As filed with the Securities and Exchange Commission on August 30, 1999
Registration No. 33-80784
File No. 811-08484
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 15 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
Amendment No. 18 /X/
(Check appropriate box or boxes)
MENTOR INSTITUTIONAL TRUST
(Exact name of registrant as specified in charter)
P.O. Box 1357
Richmond, Virginia 23286
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code (804) 782-3647
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PAUL F. COSTELLO, President
901 East Byrd Street
Richmond, Virginia 23219
(Name and address of agent for service)
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Copy to:
TIMOTHY W. DIGGINS, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
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It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on March 1, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[X] on October 31, 1999 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
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If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
PARTS A AND B OF THIS POST-EFFECTIVE AMENDMENT RELATE SOLELY TO THE SNAP
FUND. NO INFORMATION RELATING TO ANY OTHER SERIES OF THE REGISTRANT IS AMENDED
OR SUPERSEDED HEREBY.
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PROSPECTUS OCTOBER ___, 1999
SNAP FUND
EVERGREEN FAMILY OF FUNDS
THIS PROSPECTUS CONTAINS INFORMATION YOU SHOULD KNOW BEFORE YOU INVEST. PLEASE
READ IT CAREFULLY AND KEEP IT WITH YOUR INVESTMENT RECORDS.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY STATEMENT TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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Contents
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FUND SUMMARY......................................................................................................1
I. Objective, Principal Investment Strategies, and Principal Risks......................................1
Objective..............................................................................1
Principal Investment Strategies........................................................1
Principal Risks........................................................................1
II. Performance Information, Fees, and Expenses.........................................................2
Performance Information................................................................2
Fees and Expenses......................................................................3
III. Other Investment Strategies and Risks..............................................................4
GENERAL INFORMATION...............................................................................................6
Integration with Evergreen Family of Funds...............................................................6
Year 2000 Issues.........................................................................................6
HOW TO PARTICIPATE IN THE FUND....................................................................................7
Pricing of Fund Shares...................................................................................7
Purchasing Shares........................................................................................7
Redeeming Shares.........................................................................................7
Redemptions by Check.....................................................................................8
FUND DISTRIBUTIONS AND TAXES......................................................................................8
Distributions............................................................................................8
Taxes....................................................................................................9
FINANCIAL HIGHLIGHTS..............................................................................................9
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FUND SUMMARY
I. OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES, AND PRINCIPAL RISKS.
OBJECTIVE. SNAP Fund seeks as high a rate of current income as Mentor
Investment Advisors, LLC, the Fund's investment adviser ("Mentor Advisors"),
believes is consistent with preservation of capital and maintenance of
liquidity.
PRINCIPAL INVESTMENT STRATEGIES. The Fund attempts to maximize yields,
consistent with its investment objective, by buying and selling portfolio
investments in anticipation of or in response to changing economic and money
market conditions and trends. The Fund may also invest to take advantage of what
Mentor Advisors believes to be temporary disparities in yields either in those
segments of the securities markets in which the Fund invests or among particular
instruments within those segments.
The Fund follows investment and valuation policies designed to maintain
a stable net asset value of $1.00 per share, although there is no assurance that
these policies will be successful. The Fund will maintain a dollar-weighted
average maturity of 90 days or less and will not invest in securities with
remaining maturities of more than one year.
In order to meet its investment objective, the Fund will invest in a
portfolio of high-quality short-term instruments consisting of any or all of the
following: U.S. Government securities; high quality debt instruments of the
Commonwealth of Virginia, and obligations of any county, city, town, district,
authority, or other public body of the Commonwealth of Virginia; high quality
obligations of any other state or of any county, city, town, district located in
any other state; bankers' acceptances issued by a bank organized in the U.S. or
a foreign bank with an agency domiciled in the U.S.; certificates of deposit and
interest bearing time deposits of U.S. banks or U.S. branches of foreign banks
if the issuer has outstanding short-term debt obligations rated not lower than
P-1 by Moody's Investors Service, Inc. and A-1 by Standard & Poor's Ratings
Services; prime commercial paper consisting of high quality, short-term
obligations issued by banks, corporations, and other issuers organized under
U.S. law; other high-quality, short-term obligations of corporate issuers; and
repurchase agreements with respect to U.S. Government securities.
PRINCIPAL RISKS. While money market funds are designed to be relatively
low risk investments, they are not entirely free of risk. The main risks that
could adversely affect the value of the Fund's shares and the total return on
your investment include:
o INTEREST RATE RISK. The value of bonds and other debt
instruments generally rise and fall in response to changes in
interest rates. The values of the Fund's investments in such
securities can be expected to vary inversely to the changes in
prevailing interest rates. Thus, as market interest rates
rise, there is a risk that the value of the Funds investments
in debt instruments may fall. Interest rate risk is
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generally lower for investments with short maturities, and the
short-term nature of money market investments is designed to
reduce interest rate risk.
o CREDIT RISK. The values of many of the Fund's investments,
including debt instruments and repurchase agreements, may
depend in part on the credit quality of issuers and
counterparties. While the Fund invests only in high-quality
debt instruments and transacts with parties which Mentor
Advisors believes to be of high creditworthiness, there is
always a risk that issuers and counterparties may be unable or
unwilling to honor their obligations to the Fund.
An investment in the Fund is not a deposit in a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
Fund.
II. PERFORMANCE INFORMATION, FEES, AND EXPENSES.
PERFORMANCE INFORMATION. The following information provides some
indication of the Fund's risks. The bar chart shows changes in the Fund's
performance for the last three calendar years. The table following the bar chart
compares the Fund's performance to that of the Donoghue First Tier Taxable
Institutional Average. The Fund's past performance is not an indication of
future performance.
CALENDAR YEAR TOTAL RETURNS
[plot points]
1998 5.62%
1997 5.63%
1996 ____%
The return for the calendar quarter ended 9/30/99 was ____%. During the
periods shown in the bar chart, the highest return for a quarter was 1.45%
(quarter ending 12/97), and the lowest return for a quarter was 1.33% (quarters
ending 3/97; 12/98).
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AVERAGE ANNUAL TOTAL RETURNS
(for periods ending December 31, 1998)
-------------------------------- --------------------- -------------------
PAST ONE YEAR SINCE INCEPTION
(7/24/95)
-------------------------------- --------------------- -------------------
SNAP FUND 5.62% 5.53%
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FEES AND EXPENSES. The information in the expense table below is
designed to give you an idea of what you should expect to pay in expenses as an
investor in the Fund. Shares of the Fund are currently being offered to
investors through the Commonwealth of Virginia State Non-Arbitrage Program (the
"SNAP Program"). Only expenses incurred by the Fund are reflected in the table
and Example below; other expenses incurred by the SNAP Program, or by
participants in the SNAP Program, are not reflected.
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SHAREHOLDER FEES (fees paid directly from your investment)
None
ANNUAL FUND EXPENSES (expenses deducted from Fund assets) (as a % of average net assets)
Management Fee 0.09
Other Expenses 0.03
Total Annual Operating Expenses 0.12
Fee Waiver(1) 0.01
NET ANNUAL OPERATING EXPENSES 0.11
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The EXAMPLES below translate the "Total Annual Operating Expenses"
shown in the preceding table into dollar amounts. This allows you to more easily
compare the costs of investing in the Fund with those of other mutual funds. The
example assumes that you invested $10,000 in the Fund for the time periods
indicated, reinvested all distributions, and earned a hypothetical 5% annual
return.
Investors should keep in mind that the examples are for comparison
purposes only. The Fund's actual performance and expenses may be higher or
lower. Expenses are based on the Fund's last fiscal year.
EXAMPLES YEAR
1(2) $ 11
3 $ 39
5 $ 68
10 $ 154
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(1) Mentor Advisors has agreed to waive a portion of its management fee so that,
through June 30, 2000, the Fund will pay a management fee, calculated daily, at
an annual rate as follows: for the first $1 billion of assets under management,
.08% of the average daily net assets in the Fund; for the next $1 billion under
management, .06% of the average daily net assets in the Fund; and for any
amounts over $2 billion under management, .04% of the average daily net assets
in the Fund. [Mentor Advisors has agreed to waive an additional amount of its
management fee for that period in an amount equal to .01% of the average net
assets of certain other accounts managed by Mentor Advisors in connection with
the SNAP Program.]
(2) Reflects fee waiver in effect through June 30, 2000.
III. OTHER INVESTMENT STRATEGIES AND RISKS
This Section provides greater detail with regard to the Fund's
principal investment strategies and risks that are summarized in Section I. The
Fund may change its investment objective without shareholder approval.
The Fund will invest only in high quality money market instruments and
other U.S. dollar-denominated instruments of issuers that Mentor Advisors
believes present minimal credit risk. With regard to certificates of deposit and
time deposits, this means that the Fund will only invest where the issuer has
outstanding short-term debt obligations rated not lower than P-1 by Moody's A-1
by Standard & Poor's. The Fund will only invest in commercial paper or other
short-term obligations with a similar rating and will only invest in other
obligations rated AAA or AA by Standard & Poor's and Aaa or Aa by Moody's. All
rating will be evaluated at the time of the investment by the Fund.
The Fund will not purchase securities of any issuer (other than U.S.
Government securities) if, immediately thereafter, more than 5% of the Fund's
total assets would be invested in securities of that issuer (or 1% of the Fund's
total assets, or $1 million, whichever is greater, if the securities of such
issuer owned by the Fund are not rated in the highest rating category by a
nationally recognized statistical rating organization), nor will the Fund make
an investment in commercial paper if, immediately thereafter, more than 35% of
its total assets would be invested in commercial paper. All percentage
limitations on investments will apply at the time of investment and shall not be
considered violated unless an excess or deficiency occurs or exists immediately
after and as a result of such investment.
The Fund will not lend money, other than by investment in the
instruments described above and through entry into repurchase agreements, nor
will it borrow money or pledge, hypothecate, or mortgage its assets. The Fund
will not invest in securities of an issuer if any employee of the Fund or Mentor
Advisors (or, to the knowledge of the Fund or Mentor Advisors, any affiliated
person of the Fund or Mentor Advisors) is an officer or director of that issuer
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or holds 10% of the outstanding voting securities of that issuer, unless the
investment is approved or ratified by the Trustees.
The Fund's investment strategies may involve the following risks:
o INTEREST RATE RISK AND CREDIT RISK. Fixed-income debt securities
such as bonds and notes are obligations of the issuer to make
payments of principal and/or interest on future dates. The values
of the Fund's investments in such securities can be expected to
vary inversely to changes in prevailing interest rates. For
example, as market interest rates rise, the Fund's fixed-income
debt security investments are likely to be worth less. This risk
is generally greater for debt securities with longer maturities.
Fixed income investments also carry the risk that the issuer or
the guarantor of a security will be unable or unwilling to make
timely principal and/or interest payments, or otherwise to honor
its obligations.
o VARIABLE OR FLOATING-RATE SECURITIES INVESTMENT RISK. Variable or
floating-rate securities bear interest at rates subject to
periodic adjustment or provide for periodic recovery of principal
on demand. The value of the Fund's investment in certain of these
securities may depend on the Fund's right to demand that a
specified bank, broker-dealer, or other financial institution
either purchase such securities from the Fund at par or make
payment on short notice to the Fund of unpaid principal and/or
interest on the securities. These securities are subject to the
risk that the financial institution in question may be unable or
unwilling to make timely payments, or otherwise to honor its
obligations.
o REPURCHASE AGREEMENT INVESTMENT RISK. Although the Fund will
enter into repurchase agreements with respect to U.S. Government
securities only with commercial banks having assets of more than
$1 billion and with "primary dealers" in U.S. Government
securities, the value of such investments may be diminished in
the case of the default, insolvency, or bankruptcy of the Fund's
counter-party to the agreement. Mentor Advisors will monitor
repurchase agreement transactions to ensure that they will be
full collateralized at all times. Nevertheless, the Fund bears a
risk of loss if its counterparty defaults on its obligations and
the Fund is delayed or prevented from exercising its rights to
dispose of the collateral. If the Fund's counterparty should
become involved in bankruptcy or insolvency proceedings, it is
possible that the Fund may be treated as an unsecured creditor
and be required to return the underlying collateral to the
counter-party's estate.
o GENERAL RISKS. Consistent with its investment objective, and in
consideration of liquidity and the preservation of capital, the
Fund may not necessarily invest in money market instruments
paying the highest available yield at a particular time. Because
the Fund is an open-end fund, its shareholders have the right to
redeem their shares in the Fund at any time. Withdrawals by
shareholders could require the sale of portfolio investments by
the Fund at a time when such a sale might not otherwise be
desirable.
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GENERAL INFORMATION
INVESTMENT ADVISER. The Trustees of Mentor Institutional Trust, a
Massachusetts business trust of which the Fund is a series of shares, are
responsible for generally overseeing the conduct of the Fund's business. The
Trustees have hired Mentor Investment Advisors, LLC, located at 901 East Byrd
Street, Richmond, Virginia 23219, to act as investment adviser to the Fund.
Mentor Advisors is an affiliate of First Union National Bank; Mentor Advisors
and other affiliates of First Union National Bank serve as investment advisers
to the Evergreen Family of Funds, and currently have over $[ ] billion in assets
under management.
Subject to the general oversight of the Trustees, Mentor Advisors
manages the Fund's portfolio in accordance with the stated policies of the Fund,
makes investment decisions for the Fund, and places the purchase and sale orders
for the Fund's portfolio transactions. A team of investment professionals
manages the Fund for Mentor Advisors. For the fiscal year ended June 30, 1999,
the Fund paid Mentor Advisors an aggregate fee, accrued daily and paid monthly,
of .08% of the Fund's average net assets.
INTEGRATION WITH EVERGREEN FAMILY OF FUNDS. At a special meeting of
shareholders held in October 1999, shareholders [approved] a conversion of the
Fund from a series of Mentor Institutional Trust, into a series of Evergreen
Select Money Market Trust, a Delaware business trust. This change was proposed
in connection with efforts to integrate the Mentor Family of Funds and the
Evergreen Family of Funds, both of which are managed by affiliates of First
Union National Bank.
YEAR 2000 ISSUES. The Fund receives services from a number of providers
which rely on the smooth functioning of their respective systems and the systems
of others to perform those services. It is generally recognized that certain
systems in use today may not perform their intended functions adequately after
the Year 1999 because of the inability of the software to distinguish the Year
2000 from the Year 1900. Mentor Advisors is taking steps that it believes are
reasonably designed to address this potential "Year 2000" problem and to obtain
satisfactory assurances that comparable steps are being taken by the Fund's
other major service providers. There can be no assurance, however, that these
steps will be sufficient to avoid any adverse impact on the Fund from this
problem.
HOW TO PARTICIPATE IN THE FUND
PRICING OF FUND SHARES. The Fund offers its shares continuously at a
price of $1.00 per share. Shares of the Fund are sold at the net asset value
next determined after a purchase order is received by the Fund from the SNAP
Program. The Fund determines its net asset value twice each day the New York
Stock Exchange is open, at 12:00 noon and as of the close of the Exchange. The
Fund's investments are valued at amortized cost according to Securities and
Exchange Commission Rule 2a-7. The Fund will not normally have unrealized gains
or losses so long as it values its investments by the amortized cost method.
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PURCHASING SHARES. Shares of the Fund are currently being offered only
to participants in the Commonwealth of Virginia State Non-Arbitrage Program (the
"SNAP Program"). Participants in the SNAP Program wishing to purchase shares of
the Fund should consult the Information Statement of the SNAP Program, as it may
be amended from time to time (the "Information Statement"), or should contact
the SNAP Program directly, for information as to the procedures they should
follow in order to purchase shares of the Fund through the Program.
All Fund shares owned beneficially by participants in the SNAP Program
are owned of record by the Treasury Board, an agency of the Commonwealth of
Virginia, for the benefit of participants. Because the Treasury Board will be
the record owner of all shares of the Fund owned beneficially by SNAP Program
participants, a Program participant should follow the procedures described in
the Information Statement to ensure that all instructions as to any investment
by it in the Fund -- including instructions as to the purchase or sale of shares
of the Fund -- are timely carried out by the SNAP Program.
In the interest of economy and convenience, the Fund will not issue
certificates for its shares except at the shareholder's request.
Because the Fund seeks to be fully invested at all times, investments
must be in Same Day Funds to be accepted. "Same Day Funds" are funds credited by
the applicable regional Federal Reserve Bank to the account of the Fund at
Wachovia Bank. A participant in the SNAP Program wishing to invest in the Fund
must ensure that Wachovia Bank, as Depository for the SNAP Program, receives
Same Day Funds at or prior to the time the participant wishes to invest in the
Fund.
REDEEMING SHARES. Shares of the Fund may be redeemed on any day when
the New York Stock Exchange is open. Redemptions will be effected at the net
asset value per share of the Fund next determined after receipt of the
redemption request in good order. Shares redeemed at the Fund's 12:00 noon price
do not earn the income dividend declared on the day of redemption. Participants
should consult the Information Statement or contact the SNAP Program directly to
ensure that all necessary steps are taken to effect the timely redemption of
their shares. Under unusual circumstances, the Fund may suspend repurchases, or
postpone payment for more than seven days, as permitted by federal securities
laws.
The Fund will normally redeem shares for cash; however, the Fund
reserves the right to pay the redemption price wholly or partly in kind if the
Trustees determine it to be advisable in the interest of the remaining
shareholders. If portfolio securities are distributed in lieu of cash, the
shareholder will normally incur brokerage commissions upon subsequent
disposition of any such securities.
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If shares of the Fund to be redeemed represent an investment made by
check, the Fund reserves the right not to transmit the redemption proceeds to
the shareholder until the check has been collected which may take up to 15 days
after the purchase date.
REDEMPTIONS BY CHECK. SNAP Program participants may elect to have a
special checking account with Wachovia Bank. Checks may be drawn on the account
for any amount. Upon receipt of a completed signature card, Wachovia Bank will
provide the participant with a supply of checks which can be drawn on the
account. Additional supplies of checks are available, upon request. When a check
is presented to Wachovia Bank, a number of shares in the Fund owned beneficially
by the check writer will be redeemed in order to pay the full amount of the
check.
Redemption by check is not appropriate for a complete liquidation of an
account. If the amount of a redemption check is greater than the value of the
shares owned beneficially by the check writer, the check will be returned to the
depositor due to an insufficient account balance. The check writing privilege
may be suspended at any time.
FUND DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. The Fund declares all of its net interest income as a
distribution on each day the New York Stock Exchange is open for business, as a
dividend to shareholders of record immediately prior to the close of regular
trading on the Exchange. Shareholders who purchase shares of the Fund as of
12:00 noon on any day will receive the dividend declared by the Fund for that
day; shareholders who purchase shares after 12:00 noon will begin earning
dividends on the day after the Fund accepts their order. The Fund's net income
for Saturdays, Sundays, and holidays is declared as a dividend on the preceding
business day.
Dividends for any month will be paid on the last day of that month (or,
if that day is not a business day, on the preceding business day), except that
the Fund's schedule for payment of dividends during the month of December may be
adjusted to assist in the Fund's tax reporting and distribution requirements.
All distributions will be reinvested automatically in Fund shares as of the
payment date, unless the shareholder instructs the Fund to pay out distributions
to it in cash. Since the net income of the Fund is declared as dividend income
each time it is determined, the net asset value per share of the Fund normally
remains at $1 per share immediately after each determination and dividend
declaration.
TAXES. The Fund intends to qualify as a "regulated investment company"
for federal income tax purposes to be relieved of federal taxes on income and
gains it distributes to shareholders. The Fund will distribute substantially all
of its net investment income and capital gain net income on a current basis.
Distributions from the Fund will be taxable to a shareholder whether received in
cash or additional shares. Such distributions that are designated as capital
gains distributions will be taxable as such, regardless of how long Fund shares
are held, while other taxable distributions will be taxed as ordinary income.
Loss on the sale of Fund shares held for less than six months will be treated as
a long term capital loss to the extent of any capital gain distribution received
with respect to such shares. Early in each year, the Fund will notify
shareholders of the amount and tax status of distributions paid to the
shareholders by the Fund for the preceding year.
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The Fund will not be responsible for determining whether income or
gains from any investment by the Fund will be excludable from the income of
participants in the SNAP Program for tax purposes, or will otherwise be subject
to or exempt from taxation under federal or state law or be subject to rebate by
participants under federal law.
The foregoing is a summary of certain federal income tax consequences
of investing in the Fund. Shareholders should consult with their tax advisers
for more information concerning the federal, state, and local tax consequences
of investing in, redeeming, or exchanging Fund shares.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the past four years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG Peat Marwick LLP. KPMG
Peat Marwick LLP's report and the Fund's financial statements are included in
the Fund's annual report, which is available upon request.
[FINANCIAL HIGHLIGHTS TABLE]
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[Back Cover]
SNAP FUND
P.O. BOX 1357, RICHMOND, VIRGINIA 23286-0109
(800) 570-SNAP
The Fund's statement of additional information (SAI) and annual and
semi-annual reports to shareholders include additional information about the
Fund. The SAI and the financial statements included in the Fund's most recent
annual report to shareholders are incorporated by reference into this
prospectus, which means they are part of this prospectus for legal purposes. The
Fund's annual report discusses the market conditions and investment strategies
that significantly affected its performance during its last fiscal year. You may
obtain free copies of these materials, request other information about the Fund,
or make shareholder inquiries by calling Mentor Investment Group, LLC at
1-800-570-SNAP.
You may review and copy information about the Fund, including its SAI,
at the Securities and Exchange Commission's public reference room in Washington,
D.C. You may call the Commission at 1-800-SEC-0330 for information about the
operation of the public reference room. You may also access reports and other
information about the Fund on the Commission's Internet site at
HTTP://WWW.SEC.GOV. You may obtain copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Fund's file number
under the Investment Company Act, which is 811-08484.
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SNAP FUND
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
October , 1999
SNAP Fund (the "Fund") is a series of shares of beneficial interest of
Mentor Institutional Trust (the "Trust"), a series investment company. This
Statement of Additional Information is not a prospectus and should be read in
conjunction with the prospectus of the Fund dated October , 1999. A copy of the
prospectus can be obtained upon request made to Mentor Investment Group, LLC
("Mentor") at P.O. Box 1357, Richmond, Virginia 23286-0109, or by calling Mentor
at 1-800-570-SNAP.
Certain disclosure has been incorporated by reference from the Fund's
annual report, a free copy of which can be obtained by calling Mentor Services
Company at 1-800-570-SNAP.
TABLE OF CONTENTS
CAPTION PAGE
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General ......................................... 2
Investment Restrictions ......................... 2
Management of the Trust ......................... 4
Principal Holders of Securities ................. 7
Investment Advisory and Other Services .......... 7
Brokerage ....................................... 9
Determination of Net Asset Value ................ 10
Tax Status ...................................... 12
Independent Accountants ......................... 13
Custodian ....................................... 13
Performance Information ......................... 13
Shareholder Liability ........................... 14
Ratings ......................................... 14
Financial Statements ............................ 15
1
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GENERAL
Mentor Institutional Trust (the "Trust") is a Massachusetts business trust
organized on February 8, 1994 as IMG Institutional Trust. The Trust's name was
changed to Mentor Institutional Trust as of June 20, 1995. The Fund is a series
of shares of the Trust. The Fund is a diversified, open-end money-market fund.
It commenced operations as a registered investment company on July 24, 1995.
The Trust is a series management investment company with an unlimited
number of authorized shares of beneficial interest. Shares of the Trust may,
without shareholder approval, be divided into two or more series of shares
representing separate investment portfolios. Any such series of shares may be
further divided without shareholder approval into two or more classes of shares
having such preferences and special or relative rights and privileges as the
Trustees determine. The Trust's shares are currently divided into five series,
one representing the Fund, the others representing other funds with varying
investment objectives and policies. Each share has one vote, with fractional
shares voting proportionally. Shares of each class will vote together as a
single class except when required by law or determined by the Trustees. Shares
of the Fund are freely transferable, are entitled to dividends as declared by
the Trustees, and, if the Fund were liquidated, would receive the net assets of
the Fund. The Trust may suspend the sale of shares at any time and may refuse
any order to purchase shares. Although the Trust is not required to hold annual
meetings of its shareholders, shareholders have the right to call a meeting to
elect or remove Trustees, or to take other actions as provided in the Agreement
and Declaration of Trust.
INVESTMENT RESTRICTIONS
As fundamental investment restrictions, which may not be changed with
respect to the Fund without approval by the holders of a majority of the
outstanding shares of the Fund, the Fund may not:
1. Purchase any security (other than U.S. Government securities) if as a
result: (i) as to 75% of the Fund's total assets, more than 5% of the Fund's
total assets (taken at current value) would then be invested in securities of
a single issuer, or (ii) more than 25% of the Fund's total assets would be
invested in a single industry, except that the Fund may invest up to 100% of
its assets in securities of issuers in the banking industry.
2. Acquire more than 10% of the voting securities of any issuer.
3. Act as underwriter of securities of other issuers except to the extent
that, in connection with the disposition of portfolio securities, it may be
deemed to be an underwriter under certain federal securities laws.
4. Issue any class of securities which is senior to the Fund's shares of
beneficial interest.
5. Purchase or sell securities on margin (but the Fund may obtain such
short-term credits as may be necessary for the clearance of transactions).
(Margin payments in connection with transactions in futures contracts,
options, and other financial instruments are not considered to constitute the
purchase of securities on margin for this purpose.)
6. Purchase or sell real estate or interests in real estate, including
real estate mortgage loans, although it may purchase and sell securities
which are secured by real estate and securities of companies that invest or
deal in real estate or real estate limited partnership interests. (For
purposes of this restriction, investments
2
<PAGE>
by the Fund in mortgage-backed securities and other securities representing
interests in mortgage pools shall not constitute the purchase or sale of real
estate or interests in real estate or real estate mortgage loans.)
7. Borrow money in excess of 5% of the value (taken at the lower of cost
or current value) of its total assets (not including the amount borrowed) at
the time the borrowing is made, and then only from banks as a temporary
measure to facilitate the meeting of redemption requests (not for leverage)
which might otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes.
8. Pledge, hypothecate, mortgage, or otherwise encumber its assets in
excess of 15% of its total assets (taken at the lower of cost or current
value) and then only to secure borrowings permitted by these investment
restrictions.
9. Purchase or sell commodities or commodity contracts, except that the
Fund may purchase or sell financial futures contracts, options on futures
contracts, and futures contracts, forward contracts, and options with respect
to foreign currencies, and may enter into swap transactions.
10. Make loans, except by purchase of debt obligations or other
instruments in which the Fund may invest consistent with its investment
policies or by entering into repurchase agreements.
In addition, it is contrary to the current policy of the Fund, which policy
may be changed without shareholder approval, to:
1. Invest in (a) securities which at the time of such investment are not
readily marketable, (b) securities restricted as to resale, and (c)
repurchase agreements maturing in more than seven days, if, as a result, more
than 10% of the Fund's net assets (taken at current value) would then be
invested in securities described in (a), (b), and (c).
2. Invest in securities of other registered investment companies, except
by purchases in the open market involving only customary brokerage
commissions and as a result of which not more than 5% of its total assets
(taken at current value) would be invested in such securities, or except as
part of a merger, consolidation, or other acquisition.
All percentage limitations on investments will apply at the time of
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment. Except
for the investment restrictions listed above as fundamental or to the extent
designated as such in a prospectus with respect to the Fund, the other
investment policies described in this Statement or in a prospectus are not
fundamental and may be changed by approval of the Trustees. As a matter of
policy, the Trustees would not materially change the Fund's investment objective
without shareholder approval.
The Investment Company Act of 1940, as amended (the "1940 Act"), provides
that a "vote of a majority of the outstanding voting securities" of the Fund
means the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund, and (2) 67% or more of the shares present at a meeting if
more than 50% of the outstanding shares are represented at the meeting in person
or by proxy.
3
<PAGE>
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for the general oversignt of the
Fund's business. The following table provides biographical information with
respect to each Trustee and officer of the Trust. Each Trustee who is an
"interested person" of the Trust, as defined in the 1940 Act, is indicated by an
asterisk.
<TABLE>
<CAPTION>
POSITION HELD
NAME AND ADDRESS AND AGE WITH THE TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- -------------------------------- ------------------- --------------------------------------------------------
<S> <C> <C>
*Daniel J. Ludeman (41) Chairman; Trustee President and COO Elect, First Union Securities;
c/o Mentor Institutional Trust Chairman and Chief Executive Officer, Mentor
901 E. Byrd Street Investment Group, LLC; Director, Wheat, First
Richmond, VA 23219 Securities, Inc.; Managing Director, Wheat First
Butcher Singer, Inc.; Chairman and Director, Mentor
Income Fund, Inc. and America's Utility Fund, Inc.;
Chairman and Trustee, Mentor Variable Investment
Portfolios, Mentor Funds, and Cash Resource Trust.
Louis W. Moelchert, Jr. (57) Trustee Vice President for Investments, University of
University of Richmond Richmond; Trustee, Mentor Funds, Mentor Variable
Richmond, VA 23173 Investment Portfolios, and Cash Resource Trust;
Director, America's Utility Fund, Inc. and Mentor
Income Fund, Inc.
Thomas F. Keller (67) Trustee R.J. Reynolds Industries Professor of Business
c/o Mentor Institutional Trust Administration and Former Dean of Fuqua School of
901 E. Byrd Street Business, Duke University; Director of LADD
Richmond, VA 23219 Furniture, Inc., Wendy's International, Inc., American
Business Products, Inc. Dimon, Inc., and Biogen, Inc.;
Director of Nations Balanced Target Maturity Fund, Inc.,
Nations Government Income Term Trust 2003, Inc., Nations
Government Income Term Trust 2004, Inc., Hatteras Income
Securities, Inc., Nations Institutional Reserves, Nations
Fund Trust, Nations Fund, Inc., Nations Fund Portfolios,
Inc., and Nations LifeGoal Funds, Inc. Trustee, Mentor
Funds, Mentor Variable Investment Portfolios, and
Cash Resource Trust; Director, Mentor Income
Fund, Inc. and America's Utility Fund, Inc.
Arnold H. Dreyfuss (70) Trustee Chairman, Eskimo Pie Corp.; formerly, Chairman and
P.O. Box 18156 Chief Executive Officer, Hamilton Beach/Proctor-Silex,
Richmond, VA 23226 Inc.; Trustee, Mentor Funds, and Cash Resource Trust,
and Mentor Variable Investment Portfolios; Director,
America's Utility Fund, Inc. and Mentor Income Fund,
Inc.
Troy A. Peery, Jr. (52) Trustee Trustee, Mentor Funds, Cash Resource Trust, and
Heilig-Meyers Company Mentor Variable Investment Portfolios; Director,
2235 Staples Mill Road America's Utility Fund, Inc. and Mentor Income Fund,
Richmond, VA 23230 Inc; formerly, President, Heilig-Meyers Company.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
POSITION HELD
NAME AND ADDRESS AND AGE WITH THE TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- -------------------------------- ---------------- -------------------------------------------------------
<S> <C> <C>
*Peter J. Quinn, Jr. (38) Trustee Head of Retail Branch System Elect, First Union
c/o Mentor Institutional Trust Securities; formerly, President, Mentor Distributors,
901 E. Byrd Street LLC; Managing Director, Mentor Investment Group,
Richmond, VA 23219 LLC and Wheat First Butcher Singer, Inc.; formerly,
Senior Vice President/Director of Mutual Funds, Wheat
First Butcher Singer, Inc.; Trustee, Mentor Funds and
Cash Resource Trust; Director, America's Utility Fund,
Inc. and Mentor Income Fund, Inc.
Arch T. Allen, III (58) Trustee Attorney at law, Raleigh, North Carolina; Trustee,
c/o Mentor Institutional Trust Mentor Funds, Cash Resource Trust, and Mentor
901 E. Byrd Street Variable Investment Portfolios; Director, Mentor
Richmond, VA 23219 Income Fund, Inc. and America's Utility Fund, Inc.;
formerly, Vice Chancellor for Development and
University Relations, University of North Carolina at
Chapel Hill.
Weston E. Edwards (64) Trustee President, Weston Edwards & Associates; Trustee,
c/o Mentor Institutional Trust Mentor Funds, Cash Resource Trust, and Mentor
901 E. Byrd Street Variable Investment Portfolios; Director, Mentor
Richmond, VA 23219 Income Fund, Inc. and America's Utility Fund, Inc.;
Founder and Chairman, The Housing Roundtable;
formerly, President, Smart Mortgage Access, Inc.
Jerry R. Barrentine (64) Trustee President, J.R. Barrentine & Associates; Trustee,
c/o Mentor Institutional Trust Mentor Funds, Cash Resource Trust, and Mentor
901 E. Byrd Street Variable Investment Portfolios; Director, Mentor
Richmond, VA 23219 Income Fund, Inc. and America's Utility Fund, Inc.;
formerly, Executive Vice President and Chief Financial
Officer, Barclays/American Mortgage Director
Corporation; Managing Partner, Barrentine Lott &
Associates.
J. Garnett Nelson (59) Trustee Consultant, Mid-Atlantic Holdings, LLC; Trustee,
c/o Mentor Institutional Trust Mentor Funds, Cash Resource Trust, and Mentor
901 E. Byrd Street Variable Investment Portfolios; Director, Mentor
Richmond, VA 23219 Income Fund, Inc., America's Utility Fund, Inc., GE
Investment Funds, Inc., and Lawyers Title Corporation;
Member, Investment Advisory Committee, Virginia Retirement
System; formerly, Senior Vice President, The Life Insurance
Company of Virginia.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
POSITION HELD
NAME AND ADDRESS AND AGE WITH THE TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- -------------------------------- ---------------- ------------------------------------------------------
<S> <C> <C>
Paul F. Costello (38) President Chief Administrative Officer Elect, First Union
c/o Mentor Institutional Trust Securities; Managing Director, Mentor Investment
901 E. Byrd Street Group, LLC, Wheat First Butcher Singer, Inc., and
Richmond, VA 23219 Mentor Investment Advisors, LLC; President, Mentor
Income Fund, Inc., America's Utility Fund, Inc., Mentor
Funds, Cash Resource Trust, and Mentor Variable Investment
Portfolios; Director, Mentor Perpetual Advisors, LLC and
Mentor Trust Company.
Michael Wade (32) Treasurer Vice President and Assistant Treasurer, Mentor
c/o Mentor Institutional Trust Investment Group, LLC; Assistant Treasurer, Cash
901 E. Byrd Street Resource Trust, Mentor Income Fund, Inc., Mentor
Richmond, VA 23219 Funds, and America's Utility Fund, Inc.; formerly,
Senior Accountant, Wheat First Butcher Singer, Inc.
Michael H. Koonce (39) Secretary Senior Vice President and Assistant General Counsel,
c/o Mentor Institutional Trust First Union Corporation; former Senior Vice President
901 E. Byrd Street and General Counsel, Colonial Management
Richmond, VA 23219 Associates, Inc.
</TABLE>
The table below shows the fees paid to each Trustee by the Trust for the
current fiscal year and the fees paid to each Trustee by all funds in the Mentor
family (including the Trust) during the 1998 calendar year.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE COMPENSATION FROM ALL COMPLEX FUNDS
TRUSTEES FROM THE TRUST (26 FUNDS)
- --------------------------------- ------------------------ -----------------------
<S> <C> <C>
Daniel J. Ludeman ............... $0 $ 0
Arnold H. Dreyfuss .............. $0 $32,000
Thomas F. Keller ................ $0 $32,000
Louis W. Moelchert, Jr. ......... $0 $32,000
Troy A. Peery, Jr. .............. $0 $40,000
Peter Quinn+ .................... $0 $ 0
Arch Allen III+ ................. $0 $32,000
Weston E. Edwards+ .............. $0 $40,000
Jerry R. Barrentine+ ............ $0 $42,000
J. Garnett Nelson+ .............. $0 $35,000
</TABLE>
- ----------
+ Elected Trustee December 22, 1997
The Trustees do not receive pension or retirement benefits from the Trust.
The Agreement and Declaration of Trust of the Trust provides that the Trust
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 Trust, except if it is determined in the manner specified
in the Agreement and Declaration of Trust that they have not acted in good faith
in the reasonable belief that their actions were in the best interests of the
Trust or that such indemnification would relieve any officer or Trustee of any
liability to the
6
<PAGE>
Trust or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of his or her duties. The Trust, at its
expense, provides liability insurance for the benefit of its Trustees and
officers.
PRINCIPAL HOLDERS OF SECURITIES
As of , the officers and Trustees of the Trust owned as a group less than
one percent of the outstanding shares of the Fund. To the knowledge of the Fund,
no person owned beneficially more than 5% of the outstanding shares of the Fund
as of that date, except as follows:
<TABLE>
<S> <C>
Commonwealth of Virginia Percentage of Ownership: %
Department of Treasury
P.O. Box 1879
Richmond, VA 23218-1879
City of Chesapeake Percentage of Ownership: %
P.O. Box 15245
Chesapeake, VA 23328-5245
County of Chesterfield Percentage of Ownership: %
P.O. Box 70
Chesterfield, VA 23832
County of Arlington Percentage of Ownership: %
Office of the Treasurer
31 Court House Plaza
Arlington, VA 22216-0530
Medical College of Virginia Hospital Authority Percentage of Ownership: %
P.O. Box 980152
Richmond, VA 23298-0152
Virginia Port Authority Percentage of Ownership: %
600 World Trade
Norfolk, VA 23510-1617
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
Mentor Investment Advisors, LLC ("Mentor Advisors") acts as investment
adviser to the Fund pursuant to a Management Contract with the Trust. Subject to
the supervision and direction of the Trustees, Mentor Advisors, as investment
adviser, manages the Fund's portfolio in accordance with the stated policies of
the Fund and of the Trust. Mentor Advisors makes investment decisions for the
Fund and places the purchase and sale orders for portfolio transactions. Mentor
Advisors bears all expenses in connection with the performance of its services.
In addition, Mentor Advisors pays the salaries of all officers and employees who
are employed by it and the Trust.
Until November 1, 1996, Commonwealth Investment Counsel, Inc. served as
investment advisor to the Fund. On that date, Commonwealth Investment Counsel,
Inc. was reorganized as Mentor Investment Advisors, LLC, which thereupon became
investment advisor to the Fund.
Mentor Advisors is a wholly owned subsidiary of Mentor Investment Group,
LLC ("Mentor Investment Group") and its affiliates. Mentor Investment Group is
in turn a wholly owned subsidiary of First Union National
7
<PAGE>
Bank ("First Union"). First Union is a leading financial services company with
approximately $172 billion in assets and $ billion in total stockholders' equity
as of , 1999.
As compensation for Mentor Advisor's services, the fund pays a fee, accrued
daily and paid monthly, at the following annual rate: .09% of the first $500
million of average net assets; .08% of the next $250 million; .07% of the next
$250 million; .06% of the next $250 million; and .05% of any amount over $1.25
billion. Mentor Advisors has agreed to waive a portion of its management fee so
that, through June 30, 2000, the Fund will pay a management fee, calculated
daily, at an annual rate as follows: for the first $1 billion of assets under
management, .08% of the average daily net assets in the Fund; for the next $1
billion under management, .06% of the average daily net assets in the Fund; and
for any amounts over $2 billion under management, .04% of the average daily net
assets in the Fund.
For the fiscal years ended June 30, 1999, June 30, 1998, and June 30, 1997,
the Fund paid Mentor Advisors $869,858, $837,768, and $784,372, respectively,
pursuant to the Management Contract.
Mentor Advisors provides the Trust on behalf of the Fund with investment
officers who are authorized to execute purchases and sales of securities.
Investment decisions for the Fund and for the other investment advisory clients
of Mentor Advisors and its affiliates are made with a view to achieving their
respective investment objectives. Investment decisions are the product of many
factors in addition to basic suitability for the particular client involved.
Thus, a particular security may be bought or sold for certain clients even
though it could have been bought or sold for other clients at the same time.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In some instances, one client
may sell a particular security to another client. It also sometimes happens that
two or more clients simultaneously purchase or sell the same security, in which
event each day's transactions in such security are, insofar as possible,
averaged as to price and allocated between such clients in a manner which in
Mentor Advisors' opinion is equitable to each and in accordance with the amount
being purchased or sold by each. There may be circumstances when purchases or
sales of portfolio securities for one or more clients will have an adverse
effect on other clients. Mentor Advisors employs professional staffs of
portfolio managers who draw upon a variety of resources for research information
for the Fund.
The proceeds received by the Fund for each issue or sale of its shares, and
all income, earnings, profits, and proceeds thereof, subject only to the rights
of creditors, will be specifically allocated to the Fund, and constitute the
underlying assets of the Fund. The underlying assets of the Fund will be
segregated on the Trust's books of account, and will be charged with the
liabilities in respect of the Fund and with a share of the general liabilities
of the Trust. Expenses with respect to any two or more series of the Trust,
including the Fund, may be allocated in proportion to the net asset values of
the respective series except where allocations of direct expenses can otherwise
be fairly made.
Expenses incurred in the operation of the Fund or otherwise allocated to
the Fund, including but not limited to taxes, interest, brokerage fees and
commissions, fees to Trustees who are not officers, directors, stockholders, or
employees of Wheat First Butcher Singer, Inc. and subsidiaries, SEC fees and
related expenses, state Blue Sky notification and filing fees, charges of the
custodian and transfer and dividend disbursing agents, outside auditing,
accounting, and legal services, investor servicing fees and expenses, charges
for the printing of prospectuses and statements of additional information for
regulatory purposes or for distribution to shareholders, certain shareholder
report charges, and charges relating to corporate matters, are borne by the
Fund.
8
<PAGE>
The Management Contract entered into by the Trust in respect of the Fund is
subject to annual approval commencing in 2000 by (i) the Trustees or (ii) vote
of a majority (as defined in the 1940 Act) of the outstanding voting securities
of the Fund, provided that in either event the continuance is also approved by a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) of the Trust or Mentor Advisors, by vote cast in person at a meeting
called for the purpose of voting on such approval. The Management Contract is
terminable without penalty, on not more than sixty days' notice and not less
than thirty days' notice, by the Trustees, by vote of the holders of a majority
of the Fund's shares, or by Mentor Advisors, as applicable.
Mentor Distributors, LLC, 3435 Stelzer Road, Columbus, Ohio 43219, is the
distributor for the Fund. Mentor Distributors is a wholly owned subsidiary of
BISYS Fund Services, Inc.
Evergreen Service Company ("ESC"), 200 Berkeley Street, Boston,
Massachusetts 02116, serves as transfer agent and dividend disbursing and
shareholder servicing agent to the Fund pursuant to an agreement dated June 9,
1999. Under the terms of the agreement, the Fund pays ESC annual fees as
compensation for its services as follows:
ANNUAL FEE ANNUAL FEE
PER OPEN PER CLOSED
ACCOUNT ACCOUNT*
- -------------- ---------------
$25.50 $9.00
*Closed accounts are maintained on the system in order to faciliate historical
and tax information.
Evergreen Investment Services, Inc. ("EIS"), 200 Berkeley Street, Boston,
Massachusetts 02116, serves as Administrator to the Fund pursuant to an
agreement dated June 9, 1999. Under the terms of the agreement, EIS provides
administrative services to the funds within the Mentor Family of Funds, but
does not receive a fee from the SNAP Fund.
BROKERAGE
Transactions on U.S. stock exchanges, commodities markets, and futures
markets and other agency transactions involve the payment by the Fund of
negotiated brokerage commissions. Such commissions vary among different brokers.
A particular broker may charge different commissions according to such factors
as the difficulty and size of the transaction. Transactions in foreign
investments often involve the payment of fixed brokerage commissions, which may
be higher than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid by the Fund usually includes an undisclosed dealer commission or
mark-up. In underwritten offerings, the price paid by the Fund includes a
disclosed, fixed commission or discount retained by the underwriter or dealer.
It is anticipated that most purchases and sales of securities by the Fund will
be with the issuer or with underwriters of or dealers in those securities,
acting as principal. Accordingly, the Fund would not ordinarily pay significant
brokerage commissions with respect to securities transactions.
Mentor Advisors places all orders for the purchase and sale of portfolio
investments for the Fund and buys and sells investments for the Fund through a
substantial number of brokers and dealers. Mentor Advisors seeks the best
overall terms available for the Fund, except to the extent Mentor Advisors may
be permitted to pay higher brokerage commissions as described below. In doing
so, Mentor Advisors, having in mind the Fund's best
9
<PAGE>
interests, considers all factors it deems relevant, including, by way of
illustration, price, the size of the transaction, the nature of the market for
the security or other investment, the amount of the commission, the timing of
the transaction taking into account market prices and trends, the reputation,
experience, and financial stability of the broker-dealer involved, and the
quality of service rendered by the broker-dealer in other transactions.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive brokerage and research services (as defined in the Securities
Exchange Act of 1934, as amended (the "1934 Act")), from broker-dealers that
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, Mentor Advisors receives brokerage and research services and other
similar services from many broker-dealers with which it places the Fund's
portfolio transactions and from third parties with which these broker-dealers
have arrangements. These services include such matters as general economic and
market reviews, industry and company reviews, evaluations of investments,
recommendations as to the purchase and sale of investments, newspapers,
magazines, pricing services, quotation services, news services, and personal
computers utilized by Mentor Advisors' managers and analysts. Where the services
referred to above are not used exclusively by Mentor Advisors for research
purposes, Mentor Advisors, based upon its own allocations of expected use, bears
that portion of the cost of these services which directly relates to its
non-research use. Some of these services are of value to Mentor Advisors and its
affiliates in advising various of its clients (including the Fund), although not
all of these services are necessarily useful and of value in managing the Fund.
As permitted by Section 28(e) of the 1934 Act, and by the Management
Contract, Mentor Advisors may cause the Fund to pay a broker-dealer which
provides "brokerage and research services" (as defined in the 1934 Act) to
Mentor Advisors an amount of disclosed commission for effecting securities
transactions on stock exchanges and other transactions for the Fund on an agency
basis in excess of the commission which another broker-dealer would have charged
for effecting that transaction. Mentor Advisors' authority to cause the Fund to
pay any such greater commissions is also subject to such policies as the
Trustees may adopt from time to time. Mentor Advisors does not currently intend
to cause the Fund to make such payments. It is the position of the staff of the
Securities and Exchange Commission that Section 28(e) does not apply to the
payment of such greater commissions in "principal" transactions. Accordingly,
Mentor Advisors will use its best efforts to obtain the best overall terms
available with respect to such transactions, as described above.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to such other policies as the Trustees may
determine, Mentor Advisors may consider sales of shares of the Fund (and, if
permitted by law, of other Mentor funds) as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
DETERMINATION OF NET ASSET VALUE
The Trust determines net asset value per share of the Fund twice each day
the New York Stock Exchange (the "Exchange") is open, once at 12:00 noon and
again at the close of regular trading on the New York Stock Exchange. Currently,
the Exchange is closed Saturdays, Sundays, and the following holidays: New
Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, the Fourth of July, Labor Day, Thanksgiving, and Christmas.
10
<PAGE>
The valuation of the Fund's portfolio securities is based upon amortized
cost, which does not take into account unrealized securities gains or losses.
This method involves initially valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument. By using amortized cost valuation, the Fund seeks to maintain a
constant net asset value of $1.00 per share, despite minor shifts in the market
value of its portfolio securities. While this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the instrument. During periods of declining interest rates, the quoted
yield on shares of the Fund may tend to be higher than a like computation made
by a fund with identical investments utilizing a method of valuation based on
market prices and estimates of market prices for all of its portfolio
instruments. Thus, if the use of amortized cost by the Fund resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in the
Fund would be able to obtain a somewhat higher yield if he purchased shares of
the Fund on that day, than would result from investment in a fund utilizing
solely market values, and existing investors in the Fund would receive less
investment income. The converse would apply on a day when the use of amortized
cost by the Fund resulted in a higher aggregate portfolio value. However, as a
result of certain procedures adopted by the Trust, the Trust believes any
difference will normally be minimal.
The valuation of the Fund's portfolio instruments at amortized cost is
permitted in accordance with Securities and Exchange Commission Rule 2a-7 and
certain procedures adopted by the Trustees. Under these procedures, the Fund
must maintain a dollar-weighted average portfolio maturity of 90 days or less,
purchase only instruments having remaining maturities of 397 days or less, and
invest in securities determined by the Trustees to be of high quality with
minimal credit risks. The Trustees have also established procedures designed to
stabilize, to the extent reasonably possible, the Fund's price per share as
computed for the purpose of distribution, redemption and repurchase at $1.00.
These procedures include review of the Fund's portfolio holdings by the
Trustees, at such intervals as they may deem appropriate, to determine whether
the Fund's net asset value calculated by using readily available market
quotations deviates from $1.00 per share, and, if so, whether such deviation may
result in material dilution or is otherwise unfair to existing shareholders. In
the event the Trustees determine that such a deviation may result in material
dilution or is otherwise unfair to existing shareholders, they will take such
corrective action as they regard as necessary and appropriate, including the
sale of portfolio instruments prior to maturity to realize capital gains or
losses or to shorten the average portfolio maturity; withholding dividends;
redemption of shares in kind; or establishing a net asset value per share by
using readily available market quotations.
Since the net income of the Fund is declared as a dividend each time it is
determined, the net asset value per share of the Fund remains at $1.00 per share
immediately after such determination and dividend declaration. Any increase in
the value of a shareholder's investment in the Fund representing the
reinvestment of dividend income is reflected by an increase in the number of
shares of the Fund in the shareholder's account on the last day of each month
(or, if that day is not a business day, on the preceding business day). It is
expected that the Fund's net income will be positive each time it is determined.
However, if because of realized losses on sales of portfolio investments, a
sudden rise in interest rates, or for any other reason the net income of the
Fund determined at any time is a negative amount, the Fund will offset such
amount allocable to each then shareholder's account from dividends accrued
during the month with respect to such account. If at the time of payment of a
dividend by the Fund (either at the regular monthly dividend payment date, or,
in the case of a shareholder who is withdrawing all or substantially all of the
shares in an account, at the time of withdrawal), such negative
11
<PAGE>
amount exceeds a shareholder's accrued dividends, the Fund will reduce the
number of outstanding shares by treating the shareholder as having contributed
to the capital of the Fund that number of full and fractional shares which
represent the amount of the excess. Each shareholder is deemed to have agreed to
such contribution in these circumstances by its investment in the Fund.
Should the Fund incur or anticipate any unusual or unexpected significant
expense or loss which would affect disproportionately the Fund's income for a
particular period, the Trustees would at that time consider whether to adhere to
the dividend policy described above or to revise it in light of the then
prevailing circumstances in order to ameliorate to the extent possible the
disproportionate effect of such expense or loss on then existing shareholders.
Such expenses or losses may nevertheless result in a shareholder's receiving no
dividends for the period during which the shares are held and receiving upon
redemption a price per share lower than that which was paid.
TAX STATUS
The Fund intends to qualify each year and elect to be taxed as a regulated
investment company under Subchapter M of the United States Internal Revenue Code
of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its tax liability
determined under Subchapter M, the Fund will not be subject to federal income
tax on any of its net investment income or net capital gains that are
distributed to shareholders. As a series of Massachusetts business trust, the
Fund will not under present law be subject to any excise or income taxes in
Massachusetts.
In order to qualify as a "regulated investment company," the Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other dispositions of stock, securities, or foreign currencies, and other income
(including but not limited to gains from options, futures, or forward contracts)
derived with respect to its business of investing in such stock, securities, or
currencies; and (b) diversify its holdings so that, at the close of each quarter
of its taxable year, (i) at least 50% of the value of its total assets consists
of cash, cash items, U.S. Government securities, securities of other regulated
investment companies, and other securities limited generally with respect to any
one issuer to not more than 5% of the value of the total assets of the Fund and
not more than 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its total assets is invested in the securities
of any issuer (other than U.S. Government securities). In order to receive the
favorable tax treatment accorded regulated investment companies and their
shareholders, moreover, the Fund must in general distribute annually at least
90% of the sum of its taxable net investment income, its net tax-exempt income,
and the excess, if any, of net short-term capital gains over net long-term
capital losses for such year. To satisfy these requirements, the Fund may engage
in investment techniques that affect the amount, timing, and character of its
income and distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any, of
the Fund's "required distribution" over its actual distributions in any calendar
year. Generally, the "required distribution" is 98% of the Fund's ordinary
income for the calendar year plus 98% of its capital gain net income recognized
during the one-year
12
<PAGE>
period ending on October 31 plus undistributed amounts from prior years. The
Fund intends to make distributions sufficient to avoid imposition of the excise
tax. Distributions declared by the Fund during October, November, or December to
shareholders of record on a date in any such month and paid by the Fund during
the following January will be treated for federal tax purposes as paid by the
Fund and received by shareholders on December 31 of the year in which declared.
The Fund is required to withhold 31% of all income dividends and capital
gain distributions, and 31% of the gross proceeds of all redemptions of Fund
shares, in the case of any shareholder who does not provide a correct taxpayer
identification number, about whom the Fund is notified that the shareholder has
under reported income in the past, or who fails to certify to the Fund that the
shareholder is not subject to such withholding. Tax-exempt shareholders are not
subject to these back-up withholding rules so long as they furnish the Fund with
a proper certification.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and related regulations currently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative actions. Dividends and distributions also may be subject to
state, local, foreign, and other taxes. Shareholders are urged to consult their
tax advisers regarding specific questions as to federal, state, local, or
foreign taxes. The foregoing discussion relates solely to U.S. federal income
tax law.
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP, located at 99 High Street, Boston, Massachusetts
02110, are the Trust's independent auditors, providing audit services, tax
return review, and other tax consulting services. The audited financial
statements incorporated by reference into the Statement of Additional
Information have been so incorporated in reliance upon the report of KPMG Peat
Marwick LLP, the independent auditors, given on the authority of said firm as
experts in auditing and accounting.
CUSTODIAN
The custodian of the Fund, Wachovia Bank, is located at 1021 East Cary
Street, P.O. Box 27602, Richmond, Virginia 23261. Its responsibilities include
generally safeguarding and controlling the Fund's cash and securities, handling
the receipt and delivery of securities, and collecting interest and dividends on
the Fund's investments.
PERFORMANCE INFORMATION
The yield of the Fund is computed by determining the percentage net change,
excluding capital changes, in the value of an investment in one share of the
Fund over the base period, and multiplying the net change by 365/7 (or
approximately 52 weeks). The Fund's effective yield represents a compounding of
the yield by adding 1 to the number representing the percentage change in value
of the investment during the base period, raising that sum to a power equal to
365/7, and subtracting 1 from the result. Based on the seven-day period ended
June 30, 1999, the Fund's yield was 4.94% its effective yield was 5.06%.
13
<PAGE>
All data for the Fund is based on past performance and does not predict
future results. Investment performance, which will vary, is based on many
factors, including market conditions, the composition of the Fund's portfolio,
and the Fund's operating expenses. Investment performance also often reflects
the risks associated with the Fund's investment objective and policies. These
factors should be considered when comparing the Fund's investment results to
those of other mutual funds and other investment vehicles. The Fund's yield does
not reflect any expenses incurred by the Commonwealth of Virginia State
Non-Arbitrage Program, through which shares of the Fund are currently being
offered (the "SNAP Program"), or by participants in the SNAP program.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Agreement and Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by the Trust
or the Trustees. The Agreement and Declaration of Trust provides for
indemnification out of the Fund's property for all loss and expense of any
shareholder held personally liable for the obligations of the Fund. Thus the
risk of a shareholder's incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund would be unable to meet
its obligations.
RATINGS
A-1 and Prime-1 Commercial Paper Ratings
The rating A-1 (including A-1+) is the highest commercial paper rating assigned
by S&P. Commercial paper rated A-1 by S&P has the following characteristics:
o liquidity ratios are adequate to meet cash requirements;
o long-term senior debt is rated "A" or better;
o the issuer has access to at least two additional channels of borrowing;
o basic earnings and cash flow have an upward trend with allowance made for
unusual circumstances;
o typically, the issuer's industry is well established and the issuer has a
strong position within the industry; and
o the reliability and quality of management are unquestioned.
Relative strength or weakness of the above factors determines whether the
issuer's commercial paper is rated A-1, A-2 or A-3. Issues rated A-1 that are
determined by S&P to have overwhelming safety characteristics are designated
A-1+.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:
o evaluation of the management of the issuer;
o economic evaluation of the issuer's industry or industries and an appraisal
of speculative-type risks which may be inherent in certain areas;
14
<PAGE>
o evaluation of the issuer's products in relation to competition and customer
acceptance;
o liquidity;
o amount and quality of long-term debt;
o trend of earnings over a period of ten years;
o financial strength of parent company and the relationships which exist with
the issuer; and
o recognition by the management of obligations which may be present or may
arise as a result of public inter est questions and preparations to meet such
obligations.
FINANCIAL STATEMENTS
The Independent Auditors' Report, financial highlights, and financial
statements in respect of the Fund included in the Annual Report of the Fund for
the fiscal year ended June 30, 1999 and filed electronically on Form N-30D
under the Investment Company Act of 1940, as amended, on (File No.
811-08484, Accession No. ), are incorporated herein by
reference.
15
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits
(a)
(1) - Agreement and Declaration of Trust.1 (2) - Amendment to Agreement
and Declaration of Trust.4
(b) - Bylaws.1
(c)
(1) - Form of certificate representing shares of beneficial
interest for each of the Portfolios.1
(2) - Portions of Agreement and Declaration of Trust Relating to
Shareholders' Rights.1
(3) - Portions of Bylaws Relating to Shareholders' Rights.1
(d)
(1) - Form of Management Contract (Fixed-Income,
U.S. Government Cash Management Portfolio).14
(2) - Form of Management Contract (SNAP Fund).13
(3) - Form of Management Contract (International Portfolio). 14
(e) (1) - Form of Distribution Agreement.14
-1-
<PAGE>
(f) - Inapplicable.
(g)
(1) - Form of Custody Agreement.1 (16) - Form of Custody Agreement
(SNAP Fund).5 (3) - Form of Transfer Agency and Services
Agreement. 16
(h) (1) - Form of Administration Agreement.16
(i) - Opinion of counsel, including consent.3
(j) (1) - Consent of Independent Accountants (SNAP Fund).13 (2) - Consent
of Independent Accountants.15
(k) - Inapplicable.
(l) - Inapplicable.
(m) - Form of Plan of Distribution pursuant to Rule 12b-1
(International Portfolio).12
(o) - Form of Rule 18f-3 Plan.9
(p) Power of Attorney.14
1 Incorporated herein by reference to the Registrant's initial
Registration Statement on Form N-1A under the Investment Company Act of
1940 filed on April 15, 1994.
2 Incorporated herein by reference to Amendment No. 1 to the Registrant's
Registration Statement on Form N-1A filed on June 28, 1994.
3 Incorporated herein by reference to Amendment No. 2 to the Registrant's
Registration Statement on Form N-1A filed on November 18, 1994.
4 Incorporated herein by reference to Amendment No. 4 to the Registrant's
Registration Statement on Form N-1A filed on July 3, 1995.
5 Incorporated herein by reference to Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A filed on July 24, 1995.
6 Incorporated herein by reference to Amendment No. 6 to the Registrant's
Registration Statement on Form N-1A filed on September 5, 1995.
7 Incorporated herein by reference to Amendment No. 8 to the Registrant's
Registration Statement on Form N-1A filed on March 11, 1996.
8 Incorporated herein by reference to Amendment No. 9 to Registrant's
Registration Statement on Form N-1A filed on May 24, 1996.
9 Incorporated herein by reference to Amendment No. 10 to Registrant's
Registration Statement on Form N-1A filed on July 3, 1996.
10 Incorporated by reference to Amendment No. 12 to Registrant's
Registration Statement on Form N1-A filed on January 2, 1997.
11 Incorporated berein by reference to Amendment No. 13 to Registrant's
Registration Statement on Form N-1A filed on October 10, 1997.
12 Incorporated herein by reference to Amendment No. 14 to Registrant's
Registration Statement on Form N-1A filed January 30, 1998.
13 Incorporated herein by reference to Amendment No. 15. to Registrant's
Registration Statement on Form N-1A filed filed October 30, 1998.
14 Incorporated herein by reference to Amendment No. 16 to Registrant's
Registration Statement on Form N-1A filed on December 31, 1998.
15 Incorporated herein by reference to Amendment No. 17 to Registrant's
Registration Statement on Form N-1A filed on March 1, 1999.
16 Filed herewith.
Item 24. Persons Controlled by or Under Common Control with Registrant
None.
-2-
<PAGE>
Item 25. Indemnification
The information required by this item is incorporated herein by reference
from the Registrant's Initial Registration Statement on Form N-1A under the
Investment Company Act of 1940 (File No. 811-8484).
Item 26. Business and Other Connections of Investment Adviser
(a) The following is additional information with respect to the directors and
officers of Mentor Investment Advisors, LLC:
<TABLE>
<CAPTION>
BUSINESS, PROFESSION,
POSITION WITH VOCATION OR EMPLOYMENT
NAME INVESTMENT ADVISER DURING THE PAST TWO FISCAL YEARS
<S> <C> <C>
John G. Davenport Managing Director Managing Director,
Mentor Investment
Group, LLC.
Paul F. Costello Managing Director Managing Director,
Mentor Investment Group,
LLC; President, Mentor
Funds, Mentor
Institutional Trust, Cash
Resource Trust, Mentor
Income Fund, Inc.; and
America's Utility Fund,
Inc.; Senior Vice
President, Mentor
Distributors, LLC;
Managing Director, Mentor
Perpetual Advisors, LLC.
Theodore W. Price Managing Director Managing Director,
Mentor Investment
Group, LLC.
P. Michael Jones Managing Director Managing Director,
Mentor Investment
Group, LLC.
Peter J. Quinn, Jr. Managing Director Managing Director,
Mentor Investment
Group, LLC.
-3-
<PAGE>
Daniel J. Ludeman Chairman Chairman and Chief
Executive Officer,
Mentor Investment
Group, LLC.
Karen H. Wimbish Managing Director Managing Director,
Mentor Investment
Group, LLC.
Michael A. Wade Treasurer and Vice President, Mentor
Controller Investment Group, L.L.C.
Michael H. Koonce Secretary
</TABLE>
<PAGE>
(b) The following is additional information with respect to Mentor
Perpetual Advisors, LLC, the investment adviser to the Mentor Perpetual
International Portfolio:
<TABLE>
Other Substantial
Position with the Business, Profession,
Name Investment Advisor Vocation or Employment
<S> <C> <C>
Scott A. McGlashan President Director, Perpetual
Portfolio Management
Limited.
Martyn Arbib Managing Director Chairman, Perpetual
Portfolio Management
Limited.
Roger C. Cormick Managing Director Deputy Chairman -
Marketing, Perpetual
Portfolio Management
Limited.
Paul F. Costello Managing Director Managing Director, Mentor
Investment Group, LLC
and Mentor Investment
Advisors, LLC; President,
Mentor Funds, Mentor
Institutional
Trust, Cash Resource
Trust, Mentor Income
Fund, Inc., and America's
Utility Fund, Inc.;
Senior Vice President,
Mentor Distributors, LLC.
Daniel J. Ludeman Managing Director Chairman and Chief
Executive Officer,
Mentor Investment
Group, LLC; Director,
Wheat First Securities,
Inc.; Managing Director,
Wheat First Butcher
Singer, Inc.
David S. Mossop Managing Director Director, Perpetual
Portfolio Management
Limited
Peter J. Quinn, Jr. Managing Director Managing Director,
Mentor Investment
Group, LLC.
Roderick A. Smyth Managing Director Managing Director,
Mentor Investment
Group, LLC.
* The address of Mentor Investment Group, LLC, Wheat, First Securities, Inc.,
Wheat First Butcher Singer, Inc., Mentor Funds, Mentor Income Fund, Inc., Mentor
Investment Advisors, LLC, and Mentor Perpetual Advisors, LLC is 901 East Byrd
Street, Richmond, VA 23219. The address of Ryland Capital Management, Inc. and
RAC Income Fund, Inc. is 11000 Broken Land Parkway, Columbia, MD 21044. The
address of Perpetual Portfolio Management Limited is 48 Hart Street,
Henley-on-Thames, Oxon, England, RG92AZ.
</TABLE>
-6-
<PAGE>
Item 27. Principal Underwriters
(a) Mentor Distributors, LLC, the Fund's principal underwriter, acts as
principal underwriter for the following investment companies:
The Mentor Funds
o Mentor Growth Portfolio
o Mentor Short-Duration Income Portfolio o Mentor Balanced
Portfolio o Mentor Capital Growth Portfolio o Mentor Perpetual
Global Portfolio o Mentor High Income Portfolio o Mentor Income and
Growth Portfolio o Mentor Quality Income Portfolio o Mentor
Municipal Income Portfolio o Mentor U.S. Government Money Market
Portfolio o Mentor Money Market Portfolio o Mentor Tax-Exempt Money
Market Portfolio
Cash Resource Trust
o Cash Resource Money Market Fund
o Cash Resource U.S. Government Money Market Fund
o Cash Resource Tax-Exempt Money Market Fund
o Cash Resource California Tax-Exempt Money Market Fund
o Cash Resource New York Tax-Exempt Money Market Fund
Mentor Institutional Trust
o Mentor U.S. Government Cash Management Portfolio
o Mentor Fixed-Income Portfolio
o Mentor Perpetual International Portfolio
Mentor Investment Group
o Mentor Income Fund
o America's Utility Fund
Mentor Variable Investment Portfolios o Mentor VIP Growth Portfolio o
Mentor VIP Strategy Portfolio o Mentor VIP Balanced Portfolio o
Mentor VIP Capital Growth Portfolio o Mentor VIP Perpetual
International Portfolio
(b) Information concerning officers of Mentor Distributors, LLC:
-10-
Name And Principal Positions And Offices Positions And Offices
Business Address* With Underwriter With Registrant
- ----------------- -------------------- ---------------------
Lynn Mangum Chairman Inapplicable
D'Ray Moore President Inapplicable
Dennis Sheehan Executive Vice President Inapplicable
William J. Tomko Senior Vice President Inapplicable
Mark J. Rybarczyk Senior Vice President Inapplicable
Kevin J. Dell Vice President and Inapplicable
Secretary
Michael D. Burns Vice President Inapplicable
David Blackmore Vice President Inapplicable
Robert L. Tuch Assistant Secretary Inapplicable
Steven Ludwig Compliance Officer Inapplicable
*Principal Address for all Officers:
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219-8000
(c) Inapplicable.
Item 28. Location of Accounts and Records
Persons maintaining physical possession of accounts, books and
other documents required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the Rules promulgated thereunder are Registrant's
Secretary, Geoffrey B. Sale, Registrant's custodians, Investors Fiduciary Trust
Company ("IFTC") (all Portfolios other than SNAP Fund), and Wachovia Bank (SNAP
Fund only), and Registrant's transfer agents, State Street Bank and Trust
Company (through Boston Financial Data Services, Inc. ("BFDS")) (all Portfolios
other than SNAP Fund), and Wachovia
-7-
<PAGE>
Bank (SNAP Fund only). The address of the Secretary is 901 East Byrd Street,
Richmond, Virginia, 23219. The address of BFDS is 2 Heritage Drive, North
Quincy, Massachusetts 02171. The address of IFTC is 127 West 10th Street, Kansas
City, Missouri, 64105. The address of Wachovia Bank is 1021 East Cary Street,
P.O. Box 27602, Richmond, Virginia 23261.
Item 29. Management Services
None.
Item 30. Undertakings
(a) The Registrant undertakes to furnish to each person to whom a prospectus of
the Registrant is delivered a copy of the Registrant's latest annual report
to shareholders, upon request are without change.
(b) The undersigned Registrant hereby undertakes to call a meeting of
shareholders for the purpose of voting on the removal of a trustee or
trustees when requested in writing to do so by the holders of at least 10%
of the Registrant's outstanding voting securities and in connection with
such meeting to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder communications.
NOTICE
A copy of the Agreement and Declaration of Trust of Mentor
Institutional Trust is on file with the Secretary of State of The Commonwealth
of Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Registrant by an officer of the Registrant as an officer and not
individually and that the obligations of or arising out of this instrument are
not binding upon any of the Trustees, officers, or shareholders individually but
are binding only upon the assets and property of the Registrant.
-8-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
the Registration Statement to be signed on behalf of the undersigned, thereunto
duly authorized, in the City of Richmond, and the Commonwealth of Virginia on
this 27th day of August, 1999.
MENTOR INSTITUTIONAL TRUST
By: /s/ PAUL F. COSTELLO
Paul F. Costello
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
*
- - -------------------------------- Trustee August 27, 1999
Arnold H. Dreyfuss
*
- - -------------------------------- Trustee August 27, 1999
Thomas F. Keller
* Trustee August 27, 1999
- - --------------------------------
Daniel J. Ludeman
* Trustee August 27, 1999
- - --------------------------------
Louis W. Moelchert, Jr.
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
* Trustee August 27, 1999
- - ---------------------------------
Troy A. Peery, Jr.
* Trustee August 27, 1999
- - ---------------------------------
Peter J. Quinn, Jr.
* Trustee August 27, 1999
- - ---------------------------------
Arch T. Allen, III
* Trustee August 27, 1999
- - ---------------------------------
Weston E. Edwards
* Trustee August 27, 1999
- -----------------------------------
Jerry R. Barrentine
* Trustee August 27, 1999
- -----------------------------------
J. Garnett Nelson
/s/ PAUL F. COSTELLO President August 27, 1999
- -----------------------------
Paul F. Costello (Principal Executive Officer)
/s/ MICHAEL A. WADE Treasurer August 27, 1999
- ----------------------------
Michael A. Wade (Principal Financial and
Accounting Officer)
*By /s/ PAUL F. COSTELLO August 27, 1999
----------------------
Paul F. Costello
Attorney-in-Fact
</TABLE>
-10-
<PAGE>
EXHIBIT INDEX
(g) (1) Form of Custody Agreement
(g) (3) Form of Transfer Agency and Services Agreement
(h) Form of Administration Agreement
FORM OF CUSTODIAN AGREEMENT
This Agreement between EVERGREEN SELECT MONEY MARKET TRUST, a business
trust organized and existing under the laws of Delaware with its principal place
of business at 200 Berkeley Street, Boston, Massachusetts 02116 (the "FUND"),
and STATE STREET BANK and TRUST COMPANY, a Massachusetts trust company with its
principal place of business at 225 Franklin Street, Boston, Massachusetts 02110
(the "CUSTODIAN"),
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends that this Agreement be applicable to the
series set forth on Schedule C hereto (such series together with all other
series subsequently established by the Fund and made subject to this Agreement
in accordance with Section 18, be referred to herein as the "PORTFOLIO(S)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("DOMESTIC SECURITIES") and securities it desires to be held outside the United
States ("FOREIGN SECURITIES") pursuant to the provisions of the Fund's
Declaration of Trust. The Fund on behalf of the Portfolio(s) agrees to deliver
to the Custodian all securities and cash of the Portfolios, and all payments of
income, payments of principal or capital distributions received by it with
respect to all securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios ("SHARES") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "PROPER INSTRUCTIONS" (as such term is defined in
Section 6 hereof), the Custodian shall on behalf of the applicable Portfolio(s)
from time to time employ one or more sub-custodians located in the United
States, but only in accordance with an applicable vote by the Board of Trustees
of the Fund (the "BOARD OF TRUSTEES") on behalf of the applicable Portfolio(s),
and provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the Custodian. The
Custodian may employ as sub-custodian for the Fund's foreign securities on
behalf of the applicable Portfolio(s) the foreign banking institutions and
foreign securities depositories designated in Schedules A and B hereto but only
in accordance with the applicable provisions of Sections 3 and 4.
<PAGE>
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND
HELD BY THE CUSTODIAN IN THE UNITED STATES
SECTION 2.1 HOLDING SECURITIES. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to Section
2.8 in a clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury (each, a
"U.S. SECURITIES SYSTEM") and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("DIRECT PAPER")
which is deposited and/or maintained in the Direct Paper System of the Custodian
(the "DIRECT PAPER SYSTEM") pursuant to Section 2.9.
SECTION 2.2 DELIVERY OF SECURITIES. The Custodian shall release and
deliver domestic securities owned by a Portfolio held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("DIRECT PAPER SYSTEM ACCOUNT") only upon
receipt of Proper Instructions on behalf of the applicable Portfolio, which may
be continuing instructions when deemed appropriate by the parties, and only in
the following cases:
1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.8
hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.7 or into the name
or nominee name of any sub-custodian appointed pursuant to
Section 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
2
<PAGE>
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowing by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "EXCHANGE ACT") and a member of The
National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;
3
<PAGE>
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by
the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent for the
Fund (the "TRANSFER AGENT") for delivery to such Transfer
Agent or to the holders of Shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund related to the Portfolio
(the "PROSPECTUS"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper trust purpose, but only upon receipt of,
in addition to Proper Instructions from the Fund on behalf of
the applicable Portfolio, a copy of a resolution of the Board
of Trustees or of the Executive Committee thereof signed by an
officer of the Fund and certified by the Secretary or an
Assistant Secretary thereof (a "CERTIFIED RESOLUTION"),
specifying the securities of the Portfolio to be delivered,
setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper trust purpose, and
naming the person or persons to whom delivery of such
securities shall be made.
SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the Portfolio
or of any nominee of the Custodian which nominee shall be assigned exclusively
to the Portfolio, unless the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered investment companies having
the same investment adviser as the Portfolio, or in the name or nominee name of
any agent appointed pursuant to Section 2.7 or in the name or nominee name of
any sub-custodian appointed pursuant to Section 1. All securities accepted by
the Custodian on behalf of the Portfolio under the terms of this Agreement shall
be in "street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls, maturities,
tender or exchange offers.
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SECTION 2.4 BANK ACCOUNTS. The Custodian shall open and maintain a
separate bank account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940, as amended (the "1940 ACT"). Funds held by the
Custodian for a Portfolio may be deposited by it to its credit as Custodian in
the Banking Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be qualified to act as a
custodian under the 1940 Act and that each such bank or trust company and the
funds to be deposited with each such bank or trust company shall on behalf of
each applicable Portfolio be approved by vote of a majority of the Board of
Trustees. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
SECTION 2.5 COLLECTION OF INCOME. Subject to the provisions of Section
2.3, the Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and other
payments with respect to bearer domestic securities if, on the date of payment
by the issuer, such securities are held by the Custodian or its agent thereof
and shall credit such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be the responsibility of
the Fund. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data as may
be necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
SECTION 2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions
on behalf of the applicable Portfolio, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out monies of a
Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the 1940 Act
to act as a custodian and has been designated by the Custodian
as its agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
U.S. Securities System, in accordance with the conditions set
forth in Section 2.8 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.9; (d) in the case of
repurchase agreements entered into between the Fund on behalf
of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the
receipt evidencing purchase by the Portfolio of securities
owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from
the Portfolio or (e) for transfer to a time deposit account of
the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation
from a broker and/or the applicable bank pursuant to Proper
Instructions from the Fund as defined herein;
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2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued as set forth
in Section 5 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares declared pursuant
to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper trust purpose, but only upon receipt of,
in addition to Proper Instructions from the Fund on behalf of
the Portfolio, a copy of a Certified Resolution specifying the
amount of such payment, setting forth the purpose for which
such payment is to be made, declaring such purpose to be a
proper trust purpose, and naming the person or persons to whom
such payment is to be made.
SECTION 2.7 APPOINTMENT OF AGENTS. The Custodian may at any time or
times in its discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the 1940 Act to act as a
custodian, as its agent to carry out such of the provisions of this Section 2 as
the Custodian may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of its responsibilities
or liabilities hereunder.
SECTION 2.8 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The
Custodian may deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the United States Securities and Exchange
Commission (the "SEC") under Section 17A of the Exchange Act , which acts as a
securities depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively referred
to herein as "U.S. SECURITIES SYSTEM" in accordance with applicable Federal
Reserve Board and SEC rules and regulations, if any, and subject to the
following provisions:
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1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are
represented in an account of the Custodian in the U.S.
Securities System (the "U.S. SECURITIES SYSTEM ACCOUNT") which
account shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System
shall identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
U.S. Securities System that such securities have been
transferred to the U.S. Securities System Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the
Portfolio. The Custodian shall transfer securities sold for
the account of the Portfolio upon (i) receipt of advice from
the U.S. Securities System that payment for such securities
has been transferred to the U.S. Securities System Account,
and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account
of the Portfolio. Copies of all advices from the U.S.
Securities System of transfers of securities for the account
of the Portfolio shall identify the Portfolio, be maintained
for the Portfolio by the Custodian and be provided to the Fund
at its request. Upon request, the Custodian shall furnish the
Fund on behalf of the Portfolio confirmation of each transfer
to or from the account of the Portfolio in the form of a
written advice or notice and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets
reflecting each day's transactions in the U.S. Securities
System for the account of the Portfolio;
4) The Custodian shall provide the Fund with any report obtained
by the Custodian on the U.S. Securities System's accounting
system, internal accounting control and procedures for
safeguarding securities deposited in the U.S. Securities
System;
5) The Custodian shall have received from the Fund on behalf of
the Portfolio the initial or annual certificate, as the case
may be, required by Section 15 hereof;
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6) Anything to the contrary in this Agreement notwithstanding,
the Custodian shall be liable to the Fund for the benefit of
the Portfolio for any loss or damage to the Portfolio
resulting from use of the U.S. Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or
any of its agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the
Portfolio has not been made whole for any such loss or damage.
SECTION 2.9 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM.
The Custodian may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in
the Direct Paper System Account, which account shall not
include any assets of the Custodian other than assets held as
a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the
Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio, in the form of a written advice or notice,
of Direct Paper on the next business day following such
transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Direct Paper System for the account
of the Portfolio;
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6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal accounting
control as the Fund may reasonably request from time to time.
SECTION 2.10 SEGREGATED ACCOUNT. The Custodian shall upon receipt of
Proper Instructions on behalf of each applicable Portfolio establish and
maintain a segregated account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.8 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or written by
the Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the Portfolio
with the procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies and (iv) for other proper
trust purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a copy of a Certified Resolution setting forth the purpose or
purposes of such segregated account and declaring such purpose(s) to be a proper
trust purpose.
SECTION 2.11 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian
shall execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with receipt of income or other payments
with respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
SECTION 2.12 PROXIES. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the registered
holder of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting materials
and all notices relating to such securities.
SECTION 2.13 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject
to the provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without limitation,
pendency of calls and maturities of domestic securities and expirations of
rights in connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the Portfolio. With respect to tender
or exchange offers, the Custodian shall transmit promptly to the Portfolio all
written information received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Portfolio desires to take action with respect
to any tender offer, exchange offer or any other similar transaction, the
Portfolio shall notify the Custodian at least three business days prior to the
date on which the Custodian is to take such action.
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SECTION 3. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER OF THE PORTFOLIOS
SECTION 3.1. DEFINITIONS. The following capitalized terms shall have
the indicated meanings:
"COUNTRY RISK" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment; economic and financial infrastructure
(including financial institutions such as any Mandatory Securities Depositories
operating in the country); prevailing or developing custody and settlement
practices; and laws and regulations applicable to the safekeeping and recovery
of Foreign Assets held in custody in that country.
"ELIGIBLE FOREIGN CUSTODIAN" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the SEC, or a foreign branch of a Bank (as defined in Section 2(a)(5)
of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of
the 1940 Act, except that the term does not include Mandatory Securities
Depositories.
"FOREIGN ASSETS" means any of the Portfolios' investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Portfolios'
transactions in such investments.
"FOREIGN CUSTODY MANAGER" has the meaning set forth in section (a)(2) of Rule
17f-5.
"MANDATORY SECURITIES DEPOSITORY" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if the
Fund, on the Portfolios' behalf, determines to place Foreign Assets in a country
outside the United States (i) because required by law or regulation; (ii)
because securities cannot be withdrawn from such foreign securities depository
or clearing agency; or (iii) because maintaining or effecting trades in
securities outside the foreign securities depository or clearing agency is not
consistent with prevailing or developing custodial or market practices.
SECTION 3.2. DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
The Fund, by resolution adopted by the Board of Trustees, hereby delegates to
the Custodian with respect to the Portfolios, subject to Section (b) of Rule
17f-5, the responsibilities set forth in this Section 3 with respect to Foreign
Assets of the Portfolios held outside the United States, and the Custodian
hereby accepts such delegation, as Foreign Custody Manager with respect to the
Portfolios.
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SECTION 3.3. COUNTRIES COVERED. The Foreign Custody Manager shall be
responsible for performing the delegated responsibilities defined below only
with respect to the countries and custody arrangements for each such country
listed on Schedule A of this Contract, which may be amended from time to time by
the Foreign Custody Manager. The Foreign Custody Manager shall list on Schedule
A the Eligible Foreign Custodians selected by the Foreign Custody Manager to
maintain the assets of the Portfolios. Mandatory Securities Depositories are
listed on Schedule B to this Contract, which may be amended from time to time by
the Foreign Custody Manager. The Foreign Custody Manager will provide amended
versions of Schedules A and B in accordance with Section 3.7 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions
to open an account or to place or maintain Foreign Assets in a country listed on
Schedule A, and the fulfillment by the Fund on behalf of the Portfolios of the
applicable account opening requirements for the country, the Foreign Custody
Manager shall be deemed to have been delegated by the Board of Trustees on
behalf of the Portfolios responsibility as Foreign Custody Manager with respect
to that country and to have accepted such delegation. Following the receipt of
Proper Instructions directing the Foreign Custody Manager to close the account
of a Portfolio with the Eligible Foreign Custodian selected by the Foreign
Custody Manager in a designated country, the delegation by the Board of Trustees
on behalf of the Portfolios to the Custodian as Foreign Custody Manager for that
country shall be deemed to have been withdrawn and the Custodian shall
immediately cease to be the Foreign Custody Manager of the Portfolios with
respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall have
no further responsibility as Foreign Custody Manager to the Fund with respect to
the country as to which the Custodian's acceptance of delegation is withdrawn.
SECTION 3.4. SCOPE OF DELEGATED RESPONSIBILITIES.
3.4.1. Selection of Eligible Foreign Custodians. Subject to the
provisions of this Section 3, the Portfolios' Foreign Custody Manager may place
and maintain the Foreign Assets in the care of the Eligible Foreign Custodian
selected by the Foreign Custody Manager in each country listed on Schedule A, as
amended from time to time.
In performing its delegated responsibilities as Foreign Custody Manager
to place or maintain Foreign Assets with an Eligible Foreign Custodian, the
Foreign Custody Manager shall determine that the Foreign Assets will be subject
to reasonable care, based on the standards applicable to custodians in the
country in which the Foreign Assets will be held by that Eligible Foreign
Custodian, after considering all factors relevant to the safekeeping of such
assets, including, without limitation:
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(i) the Eligible Foreign Custodian's practices, procedures, and
internal controls, including, but not limited to, the physical
protections available for certificated securities (if
applicable), its methods of keeping custodial records, and its
security and data protection practices;
(ii) whether the Eligible Foreign Custodian has the financial
strength to provide reasonable care for Foreign Assets;
(iii) the Eligible Foreign Custodian's general reputation and
standing and, in the case of a foreign securities depository
or clearing agency which is not a Mandatory Securities
Depository, the foreign securities depository's or clearing
agency's operating history and the number of participants in
the foreign securities depository or clearing agency; and
(iv) whether the Fund will have jurisdiction over and be able to
enforce judgments against the Eligible Foreign Custodian, such
as by virtue of the existence of any offices of the Eligible
Foreign Custodian in the United States or the Eligible Foreign
Custodian's consent to service of process in the United
States.
3.4.2. Contracts With Eligible Foreign Custodians. The Foreign Custody
Manager shall determine that the contract (or the rules or established practices
or procedures in the case of an Eligible Foreign Custodian that is a foreign
securities depository or clearing agency) governing the foreign custody
arrangements with each Eligible Foreign Custodian selected by the Foreign
Custody Manager will provide reasonable care for the Foreign Assets held by that
Eligible Foreign Custodian based on the standards applicable to custodians in
the particular country. Each such contract shall include provisions that
provide:
(i) for indemnification or insurance arrangements (or any
combination of the foregoing) such that each Portfolio will be
adequately protected against the risk of loss of the Foreign
Assets held in accordance with such contract;
(ii) that the Foreign Assets will not be subject to any right,
security interest, or lien or claim of any kind in favor of
the Eligible Foreign Custodian or its creditors except a claim
of payment for their safe custody or administration or, in the
case of cash deposits, liens or rights in favor of creditors
of the Eligible Foreign Custodian arising under bankruptcy,
insolvency, or similar laws;
(iii) that beneficial ownership of the Foreign Assets will be freely
transferable without the payment of money or value other than
for safe custody or administration;
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(iv) that adequate records will be maintained identifying the
Foreign Assets as belonging to the applicable Portfolio or as
being held by a third party for the benefit of such Portfolio;
(v) that the independent public accountants for each Portfolio
will be given access to those records or confirmation of the
contents of those records; and
(vi) that the Fund will receive periodic reports with respect to
the safekeeping of the Foreign Assets, including, but not
limited to, notification of any transfer of the Foreign Assets
to or from a Portfolio's account or a third party account
containing the Foreign Assets held for the benefit of the
Portfolio,
or, in lieu of any or all of the provisions set forth in (i) through (vi) above,
such other provisions that the Foreign Custody Manager determines will provide,
in their entirety, the same or greater level of care and protection for the
Foreign Assets as the provisions set forth in (i) through (vi) above, in their
entirety.
3.4.3. Monitoring. In each case in which the Foreign Custody Manager
maintains Foreign Assets with an Eligible Foreign Custodian selected by the
Foreign Custody Manager, the Foreign Custody Manager shall establish a system to
monitor (i) the appropriateness of maintaining the Foreign Assets with such
Eligible Foreign Custodian and (ii) the contract governing the custody
arrangements established by the Foreign Custody Manager with the Eligible
Foreign Custodian. In the event the Foreign Custody Manager determines that the
custody arrangements with an Eligible Foreign Custodian it has selected are no
longer appropriate, the Foreign Custody Manager shall notify the Board of
Trustees in accordance with Section 3.7 hereunder.
SECTION 3.5. GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For
purposes of this Section 3, the Board of Trustees shall be deemed to have
considered and determined to accept such Country Risk as is incurred by placing
and maintaining the Foreign Assets in each country for which the Custodian is
serving as Foreign Custody Manager of the Portfolios. The Fund, on behalf of the
Portfolios, and the Custodian each expressly acknowledge that the Foreign
Custody Manager shall not be delegated any responsibilities under this Section 3
with respect to Mandatory Securities Depositories.
SECTION 3.6. STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF THE
PORTFOLIOS. In performing the responsibilities delegated to it, the Foreign
Custody Manager agrees to exercise reasonable care, prudence and diligence such
as a person having responsibility for the safekeeping of assets of management
investment companies registered under the 1940 Act would exercise.
SECTION 3.7. REPORTING REQUIREMENTS. The Foreign Custody Manager shall
report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian
and the placement of such Foreign Assets with another Eligible Foreign Custodian
by providing to the Board of Trustees amended Schedules A or B at the end of the
calendar quarter in which an amendment to either Schedule has occurred. The
Foreign Custody Manager shall make written reports notifying the Board of
Trustees of any other material change in the foreign custody arrangements of the
Portfolios described in this Article 3 after the occurrence of the material
change.
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SECTION 3.8. REPRESENTATIONS WITH RESPECT TO RULE 17f-5. The Foreign
Custody Manager represents to the Fund that it is a U.S. Bank as defined in
section (a)(7) of Rule 17f-5. The Fund represents to the Custodian that the
Board of Trustees has determined that it is reasonable for the Board of Trustees
to rely on the Custodian to perform the responsibilities delegated pursuant to
this Agreement to the Custodian as the Foreign Custody Manager of the
Portfolios.
SECTION 3.9. EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN
CUSTODY MANAGER. The Board of Trustees' delegation to the Custodian as Foreign
Custody Manager of the Portfolios shall be effective as of the date of execution
of this Agreement and shall remain in effect until terminated at any time,
without penalty, by written notice from the terminating party to the
non-terminating party. Termination will become effective thirty (30) days after
receipt by the non-terminating party of such notice. The provisions of Section
3.3 hereof shall govern the delegation to and termination of the Custodian as
Foreign Custody Manager of the Portfolios with respect to designated countries.
SECTION 4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE
PORTFOLIOS HELD OUTSIDE OF THE UNITED STATES
SECTION 4.1 DEFINITIONS. Capitalized terms in this Section 4 shall
have the following meanings:
"FOREIGN SECURITIES SYSTEM" means either a clearing agency or a securities
depository listed on Schedule A hereto or a Mandatory Securities Depository
listed on Schedule B hereto.
"FOREIGN SUB-CUSTODIAN" means a foreign banking institution serving as an
Eligible Foreign Custodian.
SECTION 4.2. HOLDING SECURITIES. The Custodian shall identify on its
books as belonging to the Portfolios the foreign securities held by each Foreign
Sub-Custodian or Foreign Securities System. The Custodian may hold foreign
securities for all of its customers, including the Portfolios, with any Foreign
Sub-Custodian in an account that is identified as belonging to the Custodian for
the benefit of its customers, provided however, that (i) the records of the
Custodian with respect to foreign securities of the Portfolios which are
maintained in such account shall identify those securities as belonging to the
Portfolios and (ii) the Custodian shall require that securities so held by the
Foreign Sub-Custodian be held separately from any assets of such Foreign
Sub-Custodian or of other customers of such Foreign Sub-Custodian.
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SECTION 4.3. FOREIGN SECURITIES SYSTEMS. Foreign securities shall be
maintained in a Foreign Securities System in a designated country only through
arrangements implemented by the Foreign Sub-Custodian in such country pursuant
to the terms of this Agreement.
SECTION 4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. Delivery of Foreign Securities. The Custodian or a Foreign
Sub-Custodian shall release and deliver foreign securities of the Portfolios
held by such Foreign Sub-Custodian, or in a Foreign Securities System account,
only upon receipt of Proper Instructions, which may be continuing instructions
when deemed appropriate by the parties, and only in the following cases:
(i) upon the sale of such foreign securities for the Portfolios in
accordance with reasonable market practice in the country
where such foreign securities are held or traded, including,
without limitation: (A) delivery against expectation of
receiving later payment; or (B) in the case of a sale effected
through a Foreign Securities System in accordance with the
rules governing the operation of the Foreign Securities
System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other
similar offers for foreign securities of the Portfolios;
(iv) to the issuer thereof or its agent when such foreign
securities are called, redeemed, retired or otherwise become
payable;
(v) to the issuer thereof, or its agent, for transfer into the
name of the Custodian (or the name of the respective Foreign
Sub-Custodian or of any nominee of the Custodian or such
Foreign Sub-Custodian) or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with market
custom; provided that in any such case the Foreign
Sub-Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from
the Foreign Sub-Custodian's own negligence or willful
misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
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(viii) in the case of warrants, rights or similar foreign securities,
the surrender thereof in the exercise of such warrants, rights
or similar securities or the surrender of interim receipts or
temporary securities for definitive securities;
(ix) or delivery as security in connection with any borrowing by
the Portfolios requiring a pledge of assets by the Portfolios;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper trust purpose, but only upon receipt of,
in addition to Proper Instructions, a copy of a Certified
Resolution specifying the foreign securities to be delivered,
setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper trust purpose, and
naming the person or persons to whom delivery of such
securities shall be made.
4.4.2. Payment of Portfolio Monies. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed appropriate by
the parties, the Custodian shall pay out, or direct the respective Foreign
Sub-Custodian or the respective Foreign Securities System to pay out, monies of
a Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the Portfolio,
unless otherwise directed by Proper Instructions, by (A)
delivering money to the seller thereof or to a dealer therefor
(or an agent for such seller or dealer) against expectation of
receiving later delivery of such foreign securities; or (B) in
the case of a purchase effected through a Foreign Securities
System, in accordance with the rules governing the operation
of such Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of
foreign securities of the Portfolio;
(iii) for the payment of any expense or liability of the Portfolio,
including but not limited to the following payments: interest,
taxes, investment advisory fees, transfer agency fees, fees
under this Agreement, legal fees, accounting fees, and other
operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign
exchange contracts for the Portfolio, including transactions
executed with or through the Custodian or its Foreign
Sub-Custodians;
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(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign
securities; and
(viii) for any other proper trust purpose, but only upon receipt of,
in addition to Proper Instructions, a copy of a Certified
Resolution specifying the amount of such payment, setting
forth the purpose for which such payment is to be made,
declaring such purpose to be a proper trust purpose, and
naming the person or persons to whom such payment is to be
made.
4.4.3. Market Conditions. Notwithstanding any provision of this
Agreement to the contrary, settlement and payment for Foreign Assets received
for the account of the Portfolios and delivery of Foreign Assets maintained for
the account of the Portfolios may be effected in accordance with the customary
established securities trading or processing practices and procedures in the
country or market in which the transaction occurs, including, without
limitation, delivering Foreign Assets to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) with the expectation of
receiving later payment for such Foreign Assets from such purchaser or dealer.
SECTION 4.5. REGISTRATION OF FOREIGN SECURITIES. The foreign securities
maintained in the custody of a Foreign Custodian (other than bearer securities)
shall be registered in the name of the applicable Portfolio or in the name of
the Custodian or in the name of any Foreign Sub-Custodian or in the name of any
nominee of the foregoing, and the Fund on behalf of such Portfolio agrees to
hold any such nominee harmless from any liability as a holder of record of such
foreign securities. The Custodian or a Foreign Sub-Custodian shall not be
obligated to accept securities on behalf of a Portfolio under the terms of this
Agreement unless the form of such securities and the manner in which they are
delivered are in accordance with reasonable market practice.
SECTION 4.6. BANK ACCOUNTS. A bank account or bank accounts opened and
maintained outside the United States on behalf of a Portfolio with a Foreign
Sub-Custodian shall be subject only to draft or order by the Custodian or such
Foreign Sub-Custodian, acting pursuant to the terms of this Agreement to hold
cash received by or from or for the account of the Portfolio.
SECTION 4.7. COLLECTION OF INCOME. The Custodian shall use reasonable
endeavors to collect all income and other payments in due course with respect to
the Foreign Assets held hereunder to which the Portfolios shall be entitled and
shall credit such income, as collected, to the applicable Portfolio. In the
event that extraordinary measures are required to collect such income, the Fund
and the Custodian shall consult as to such measures and as to the compensation
and expenses of the Custodian relating to such measures.
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SECTION 4.8. PROXIES. The Custodian will generally with respect to the
foreign securities held under this Section 4 use its reasonable endeavors to
facilitate the exercise of voting and other shareholder proxy rights, subject
always to the laws, regulations and practical constraints that may exist in the
country where such securities are issued. The Fund acknowledges that local
conditions, including lack of regulation, onerous procedural obligations, lack
of notice and other factors may have the effect of severely limiting the ability
of the Fund to exercise shareholder rights.
SECTION 4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The
Custodian shall transmit promptly to the Fund written information (including,
without limitation, pendency of calls and maturities of foreign securities and
expirations of rights in connection therewith) received by the Custodian via the
Foreign Sub-Custodians from issuers of the foreign securities being held for the
account of the Portfolios. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund written information so received by
the Custodian from issuers of the foreign securities whose tender or exchange is
sought or from the party (or its agents) making the tender or exchange offer.
The Custodian shall not be liable for any untimely exercise of any tender,
exchange or other right or power in connection with foreign securities or other
property of the Portfolios at any time held by it unless (i) the Custodian or
the respective Foreign Sub-Custodian is in actual possession of such foreign
securities or property and (ii) the Custodian receives Proper Instructions with
regard to the exercise of any such right or power, and both (i) and (ii) occur
at least three (3) business days prior to the date on which such right or power
is to be exercised.
SECTION 4.10. LIABILITY OF FOREIGN SUB-CUSTODIANS AND FOREIGN
SECURITIES SYSTEMS. Each agreement pursuant to which the Custodian employs as a
Foreign Sub-Custodian shall, to the extent possible, require the Foreign
Sub-Custodian to exercise reasonable care in the performance of its duties and,
to the extent possible, to indemnify, and hold harmless, the Custodian from and
against any loss, damage, cost, expense, liability or claim arising out of or in
connection with the Foreign Sub-Custodian's performance of such obligations. At
the Fund's election, the Portfolios shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a Foreign
Sub-Custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Portfolios have not been made
whole for any such loss, damage, cost, expense, liability or claim.
SECTION 4.11. TAX LAW. The Custodian shall have no responsibility or
liability for any obligations now or hereafter imposed on the Fund, the
Portfolios or the Custodian as custodian of the Portfolios by the tax law of the
United States or of any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the obligations imposed on
the Fund with respect to the Portfolios or the Custodian as custodian of the
Portfolios by the tax law of countries other than those mentioned in the above
sentence, including responsibility for withholding and other taxes, assessments
or other governmental charges, certifications and governmental reporting. The
sole responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any claim for exemption or
refund under the tax law of countries for which the Fund has provided such
information.
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SECTION 4.12. CONFLICT. If the Custodian is delegated the
responsibilities of Foreign Custody Manager pursuant to the terms of Section 3
hereof, in the event of any conflict between the provisions of Sections 3 and 4
hereof, the provisions of Section 3 shall prevail.
SECTION 5. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent and deposit into the account of the appropriate Portfolio
such payments as are received for Shares thereof issued or sold from time to
time by the Fund. The Custodian will provide timely notification to the Fund on
behalf of each such Portfolio and the Transfer Agent of any receipt by it of
payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Fund's Declaration of Trust and any applicable votes of the
Board of Trustees pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial bank designated
by the redeeming shareholders. In connection with the redemption or repurchase
of Shares, the Custodian shall honor checks drawn on the Custodian by a holder
of Shares, which checks have been furnished by the Fund to the holder of Shares,
when presented to the Custodian in accordance with such procedures and controls
as are mutually agreed upon from time to time between the Fund and the
Custodian.
SECTION 6. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Agreement means a writing
signed or initialed by one or more person or persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees accompanied
by a detailed description of procedures approved by the Board of Trustees,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board of Trustees and
the Custodian are satisfied that such procedures afford adequate safeguards for
the Portfolios' assets. For purposes of this Section, Proper Instructions shall
include instructions received by the Custodian pursuant to any three - party
agreement which requires a segregated asset account in accordance with Section
2.10.
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SECTION 7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Agreement, provided that all such payments
shall be accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Portfolio except as otherwise directed by the Board of
Trustees.
SECTION 8. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a Certified Resolution as conclusive
evidence (a) of the authority of any person to act in accordance with such
resolution or (b) of any determination or of any action by the Board of Trustees
pursuant to the Fund's Declaration of Trust as described in such resolution, and
such resolution may be considered as in full force and effect until receipt by
the Custodian of written notice to the contrary.
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SECTION 9. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees to keep the books of
account of each Portfolio and/or compute the net asset value per Share of the
outstanding Shares or, if directed in writing to do so by the Fund on behalf of
the Portfolio, shall itself keep such books of account and/or compute such net
asset value per Share. If so directed, the Custodian shall also calculate daily
the net income of the Portfolio as described in the Prospectus and shall advise
the Fund and the Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Fund to do so, shall advise
the Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per Share and the
daily income of each Portfolio shall be made at the time or times described from
time to time in the Prospectus.
SECTION 10. RECORDS
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Agreement in
such manner as will meet the obligations of the Fund under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the SEC. The Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by each Portfolio and held by the Custodian and
shall, when requested to do so by the Fund and for such compensation as shall be
agreed upon between the Fund and the Custodian, include certificate numbers in
such tabulations.
SECTION 11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder in connection with the preparation of the Fund's
Form N-1A, and Form N-SAR or other annual reports to the SEC and with respect to
any other requirements thereof.
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SECTION 12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a U.S. Securities System or a Foreign Securities System (collectively
referred to herein as the "SECURITIES SYSTEMS"), relating to the services
provided by the Custodian under this Agreement; such reports, shall be of
sufficient scope and in sufficient detail, as may reasonably be required by the
Fund to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
SECTION 13. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
SECTION 14. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Agreement,
but shall be kept indemnified by and shall be without liability to the Fund for
any action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. The Custodian shall be
without liability to the Fund and the Portfolios for any loss, liability, claim
or expense resulting from or caused by anything which is (A) part of Country
Risk (as defined in Section 3 hereof), including without limitation
nationalization, expropriation, currency restrictions, or acts of war,
revolution, riots or terrorism, or (B) part of the "prevailing country risk" of
the Portfolios, as such term is used in SEC Release Nos. IC-22658; IS-1080 (May
12, 1997) or as such term or other similar terms are now or in the future
interpreted by the SEC or by the staff of the Division of Investment Management
thereof.
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Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, work
stoppages, natural disasters, or other similar events or acts; (ii) errors by
the Fund or the Investment Advisor in their instructions to the Custodian
provided such instructions have been in accordance with this Agreement; (iii)
the insolvency of or acts or omissions by a Securities System; (iv) any delay or
failure of any broker, agent or intermediary, central bank or other commercially
prevalent payment or clearing system to deliver to the Custodian's sub-custodian
or agent securities purchased or in the remittance or payment made in connection
with securities sold; (v) any delay or failure of any company, corporation, or
other body in charge of registering or transferring securities in the name of
the Custodian, the Fund, the Custodian's sub-custodians, nominees or agents or
any consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) changes to any existing, or any provision of any
future, law or regulation or order of the United States of America, or any state
thereof, or any other country, or political subdivision thereof or of any court
of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth
with respect to sub-custodians generally in this Agreement.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Agreement, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
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SECTION 15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Agreement shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.8 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees has approved the
initial use of a particular Securities System by such Portfolio, as required by
Rule 17f-4 under the 1940 Act and that the Custodian shall not with respect to a
Portfolio act under Section 2.9 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees has approved the initial use of the Direct Paper System by such
Portfolio; provided further, however, that the Fund shall not amend or terminate
this Agreement in contravention of any applicable federal or state regulations,
or any provision of the Fund's Declaration of Trust, and further provided, that
the Fund on behalf of one or more of the Portfolios may at any time by action of
its Board of Trustees (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Agreement, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
SECTION 16. SUCCESSOR CUSTODIAN
If a successor custodian for one or more Portfolios shall be appointed
by the Board of Trustees, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities of each applicable Portfolio then held by it
hereunder and shall transfer to an account of the successor custodian all of the
securities of each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a Certified Resolution, deliver at the office of
the Custodian and transfer such securities, funds and other properties in
accordance with such resolution.
In the event that no written order designating a successor custodian or
Certified Resolution shall have been delivered to the Custodian on or before the
date when such termination shall become effective, then the Custodian shall have
the right to deliver to a bank or trust company, which is a "bank" as defined in
the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of
its own selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of each
applicable Portfolio and all instruments held by the Custodian relative thereto
and all other property held by it under this Agreement on behalf of each
applicable Portfolio, and to transfer to an account of such successor custodian
all of the securities of each such Portfolio held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Agreement.
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In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the Certified Resolution to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Agreement relating to the duties
and obligations of the Custodian shall remain in full force and effect.
SECTION 17. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with the general tenor of
this Agreement. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Fund's Declaration of
Trust. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Agreement.
SECTION 18. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to those set forth on Schedule C with respect to which it desires to
have the Custodian render services as custodian under the terms hereof, it shall
so notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.
SECTION 19. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
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SECTION 20. PRIOR AGREEMENTS
This Agreement supersedes and terminates, as of the date hereof, all
prior Agreements between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
SECTION 21. NOTICES.
Any notice, instruction or other instrument required to be given
hereunder may be delivered in person to the offices of the parties as set forth
herein during normal business hours or delivered prepaid registered mail or by
telex, cable or telecopy to the parties at the following addresses or such other
addresses as may be notified by any party from time to time.
To the Fund: EVERGREEN SELECT MONEY MARKET TRUST
c/o First Union Corporation - Legal Division
200 Berkeley Street
Boston, Massachusetts 02116-5034
Attention: Terrence J. Cullen, Esq.
Telephone: 617-210-3200
Telecopy: 617-210-3468
To the Custodian: STATE STREET BANK AND TRUST COMPANY
One Heritage Drive, 3rd Floor South
North Quincy, Massachusetts 02171
Attention: Ronald F. Mauriello
Telephone: 617-985-1891
Telecopy: 617-537-5203
Such notice, instruction or other instrument shall be deemed to have
been served in the case of a registered letter at the expiration of five
business days after posting, in the case of cable twenty-four hours after
dispatch and, in the case of telex, immediately on dispatch and if delivered
outside normal business hours it shall be deemed to have been received at the
next time after delivery when normal business hours commence and in the case of
cable, telex or telecopy on the business day after the receipt thereof. Evidence
that the notice was properly addressed, stamped and put into the post shall be
conclusive evidence of posting.
SECTION 22. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
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SECTION 23. SHAREHOLDER COMMUNICATIONS ELECTION
SEC Rule 14b-2 requires banks which hold securities for the account of
customers to respond to requests by issuers of securities for the names,
addresses and holdings of beneficial owners of securities of that issuer held by
the bank unless the beneficial owner has expressly objected to disclosure of
this information. In order to comply with the rule, the Custodian needs the Fund
to indicate whether it authorizes the Custodian to provide the Fund's name,
address, and share position to requesting companies whose securities the Fund
owns. If the Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the Custodian "yes" or
does not check either "yes" or "no" below, the Custodian is required by the rule
to treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
the Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
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IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of September 18, 1997.
EVERGREEN SELECT MONEY MARKET TRUST FUND SIGNATURE ATTESTED TO BY:
By:--------------------------- By: ----------------------
Name: John J. Pileggi Name: George O. Martinez
--------------------- -----------------------
Title: President Title: Secretary
--------------------- -----------------------
STATE STREET BANK AND TRUST COMPANY SIGNATURE ATTESTED TO BY:
By:--------------------------- By: ----------------------
Name: Ronald E. Logue Name: Glenn Ciotti
------------------------ ----------------------
Title: Executive Vice President Title: VP and Assoc. Counsel
------------------------ ----------------------
FORM OF MASTER TRANSFER AND RECORDKEEPING AGREEMENT
AGREEMENT made as of the 18th day of September, 1997 by and between
each of the parties listed on Exhibit A which is attached hereto and made a part
hereof (each a "Fund" or "Funds"), each for itself and not jointly, each having
its principal place of business at 200 Berkeley Street, Boston, Massachusetts
02116, and Evergreen Service Company ("ESC"), having its principal place of
business at 200 Berkeley Street, Boston, Massachusetts 02116.
W I T N E S S E T H T H A T
WHEREAS, each Fund desires ESC to perform certain services for the
Fund, and ESC is willing to perform such services.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, each party, for itself and not jointly, agrees as follows:
1. ADDITIONAL PARTIES - Any other registered investment company for
which Keystone Investment Management Company (KIMCO), Evergreen Asset Management
Corp. ("Evergreen Asset"), First Union National Bank or one of its affiliates
serves as investment adviser, trustee or manager may become a Fund party to this
Agreement, for itself and not jointly, by giving written notice to ESC that it
has elected to become a Fund party hereto, to which election ESC has given its
written consent.
2. SERVICES - ESC shall perform for each Fund the services set forth on
Exhibit B which is attached hereto and made a part hereof. ESC shall also
perform for each Fund, without additional charge, any services which it
customarily performs in the ordinary course of business without additional
charge for the investment companies for which ESC acts as transfer agent,
dividend disbursing agent, or shareholder servicing and recordkeeping agent.
ESC shall perform such other services in addition to those set forth on
Exhibit B hereto as a Fund shall request in writing. Any of the services to be
performed hereunder, and the manner in which such services are to be performed,
shall be changed only pursuant to a written agreement signed by the parties
hereto.
ESC will undertake no activity which, in its judgment, will adversely
effect the performance of its obligations to a Fund under this Agreement.
3. FEES - Each Fund shall pay ESC for the services to be performed
pursuant to this Agreement in accordance with and in the manner set forth with
respect to such Fund on Exhibit C attached hereto and made a part hereof.
4. EFFECTIVE DATE - This Agreement shall become effective as of the
date set forth above and shall become effective as to each Fund which gives
written notice to ESC
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pursuant to Paragraph 1 hereof that it elects to become a party hereto as of the
date of such notice.
5. TERM - This Agreement shall be in effect until terminated in
accordance with Section 17 hereof.
6. USE OF ESC'S NAME - The Funds will not use ESC's name in any sales
literature or other material in a manner not approved by ESC in writing before
such use, unless a similar use was previously approved. Notwithstanding the
foregoing, ESC hereby consents to all uses of ESC's name which merely refer in
accurate terms to ESC's appointments hereunder or which are required by the
Securities and Exchange Commission or a state securities commission, and
provided, further, that in no case will such approval be unreasonably withheld
or delayed.
7. STANDARD OF CARE - ESC shall at all times use its best efforts and
act in good faith and in a non-negligent manner in performing all services
pursuant to this Agreement.
8. UNCONTROLLABLE EVENTS - ESC shall not be liable for damage, loss of
data, delays or errors occurring by reason of circumstances beyond its control,
including, but not limited to, acts of civil or military authority, national
emergencies, fire, flood or catastrophe, acts of God, insurrection, war, riots,
or failure of transportation, communication or power supply. However, ESC shall
keep in a separate and safe place additional copies of all records required to
be maintained pursuant to this Agreement or additional tapes or discs necessary
to reproduce all such records. Furthermore, at all times during this Agreement,
ESC shall maintain an arrangement whereby ESC will have a backup computer
facility available for its use in providing the services required hereunder in
the event circumstances beyond ESC's control result in ESC not being able to
process the necessary work at its principal computer facility. ESC shall, from
time to time, upon request from any Fund provide written evidence and details of
its arrangement for obtaining the use of such a backup computer facility. ESC
shall use reasonable care to minimize the likelihood of all damage, loss of
data, delays and errors resulting from an uncontrollable event. Should such
damage, loss of data, delays or errors occur, ESC shall use its best efforts to
mitigate the effects of such occurrence. Representatives of each Fund shall be
entitled to inspect the ESC premises and operating capabilities within
reasonable business hours and upon reasonable notice to ESC.
9. INDEMNIFICATION - Each Fund shall indemnify and hold ESC, its
employees and agents harmless against any losses, claims, damages, judgments,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from (1) transactions which occurred prior to the date ESC began
serving as Transfer Agent to the Fund; (2) action taken or permitted by ESC in
good faith with due care and without negligence in reliance upon instructions
received from such Fund in accordance with Section 10 hereof or with respect to
a Fund upon the opinion of counsel for the Fund, as to anything arising in
connection with its performance under this Agreement; or (3) any act done or
suffered by ESC with respect to a Fund in good faith with due care and without
negligence in connection with its performance under this Agreement in reliance
upon any instruction, order, stock certificate or other instrument reasonably
believed by it to be
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genuine and to bear the genuine signature of any person or persons authorized to
sign, countersign, or execute same, and which complies with all applicable
requirements of the Fund's current prospectus(es) and statement of additional
information, this Agreement and instructions and other governing documents
provided to ESC by the Fund. For purposes of this indemnification, it is
specifically agreed that if any instruction received by ESC in accordance with
Section 10 hereof differs from the requirements set forth in the Fund's current
prospectus(es) or statement of additional information then, with regard to that
difference, the instruction, order, stock certificate or other instrument relied
upon by ESC, ESC need only comply with such instruction (and not the current
prospectus(es) or statement of additional information).
In the event that ESC requests any Fund to indemnify or hold it
harmless hereunder, ESC shall use its best efforts to inform the Fund of the
relevant facts concerning the matter in question. ESC shall use reasonable care
to identify and promptly notify a Fund concerning any matter which ESC believes
may result in a claim for indemnification against such Fund, and shall notify
the Fund within seven days of notice to ESC of the filing of any suit or other
legal action or the institution by a government agency of any administrative
action or investigation against ESC which involves its duties under this
Agreement. Each Fund shall have the election of defending ESC against any claim
with respect to such Fund which may be the subject of indemnification or holding
it harmless hereunder. In the event a Fund so elects, it will so notify ESC.
Thereupon the Fund shall take over defense of the claim, and, if so requested by
a Fund, ESC shall incur no further legal or other expenses related thereto for
which it shall be entitled to indemnity or holding harmless hereunder; provided,
however, that nothing herein shall prevent ESC from retaining counsel to defend
any claim at ESC's own expense.
Except with the prior written consent of a Fund, ESC shall in no event
confess any claim or make any compromise in any matter in which such Fund will
be asked to indemnify or hold ESC harmless hereunder. ESC shall be without
liability to a Fund with respect to anything done or omitted to be done in
accordance with the terms of this Agreement or instructions properly received
pursuant hereto if done in good faith and without negligence or willful or
wanton misconduct. In no event shall ESC be liable for consequential damages,
lost profits, or other special damages, even if ESC has been informed of the
possibility of such damage or loss by the Fund or by third parties.
Notwithstanding the foregoing, ESC shall be liable to each Fund for
any damage or losses suffered by such Fund as a result of a delay or negligence
on the part of ESC in processing a purchase or liquidation transaction or in
making payment to a shareholder of such Fund; it being agreed that, without in
any way limiting ESC's liability for other transactions hereunder, that such
damages shall not be deemed to be consequential or special.
10. INSTRUCTIONS - ESC shall comply with all instructions issued by a
Fund in the form prescribed below which are permitted or required under Exhibit
B attached hereto. Whenever ESC takes action hereunder pursuant to instructions
from a Fund, ESC shall be entitled to rely upon such instructions only when such
instructions are signed by the President or Treasurer of the Fund or by an
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individual designated in writing by the President or Treasurer as a person
authorized to give instructions hereunder. A Fund may waive the requirement that
all instructions be in writing, if such waiver defines the occurrences not
requiring written instruction, indicates the persons authorized to give such
non-written instructions, and is signed by one of the persons pursuant to the
immediately preceding sentence of this Section 10. In the event ESC obtains a
Fund's written waiver, it may rely on non-written instructions received pursuant
thereto.
11. CONFIDENTIALITY - ESC agrees to treat as confidential all records
and other information relative to a Fund and the Fund's shareholders. ESC, on
behalf of itself and its employees, agrees to keep confidential all such
information, except, after prior notification to and approval by a Fund (which
approval shall not be unreasonably withheld and may not be withheld where ESC
may be exposed to civil or criminal contempt proceedings) when requested to
divulge such information by duly constituted authorities or when requested by a
shareholder of a Fund seeking information about his own or an appropriately
related account.
12. REPORTS - ESC will furnish to each Fund and to properly authorized
auditors, examiners, investment companies, dealers, salesmen, insurance
companies, transfer agents, registrars, investors, and others designated by each
Fund in writing, such reports at such times as are prescribed for each service
in Exhibit B.
13. RIGHT OF OWNERSHIP - ESC agrees that all records and other data
received, computed, developed, used and/or stored pursuant to this Agreement are
the exclusive property of each respective Fund and that all such records and
other data will be furnished without additional charge to a Fund in available
machine readable data form immediately upon termination of this Agreement with
respect to such Fund for any reason whatsoever. Furthermore, upon a Fund's
request at any time or times while this Agreement is in effect, ESC shall
deliver to such Fund, at the Fund's expense, any or all of the data and records
held by ESC pursuant to this Agreement, in the form as requested by the Fund. On
the effective date of termination of this Agreement with respect to a Fund or,
if later, on the date a Fund ceases to use ESC's services, ESC will promptly
return to the Fund any and all records and other data belonging to the Fund free
of any claim or retention of rights by ESC.
14. REDEMPTION OF SHARES - The parties hereto agree that ESC shall
process liquidations, redemptions or repurchases of shares of each Fund, as the
agent for such Fund, in the manner described in the then current prospectus(es)
and statement of additional information for the Fund. Notwithstanding the
foregoing, ESC shall be liable for any losses, damages, claims or expenses
resulting from ESC's failure to obtain the appropriate signature guarantee with
regard to any redemption or transfer processed by ESC even if the current
prospectus(es) or statement of additional information authorizes ESC to waive
the requirement of a signature guarantee unless ESC is authorized in writing by
an appropriate party to waive such a requirement.
15. SUBCONTRACTING - Each Fund may require that ESC, or ESC may, with
the prior written consent of such Fund, subcontract with one or more of its
affiliated or other persons to
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perform all or part of its obligations hereunder, provided, however, that,
notwithstanding any such subcontract, ESC shall be fully responsible to each
Fund hereunder.
16. ASSIGNMENT - This Agreement and the rights and duties hereunder
shall not be assignable by ESC or any of the Fund parties hereto except by the
specific written consent of the other party.
17. TERMINATION - This Agreement may be terminated with respect to a
Fund on such date on which ESC has given such Fund not less than 180 days prior
written notice or on which such Fund has given ESC not less than 90 days prior
written notice. Upon such termination, ESC will use its best efforts to
cooperate and assist in accomplishing a timely, efficient and accurate
conversion to the person or firm which will provide the services described
hereunder. This Agreement may be terminated by any Fund without the payment of
any penalty, forfeiture, compulsory buyout amount or performance of any other
obligation which could deter termination; provided, however, that for the
purpose of this Section 17 any amount due under Section 3 of this Agreement
which is undisputed is not considered a penalty, forfeiture, compulsory buyout
amount or performance of any other obligation which could deter termination.
This Agreement may be terminated with respect to a Fund after written
notice to ESC by the Fund if there is a material breach or violation of this
Agreement or if ESC fails to perform any of its obligations under this Agreement
and the failure continues for more than 30 days after the Fund gives notice of
the failure to ESC or bankruptcy or insolvency proceedings of any nature are
instituted by or against ESC.
18. INSURANCE - ESC shall maintain throughout the term of this
Agreement a fidelity bond(s) in an amount in excess of the minimum amount
required to be obtained by the Funds which are parties hereto pursuant to Rule
17g-1 under the Investment Company Act of 1940 (the "1940 Act") covering the
acts of its officers, employees or agents in performing any and all of the
services required to be performed hereunder. ESC agrees to promptly notify each
Fund in writing of any material amendment or cancellation of such bond(s). ESC
shall at such times as the Fund may request, but at least once each year, notify
each Fund of any claims made pursuant to such bond(s).
19. AMENDMENT - This Agreement may be amended at any time by an
instrument in writing executed by both ESC and any Fund which is a party hereto,
or each of their respective successors, provided that any such amendment will
conform to the requirements set forth in the 1940 Act and the rules and
regulations thereunder.
20. NOTICE - Any notice shall be sufficiently given when sent by
registered or certified mail to any party at the address of such party set forth
above or at such other address as such party may from time to time specify in
writing to the other party.
21. SECTION HEADINGS - Section headings are included for convenience
only and are not to be used to construe or interpret this Agreement.
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22. INTERPRETIVE PROVISIONS - In connection with the operation of this
Agreement, ESC and one or more of the Funds may agree with respect to such Funds
and ESC from time to time on such provisions interpretive of or in addition to
the provisions of this Agreement as may in their combined opinion be consistent
with the general tenor of this Agreement. Furthermore, ESC and such Fund(s) may
agree to add to, delete from or change the services set forth with respect to
such Fund(s) in Exhibit B of the Agreement. Each such interpretive or additional
provision, and each addition, deletion or change is to be signed by all parties
affected and annexed hereto, and no such provision, addition, deletion or change
shall contravene any applicable federal or state law or regulation and no such
provision, addition, deletion or change shall be deemed to be an amendment of
any provision of this Agreement with the exception of Exhibit B hereto.
23. GOVERNING LAW - This Agreement shall be governed by and its
provisions shall be construed in accordance with the laws of The Commonwealth of
Massachusetts.
24. DELAWARE BUSINESS TRUST - Each of the Funds listed on Exhibit A
attached hereto is a Delaware business trust established under a Declaration of
Trust. The obligations of such Funds are not personally binding upon, nor shall
recourse be had against the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Funds, but only the property
of such Funds shall be bound.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
EVERGREEN SERVICE COMPANY
By: /s/ Edward J. Falvey
-----------------------
Edward J. Falvey
President
Evergreen Select Fixed Income Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Select Limited Duration Fund Evergreen Select Fixed Income
Fund Evergreen Select Income Plus Fund Evergreen Select Intermediate
Tax Exempt Bond Fund Evergreen Select Core Bond Fund Evergreen Select
Intermediate Bond Fund Evergreen Select Adjustable Rate Fund
Evergreen Select Equity Trust, a Delaware Business Trust consisting of the
following series:
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Evergreen Select Strategic Value Fund Evergreen Select Large Cap Blend
Fund Evergreen Select Strategic Growth Fund Evergreen Select Social
Principles Fund Evergreen Select Equity Income Fund Evergreen Select
Small Company Value Fund Evergreen Select Common Stock Fund Evergreen
Select Small Cap Growth Fund Evergreen Select Balanced Fund Evergreen
Select Diversified Value Fund
Evergreen Select Money Market Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Select 100% Treasury Money Market Fund
Evergreen Institutional Money Market Fund
Evergreen Institutional Tax Exempt Money Market Fund
Evergreen Institutional Treasury Money Market Fund
Evergreen Municipal Trust, a Delaware Business Trust consisting of the following
series:
Evergreen California Tax Free Fund Evergreen Connecticut Municipal Bond
Fund Evergreen Florida High Income Municipal Bond Fund Evergreen
Florida Municipal Bond Fund Evergreen Georgia Municipal Bond Fund
Evergreen Massachusetts Tax Free Fund Evergreen Missouri Tax Free Fund
Evergreen New Jersey Tax Free Income Fund Evergreen New York Tax Free
Fund Evergreen North Carolina Municipal Bond Fund Evergreen
Pennsylvania Tax Free Fund Evergreen South Carolina Municipal Bond Fund
Evergreen Virginia Municipal Bond Fund Evergreen High Grade Tax Free
Fund Evergreen Short-Intermediate Municipal Fund Evergreen Tax Free
Fund
Evergreen Equity Trust, a Delaware Business Trust consisting of the following
series:
Evergreen Aggressive Growth Fund Evergreen Fund Evergreen Micro
Cap Fund Evergreen Omega Fund Evergreen Small Company Growth Fund
Keystone Strategic Growth Fund (K-2) Evergreen American Retirement Fund
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Evergreen Foundation Fund Evergreen Tax Strategic Foundation Fund
Evergreen Balanced Fund Evergreen Fund for Total Return Evergreen
Growth & Income Fund Evergreen Income & Growth Fund Evergreen Small Cap
Equity Income Fund Evergreen Value Fund Evergreen Utility Fund Keystone
Growth and Income Fund (S-1)
Evergreen Fixed Income Trust, a Delaware Business Trust consisting of the
following series:
Evergreen U.S. Government Fund
Evergreen Strategic Income Fund
Evergreen Diversified Bond Fund
Keystone High Income Bond Fund (B-4)
Evergreen Capital Preservation and Income Fund
Evergreen Intermediate Term Bond Fund
Evergreen Intermediate-Term Government Securities Fund
Evergreen Short-Intermediate Bond Fund
Evergreen International Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Emerging Markets Growth Fund Evergreen
Global Leaders Fund Evergreen Global Opportunities Fund Evergreen
International Equity Fund Evergreen Latin America Fund Evergreen
Natural Resources Fund Keystone Precious Metals Holdings Keystone
International Fund
Evergreen Money Market Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Money Market Fund
Evergreen Pennsylvania Tax Free Money Market Fund
Evergreen Tax Exempt Money Market Fund
Evergreen Treasury Money Market Fund
By: /s/ John Pileggi
---------------------------
John Pileggi
President and Treasurer of each
Delaware Business Trust listed above
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EXHIBIT A
Evergreen Select Fixed Income Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Select Limited Duration Fund Evergreen Select Fixed Income
Fund Evergreen Select Income Plus Fund Evergreen Select Intermediate
Tax Exempt Bond Fund Evergreen Select Core Bond Fund Evergreen Select
Intermediate Bond Fund Evergreen Select Adjustable Rate Fund
Evergreen Select Equity Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Select Strategic Value Fund Evergreen Select Large Cap Blend
Fund Evergreen Select Strategic Growth Fund Evergreen Select Social
Principles Fund Evergreen Select Equity Income Fund Evergreen Select
Small Company Value Fund Evergreen Select Common Stock Fund Evergreen
Select Small Cap Growth Fund Evergreen Select Balanced Fund Evergreen
Select Diversified Value Fund
Evergreen Select Money Market Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Select 100% Treasury Money Market Fund
Evergreen Institutional Money Market Fund
Evergreen Institutional Tax Exempt Money Market Fund
Evergreen Institutional Treasury Money Market Fund
Evergreen Municipal Trust, a Delaware Business Trust consisting of the following
series:
Evergreen California Tax Free Fund Evergreen Connecticut Municipal Bond
Fund Evergreen Florida High Income Municipal Bond Fund Evergreen
Florida Municipal Bond Fund Evergreen Georgia Municipal Bond Fund
Evergreen Massachusetts Tax Free Fund Evergreen Missouri Tax Free Fund
Evergreen New Jersey Tax Free Income Fund Evergreen New York Tax Free
Fund Evergreen North Carolina Municipal Bond Fund
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Evergreen Pennsylvania Tax Free Fund
Evergreen South Carolina Municipal Bond Fund
Evergreen Virginia Municipal Bond Fund
Evergreen High Grade Tax Free Fund
Evergreen Short-Intermediate Municipal Fund
Evergreen Tax Free Fund
Evergreen Equity Trust, a Delaware Business Trust consisting of the following
series:
Evergreen Aggressive Growth Fund Evergreen Fund Evergreen Micro Cap
Fund Evergreen Omega Fund Evergreen Small Company Growth Fund Keystone
Strategic Growth Fund (K-2) Evergreen American Retirement Fund
Evergreen Foundation Fund Evergreen Tax Strategic Foundation Fund
Evergreen Balanced Fund Evergreen Fund for Total Return Evergreen
Growth & Income Fund Evergreen Income & Growth Fund Evergreen Small Cap
Equity Income Fund Evergreen Value Fund Evergreen Utility Fund Keystone
Growth and Income Fund (S-1)
Evergreen Fixed Income Trust, a Delaware Business Trust consisting of the
following series:
Evergreen U.S. Government Fund
Evergreen Strategic Income Fund
Evergreen Diversified Bond Fund
Keystone High Income Bond Fund (B-4)
Evergreen Capital Preservation and Income Fund
Evergreen Intermediate Term Bond Fund
Evergreen Intermediate-Term Government Securities Fund
Evergreen Short-Intermediate Bond Fund
Evergreen International Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Emerging Markets Growth Fund
Evergreen Global Leaders Fund
Evergreen Global Opportunities Fund
Evergreen International Equity Fund
Evergreen Latin America Fund
Evergreen Natural Resources Fund
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Keystone Precious Metals Holdings
Keystone International Fund
Evergreen Money Market Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Money Market Fund
Evergreen Pennsylvania Tax Free Money Market Fund
Evergreen Tax Exempt Money Market Fund
Evergreen Treasury Money Market Fund
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EXHIBIT B
The services provided for in this Agreement shall be performed by ESC,
or any agent appointed by ESC pursuant to Section 15 of this Agreement, under
the name of Evergreen Service Company (ESC) and this name or any similar name or
logo will not be used by ESC or its agents for any purposes other than those
related to this Agreement or to any other agreement which ESC may enter into
with any of the Fund (s) or with companies affiliated with the Fund (s).
The offices of ESC shall be open to perform the services pursuant to
this Agreement on all days when the Fund is open to transact business.
ESC will perform all services normally provided to investment companies
such as the Fund(s), and the quality of such services shall be equal to or
better than that provided to the other investment companies serviced by ESC.
With respect to each Fund, by way of illustration, but not limitation, these
services will include:
1. Establishing, maintaining, safeguarding and reporting on
shareholder account information and account histories,
(including registration, name and address recorded in
generally accepted form, dealer, representative, branch, and
territory information, mailing address, distribution address,
various codes and specific information relating to (if
applicable); withdrawal plans, letters of intent, systematic
investing, insured redemptions plans, account groupings for
rights of accumulation discount processing, and for account
group reporting for plan accounts and other accounts grouped
for master sub-account reporting.)
2. Recording and controlling shares outstanding in certificate
("issued") and non-certificate ("unissued") form.
3. Maintaining a record for each certificate issued to include
certificate number, account number, issued date, number of
shares, canceled date or stop date, where appropriate.
4. Reconciling the number of outstanding shares of each Fund on a
daily basis with the Fund and the Fund's custodian, promptly
correcting any differences noted.
5. Establishing and maintaining a trade file on behalf of each
Fund based on trade information furnished to the transfer
agent by the Fund or its distributors.
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6. Accepting and processing direct cash investments however
received and investing such investments promptly in
shareholder accounts.
7. Passing upon the adequacy of documents properly endorsed and
guaranteed submitted by or on behalf of a shareholder to
transfer ownership or redeem shares.
8. Transferring ownership of shares upon the books of each Fund.
9. Redeeming shares and preparing and mailing redemption checks
or wire proceeds as instructed.
10. Preparing and promptly mailing account statements to the
shareholder or such other authorized address and, when
appropriate, as instructed by a Fund, to the dealer or dealer
branch, whenever transaction activity effecting share balances
are posted to a Fund account that is of the type that should
receive such statement.
11. Checking surrendered certificates for stop transfer
instructions.
12. Canceling certificates surrendered.
13. Issuing certificates as replacements for those canceled, or as
an original issue of additional shares or upon the reduction
of an equal number of unissued shares.
14. Maintaining and updating a stop transfer file, promptly
placing stop transfer codes upon notification of possible
loss, destruction or disappearance of a certificate. Upon
receipt of proper documentation obtaining necessary insurance
forms and issuing replacement certificates.
15. Balancing outstanding shares of record with the custodian
prior to each distribution and calculating and paying or
reinvesting distributions to shareholders of record and to
open trade receivables and free stock.
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16. Processing exchanges of shares of one Fund or Portfolio for
another, calculating proper sales charges and collecting fees
as required.
17. Processing withdrawal plan liquidations according to plan
instructions.
18. Reporting to each Fund and its custodian daily the capital
stock activities and dollar amounts of transactions.
19. Promptly answering inquiries from shareholders, dealers, Fund
personnel, and others as requested in accordance with the
terms of this Agreement as to account matters, referring
policy or investment matters to the Fund.
20. Mailing reports and special mailings, as directed by a Fund,
to all shareholders or selected holders or dealers.
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B-3
<PAGE>
21. Providing services with regard to the annual or special
meetings of a Fund, including preparation and timely mailing
of proxy material to shareholders of record and others as
directed by the Fund, and receiving, examining and recording
all properly executed proxies and performing such follow-up as
required by the Fund.
22. Providing periodic listings and tallies of shareholder votes
and certifying the final tally.
23. Providing an inspector of elections at the annual or any
special meetings of a Fund.
24. Maintaining tax information for each account, deducting
amounts where required and furnishing to a Fund, its
shareholders, dealers and, when appropriate, regulatory
bodies, the necessary tax information, all in compliance with
the various applicable laws.
25. Maintaining records of account and distribution information
for checks and confirmations returned as undeliverable by the
Post Office.
26. Maintaining records and reporting sales information for Blue
Sky reporting purposes.
27. Calculating and processing Fund mergers or stock dividends, as
directed by a Fund.
28. Maintaining all Fund records as outlined in the record and
tape retention schedule delivered by a Fund.
29. Reconciling all investment, distribution and redemption
accounts.
30. Providing for the replacement of uncashed distribution or
redemption checks.
31. Maintaining and safeguarding an inventory of unissued blank
stock certificates, checks and other Fund records.
32. Making available to a Fund and its distributors at their
locations devices which will provide immediate electronic
access to computerized records maintained for a Fund.
33. Providing space and such technical expertise as may be
required to enable a Fund
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<PAGE>
and its properly authorized auditors, examiners and others
designated by the Fund in writing to properly understand and
examine all books, records, computer files, microfilm and
other items maintained pursuant to this Agreement, and to
assist as required in such examination.
34. Assigning a single account number to each shareholder
regardless of the number of Funds or Portfolios owned for
which Keystone Investment Management Company, Evergreen Asset
Management Corp., First Union National Bank or one of its
affiliates is the trustee, investment adviser or manager
(except as instructed otherwise.)
35. Mailing prospectuses to existing accounts on receipt of the
first direct investment transaction after a new prospectus has
been issued by a Fund.
36. Mailing cash election notices when required prior to capital
gains distributions.
37. Maintaining information, performing the necessary research and
producing reports required to comply with all applicable state
escheat or abandoned property laws.
With respect to each Fund, the Transfer Agent will produce reports as requested
by a Fund including, but not limited to, the following:
Shareholder Account Confirmation As required
Redemption Checks When redemption is made
Certificates When requested
Withdrawal plan payment checks On payment cycle
Distribution checks As required
Name and address labels
(per account registration) As requested
Proxy When required
1099 Annually
1042-S Annually
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Transaction journals Daily
Record date position control Daily
Daily and (monthly) cash proof Daily
Daily and (monthly) share proof Daily
Daily master control Daily
Blue Sky exception Daily
Blue Sky master list Monthly and whenever a new
permit is issued by a state
Blue Sky sales report Cycle as designated in
advance by distributor
Check register Daily
Account information reports When requested
(Monthly) Cumulative Monthly
transaction
New account list Monthly
Shareholder master list When requested
Sales by State Monthly
Activities statistics Monthly
Distribution journals As required
Proxy tallies and vote listings When requested
Withdrawal plan account check Monthly
reconciliation
Dividend account check As required
reconciliation
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B-9
FORM OF ADMINISTRATIVE SERVICES AGREEMENT
EVERGREEN SELECT MONEY MARKET TRUST
This Administrative Services Agreement is made as of this 18th day of
September, 1998 between Evergreen Select Money Markey Trust, a Delaware business
trust (herein called the "Trust"), and Evergreen Investment Services, Inc., a
Delaware corporation (herein called "EIS").
W I T N E S S E T H:
WHEREAS, the Trust is a Delaware business trust consisting of one or
more portfolios which operates as an open-end management investment company and
is so registered under the Investment Company Act of 1940; and
WHEREAS, the Trust desires to retain EIS as its Administrator to
provide it with administrative services, and EIS is willing to render such
services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR. The Trust hereby appoints EIS as
administrator of the Trust and each of its portfolios listed on SCHEDULE A
attached hereto on the terms and conditions set forth in this Agreement; and EIS
hereby accepts such appointment and agrees to perform the services and duties
set forth in Section 2 of this Agreement in consideration of the compensation
provided for in Section 4 hereof.
2. SERVICES AND DUTIES. As Administrator, and subject to the
supervision and control of the Trustees of the Trust, EIS will hereafter provide
facilities, equipment and personnel to carry out the following administrative
services for operation of the business and affairs of the Trust and each of its
portfolios:
(a) prepare, file and maintain the Trust's governing documents,
including the Declaration of Trust (which has previously been
prepared and filed), the By-laws, minutes of meetings of
Trustees and shareholders, and proxy statements for meetings
of shareholders;
(b) prepare and file with the Securities and Exchange Commission
and the appropriate state securities authorities the
registration statements for the Trust and the Trust's shares
and all amendments thereto, reports to regulatory authorities
and shareholders, prospectuses, proxy statements, and such
other documents as may be necessary or convenient to enable
the Trust to make a continuous offering of its shares;
(c) prepare, negotiate and administer contracts on behalf of the
Trust with, among others, the Trust's distributor, custodian
and transfer agent;
<PAGE>
(d) supervise the Trust's fund accounting agent in the maintenance
of the Trust's general ledger and in the preparation of the
Trust's financial statements, including oversight of expense
accruals and payments and the determination of the net asset
value of the Trust's assets and of the Trust's shares, and of
the declaration and payment of dividends and other
distributions to shareholders;
(e) calculate performance data of the Trust for dissemination to
information services covering the investment company industry;
(f) prepare and file the Trust's tax returns;
(g) examine and review the operations of the Trust's custodian and
transfer agent;
(h) coordinate the layout and printing of publicly disseminated
prospectuses and reports;
(i) prepare various shareholder reports;
(j) assist with the design, development and operation of new
portfolios of the Trust;
(k) coordinate shareholder meetings;
(l) provide general compliance services; and
(m) advise the Trust and its Trustees on matters concerning the
Trust and its affairs.
The foregoing, along with any additional services that EIS shall agree
in writing to perform for the Trust hereunder, shall hereafter be referred to as
"Administrative Services." Administrative Services shall not include any duties,
functions, or services to be performed for the Trust by the Trust's investment
adviser, distributor, custodian or transfer agent pursuant to their agreements
with the Trust.
3. EXPENSES. EIS shall be responsible for expenses incurred in
providing office space, equipment and personnel as may be necessary or
convenient to provide the Administrative Services to the Trust. The Trust shall
be responsible for all other expenses incurred by EIS on behalf of the Trust,
including without limitation postage and courier expenses, printing expenses,
registration fees, filing fees, fees of outside counsel and independent
auditors, insurance premiums, fees payable to Trustees who are not EIS
employees, and trade association dues.
4. COMPENSATION. For the Administrative Services provided, the Trust
hereby agrees to pay and EIS hereby agrees to accept as full compensation for
its services rendered hereunder an administrative fee, calculated daily and
payable monthly, at an annual rate determined in accordance with the table
below.
<PAGE>
Aggregate Daily Net Assets of Funds
Administered by EIS for Which Any
Affiliate of First Union National Bank
Administrative Fee serves as Investment Adviser
------------------ ----------------------------
.050% on the first $7 billion
.035% on the next $3 billion
.030% on the next $5 billion
.020% on the next $10 billion
.015% on the next $5 billion
.010% on assets in excess of $30 billion
Each portfolio of the Trust shall pay a portion of the administrative fee equal
to the rate determined above times that portfolio's average annual daily net
assets.
5. RESPONSIBILITY OF ADMINISTRATOR. EIS shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from wilful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. EIS shall be entitled to rely on
and may act upon advice of counsel (who may be counsel for the Trust) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Any person, even though also an officer,
director, partner, employee or agent of EIS, who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with the duties of EIS hereunder) to be
rendering such services to or acting solely for the Trust and not as an officer,
director, partner, employee or agent or one under the control or direction of
EIS even though paid by EIS.
6. DURATION AND TERMINATION.
(a) This Agreement shall continue in effect from year to year
thereafter, provided it is approved, at least annually, by a
vote of a majority of Trustees of the Trust including a
majority of the disinterested Trustees.
(b) This Agreement may be terminated at any time, without payment
of any penalty, on sixty (60) day's prior written notice by a
vote of a majority of the Trust's Trustees or by EIS.
7. AMENDMENT. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which an enforcement of the change, waiver, discharge or
termination is sought.
8. NOTICES. Notices of any kind to be given to the Trust hereunder by
EIS shall be in writing and shall be duly given if delivered to the Trust and to
its investment adviser at the following address: First Union National Bank, One
First Union Center, Charlotte, North Carolina 28288. Notices of any kind to be
given to EIS hereunder by the Trust shall be in writing and shall be duly given
if delivered to EIS at 200 Berkeley Street, Boston, Massachusetts 02116.
Attention: Chief Administrative Officer.
<PAGE>
9. LIMITATION OF LIABILITY. EIS is hereby expressly put on notice of
the limitation of liability as set forth in the Declaration of Trust and agrees
that the obligations pursuant to this Agreement of a particular portfolio and of
the Trust with respect to that particular portfolio be limited solely to the
assets of that particular portfolio, and EIS shall not seek satisfaction of any
such obligation from the assets of any other portfolio, the shareholders of any
portfolio, the Trustees, officers, employees or agents of the Trust, or any of
them.
10. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court or
regulatory agency decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. Subject to the provisions of Section 5
hereof, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by
Delaware law; provided, however, that nothing herein shall be construed in a
manner inconsistent with the Investment Company Act of 1940 or any rule or
regulation promulgated by the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Administrative
Services Agreement to be executed by their officers designated below as of the
day and year first above written.
EVERGREEN SELECT MONEY MARKET TRUST
ATTEST: By:
-----------------------------
Name: John Pileggi
Title: President
EVERGREEN INVESTMENT SERVICES, INC.
ATTEST:_______________________ By:
---------------------------
Name: Gordon Forrester
Title: Chief Administrative Officer
<PAGE>
SCHEDULE A
