities
Act of 1933 (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. The Registration Statement does
not constitute an offer to sell, or the solicitation of an offer to buy,
any beneficial interests in the Registrant.
TAX FREE MONEY PORTFOLIO
PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.
Tax Free Money Portfolio (the "Portfolio") is a no-load, diversified, open-
end management investment company which was organized as a trust under the
laws of the State of New York on March 26, 1990. Beneficial interests in
the Portfolio are issued solely in private placement transactions that do
not involve any "public offering" within the meaning of Section 4(2) of the
Securities Act of 1933, as amended (the "1933 Act"). Investments in the
Portfolio may only be made by investment companies, insurance company
separate accounts, common or commingled trust funds or similar
organizations or entities that are "accredited investors" within the
meaning of Regulation D under the 1933 Act. This registration statement
does not constitute an offer to sell, or the solicitation of an offer to
buy, any "security" within the meaning of the 1933 Act.
The investment objectives of the Portfolio are to provide its investors
with a high level of current income consistent with liquidity and the
preservation of capital. The Portfolio seeks to achieve its investment
objectives by investing 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 the interest on
which is exempt from Federal income taxes ("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 Municipal
Obligations. Although not a policy of the Portfolio, the Portfolio
generally intends to invest no more than 25% of its assets in Municipal
Obligations of issuers in any one state, territory or possession of the
United States.
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 asset 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 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 Company, 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.
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 user of the
facility being financed. The Portfolio may invest in "private activity"
bonds, described below, 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 could 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 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 invest in Municipal Obligations the income on which may
be derived from economically related projects or projects of a similar
type. To the extent that the Portfolio's assets are concentrated in
Municipal Obligations payable from revenues on economically related
projects and facilities, or issued by issuers in particular states, the
Portfolio will be subject to the particular risks presented by those
projects, facilities or states to a greater extent than it would be if the
Portfolio's assets were not so concentrated. 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.
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 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 may not, with respect to 75% of its
total assets, invest more than 5% of its total assets in the obligations of
any one issuer except for U.S. Government Obligations and repurchase
agreements, which may be purchased without limitation. This restriction,
however, shall not preclude the purchase by the Portfolio of issues backed
by letters of credit or guarantees of banks or other financial
institutions, even though any such bank or financial institution provides a
letter of credit or guarantee with respect to securities that in the
aggregate represent more than 5% but not more than 10% of the total assets
of the Portfolio, and will consider the issuer of the security (and not the
letter of credit or guarantee) the principal obligator of the obligation.
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 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.
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.
Credit Enhancement. Certain of the Portfolio's acceptable investments
may be credit-enhanced by a guaranty, letter of credit, or insurance. Any
bankruptcy, receivership, default, or change in the credit quality of the
party providing the credit enhancement will adversely affect the quality
and marketability of the underlying security and could cause losses to the
Portfolio. The Portfolio may have more than 25% of its total assets
invested in securities credit-enhanced by banks.
ITEM 5. MANAGEMENT OF THE FUND.
The Board of Trustees provides broad supervision over the affairs of the
Portfolio. Bankers Trust is the Portfolio's investment adviser. A majority
of the Portfolio's Trustees are not affiliated with the Adviser. Bankers
Trust, the Portfolio's administrator (the "Administrator"), supervises the
overall administration of the Portfolio. The Portfolio's fund accountant,
transfer agent, custodian and dividend paying agent is also Bankers Trust.
Bankers Trust, a New York banking corporation with principal offices at
280 Park Avenue, New York, New York 10017, is a wholly-owned subsidiary of
Bankers Trust New York Corporation. Bankers Trust conducts a variety of
general banking and trust activities and is a major wholesale supplier of
financial services to the international and domestic institutional market.
As of December 31, 1996, Bankers Trust New York Corporation was the seventh
largest bank holding company in the United States with total assets of
approximately $120 billion. Bankers Trust is a worldwide merchant bank
dedicated to servicing the needs of corporations, governments, financial
institutions and private clients through a global network of over 120
offices in more than 40 countries. Investment management is a core business
of Bankers Trust, built on a tradition of excellence from its roots as a
trust bank founded in 1903. The scope of Bankers Trust's investment
management capability is unique due to its leadership positions in both
active and passive quantitative management and its presence in major equity
and fixed income markets around the world. Bankers Trust is one of the
nation's largest and most experienced investment managers with
approximately $227 billion in assets under management globally. Of that
total, approximately $45 billion are in cash assets alone. This makes
Bankers Trust one of the nation's leading managers of cash funds.
Bankers Trust has more than 50 years of experience managing retirement
assets for the nation's largest corporations and institutions. In the past,
these clients have been serviced through separate account and commingled
fund structures. Now, the BT Family of Funds brings Bankers Trust's
extensive investment management expertise, once available to only the
largest institutions in the U.S., to individual investors. Bankers Trust's
officers have had extensive experience in managing investment portfolios
having objectives similar to those of the Portfolio.
Bankers Trust, subject to the supervision and direction of the Board of
Trustees, manages the Portfolio in accordance with the Portfolio's
investment objectives and stated investment policies, makes investment
decisions for the Portfolio, places orders to purchase and sell securities
and other financial instruments on behalf of the Portfolio and employs
professional investment managers and securities analysts who provide
research services to the Portfolio. All orders for investment transactions
on behalf of the Portfolio are placed by Bankers Trust with broker-dealers
and other financial intermediaries that it selects, including those
affiliated with Bankers Trust. A Bankers Trust affiliate will be used in
connection with a purchase or sale of an investment for the Portfolio only
if Bankers Trust believes that the affiliate's charge for the transaction
does not exceed usual and customary levels. The Portfolio will not invest
in obligations for which Bankers Trust or any of its affiliates is the
ultimate obligor or accepting bank. The Portfolio may, however, invest in
the obligations of correspondents and customers of Bankers Trust. As
compensation for its investment advisory services, the Portfolio will pay
Bankers Trust a fee computed daily and paid monthly at the annual rate of
0.15% of the average daily net assets of the Portfolio pursuant to an
investment advisory agreement.
Bankers Trust has been advised by its counsel that, in counsel's
opinion, Bankers Trust currently may perform the services for the Portfolio
described in this Registration Statement without violation of the Glass-
Steagall Act or other applicable banking laws or regulations.
Under an administration and services agreement with the Portfolio (the
"Administration and Services Agreement"), Bankers Trust calculates the
value of the net assets of the Portfolio and generally assists the Board of
Trustees in all aspects of the administration and operation of the
Portfolio. The Administration and Services Agreement provides for the
Portfolio to pay Bankers Trust a fee computed daily and paid monthly at the
annual rate of 0.05% of the average daily net assets of the Portfolio.
Under the Administration and Services Agreement, Bankers Trust may delegate
one or more of its responsibilities to others at Bankers Trust's expense.
The Portfolio bears its own expenses. Operating expenses for the
Portfolio generally consist of all costs not specifically borne by Bankers
Trust or Edgewood Services, Inc. ("Edgewood"), the Portfolio's placement
agent 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 (`NAV'').
Investors in the Portfolio (e.g., investment companies, insurance company
separate accounts and common and commingled trust funds) will each be
liable for all obligations of the Portfolio. However, the risk of an
investor in the Portfolio incurring financial loss on account of such
liability is limited to circumstances in which both inadequate insurance
existed and the Portfolio itself was unable to meet its obligations.
The Portfolio reserves the right to create and issue a number of series, in
which case investments in each series would participate equally in the
earnings, dividends and assets of the particular series. Currently, the
Portfolio has only one series.
Investments in the Portfolio have no pre-emptive or conversion rights and
are fully paid and non-assessable, except as set forth below. The Portfolio
is not required and has no current intention to hold annual meetings of
investors, but the Portfolio will hold special meetings of investors when
in the judgment of the Trustees it is necessary or desirable to submit
matters for an investor vote. Changes in fundamental policies will be
submitted to investors for approval. Investors have under certain
circumstances (e.g. upon application and submission of certain specified
documents to the Trustees by a specified 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 NAV of the Portfolio is determined each day on which the Portfolio
is open ("Portfolio Business Day") (and on such other days as are deemed
necessary in order to comply with Rule 22c-1 under the Investment Company
Act of 1940, as amended (the "1940 Act")). This determination is made twice
during each such day as of 12:00 noon, Eastern time and as of the close of
regular trading on the New York Stock Exchange Inc. (the "NYSE") which is
currently 4:00 p.m. (or should the NYSE close earlier, at the time of such
early closing), Eastern time (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 the Valuation Time, on each
such business day, the value of each investor's beneficial interest in the
Portfolio will be determined by multiplying the NAV of the Portfolio by the
percentage, effective for that day, that represents that investor's share
of the aggregate beneficial interests in the Portfolio. Any additions or
withdrawals, which are to be effected on that day, will then be effected.
The investor's percentage of the aggregate beneficial interests in the
Portfolio will then be re-computed as the percentage equal to the fraction
(i) the numerator of which is the value of such investor's investment in
the Portfolio as of the Valuation Time, on such day plus or minus, as the
case may be, the amount of any additions to or withdrawals from the
investor's investment in the Portfolio effected on such day, and (ii) the
denominator of which is the aggregate NAV of the Portfolio as of the
Valuation Time, on such day plus or minus, as the case may be, the amount
of the net additions to or withdrawals from the aggregate investments in
the Portfolio by all investors in the Portfolio. The percentage so
determined will then be applied to determine the value of the investor's
interest in the Portfolio as of the Valuation Time, on the following
business day of the Portfolio.
The Net Income of the Portfolio shall consist of (i) all income accrued,
less the amortization of any premium, on the assets of the Portfolio, less
(ii) all actual and accrued expenses of the Portfolio determined in
accordance with generally accepted accounting principles. Interest income
includes discount earned (including both original issue and market
discount) on discount paper accrued ratably to the date of maturity and any
net realized gains or losses on the assets of the Portfolio. All the Net
Income of the Portfolio is allocated pro rata among the investors in the
Portfolio. The Net Income is accrued daily and distributed monthly to the
investors in the Portfolio.
Under the anticipated method of operation of the Portfolio, the Portfolio
will not be subject to any income tax. However, each investor in the
Portfolio will be taxable on its share (as determined in accordance with
the governing instruments of the Portfolio) of the Portfolio's ordinary
income and capital gain in determining its income tax liability. The
determination of such share will be made in accordance with the Internal
Revenue Code of 1986, as amended, and regulations promulgated thereunder.
It is intended that the Portfolio's assets, income and distributions will
be managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended, assuming that the investor invested all of its assets in
the Portfolio.
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. See "General Description of
Registrant" above.
An investment in the Portfolio may be made without a sales load. All
investments are made at the NAV next determined if an order is received by
the Portfolio by the designated cutoff time for each accredited investor.
The NAV of the Portfolio is determined on each Portfolio Business Day.
Securities are valued at amortized cost, which the Trustees of the
Portfolio have determined in good faith constitutes fair value for the
purposes of complying with the 1940 Act. This valuation method will
continue to be used until such time as the Trustees of the Portfolio
determine that it does not constitute fair value for such purposes.
There is no minimum initial or subsequent investment in the Portfolio.
However, because the Portfolio intends to be as fully invested at all times
as is reasonably practicable in order to enhance the yield on its assets,
investments must be made in Federal funds (i.e., monies credited to the
account of the Portfolio's custodian bank by a Federal Reserve Bank).
The Portfolio and Edgewood reserve the right to cease accepting
investments at any time or to reject any investment order.
The placement agent for the Portfolio is Edgewood. The principal business
address of Edgewood and its affiliates is Clearing Operations, P.O. Box
897, Pittsburgh, Pennsylvania 15230-0897. Edgewood receives no additional
compensation for serving as the placement agent for the Portfolio.
ITEM 8. REDEMPTION OR REPURCHASE.
An investor in the Portfolio may withdraw all or any portion of its
investment at the NAV next determined if a withdrawal request in proper
form is furnished by the investor to the Portfolio by the designated cutoff
time for each accredited investor. The proceeds of a withdrawal will be
paid by the Portfolio in Federal funds normally on the Portfolio Business
Day the withdrawal is effected, but in any event within seven days. The
Portfolio reserves the right to pay redemptions in kind. Investments in the
Portfolio may not be transferred.
The right of any investor to receive payment with respect to any withdrawal
may be suspended or the payment of the withdrawal proceeds postponed during
any period in which the NYSE is closed (other than weekends or holidays) or
trading on such Exchange is restricted, or, to the extent otherwise
permitted by the 1940 Act, if an emergency exists.
ITEM 9. PENDING LEGAL PROCEEDINGS.
Not applicable.
TAX FREE MONEY PORTFOLIO
PART B
ITEM 10. COVER PAGE.
Not applicable.
ITEM 11. TABLE OF CONTENTS.
General Information and History....................1
Investment Objectives and Policies....................1
Management of the Fund................................6
Control Persons and Principal Holders of Securities...8
Investment Advisory and Other Services................8
Brokerage Allocation and Other Practices..............9
Capital Stock and Other Securities...................10
Purchase, Redemption and Pricing of Securities Being Offered 11
Tax Status...........................................11
Underwriters.........................................12
Calculation of Performance Data......................12
Financial Statements.............................12
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 Tax Free Money Portfolio (the "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.
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 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 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 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.
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 5% of its total assets in any one issuer
(other than U.S. government obligations) or purchase more than 10% of
any class of securities of any one issuer; provided, however, that (i)
up to 25% of the assets of the Portfolio may be invested without
regard to this restriction and (ii) this restriction shall not
preclude the purchase by the Portfolio of issues guaranteed by the
U.S. government, its agencies or instrumentalities or backed by
letters of credit or guarantees of one or more commercial banks or
other financial institutions, even though any one such commercial bank
or financial institution provides a letter of credit or guarantee with
respect to securities which in the aggregate represent more than 5%,
but not more than 10%, of the total assets of the Portfolio.
(4) Invest more than 25% of the total assets of the Portfolio in the
securities of issuers in any single industry; provided that (i) this
limitation shall not apply to U.S. government obligations and (ii)
this limitation shall not apply to the purchase of Municipal
Obligations or letters of credit or guarantees of banks or other
financial institutions that support Municipal Obligations.
(5) Make short sales of securities, maintain a short position or
purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions.
(6) Underwrite the securities issued by others (except to the extent
the Portfolio may be deemed to be an underwriter under the Federal
securities laws in connection with the disposition of its portfolio
securities) or knowingly purchase restricted securities 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.
(7) Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil, gas or mineral
interests, but this shall not prevent the Portfolio from investing in
obligations secured by real estate or interests therein.
(8) Make loans to others, except through the purchase of qualified
debt obligations and the entry into repurchase agreements.
(9) Invest more than an aggregate of 10% of its net assets (taken at
current value) in (i) securities that cannot be readily resold to the
public because of legal or contractual restrictions or because there
are no market quotations readily available or (ii) other "illiquid"
securities (including time deposits and repurchase agreements maturing
in more than seven calendar days).
(10) Purchase more than 10% of the voting securities of any issuer or
invest in companies for the purpose of exercising control or
management.
(11) Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act or in connection with a merger,
consolidation, reorganization, acquisition of assets or an offer of
exchange.
(12) Issue any senior securities, except insofar as it may be deemed
to have issued a senior security by reason of (i) entering into a
repurchase agreement or (ii) borrowing in accordance with terms
described herein.
(13) Purchase or retain the securities of any issuer if any of the
officers or trustees of the Portfolio or its investment adviser owns
individually more than 1/2 of 1% of the securities of such issuer, and
together such officers and trustees own more than 5% of the securities
of such issuer.
(14) Invest in warrants, except that the Portfolio may invest in
warrants if, as a result, the investments (valued at the lower of cost
or market) would not exceed 5% of the value of the Portfolio's net
assets, of which not more than 2% of the Portfolio's net assets may be
invested in warrants not listed on a recognized domestic stock
exchange. Warrants acquired by the Portfolio as part of a unit or
attached to securities at the time of acquisition are not subject to
this limitation.
(15) 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.
ADDITIONAL RESTRICTIONS. In order to comply with certain 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;
(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 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) (other than warrants
acquired by the Portfolio as part of a unit or attached to securities
at the time of purchase), 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);
The 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, their birthdates, and their
principal occupations during the past five years are set forth below. Their
titles may have varied during that period. Unless otherwise indicated
below, the address of each Trustee and officer is Clearing Operations, P.O.
Box 897, Pittsburgh, Pennsylvania 15230-0897.
TRUSTEES
PHILIP W. COOLIDGE* (birthdate: September 2, 1951) -- Trustee; Chairman,
Chief Executive Officer and President, Signature Financial Group, Inc.
("SFG") (since December, 1988) and Signature Broker-Dealer Services, Inc.
(`Signature'') (since April, 1989). His address is 6 St. James Avenue,
Boston, Massachusetts 02116.
CHARLES P. BIGGAR (birthdate: October 13, 1930) -- Trustee; Retired;
Director of Chase/NBW Bank Advisory Board; Director Batemen, Eichler, Hill
Richards Inc.; Formerly Vice President of International Business Machines
and President of the National Services and the Field Engineering Divisions
of IBM. His address is 12 Hitching Post Lane, Chappaqua, New York 10514.
S. LELAND DILL (birthdate: March 28, 1930) -- Trustee; Retired; Director,
Coutts Group and Coutts (U.S.A.) International; Coutts Trust Holdings Ltd.
Director, Zweig Series Trust; formerly Partner of KPMG Peat Marwick;
Director, Vinters International Company Inc.; General Partner of Pemco (an
investment company registered under the 1940 Act). His address is 5070
North Ocean Drive, Singer Island, Florida 33404.
PHILIP SAUNDERS, JR. (birthdate: October 11, 1935) -- Trustee; Principal,
Philip Saunders Associates (Consulting); former Director of Financial
Industry Consulting, Wolf & Company; President, John Hancock Home Mortgage
Corporation; and Senior Vice President of Treasury and Financial Services,
John Hancock Mutual Life Insurance Company, Inc. His address is 445 Glen
Road, Weston, Massachusetts 02193.
*Indicates an `interested person'' (as defined by the 1940 Act) of the
Portfolio.
OFFICERS
RONALD M. PETNUCH (birthdate: February 27, 1960) - President and Treasurer;
Senior Vice President, Federated Services Company (`FSC''); formerly,
Director of Proprietary Client Services, Federated Administrative Services
(`FAS''), and Associate Corporate Counsel, Federated Investors (``FI'').
CHARLES L. DAVIS, JR. (birthdate: March 23, 1960) - Vice President and
Assistant Treasurer; Vice President, FAS.
JAY S. NEUMAN (birthdate: April 22, 1950) - Secretary; Corporate Counsel,
FI.
Messrs. Coolidge, Petnuch, Davis, and Neuman also hold similar positions
for other investment companies for which Signature, Edgewood Services, Inc.
(`Edgewood'') or an affiliate serves as the principal underwriter.
No person who is an officer or director of Bankers Trust is an officer or
Trustee of the Portfolio. No director, officer or employee of Edgewood or
any of its affiliates will receive any compensation from the Trust or any
Portfolio for serving as an officer or Trustee of the Portfolio.
The Trustees of the Portfolio received the following remuneration from the
Portfolio for the fiscal year ended December 31, 1996:
TRUSTEE COMPENSATION TABLE
Name, Aggregate Total
Position With Compensation Compensation From
Trust/Portfolio From Portfolio Fund Complex*
Philip W. Coolidge $23 $1,250
Trustee of Trust
and Portfolio
Charles P. Biggar $765 $28,750
Trustee of Portfolio
S. Leland Dill $705 $28,750
Trustee of Portfolio
Philip Saunders, Jr. $705 $28,750
Trustee of the Portfolio
*Aggregated information is furnished for the BT Family of Funds which
consists of the following: BT Investment Funds, BT Institutional Funds, BT
Pyramid Funds, BT Advisor Funds, BT Investment Portfolios, Cash Management
Portfolio, Treasury Money Portfolio, Tax Free Money Portfolio, NY Tax Free
Money Portfolio, International Equity Portfolio, Utility Portfolio, Short
Intermediate US Government Securities Portfolio, Intermediate Tax Free
Portfolio, Asset Management Portfolio, Equity 500 Index Portfolio, and
Capital Appreciation Portfolio.
The Portfolio's Declaration of Trust provides that it will indemnify its
Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Portfolio, unless, as to liability to the Portfolio or its
investors, it is finally adjudicated that they engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in their offices, or unless with respect to any other
matter it is finally adjudicated that they did not act in good faith in the
reasonable belief that their actions were in the best interests of the
Portfolio. In the case of settlement, such indemnification will not be
provided unless it has been determined by a court or other body approving
the settlement or other disposition, or by a reasonable determination,
based upon a review of readily available facts, by vote of a majority of
disinterested Trustees or in a written opinion of independent counsel, that
such officers or Trustees have not engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of their duties.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of March 1, 1997, 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.
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 willful misfeasance, bad faith or gross negligence or of
reckless disregard of its or their obligations and duties under the
Advisory Agreement.
For the fiscal years ended December 31, 1996, 1995 and 1994, Bankers Trust
earned $187,326, $180,724, and $182,954, respectively, in compensation for
investment advisory services provided to the Portfolio. During the same
periods, Bankers Trust reimbursed $43,832, $31,541, and $33,719,
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; Portfolio; prepare and file tax returns; supply
financial information and supporting data for reports to and filings with
the Securities and Exchange Commission (the "SEC"); supply supporting
documentation for meetings of the Board of Trustees; provide monitoring
reports and assistance regarding compliance with the Portfolio's
Declaration of Trust, by-laws, investment objectives and policies and with
Federal and state securities laws; arrange for appropriate insurance
coverage; calculate the net asset value, net income and realized capital
gains or losses of the Portfolio; and negotiate arrangements with, and
supervise and coordinate the activities of, agents and others retained by
the Portfolio to supply services to the Portfolio and/or its investors.
Pursuant to a sub-administration agreement (the "Sub-Administration
Agreement"), FSC performs such sub-administration duties for the Portfolio
as from time to time may be agreed upon by Bankers Trust and FSC. The Sub-
Administration Agreement provides that FSC will receive such compensation
as from time to time may be agreed upon by FSC and Bankers Trust. All such
compensation will be paid by Bankers Trust.
Bankers Trust also provides fund accounting, transfer agency and custodian
services to the Portfolio pursuant to the Administration Agreement.
For the fiscal years ended December 31, 1996, 1995 and 1994, Bankers
Trust earned $62,442, $60,241, and $60,985, respectively, for
administrative and other services to the Portfolio. Bankers Trust
reimbursed the Portfolio for a portion of its administrative and services
fees for the periods above. See "Investment Advisory and Other Services"
above.
Coopers & Lybrand L.L.P. are the independent 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 execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and
on a continuing basis. In addition, Bankers Trust is authorized, in
selecting parties to execute a particular transaction and in evaluating the
best overall terms available, to consider the brokerage, but not research
services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided to the Portfolio, and/or the
other accounts over which Bankers Trust or its affiliates exercise
investment discretion. Bankers Trust's fees under its agreements with the
Portfolio are not reduced by reason of its receiving brokerage services.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Investors are entitled to
participate pro rata in distributions of taxable income, loss, gain and
credit of the Portfolio. Upon liquidation or dissolution of the Portfolio,
investors are entitled to share pro rata in the Portfolio's net assets
available for distribution to its investors. Investments in the Portfolio
have no preference, preemptive, conversion or similar rights and are fully
paid and nonassessable, except as set forth below. Investments in the
Portfolio may not be transferred. Certificates representing an investor's
beneficial interest in the Portfolio are issued only upon the written
request of an investor.
Each investor is entitled to a vote in proportion to the amount of its
investment in the Portfolio. Investors in the Portfolio do not have
cumulative voting rights, and investors holding more than 50% of the
aggregate beneficial interest in the Portfolio may elect all of the
Trustees of the Portfolio if they choose to do so and in such event the
other investors in the Portfolio would not be able to elect any Trustee.
The Portfolio is not required and has no current intention to hold annual
meetings of investors but the Portfolio will hold special meetings of
investors when in the judgment of the Portfolio's Trustees it is necessary
or desirable to submit matters for an investor vote. No material amendment
may be made to the Portfolio's Declaration of Trust without the affirmative
majority vote of investors (with the vote of each being in proportion to
the amount of their investment).
The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two-thirds of
its investors (with the vote of each being in proportion to their
respective percentages of the beneficial interests in the Portfolio),
except that if the Trustees of the Portfolio recommend such sale of assets,
the approval by vote of a majority of the investors (with the vote of each
being in proportion to their respective percentages of the beneficial
interests of the Portfolio) will be sufficient. The Portfolio may also be
terminated (i) upon liquidation and distribution of its assets, if approved
by the vote of two-thirds of its investors (with the vote of each being in
proportion to the amount of their investment), or (ii) by the Trustees of
the Portfolio by written notice to its investors.
The Portfolio is organized as a trust under the laws of the State of New
York. Investors in the Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by the
Portfolio in the event that there is imposed upon an investor a greater
portion of the liabilities and obligations of the Portfolio than its
proportionate beneficial interest in the Portfolio. The Declaration of
Trust also provides that the Portfolio shall maintain appropriate insurance
(for example, fidelity bonding and errors and omissions insurance) for the
protection of the Portfolio, its investors, Trustees, officers, employees
and agents covering possible tort and other liabilities. Thus, the risk of
an investor incurring financial loss on account of investor liability is
limited to circumstances in which both inadequate insurance existed and the
Portfolio itself was unable to meet its obligations.
The Declaration of Trust further provides that obligations of the
Portfolio are not binding upon the Trustees individually but only upon the
property of the Portfolio and that the Trustees will not be liable for any
action or failure to act, but nothing in the Declaration of Trust protects
a Trustee against any liability to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
The Portfolio reserves the right to create and issue a number of series, in
which case investments in each series would participate equally in the
earnings and assets of the particular series. Investors in each series
would be entitled to vote separately to approve advisory agreements or
changes in investment policy, but investors of all series may vote together
in the election or selection of Trustees, principal underwriters and
accountants for the Portfolio. Upon liquidation or dissolution of the
Portfolio, the investors in each series would be entitled to share pro rata
in the net assets of their respective series available for distribution to
investors.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the Securities Act of 1933, as amended. See
"General Description of Registrant," "Purchase of Securities Being Offered"
and "Redemption or Repurchase" in Part A.
The Portfolio determines its net asset value as of 12:00 noon and 4:00
p.m., Eastern time, on each day on which the Portfolio is open ("Portfolio
Business Day"), by dividing the value of the Portfolio's net assets (i.e.,
the value of its securities and other assets less its liabilities,
including expenses payable or accrued) by the value of the investment of
the investors in the Portfolio at the time the determination is made. (As
of the date of this Registration Statement, the Portfolio is open for
trading every weekday except for: (a) the following holidays: New Year's
Day, Martin Luther King's Birthday, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Columbus Day, November 11, Thanksgiving
Day and Christmas; and (b) the preceding Friday of the subsequent Monday
when one of the calendar-determined holidays falls on a Saturday or Sunday,
respectively. Purchases and withdrawals will be effected at the time of
determination of net asset value next following the receipt of any purchase
or withdrawal order.
The securities held by the Portfolio are valued at their amortized cost.
Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium. If fluctuating interest rates cause the market value of the
securities held by the Portfolio to deviate more than 1/2 of 1% from their
value determined on the basis of amortized cost, the Board of Trustees will
consider whether any action should be initiated, as described in the
following paragraph. Although the amortized cost method provides certainty
in valuation, it may result in periods during which the stated value of an
instrument is higher or lower than the price an investment company would
receive if the instrument were sold.
Pursuant to rules of the SEC, the Board of Trustees has established
procedures to stabilize the value of the Portfolio's net assets within 1/2
of 1% of the value determined on the basis of amortized cost. These
procedures include a review of the extent of any such deviation of net
asset value, based on available market rates. Should that deviation exceed
1/2 of 1%, the Board of Trustees will consider whether any action should be
initiated to eliminate or reduce material dilution or other unfair results
to the investors in the Portfolio. Such action may include withdrawal in
kind, selling its securities prior to maturity and utilizing a portfolio
valuation as determined by using available market quotations. The Portfolio
will maintain a dollar-weighted average maturity of 90 days or less, will
not purchase any instrument that under applicable SEC rules would be deemed
to have a remaining maturity greater than one year or subject to a
repurchase agreement having a duration of greater than one year, will limit
its investments, including repurchase agreements, to U.S. dollar-
denominated instruments that are issued or guaranteed by the U.S. Treasury,
by an agency of the U.S. government or an instrumentality established or
sponsored by the U.S. government, including repurchase agreements backed by
such obligations, and will comply with certain reporting and recordkeeping
procedures.
ITEM 20. TAX STATUS.
The Portfolio is organized as a trust under New York law. Under the
anticipated method of operation of the Portfolio, the Portfolio will not be
subject to any income tax. However each investor in the Portfolio will be
taxable on its share (as determined in accordance with the governing
instruments of the Portfolio) of the Portfolio's ordinary income and
capital gain in determining its income tax liability. The determination of
such share will be made in accordance with the Internal Revenue Code of
1986, as amended, and regulations promulgated thereunder.
The Portfolio's taxable year-end is December 31. Although, as described
above, the Portfolio will not be subject to Federal income tax, it will
file appropriate income tax returns.
It is intended that the Portfolio's assets, income and distributions will
be managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended, assuming that the investor invested all of its assets in
the Portfolio.
There are certain tax issues that will be relevant to only certain of the
investors, specifically investors that are segregated asset accounts and
investors who contribute assets rather than cash to the Portfolio. It is
intended that such segregated asset accounts will be able to satisfy
diversification requirements applicable to them and that such contributions
of assets will not be taxable provided certain requirements are met. Such
investors are advised to consult their own tax advisors as to the tax
consequences of an investment in the Portfolio.
ITEM 21. UNDERWRITERS.
The placement agent for the Portfolio is Edgewood, which receives no
additional compensation for serving in this capacity. Investment companies,
insurance company separate accounts, common and commingled trust funds and
similar organizations and entities may continuously invest in the
Portfolio.
ITEM 22. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 23. FINANCIAL STATEMENTS.
The following financial statements, contained in the Annual Report of BT
Investment Funds dated December 31, 1996, (File No. 811-04760) for the
fiscal year ended December 31, 1996, are incorporated by reference into
this Part B:
Statement of Assets and Liabilities, December 31, 1996
Statement of Operations for the fiscal year ended December 31, 1996
Statement of Changes in Net Assets for the fiscal years ended December 31,
1996 and 1995
Financial Highlights: Selected ratios and supplemental data for the
periods indicated
Schedule of Portfolio Investments, December 31, 1996
Notes to Financial Statements
Report of Independent Accountants
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a)Financial Statements:
Incorporated by reference to the Annual Report of BT
Investment Funds dated December 31, 1996, pursuant to Rule
411 under the Securities Act of 1933. (File Nos. 33-07404
and 811-04760)
(b)Exhibits:
(1) (i) Conformed copy of Amended and Restated Declaration
of Trust of the Registrant; (3)
(ii) Conformed copy of Amendment to the Amended and
Restated Declaration of Trust; (3)
(2) Copy of By-Laws of the Registrant; (3)
(3) Not applicable;
(4) Not applicable;
(5) Conformed copy of Investment Advisory Agreement between
the Registrant and Bankers Trust Company (``Bankers
Trust''); (3)
(6) Not applicable;
(7) Not applicable;
(8) Not applicable;
(9) (i) Conformed copy of Administration and Services
Agreement between the Registrant and Bankers Trust;
(2)
(ii) Conformed copy of Exclusive Placement Agent
Agreement and Amended Exhibit thereto; +
(10) Not applicable;
(11) Not applicable;
(12) Not applicable;
(13) Investment representation letters of initial investors;
(1)
(14) Not applicable;
(15) Not applicable;
(16) Not applicable;
(17) Copy of Financial Data Schedule; +
(18) Not applicable;
(19) Conformed copy of Power of Attorney. +
+ All exhibits been filed electronically.
1.Previously filed on February 15, 1992.
2.Previously filed on April 30, 1993.
3.Response is incorporated by reference to Registrant's Amendment No. 6 on
Form N-1A filed April 24, 1996.
Item 25. Persons Controlled by or under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of December 31, 1996
Beneficial Interests 2
Item 27. Indemnification: (4)
Item 28. Business and Other Connections of Investment Adviser:
Bankers Trust serves as investment adviser to the Portfolio. Bankers Trust,
a New York banking corporation, is a wholly owned subsidiary of Bankers
Trust New York Corporation. Bankers Trust conducts a variety of commercial
banking and trust activities and is a major wholesale supplier of financial
services to the international institutional market.
To the knowledge of the Trust, none of the directors or officers of Bankers
Trust, except those set forth below, is engaged in any other business,
profession, vocation or employment of a substantial nature, except that
certain directors and officers also hold various positions with and engage
in business for Bankers Trust New York Corporation. Set forth below are the
names and principal businesses of the directors and officers of Bankers
Trust who are engaged in any other business, profession, vocation or
employment of a substantial nature.
George B. Beitzel, International Business Machines Corporation, Old Orchard
Road, Armonk, NY 10504. 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 Haas
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.
4.Response is incorporated by reference to Registrant's Amendment No. 6 on
Form N-1A filed April 24, 1996.
Vernon E. Jordan, Jr., Akin, Gump, Strauss, Hauer & Feld, LLP, 1333 New
Hampshire Ave., N.W., Washington, DC 20036. 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.,
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.
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:
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one of the
following locations:
Registrant: Federated Investor Tower, Pittsburgh, PA
15222-3779.
Bankers Trust Company: 280 Park Avenue, New York, NY
10017.
Investors Fiduciary Trust Company: 127 West 10th Street, Kansas City, MO
64105.
Edgewood Services, Inc.: Clearing Operations, P.O. Box 897,
Pittsburgh, PA 15230-0897.
Item 31. Management Services:
Not applicable.
Item 32. Undertakings:
Not applicable.
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant, TAX FREE MONEY PORTFOLIO, has duly caused this Amendment to its
Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Pittsburgh and
Commonwealth of Pennsylvania on the 19th day of March, 1997.
TAX FREE MONEY PORTFOLIO
By: /s/ Jay S. Neuman
Jay S. Neuman, Secretary
March 19, 1997
Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
September 30, 1996
Edgewood Services, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ladies and Gentlemen:
Re: EXCLUSIVE PLACEMENT AGENT AGREEMENT
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned open-end management investment companies
(collectively, the `Trusts'') registered under the Investment Company Act of
1940, as amended (the `1940 Act''), each organized as a business trust under
the laws of the State of New York, has agreed that Edgewood Services, Inc., a
New York corporation (`ESI''), shall be the exclusive placement agent (the
`Exclusive Placement Agent'') of beneficial interests (``Trust Interests'') of
each series of the Trusts.
1. Services as Exclusive Placement Agent.
1.1 ESI will act as Exclusive Placement Agent of the Trust Interests.
In acting as Exclusive Placement Agent under this Exclusive Placement Agent
Agreement, neither ESI nor its employees or any agents thereof shall make any
offer or sale of Trust Interests in a manner which would require the Trust
Interests to be registered under the Securities Act of 1933, as amended (the
`1933 Act'').
1.2 All activities by ESI and its agents and employees as Exclusive
Placement Agent of Trust Interests shall comply with all applicable laws, rules
and regulations, including, without limitation, all rules and regulations
adopted pursuant to the 1940 Act by the Securities and Exchange Commission (the
``ommission'').
1.3 Nothing herein shall be construed to require a Trust to accept
any offer to purchase any Trust Interests, all of which shall be subject to
approval by the Trust's Board of Trustees.
1.4 The Trusts shall furnish from time to time for use in connection
with the sale of Trust Interests such information with respect to the Trust and
Trust Interests as ESI may reasonably request. The Trusts shall also furnish
ESI upon request with: (a) unaudited semiannual statements of the Trust's books
and accounts prepared by the Trust, and (b) from time to time such additional
information regarding the Trust's financial or regulatory condition as ESI may
reasonably request.
1.5 Each Trust represents to ESI that all registration statements
filed by the Trust with the Commission under the 1940 Act with respect to Trust
Interests have been prepared in conformity with the requirements of such statute
and the rules and regulations of the Commission thereunder. As used in this
Agreement the term `registration statement'' shall mean any registration
statement filed with the Commission, as modified by any amendments thereto that
at any time shall have been filed with the Commission by or on behalf of a
Trust. Each Trust represents and warrants to ESI that any registration
2
statement will contain all statements required to be stated therein in
conformity with both such statute and the rules and regulations of the
Commission; that all statements of fact contained in any registration statement
will be true and correct in all material respects at the time of filing of such
registration statement or amendment thereto; and that no registration statement
will include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading to a purchaser of Trust Interests. The Trusts may but shall not
be obligated to propose from time to time such amendment to any registration
statement as in the light of future developments may, in the opinion of the
Trust's counsel, be necessary or advisable. If a Trust shall not propose such
amendment and/or supplement within fifteen days after receipt by the Trust of a
written request from ESI to do so, ESI may, at its option, terminate this
Agreement. The Trusts shall not file any amendment to any registration
statement without giving ESI reasonable notice thereof in advance; provided,
however, that nothing contained in this Agreement shall in any way limit a
Trust's right to file at any time such amendment to any registration statement
as the Trust may deem advisable, such right being in all respects absolute and
unconditional.
1.6 Each Trust severally agrees to indemnify, defend and hold ESI, its
several officers and directors, and any person who controls ESI within the
meaning of Section 15 of the 1933 Act or Section 20 of the Securities Exchange
Act of 1934 (the ``934 Act'') (for purposes of this paragraph 1.6,
collectively, the ``overed Persons'') free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which any Covered Person may incur under
the 1933 Act, the 1934 Act, common law, or otherwise, but only to the extent
3
that such liability or expense incurred by a Covered Person resulting from such
claims or demands shall arise out of or be based on (i) any untrue statement of
a material fact contained in any registration statement, private placement
memorandum or other offering material (`Offering Material'') or (ii) any
omission to state a material fact required to be stated in any Offering Material
or necessary to make the statements in any Offering Material not misleading;
provided, however, that each Trust's agreement to indemnify Covered Persons
shall not be deemed to cover any claims, demands, liabilities or expenses
arising out of any financial and other statements as are furnished in writing to
the Trust by ESI in its capacity as Exclusive Placement Agent for use in the
answers to any items of any registration statement or in any statements made in
any Offering Material, or arising out of or based on any omission or alleged
omission to state a material fact in connection with the giving of such
information required to be stated in such answers or necessary to make the
answers not misleading; and further provided that each Trust's agreement to
indemnify ESI and each Trust's representation and warranties hereinbefore set
forth in paragraph 1.5 shall not be deemed to cover any liability to the Trust
or its investors to which a Covered Person would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of a Covered Person's reckless disregard of its obligations
and duties under this Agreement. A Trust shall be notified of any action
brought against a Covered Person, such notification to be given by letter or by
telegram addressed to the Trust, Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779, Attention: Secretary, with a copy to Burton M.
Leibert, Esq., Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd
Street, New York, NY 10022, promptly after the summons or other first legal
process shall have been duly and completely served upon such Covered Person.
The failure to so notify a Trust of any such action shall not relieve the Trust
(i) from any liability except to the extent the Trust shall have been prejudiced
4
by such failure, or (ii) from any liability that the Trust may have to the
Covered Person against whom such action is brought by reason of any such untrue
or alleged untrue statement, or omission or alleged omission, otherwise than on
account of the Trust's indemnity agreement contained in this paragraph. Each
Trust will be entitled to assume the defense of any suit brought to enforce any
such claim, demand or liability, but in such case such defense shall be
conducted by counsel of good standing chosen by the Trust and approved by ESI,
which approval shall not be unreasonably withheld. In the event a Trust elects
to assume the defense in any such suit and retain counsel of good standing
approved by ESI, the defendant or defendants in such suit shall bear the fees
and expenses of any additional counsel retained by any of them; but in case a
Trust does not elect to assume the defense of any such suit, or in case ESI
reasonably does not approve of counsel chosen by the Trust, the Trust will
reimburse the Covered Person named as defendant in such suit, for the fees and
expenses of any counsel retained by ESI or the Covered Persons. Each Trust's
indemnification agreement contained in this paragraph and each Trust's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
Covered Persons, and shall survive the delivery of any Trust Interests. This
agreement of indemnity will inure exclusively to Covered Persons and their
successors. Each Trust agrees to notify ESI promptly of the commencement of any
litigation or proceedings against the Trust or any of its officers or Trustees
in connection with the issue and sale of any Trust Interests.
1.7 ESI agrees to indemnify, defend and hold each Trust, its several
officers and trustees, and any person who controls a Trust within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act (for purposes of this
paragraph 1.7, collectively, the `Covered Persons'') free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
5
costs of investigating or defending such claims, demands, liabilities and any
counsel fees incurred in connection therewith) that Covered Persons may incur
under the 1933 Act, the 1934 Act, common law, or otherwise, but only to the
extent that such liability or expense incurred by a Covered Person resulting
from such claims or demands shall arise out of or be based on (i) any untrue
statement of a material fact contained in information furnished in writing by
ESI in its capacity as Exclusive Placement Agent to the Trusts for use in the
answers to any of the items of any registration statement or in any statements
in any other Offering Material, or (ii) any omission to state a material fact in
connection with such information furnished in writing by ESI to a Trust required
to be stated in such answers or necessary to make such information not
misleading. ESI shall be notified of any action brought against a Covered
Person, such notification to be given by letter or telegram addressed to ESI at
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779,
Attention: Secretary, promptly after the summons or other first legal process
shall have been duly and completely served upon such Covered Person. The
failure to so notify ESI of any such action shall not relieve ESI (i) from any
liability except to the extent a Trust shall have been prejudiced by such
failure, or (ii) from any liability that ESI may have to the Covered Person
against whom such action is brought by reason of any such untrue or alleged
untrue statement, or omission or alleged omission, otherwise than on account of
ESI's indemnity agreement contained in this paragraph. ESI will be entitled to
assume the defense of any suit brought to enforce any such claim, demand or
liability, but in such case such defense shall be conducted by counsel of good
standing chosen by ESI and approved by the Trust, which approval shall not be
unreasonably withheld. In the event that ESI elects to assume the defense in
any such suit and retain counsel of good standing approved by a Trust, the
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them; but in case ESI does not elect to
6
assume the defense of any such suit, or in case a Trust reasonably does not
approve of counsel chosen by ESI, ESI will reimburse the Covered Person named as
defendant in such suit, for the fees and expenses of any counsel retained by the
Trust or the Covered Persons. ESI's indemnification agreement contained in this
paragraph and ESI's representations and warranties in this Agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of Covered Persons, and shall survive the delivery of any
Trust Interests. This agreement of indemnity will inure exclusively to Covered
Persons and their successors. ESI agrees to notify each Trust promptly of the
commencement of any litigation or proceedings against ESI or any of its officers
or directors in connection with the issue and sale of any Trust Interests.
1.8 No Trust Interests shall be offered by either ESI or the Trusts
under any of the provisions of this Agreement and no orders for the purchase or
sale of Trust Interests hereunder shall be accepted by the Trusts if and so long
as the effectiveness of the registration statement or any necessary amendments
thereto shall be suspended under any of the provisions of the 1940 Act;
provided, however, that nothing contained in this paragraph shall in any way
restrict or have an application to or bearing on a Trust's obligation to redeem
Trust Interests from any investor in accordance with the provisions of the
Trust's registration statement or Declaration of Trust, as amended from time to
time. Each Trust shall notify ESI promptly of the suspension of its
registration statement or any necessary amendments thereto, such notification to
be given by letter or telegram addressed to ESI at Federated Investors Tower,
1001 Liberty Avenue, Pittsburgh, PA 15222-3779, Attention: Secretary.
1.9 Each Trust agree to advise ESI as soon as reasonably practical by
a notice in writing delivered to ESI or its counsel:
7
(a) of any request by the Commission for amendments to the
registration statement then in effect or for additional information;
(b) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement then in effect or the
initiation by service of process on a Trust of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statements of
a material fact made in the registration statement then in effect or that
requires the making of a change in such registration statement in order to make
the statements therein not misleading; and
(d) of all action of the Commission with respect to any amendment to
any registration statement that may from time to time be filed with the
Commission.
For purposes of this paragraph 1.9, informal requests by or acts of
the Staff of the Commission shall not be deemed actions of or requests by the
Commission.
1.10 ESI agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trusts all records and
other information not otherwise publicly available relative to the Trusts and
their respective prior, present or potential investors and not to use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by a Trust, which approval shall not be unreasonably
withheld and may not be withheld where ESI may be exposed to civil or criminal
8
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by a Trust.
1.11 In addition to ESI's duties as Exclusive Placement Agent, the
Trusts understand that ESI may, in its discretion, perform additional functions
in connection with transactions in Trust Interests.
The processing of Trust Interest transactions may include, but is not
limited to, compilation of all transactions from ESI's various offices; creation
of a transaction tape and timely delivery of it to the Trusts' transfer agent
for processing; reconciliation of all transactions delivered to the Trusts'
transfer agent; and the recording and reporting of these transactions executed
by the Trusts' transfer agent in customer statements; rendering of periodic
customer statements; and the reporting of IRS Form 1099 information at year end
if required.
ESI may also provide other investor services, such as communicating
with Trust investors and other functions in administering customer accounts for
Trust investors.
ESI understands that these services may result in cost savings to the
Trusts or to the Trusts' investment manager and neither the Trusts nor the
Trusts' investment manager will compensate ESI for all or a portion of the costs
incurred in performing functions in connection with transactions in Trust
Interests. Nothing herein is intended, nor shall be construed, as requiring ESI
to perform any of the foregoing functions.
1.12 Except as set forth in paragraph 1.6 of this Agreement, the
Trusts shall not be liable to ESI or any Covered Persons as defined in paragraph
9
1.6 for any error of judgment or mistake of law or for any loss suffered by ESI
in connection with the matters to which this Agreement relates, except a loss
resulting from the willful misfeasance, bad faith or gross negligence on the
part of a Trust in the performance of its duties or from reckless disregard by a
Trust of its obligations and duties under this Agreement.
1.13 Except as set forth in paragraph 1.7 of this Agreement, ESI shall
not be liable to any Trust or any Covered Persons as defined in paragraph 1.7
for any error of judgment or mistake of law or for any loss suffered by a Trust
in connection with the matters to which this Agreement relates, except a loss
resulting from the willful misfeasance, bad faith or gross negligence on the
part of ESI in the performance of its duties or from reckless disregard by ESI
of its obligations and duties under this Agreement.
2. Term.
This Agreement shall become effective on the date first written above
and, unless sooner terminated as provided herein, shall continue until one year
from the date first written above, and thereafter shall continue automatically
for successive annual periods, provided such continuance is specifically
approved at least annually with respect to each Trust by (i) each Trust's Board
of Trustees or (ii) by a vote of a majority (as defined in the 1940 Act) of each
Trust's outstanding voting securities, provided that in either event the
continuance is also approved by the majority of the Trust's Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust and who have no
direct or indirect financial interest in this Agreement, by vote cast in person
at a meeting called for the purpose of voting on such approval. This Agreement
is terminable without penalty, on not less than 60 days' notice, by a Board, by
a vote of a majority (as defined in the 1940 Act) of a Trust's outstanding
10
voting securities, or by ESI. This Agreement will also terminate automatically
in the event of its assignment (as defined in the 1940 Act and the rules
thereunder).
3. Representations and Warranties.
ESI and each Trust each hereby represents and warrants to the other
that it has all requisite authority to enter into, execute, deliver and perform
its obligations under this Agreement and that, with respect to it, this
Agreement is legal, valid and binding, and enforceable in accordance with its
terms.
4. Concerning Applicable Provisions of Law, etc.
This Agreement shall be subject to all applicable provisions of law,
including the applicable provisions of the 1940 Act and to the extent that any
provisions herein contained conflict with any such applicable provisions of law,
the latter shall control.
The laws of the State of New York shall, except to the extent that any
applicable provisions of Federal law shall be controlling, govern the
construction, validity and effect of this Agreement, without reference to
principles of conflicts of law.
The undersigned officer of each Trust has executed this Agreement not
individually, but as President under each Trust's Declaration of Trust, as
amended. Pursuant to the Declaration of Trust, the obligations of this
Agreement are not binding upon any of the Trustees or investors of the Trust
individually, but bind only the trust estate.
11
If the contract set forth herein is acceptable to you, please so indicate
by executing the enclosed copy of this Agreement and returning the same to the
undersigned, whereupon this Agreement shall constitute a binding contract
between the parties hereto effective at the closing of business on the date
hereof.
Very truly yours,
Charles L. Davis, Jr.
By:/s/ Charles L. Davis, Jr.
Vice President, on behalf of the Trusts listed
on Exhibit A, attached hereto:
Accepted:
EDGEWOOD SERVICES, INC..
By:/s/ R. Jeffrey Niss
12
EXHIBIT A
TO
EXCLUSIVE PLACEMENT AGENT AGREEMENT
Pursuant to the Exclusive Placement Agreement, ESI shall be Exclusive
Placement Agent with respect to the following Trusts, effective as of the date
indicated below:
Name of Trust Date
BT Investment Portfolios:
Liquid Assets Portfolio September 30, 1996
Asset Management Portfolio II September 30, 1996
Asset Management Portfolio III September 30, 1996
Global High Yield Securities PortfolioSeptember 30, 1996
Latin American Equity Portfolio September 30, 1996
Small Cap Portfolio September 30, 1996
Pacific Basin Equity Portfolio September 30, 1996
European Equity Portfolio September 30, 1996
International Bond Portfolio September 30, 1996
100% Treasury Portfolio September 30, 1996
Growth and Income Portfolio September 30, 1996
U.S. Bond Index Portfolio September 30, 1996
Equity 500 Equal Weighted Index Portfolio September 30, 1996
Small Cap Index Portfolio September 30, 1996
EAFE Equity Index Portfolio September 30, 1996
Cash Management Portfolio September 30, 1996
Treasury Money Portfolio September 30, 1996
Tax Free Money Portfolio September 30, 1996
International Equity Portfolio September 30, 1996
13
Utility Portfolio September 30, 1996
Equity 500 Index Portfolio September 30, 1996
Short/Intermediate U.S. Government Securities PortfolioSeptember 30, 1996
Asset Management Portfolio September 30, 1996
Capital Appreciation Portfolio September 30, 1996
Intermediate Tax Free Portfolio September 30, 1996
093096
093096
Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
EXHIBIT A
TO
EXCLUSIVE PLACEMENT AGENT AGREEMENT
AS LAST AMENDED: DECEMBER 11, 1996
Pursuant to the Exclusive Placement Agreement, ESI shall be Exclusive
Placement Agent with respect to the following Trusts, effective as of the date
indicated below:
Name of Trust Date
BT Investment Portfolios:
Liquid Assets Portfolio September 30, 1996
Asset Management Portfolio II September 30, 1996
Asset Management Portfolio III September 30, 1996
Global High Yield Securities PortfolioSeptember 30, 1996
Latin American Equity Portfolio September 30, 1996
Small Cap Portfolio September 30, 1996
Pacific Basin Equity Portfolio September 30, 1996
European Equity Portfolio September 30, 1996
International Bond Portfolio September 30, 1996
100% Treasury Portfolio September 30, 1996
Growth and Income Portfolio September 30, 1996
U.S. Bond Index Portfolio September 30, 1996
Equity 500 Equal Weighted Index Portfolio September 30, 1996
Small Cap Index Portfolio September 30, 1996
EAFE Equity Index Portfolio September 30, 1996
BT RetirementPlus Portfolio December 11, 1996
Cash Management Portfolio September 30, 1996
Treasury Money Portfolio September 30, 1996
Tax Free Money Portfolio September 30, 1996
International Equity Portfolio September 30, 1996
Utility Portfolio September 30, 1996
Equity 500 Index Portfolio September 30, 1996
Short/Intermediate U.S. Government Securities PortfolioSeptember 30, 1996
Asset Management Portfolio September 30, 1996
Capital Appreciation Portfolio September 30, 1996
Intermediate Tax Free Portfolio September 30, 1996
121196
Exhibit 19 under Form N-1A
Exhibit 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
The undersigned Trustees and officers, as indicated respectively below, of
BT Investment Funds, BT Institutional Funds, BT Pyramid Mutual Funds, The
Leadership Trust, and BT Advisor Funds (each, a `Trust'') and, Cash Management
Portfolio, Treasury Money Portfolio, Tax Free Money Portfolio, NY Tax Free Money
Portfolio, International Equity Portfolio, Utility Portfolio, Short/Intermediate
U.S. Government Securities Portfolio, Equity 500 Index Portfolio, Asset
Management Portfolio, Capital Appreciation Portfolio, Intermediate Tax Free
Portfolio, and BT Investment Portfolios (each, a `Portfolio Trust'') each
hereby constitutes and appoints the Secretary and each Assistant Secretary of
each Trust and each Portfolio Trust and the Deputy General Counsel of Federated
Investors, each of them with full powers of substitution, as his true and lawful
attorney-in-fact and agent to execute in his name and on his behalf in any and
all capacities the Registration Statements on Form N-1A, and any and all
amendments thereto, and all other documents, filed by a Trust or a Portfolio
Trust with the Securities and Exchange Commission (the `SEC'') under the
Investment Company Act of 1940, as amended, and (as applicable) the Securities
Act of 1933, as amended, and any and all instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Trust or
Portfolio Trust to comply with such Acts, the rules, regulations and
requirements of the SEC, and the securities or Blue Sky laws of any state or
other jurisdiction, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the SEC and such other jurisdictions,
and the undersigned each hereby ratifies and confirms as his own act and deed
any and all acts that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents has,
and may exercise, all of the powers hereby conferred. The undersigned each
hereby revokes any Powers of Attorney previously granted with respect to any
Trust or Portfolio Trust concerning the filings and actions described herein.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand as of
the 30th day of September, 1996.
SIGNATURES TITLE
/s/ Ronald M. Petnuch President and Treasurer (Chief Executive Officer,
Ronald M. Petnuch Principal Financial and Accounting Officer)
of each Trust and Portfolio Trust
/s/ Philip W. Coolidge Trustee of each Trust and
Philip W. Coolidge Portfolio Trust
/s/ Charles P. Biggar Trustee of each Portfolio Trust
Charles P. Biggar and BT Institutional Funds
SIGNATURES TITLE
/s/ S. Leland Dill Trustee of each Portfolio Trust
S. Leland Dill and BT Investment Funds
2
/s/ Philip Saunders, Jr. Trustee of each Portfolio Trust
Philip Saunders, Jr. and BT Investment Funds
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the BT
"Tax Free Portfolio Annual Report dated December 31, 1996, and is qualified"
in its entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0008116074
<NAME> TAX FREE MONEY PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 123832836
<INVESTMENTS-AT-VALUE> 123832836
<RECEIVABLES> 986369
<ASSETS-OTHER> 9805
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 124829010
<PAYABLE-FOR-SECURITIES> 7082306
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32938
<TOTAL-LIABILITIES> 7115244
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117713766
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 117713766
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4423864
<OTHER-INCOME> 0
<EXPENSES-NET> 249768
<NET-INVESTMENT-INCOME> 4174096
<REALIZED-GAINS-CURRENT> (8495)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 4165601
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1989033)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 187326
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 293600
<AVERAGE-NET-ASSETS> 124884459
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
