<PAGE> 1
As filed with the Securities and Exchange Commission on March 15, 1999
Registration No. 811-8494 and 33-78408
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. _6_ [x]
and
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. _8_
(Check appropriate box or boxes) [x]
----------
MAGNA FUNDS
(Exact name of registrant as specified in charter)
3435 Stelzer Road
Columbus, Ohio 43219
Registrant's Telephone Number, Including Area Code: (800) 219-4182
Name and address
of agent for service Copy to
- -------------------- -------
Walter B. Grimm John M. Loder, Esq.
BISYS Fund Services Ropes & Gray
3435 Stelzer Road One International Place
Columbus, Ohio 43219 Boston, MA 02110
----------
It is proposed that this filing will become effective (check
appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b),
[ ] 60 days after filing pursuant to paragraph (a)(1),
[X] 75 days after filing pursuant to paragraph (a)(2), or
[ ] on ____________ pursuant to paragraph (a)(2) of rule 485.
<PAGE> 2
MAGNA FUNDS
Cross Reference Sheet
Note: The information contained in this filing relates solely to the Magna
Money Market Fund series of Magna Funds. No information contained in
any prior Magna Funds filing relating to any other series of Magna
Funds is amended or superseded hereby.
PART A
<TABLE>
<CAPTION>
ITEM REGISTRATION STATEMENT CAPTION CAPTION IN PROSPECTUS
NO.
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page; The Trust; Investment
Objective and Policies; Risk and
Other Information About the
Fund's Investments
5. Management of the Fund Cover Page; The Trust; The Fund's
Investment Adviser; Fund
Management and Expenses;
Portfolio Transactions; Back
Cover
6. Capital Stock and Other Securities The Trust; Shareholder Services;
Dividends, Capital Gain
Distributions and Taxes
7. Purchase of Securities Being Offered How to Purchase Shares;
Shareholder Services; Fund
Management and Expenses
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
-2-
<PAGE> 3
PART B
<TABLE>
<CAPTION>
ITEM REGISTRATION STATEMENT CAPTION CAPTION IN STATEMENT OF
NO. ADDITIONAL INFORMATION
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Objectives and
Policies; Investment Restrictions
14. Management of the Fund Management of the Trust
15. Control Persons and Principal Holders Management of the Trust;
of Securities Description of the Trust
16. Investment Advisory and Other Investment Advisory and Other
Services Services
17. Brokerage Allocation and Other Portfolio Transactions and
Practices Brokerage
18 Capital Stock and Other Securities How to Redeem Shares
(Prospectus); Redemptions;
Dividends, Capital Gain
Distributions and Taxes
(Prospectus); Net Income,
Dividends and Valuation; Tax
Status; Description of the Trust
19. Purchase, Redemption and Pricing of How to Purchase Shares
Securities Being Offered (Prospectus); Shareholder
Services; How to Redeem Shares
(Prospectus); Redemptions; Net
Income, Dividends and Valuation
20. Tax Status Dividends, Capital Gain
Distributions and Taxes
(Prospectus); Net Income,
Dividends and Valuation; Tax
Status
</TABLE>
-3-
<PAGE> 4
PART B (CON'T)
<TABLE>
<CAPTION>
ITEM REGISTRATION STATEMENT CAPTION CAPTION IN STATEMENT OF
NO. ADDITIONAL INFORMATION
<S> <C> <C>
21. Underwriters Investment Advisory and Other
Services
22. Calculations of Performance Data Calculations of Performance Data
23. Financial Statements Not Applicable
</TABLE>
PART C
The information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of the Registration Statement.
-4-
<PAGE> 5
============================== ==============================
INVESTMENT ADVISER
Union Planters Bank, National Association MAGNA FUNDS
1401 South Brentwood Boulevard MAGNA MONEY MARKET FUND
St. Louis, Missouri 63144
ADMINISTRATOR & DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219 PROSPECTUS
AND
TRANSFER AND DIVIDEND PAYING APPLICATION
AGENT
BISYS Fund Services JUNE 1, 1999
3435 Stelzer Road
Columbus, Ohio 43219
CUSTODIAN
Fifth Third Bank
Fifth Third Center
Cincinnati, Ohio 45263
INDEPENDENT ACCOUNTANTS 3435 STELZER ROAD
PricewaterhouseCoopers LLP COLUMBUS, OHIO 43219
100 East Broad Street (800) 219-4182
Columbus, Ohio 43215
============================== ==============================
<PAGE> 6
MAGNA MONEY MARKET FUND
3435 STELZER ROAD
COLUMBUS, OHIO 43219
(800) 219-4182
PROSPECTUS
JUNE 1, 1999
Magna Money Market Fund (the "Fund") is a series of Magna Funds (the
"Trust"), a mutual fund currently offering three series of shares. The other two
series of shares, Magna Intermediate Government Bond Fund and Magna Growth &
Income Fund, are offered pursuant to a separate prospectus. The Fund's
investment adviser is Union Planters Bank, National Association ("Union
Planters"). Investments in the Fund are neither insured nor guaranteed by the
U.S. Government. There can be no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
This Prospectus concisely describes the information that you should
know before investing in the Fund. Please read it carefully and keep it for
future reference. A Statement of Additional Information dated June 1, 1999 is
available free of charge; write to Magna Funds, P.O. Box 182754, Columbus, Ohio
43218-2754 or telephone (800) 219-4182. The Statement of Additional Information
(the "Statement"), which contains more detailed information about the Fund, has
been filed with the Securities and Exchange Commission (the "SEC") and is
incorporated by reference into this Prospectus.
Shares are offered to the public through BISYS Fund Services ("BISYS"),
the Trust's distributor. Shares are offered at net asset value.
For information about the Fund, including:
o Establishing an account
o Account procedures and status
o Exchanges
o Shareholder services
Call (800) 219-4182
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, Union Planters Corporation, Union Planters Bank, National
Association, or any other bank, and shares are not federally insured by the
Federal Deposit Insurance Corporation or any other government agency. Investment
in the Fund involves the risk of a possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 7
<TABLE>
TABLE OF CONTENTS
<CAPTION>
<S> <C>
SUMMARY OF EXPENSES...........................................................1
INVESTMENT OBJECTIVES AND POLICIES............................................2
RISK AND OTHER INFORMATION ABOUT THE FUND'S INVESTMENTS.......................3
THE FUND'S INVESTMENT ADVISER.................................................4
FUND MANAGEMENT AND EXPENSES..................................................4
PORTFOLIO TRANSACTIONS........................................................5
HOW TO PURCHASE SHARES........................................................5
SHAREHOLDER SERVICES..........................................................6
HOW TO REDEEM SHARES..........................................................7
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES..............................8
THE TRUST....................................................................10
ADDITIONAL INFORMATION.......................................................10
</TABLE>
<PAGE> 8
SUMMARY OF EXPENSES
The following information is provided to assist you in understanding
the various expenses that, as an investor in the Fund, you will bear directly or
indirectly. The table below summarizes your maximum transaction costs from an
investment in the Fund and the expenses which the Fund is expected to incur
during the current fiscal year. The examples show the cumulative expenses
attributable to a hypothetical $1,000 investment in the Fund over specified
periods. The information below should not be considered a representation of
future expenses, as actual expenses may be greater or less than those shown. THE
ASSUMED 5% ANNUAL RETURN IN THE EXAMPLE BELOW SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE FUND INVESTMENT PERFORMANCE, SINCE ACTUAL
PERFORMANCE WILL DEPEND UPON ACTUAL INVESTMENT RESULTS OF SECURITIES HELD IN THE
FUND'S PORTFOLIO.
<TABLE>
<CAPTION>
Magna Money
Market Fund
-----------
<S> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchase (as % of
offering price)............................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as % of offering price).................................... None
Deferred Sales Load (as % of original purchase price
or redemption proceeds, as applicable) None
Redemption Fees (1)........................................... None
Exchange Fees................................................. None
Annual Fund Operating Expenses (as % of net assets):
Investment Advisory Fees (after fee waiver) (2)............... 0.20%
12b-1 Fees (after fee waiver) (2)............................. 0.00%
Other Expenses................................................ 0.46%
-----
Total Fund Operating Expenses................................. 0.66%
=====
</TABLE>
- --------------------
(1) A Wire Fee (currently $5.00) will be deducted from the
proceeds of redemptions effected by telephone. See "How to
Redeem Shares."
(2) The Fund's investment adviser and distributor has voluntarily
agreed to reduce their fees to the amounts shown in the table
above through [August 31, 2000]. Without such voluntary
reductions, the adviser would be entitled to receive an
investment advisory fee of 0.40% of the Fund's average daily
net assets, and the distributor would be entitled to receive
12b-1 fees of 0.25% of the Fund's average daily net assets.
1
<PAGE> 9
EXAMPLE:
- --------
You would pay the following expenses on a $1,000 investment assuming a 5% annual
return (with or without a redemption at the end of each time period):
<TABLE>
<S> <C>
One Year................................................. $9.00
Three Years.............................................. $27.00
</TABLE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund seeks maximum current income consistent with preservation of
capital and liquidity. The Fund invests in a variety of high quality money
market instruments. Investment in the Fund will be pooled with money from other
investors in the Fund to invest in a managed portfolio consisting of securities
appropriate to the Fund's investment objective and policies, as described below.
There can be no assurance that the Fund will achieve its objective.
The Fund invests in certificates of deposits, bankers' acceptances and
other dollar-denominated obligations of banks whose net assets exceed $100
million. Up to 100% of the Fund's assets may be invested in these kinds of
obligations. These obligations may be issued by U.S. banks or their foreign
branches, or foreign banks (including their U.S. or foreign branches), subject
to the conditions set forth in the Statement.
The Fund may invest in commercial paper and other corporate debt
obligations that satisfy the Fund's quality and maturity standards.
The Fund may invest in "U.S. Government Securities," which term, as
used in this prospectus, includes all securities issued or guaranteed by the
U.S. Government or its agencies, authorities or instrumentalities. Some U.S.
Government Securities are backed by the full faith and credit of the United
States, some are supported by the discretionary authority of the U.S. Government
to purchase the issuer's obligations (e.g., obligations of the Federal National
Mortgage Association), some by the right of the issuer to borrow from the U.S.
Government (e.g., obligations of Federal Home Loan Banks), while still others
are supported only by the credit of the issuer itself (e.g., obligations of the
Student Loan Marketing Association).
The Fund may also invest in repurchase agreements relating to any of
the securities referred to above. In repurchase agreements, the Fund buys a
security from a seller, usually a
2
<PAGE> 10
bank or brokerage firm, with the understanding that the seller will repurchase
the security from the Fund at a higher price at a later date.
All of the Fund's investments at the time of purchase (other than U.S.
Government Securities and repurchase agreements relating thereto) will be rated
in the highest rating category by a major rating agency or, if unrated, will be
of comparable quality as determined by Union Planters Bank, National Association
("Union Planters" or the "Adviser"), under guidelines approved by the Trust's
trustees.
All investments of the Fund mature in 397 days or less, and the average
maturity of the Fund's investments is 90 days or less. The maturity of
repurchase agreements is calculated by reference to the repurchase date, not by
reference to the maturity of the underlying security. All investments of the
Fund will be in U.S. dollars and will be determined by the Adviser to present
minimal credit risks under guidelines established by the Trust's trustees.
No more than 10% of the Fund's net assets will be invested in illiquid
securities, including repurchase agreements with maturities of more than seven
days.
Note: Except for certain policies that are explicitly described as
fundamental in this Prospectus or in the Statement, the investment policies of
the Fund and the Fund's investment objective may be changed without shareholder
approval or prior notice.
The Fund intends that all of its investments will comply with Rule 2a-7
under the Investment Company Act of 1940, as amended (the "1940 Act").
RISK AND OTHER INFORMATION ABOUT THE FUND'S INVESTMENTS
It is important to understand the following risks inherent in investing
in the Fund before you invest.
By investing only in high-quality, short-term securities, the Fund
seeks to minimize risk. Although changes in interest rates can change the market
value of the Fund's investments, the Fund expects those changes in the value of
its investments to be minimal. The Fund cannot guarantee, however, that it will
be able to maintain the net asset value of its shares at $1.00.
All repurchase agreements entered into by the Fund provide that the
seller's obligations must be fully collateralized at all times. The Fund may,
however, face various delays and risks of loss if the seller defaults.
The Fund's holdings of obligations of foreign banks or of foreign
branches or subsidiaries of U.S. banks may be subject to different risks than
obligations of domestic banks, such as foreign economic, political and legal
developments and the fact that different regulatory requirements apply.
3
<PAGE> 11
Special Year 2000 Risk Considerations. Many services provided to the
Fund depend on the proper functioning of computer systems. Many systems in use
today cannot distinguish between the year 1900 and the year 2000. Should any of
the Fund's (including the Fund's third party providers') service systems fail to
process information properly, that could have an adverse impact on the Fund's
operations and services provided to shareholders. Union Planters, as well as the
Fund's administrator, transfer agent, custodian and other service providers,
have reported that each is working toward mitigating the risks associated with
the so-called "Year 2000 Problem." However, there can be no assurance that the
problem will be corrected in all respects and that the Fund's operations and
services provided to shareholders will not be adversely affected.
THE FUND'S INVESTMENT ADVISER
Union Planters serves as the investment adviser to the Fund. Union
Planters, a national bank, is an indirect wholly-owned subsidiary of Union
Planters Corporation, a Tennessee corporation and a bank holding company.
Union Planters is a multi-state national banking association
headquartered in Memphis, Tennessee with total assets of approximately $30
billion. Union Planters strives to provide a full array of financial services to
all segments of its customer base including business, commercial, consumer,
agricultural and mortgage loans, warehouse lending and personal banking and
trust services. Further, Union Planters' customers can conveniently access
investment and insurance services through Union Planters' subsidiaries.
FUND MANAGEMENT AND EXPENSES
The Fund has agreed to pay Union Planters an investment advisory fee at
the annual rate of 0.40% of the Fund's average daily net assets. Union Planters
has voluntarily agreed, however, to reduce the annual rate of its fee with
respect to the Fund to 0.20% through [August 31, 2000].
Under an agreement with the Trust, BISYS Fund Services ("BISYS")
provides management and administrative services to the Fund, and, in general,
supervises the operations of the Trust. The Fund pays BISYS a fee for its
services to the Fund at the annual rate of 0.20% of the Fund's average net
assets. The Fund has adopted a plan under Rule 12b-1 under the Investment
Company Act of 1940 providing for payment to BISYS of a service fee at the
annual rate of 0.25% of the Fund's average daily net assets. BISYS has agreed to
waive this fee through [August 31, 2000]. If the fee was not being waived, BISYS
would use the fee to pay the dealer responsible for a shareholder's account a
service fee at the annual rate of 0.25% of the average daily net assets of such
account.
In addition to the investment advisory, management and 12b-1 fees, the
Fund pays all expenses of the Fund's operations not expressly assumed by Union
Planters or BISYS, including taxes, brokerage commissions, fees and expenses of
registering or qualifying the Fund's shares under federal and state securities
laws, fees of the Fund's custodian, transfer agent, independent accountants and
legal counsel, expenses of shareholders' and trustees' meetings, expenses of
4
<PAGE> 12
preparing, printing and mailing prospectuses to existing shareholders, and fees
of Trust trustees who are not directors, officers or employees of Union
Planters, BISYS or their respective affiliated companies.
The Trust's board of trustees oversees and supervises the affairs of
the Fund, including the provision of services to the Fund by Union Planters and
BISYS.
PORTFOLIO TRANSACTIONS
In placing orders for the purchase and sale of portfolio securities for
the Fund, Union Planters will always seek the best price and execution. It is
expected that the Fund's portfolio transactions will generally be with issuers
or dealers in money market instruments acting as principal. Accordingly, the
Fund does not anticipate that it will pay significant brokerage commissions.
Some of the Fund's portfolio transactions may be placed with brokers
who provide Union Planters with supplementary information and statistical
information or furnish market quotations to the Fund or other accounts advised
by Union Planters. The business would not be so placed if the Fund would not
thereby obtain the best price and execution. Although it is not possible to
assign an exact dollar value to these research services, they may, to the extent
used, tend to reduce the expenses of Union Planters. The research services may
also be used by Union Planters in connection with its other advisory accounts
and in some cases may not be used with respect to the Fund or the other funds of
the Trust. Subject to seeking best price and execution, Union Planters may also
allocate Fund portfolio transactions to dealers whose customers have invested in
the Trust.
HOW TO PURCHASE SHARES
The Fund currently offers one class of shares (Class A shares). You may
make an initial purchase of shares of the Fund by submitting a completed
application form and payment to:
Magna Funds
P.O. Box 182754
Columbus, OH 43218-2754
The minimum initial investment in any Fund is $1,000 for regular accounts
and $100 for IRAs and tax qualified retirement plans. Subsequent investments
must be at least $50. See "Shareholder Services" below for further information
about minimum investments in certain other circumstances.
Certificates will not be issued for shares. The Fund may refuse any
purchase order for its shares. See the Statement for more information.
Upon acceptance of your order, BISYS Fund Services ("BISYS"), the Funds'
shareholder servicing agent, will open an account for you, apply the payment to
the purchase of full and fractional Fund shares and mail a statement of the
account confirming the transaction.
5
<PAGE> 13
After an account has been established, you may send subsequent investments
at any time directly to BISYS at the above address. The remittance must be
accompanied by either the account identification slip detached from a statement
of account or a note containing sufficient information to identify the account,
i.e., the Fund's name and your account number or your name and social security
number.
Subsequent investments can also be made by federal funds wire. To purchase
shares by wire, contact the Trust at (800) 219-4182 to obtain instructions
regarding the bank account number into which the funds should be wired and other
pertinent information.
The Fund reserves the right to reject any purchase order, including orders
in connection with exchanges, for any reason which the Fund in its sole
discretion deems appropriate. Although the Fund does not anticipate that it will
do so, the Fund reserves the right to suspend or change the terms of the
offering of its shares.
The price you pay will be the per share net asset value next calculated
after a proper investment order is received by BISYS. Assets of the Fund
normally are valued at amortized cost on each day that the New York Stock
Exchange is open for trading. Net asset value per share is determined by
dividing the Fund's net assets by the total number of Fund shares outstanding.
The Fund's net assets are equal to the value of its investments and its other
assets minus its liabilities.
The Fund may accept telephone orders from broker-dealers who have been
previously approved by BISYS. It is the responsibility of such broker-dealers to
forward purchase or redemption orders promptly to the Fund. In addition to any
sales charge, broker-dealers may charge the investor a transaction-based fee or
other fee for their services at either the time of purchase or the time of
redemption. Such charges may vary among broker-dealers but in all cases will be
retained by the broker-dealer and not remitted to the Fund or Union Planters.
SHAREHOLDER SERVICES
The Fund offers the following shareholder services, the terms,
restrictions and limitations of which are more fully described in the Statement.
Application forms are available from BISYS.
AUTOMATIC INVESTMENT PLAN
Voluntary monthly investments of at least $100 may be made automatically
by pre-authorized withdrawals from your checking account.
RETIREMENT PLANS
The Fund's shares may be purchased by all types of tax-deferred retirement
plans. Union Planters and its affiliates make available retirement plan forms
for IRAs.
SYSTEMATIC WITHDRAWAL PLAN
If the value of your account is at least $10,000 you may have periodic
cash withdrawals automatically paid to you or any person you designate.
6
<PAGE> 14
CHECK WRITING
If the value of your account is at least [$10,000] you may select the
check writing option on your application. The Fund will send you checks drawn on
Fifth Third Bank, the Fund's custodian. Each check must be written for [$250] or
more, subject to any exceptions set forth in the Statement.
HOW TO REDEEM SHARES
You can redeem your shares by sending a written request to Magna Funds,
P.O. Box 182754, Columbus, Ohio 43218-2754.
The request must include the Fund's name, your account number, the exact
name(s) in which your shares are registered, and the number of shares or the
dollar amount to be redeemed. All owners of the shares must sign the request in
the exact names in which the shares are registered (this appears on your
confirmation statement) and should indicate any special capacity in which they
are signing (such as trustee or custodian or on behalf of a partnership,
corporation or other entity).
If you are redeeming shares worth more than $10,000, or requesting that
the proceeds check be made out to someone other than the registered owner(s), or
be sent to an address other than your record address, you must have your
signature guaranteed by an eligible guarantor. Eligible guarantors include
commercial banks, trust companies, savings associations, credit unions and
brokerage firms that are members of domestic securities exchanges. Before
submitting your redemption request, you should verify with the guarantor
institution that it is an eligible guarantor. Signature guarantees by notaries
public are not acceptable.
You may also redeem your shares by making a telephone call directly to
BISYS at (800) 219-4182. When you telephone a redemption request, the proceeds
are wired to the bank account previously chosen by you. A telephonic redemption
request must be received by BISYS prior to the close of regular trading on the
New York Stock Exchange ("NYSE"). If you telephone your request to BISYS after
the NYSE closes or on a day when the NYSE is not open for business, the
redemption price will be the net asset value per share next determined. The
Trust, BISYS and Fifth Third Bank, the Trust's custodian, are not responsible
for the authenticity of withdrawal instructions received by telephone.
Reasonable procedures will be adopted to verify that telephone instructions are
genuine.
You may select the telephone redemption service when you fill out your
initial application or you may select it later by completing the Service Options
Form (with a signature guarantee), available from BISYS. If you decide to change
the bank account to which proceeds are to be wired, you must send in this change
on the Service Options Form with a signature guarantee. Telephonic redemptions
may be made only if your bank is a member of the Federal Reserve System or has a
correspondent bank that is a member of the System. If your account is with a
savings bank, it must have only one correspondent bank that is a member of the
System. In times of heavy market activity, a shareholder who encounters
difficulty in placing a redemption or exchange order by telephone may wish to
place the order by mail as described above.
7
<PAGE> 15
The redemption price will be the net asset value per share next determined
after the redemption request and any necessary special documentation are
received by BISYS in proper form.
Proceeds resulting from a written redemption request will normally be
mailed to you within seven days after receipt of your request in good order.
Telephonic redemption proceeds will normally be wired to your bank on the first
business day following receipt of a proper redemption request. If you purchased
your shares by check and your check was deposited less than 15 days prior to the
redemption request, the Fund may withhold redemption proceeds until your check
has cleared, which may take up to 15 days from the purchase date.
The Fund may suspend the right of redemption and may postpone payment for
more than seven days when the New York Stock Exchange is closed for other than
weekends or holidays, or if permitted by the rules of the SEC when trading on
the Exchange is restricted or during an emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly the value of
its net assets, or during any other period permitted by the SEC for the
protection of investors.
If the value of your account falls below a minimum amount set by the
trustees of the Trust (currently $100), the Fund may close your account and send
you the balance. The Fund will notify you at least 60 days before closing your
account, to give you time to purchase additional shares to bring your account
value above the minimum. Accounts will not be closed solely because the value of
shares has fallen through market price movements.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
The Fund pays out as dividends substantially all of the net investment
income from interest it receives from its investments. The Fund's dividends are
declared daily and paid to you monthly. If all of your Fund shares are redeemed
at any time during a month, all dividends accrued to date will be paid together
with the redemption proceeds. Dividends are automatically reinvested in more
shares. If you prefer, you may receive them in cash by selecting that option on
your Account Application. You may change your distribution option by notifying
BISYS in writing or by calling (800) 219-4182. If you elect to receive your
dividends in cash and the dividend checks sent to you are returned
"undeliverable" to the Fund or remain uncashed for six months, your cash
election will be automatically changed and your future dividends will be
reinvested.
For current yield information, shareholders or their investment
representatives may call BISYS at (800) 219-4182.
As long as the Fund distributes substantially all its net investment
income and net short-term capital gains, if any, to its shareholders, it will
not pay federal income tax on the amounts distributed.
8
<PAGE> 16
The Fund does not expect to realize a substantial amount of long-term
capital gains. If it does, it will distribute them annually and they will be
taxable to you as long-term capital gains, whether received in cash or
additional shares and regardless of how long you have held your shares. No
distribution from any Fund is expected to be eligible for the dividends-received
deduction for corporations.
To avoid certain excise taxes, the Fund must distribute by December 31 of
each year virtually all of its ordinary income realized in that year, and all of
any previously undistributed capital gain net income it realized in the twelve
months ending October 31 of that year. Certain dividends declared by the Fund in
December, but not actually received by you until January, will be treated for
federal tax purposes as though you had received them on December 31.
BISYS will send you and the Internal Revenue Service an annual statement
detailing federal tax information, including information about dividends and
distributions paid to you during the preceding year. You should consult your tax
adviser about any state or local taxes that may apply to such distributions. BE
SURE TO KEEP THIS STATEMENT AS A PERMANENT RECORD. A FEE MAY BE CHARGED FOR ANY
DUPLICATE INFORMATION REQUESTED.
The Fund is required to withhold 31% of all income dividends and capital
gain distributions they pay to you if you do not provide a correct, certified
taxpayer identification number, if the Fund is notified that you have
underreported income in the past, or if you fail to certify to the Fund that you
are not subject to such federal back-up withholding. In addition, the Fund is
required to withhold 31% of the gross proceeds of Fund shares you redeem if you
have not provided a correct, certified taxpayer identification number. If you
are a tax-exempt shareholder, however, these backup withholding rules will not
apply so long as you furnish the Fund with an appropriate certification.
Dividends and distributions of short-term capital gains, if any, are
taxable to you as ordinary income, whether paid in cash or in additional shares.
Dividends derived from interest on U.S. Government Securities may be
exempt from state and local taxes. The Fund intends to advise shareholders of
the proportion of its dividends derived from such interest.
Before investing in the Fund, you should check the consequences of your
local and state tax laws, and of any retirement plan offering tax benefits.
Note: The information above is only a summary of applicable tax law. You
should consult your own tax adviser for more information about the tax
consequences of an investment in the Fund.
9
<PAGE> 17
THE TRUST
The Trust is a diversified open-end management investment company
organized as a Massachusetts business trust on April 28, 1994. The Trust is
authorized to issue an unlimited number of full and fractional shares of
beneficial interest in multiple series. The Fund is a series of the Trust that
commenced operations in 1999. Shares are freely transferable and entitle
shareholders to receive dividends as determined by the Trust's board of trustees
and to cast a vote for each share held at shareholder meetings. The Trust does
not generally hold shareholder meetings and will do so only when required by
law. Shareholders may call meetings to consider removal of the Trust's trustees.
ADDITIONAL INFORMATION
The Fund may include its yield in advertisements or other written sales
material. Yield may be either the yield for a particular seven-day period
(stated on an annualized basis), or an "effective yield" calculated by assuming
that an investor reinvests all Fund dividends throughout a one-year period and
that the Fund earns net income for the entire year at the same rate as net
income is earned during a particular seven-day period.
The Fund may also show illustrations of how the value of an account with
the Fund would have grown over past time periods, assuming that all dividends
paid to that account were immediately reinvested in shares of the Fund.
10
<PAGE> 18
MAGNA MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
JUNE 1, 1999
This Statement of Additional Information (the "Statement") is not a
prospectus. This Statement relates to the prospectus of Magna Money Market Fund
(the "Fund") dated June 1, 1999 (the "Prospectus"), and should be read in
conjunction therewith. A copy of the Prospectus may be obtained from the Fund's
distributor, BISYS Fund Services, 3435 Stelzer Road, Columbus Ohio 43219 ((800)
219-4182).
<PAGE> 19
<TABLE>
TABLE OF CONTENTS
-----------------
<CAPTION>
PAGE
----
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES............................................1
INVESTMENT RESTRICTIONS.......................................................3
MANAGEMENT OF THE TRUST.......................................................6
INVESTMENT ADVISORY AND OTHER SERVICES........................................9
PORTFOLIO TRANSACTIONS AND BROKERAGE.........................................11
DESCRIPTION OF THE TRUST.....................................................12
HOW TO BUY SHARES............................................................15
NET INCOME, DIVIDENDS AND VALUATION..........................................15
SHAREHOLDER SERVICES.........................................................16
REDEMPTIONS..................................................................18
TAX STATUS...................................................................20
PERFORMANCE INFORMATION......................................................22
APPENDIX A..................................................................A-1
DESCRIPTION OF CERTAIN FUND INVESTMENTS.....................................A-1
APPENDIX B..................................................................B-1
RATINGS OF CORPORATE AND COMMERCIAL PAPER...................................B-1
</TABLE>
i
<PAGE> 20
INVESTMENT OBJECTIVES AND POLICIES
----------------------------------
GENERAL
- -------
The investment objective and policies of the Magna Money Market Fund
(the "Fund"), a series of Magna Funds (the "Trust"), are summarized in the
Fund's Prospectus under "Investment Objective and Policies" and "Risk and Other
Information about the Fund's Investments." The investment policies of the Fund
set forth in the Prospectus and in this Statement of Additional Information may
be changed by Union Planters Bank, National Association ("Union Planters"), the
Funds' adviser, subject to review and approval by the Trust's board of trustees,
without shareholder approval, except that the Fund's investment objective as set
forth in the Prospectus and any Fund policy explicitly identified as
"fundamental" may not be changed without the approval of the holders of a
majority of the outstanding shares of the Fund (which in the Prospectus and this
Statement of Additional Information means the lesser of (i) 67% of the shares of
the Fund represented at a meeting at which 50% or more of the outstanding shares
are represented or (ii) more than 50% of the outstanding shares).
The Fund will invest only in securities which Union Planters, acting
under guidelines established by the Trust's board of trustees, has determined
are of high quality and present minimal credit risk. For a description of
certain of the money market instruments in which the Fund may invest, and the
related descriptions of the ratings of Standard & Poor's Corporation ("S&P") and
Moody's Investors Service, Inc. ("Moody's"), see Appendices A and B to this
Statement. Money market instruments maturing in less than one year may yield
less than obligations of comparable quality having longer maturities.
As described in the Prospectus, the Fund's investments may include
certain U.S. dollar-denominated obligations of foreign banks or of foreign
branches and subsidiaries of U.S. banks, which may be subject to foreign
economic, political and legal risks. Such risks include foreign economic and
political developments, foreign governmental restrictions that may adversely
affect payment of principal and interest on the obligations, foreign withholding
and other taxes on interest income, difficulties in obtaining and enforcing a
judgment against a foreign obligor, exchange control regulations (including
currency blockage), and the expropriation or nationalization of assets or
deposits. Foreign branches of U.S. banks and foreign banks are not necessarily
subject to the same or similar regulatory requirements that apply to domestic
banks. For instance, such branches and banks may not be subject to the types of
requirements imposed on domestic banks with respect to mandatory reserves, loan
limitations, examinations, accounting, auditing, recordkeeping and the public
availability of information. Obligations of such branches or banks will be
purchased only when the Adviser believes the risks are minimal.
Considerations of liquidity, safety and preservation of capital may
preclude the Fund from investing in money market instruments paying the highest
available yield at a particular
1
<PAGE> 21
time. The Fund, consistent with its investment objective, attempts to maximize
yields by engaging in portfolio trading and by buying and selling portfolio
investments in anticipation of or in response to changing economic and money
market conditions and trends. The Fund also invests to take advantage of what
are believed to be temporary disparities in the yields of the different segments
of the high quality money market or among particular instruments within the same
segment of the market. These policies, as well as the relatively short maturity
of obligations to be purchased by the Fund, may result in frequent changes in
the portfolio of the Fund. There are usually no brokerage commissions as such
paid by the Fund in connection with the purchase of securities of the type in
which it invests. See "Portfolio Transactions."
See also "Investment Restrictions" below.
As noted in the Prospectus, the Fund may enter into repurchase
agreements, which are agreements by which the Fund purchases a security and
obtains a simultaneous commitment from the seller (a member bank of the Federal
Reserve or, to the extent permitted by the Investment Company Act of 1940 (the
"1940 Act"), a recognized securities dealer) to repurchase the security at an
agreed upon price and date (usually seven days or less from the date of original
purchase). The resale price is in excess of the purchase price and reflects an
agreed upon market rate unrelated to the coupon rate on the purchased security.
Such transactions afford the Fund the opportunity to earn a return on
temporarily available cash at relatively low market risk. While the underlying
security may be a U.S. Government Security or another type of high quality money
market instrument, the obligation of the seller is not guaranteed by the U.S.
Government or the issuer of any other high quality money market instrument
underlying the agreement, and there is a risk that the seller may fail to
repurchase the underlying security. In such event, the Fund would attempt to
exercise rights with respect to the underlying security, including possible
disposition in the market. However, in case of such a default, the Fund may be
subject to various delays and risks of loss, including (a) possible declines in
the value of the underlying security during the period while the Fund seeks to
enforce its rights thereto, (b) possible reduced levels of income and lack of
access to income during this period, and (c) inability to enforce rights and the
expenses involved in attempted enforcement. The Fund will enter into repurchase
agreements only where the market value of the underlying security equals or
exceeds the repurchase price, and the Fund will require the seller to provide
additional collateral if this market value falls below the repurchase price at
any time during the term of the repurchase agreement.
As described in the Prospectus, all of the Fund's investments will, at
the time of investment, have remaining maturities of 397 days or less. The
average maturity of the Fund's portfolio securities based on dollar value will
not exceed 90 days at the time of each investment. If the disposition of a
portfolio security results in a dollar-weighted average portfolio maturity in
excess of 90 days for the Fund, the Fund will invest its available cash in such
a manner as to reduce its dollar-weighted average portfolio maturity to 90 days
or less as soon as reasonably practicable. For the purposes of the foregoing
maturity restrictions, variable rate instruments which are scheduled to mature
in more than 397 days are treated as
2
<PAGE> 22
having a maturity equal to the longer of (i) the period remaining until the next
readjustment of the interest rate and (ii) if the Fund is entitled to demand
prepayment of the instrument, the notice period remaining before the Fund is
entitled to such prepayment; other variable rate instruments are treated as
having a maturity equal to the shorter of such periods. Floating rate
instruments which are scheduled to mature in more than 397 days are treated as
having a maturity equal to the notice period remaining before the Fund is
entitled to demand prepayment of the instrument; other floating rate
instruments, and all such instruments which are U.S.
Government Securities, are treated as having a maturity of one day.
The value of the securities held by the Fund can be expected to vary
inversely with changes in prevailing interest rates. Thus, if interest rates
increase after a security is purchased, that security, if sold, might be sold at
a loss. Conversely, if interest rates decline after purchase, the security, if
sold, might be sold at a profit. In either instance, if the security was held to
maturity, no gain or loss would normally be realized as a result of these
fluctuations. Substantial redemptions of Fund shares could require the sale of
portfolio investments at a time when a sale might not be desirable.
After purchase by the Fund, a security may cease to be rated or its
rating may be reduced below the minimum required for purchase by such Fund.
Neither event will require a sale of such security by such Fund. However, such
event will be considered in determining whether the Fund should continue to hold
the security. To the extent that the ratings given by Moody's or S&P (or another
SEC-approved nationally recognized statistical rating organization ("NRSRO"))
may change as a result of changes in such organizations or their rating systems,
each Fund will, in accordance with standards approved by the Board of Trustees,
attempt to use comparable ratings as standards for investments in accordance
with the investment policies contained in the Prospectus.
INVESTMENT RESTRICTIONS
-----------------------
The following is a list of the Fund's investment restrictions. The
restrictions set forth in the numbered paragraphs are fundamental policies and,
accordingly, will not be changed without the consent of the holders of a
majority of the outstanding voting securities of the applicable Fund.
The Fund will not:
(1) Purchase any security (other than U.S. Government Securities and
repurchase agreements relating thereto) if, as a result, more than 5% of the
Fund's total assets (taken at current value) would be invested in securities of
a single issuer. This restriction applies to securities subject to repurchase
agreements but not to the repurchase agreements themselves;
(2) Purchase any security if, as a result, more than 25% of the Fund's
total assets (taken at current value) would be invested in any one industry.
This restriction does not apply
3
<PAGE> 23
to U.S. Government Securities and bank obligations. For purposes of this
restriction, telephone, gas and electric public utilities are each regarded as
separate industries and finance companies whose financing activities are related
primarily to the activities of their parent companies are classified in the
industry of their parents;
(3) Purchase securities on margin (but it may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities); or make short sales except where, by virtue of ownership of other
securities, it has the right to obtain, without payment of further
consideration, securities equivalent in kind and amount to those sold, and the
Fund will not deposit or pledge more than 10% of its total assets (taken at
current value) as collateral for such sales;
(4) Acquire more than 10% of the total value of any class of the
outstanding securities of an issuer or acquire more than 10% of the outstanding
voting securities of an issuer. This restriction does not apply to U.S.
Government Securities;
(5) Borrow money, except as a temporary measure for extraordinary or
emergency purposes (but not for the purpose of investment), in excess of 10% of
its total assets (taken at cost) or 5% of such total assets (taken at current
value), whichever is lower;
(6) Pledge, mortgage or hypothecate more than 10% of its total assets
(taken at cost);
(7) Make loans, except by purchase of debt obligations in which the
Fund may invest consistent with its objective and investment policies. This
restriction does not apply to repurchase agreements;
(8) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts, commodities or commodity contractors or real estate. This restriction
does not prevent the Fund from purchasing securities of companies investing in
real estate or of companies which are not principally engaged in the business of
buying or selling such leases, rights or contracts;
(9) Act as underwriter except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an underwriter
under the federal securities laws;
(10) Make investments for the purpose of exercising control or
management;
(11) Participate on a joint or joint and several basis in any trading
account in securities (the "bunching" of orders for the purchase or sale of
portfolio securities with other accounts under the management of Union Planters
to reduce acquisition costs, to average prices among them, or to facilitate such
transactions, is not considered participating in a trading account in
securities);
(12) Write or purchase puts, calls or combinations thereof; or
4
<PAGE> 24
(13) Invest in the securities of other investment companies, except in
connection with a merger, consolidation or similar transaction.
Except as otherwise stated, the foregoing percentages and the
percentage limitations set forth in the Prospectus will apply at the time of the
purchase of a security and shall not be considered violated unless an excess or
deficiency occurs or exists immediately after and as a result of a purchase of
such security.
The Fund will not purchase any security restricted as to disposition
under federal securities laws if, as a result, more than 10% of the Fund's net
assets would be invested in such securities or in other securities that are
illiquid. [The Fund has implemented procedures to determine the liquidity of
Section 4(2) commercial paper purchased by the Fund for purposes of determining
whether the Fund's limit on the purchases of illiquid securities has been met].
The staff of the SEC is currently of the view that repurchase
agreements maturing in more than seven days are "illiquid" securities. The Fund
currently intends to conduct its operations in a manner consistent with this
view. In addition, certain loan participations may be "illiquid" securities for
this purpose.
5
<PAGE> 25
MANAGEMENT OF THE TRUST
The trustees and officers of the Trust and their principal occupations
during the past five years are as follows (an asterisk indicates a trustee who
is an "interested person" of the Trust as defined in the 1940 Act):
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION WITH THE TRUST DURING THE PAST FIVE YEARS
- --------------------- ----------------------- --------------------------
<S> <C> <C>
Robert R. Archibald, Ph.D. (50) Trustee President, Missouri
Missouri Historical Society Historical Society
P.O. Box 11940
St. Louis, MO 63112-0940
Earl E. Lazerson (67) Trustee Director, National Stockyards;
5 Hidden Valley Lane Director, AAA of Missouri;
Edwardsville, IL 62022 President (until 1993) and
Professor (until 1994), So.
Illinois University at Edwardsville
Brad L. Badgley* (47) Trustee Attorney, Heiligenstein & Badgley,
Heiligenstein & Badgley PC PC; Director, Magna Trust Company
30 Public Square (an affiliate of Magna Bank, N.A.,
Belleville, Illinois 62220 which merged into Union Planters in
1998) (until 1997); Director, Banc
Star One (1995 to present)
Robert E. Saur (55) Trustee President and Owner, Conrad
750 S. Hanley Street Properties Corp. (real estate);
Clayton, MO 63105 Director, Enterbank Holding Company
Harry R. Maier* (52) Trustee Chief Executive Officer, Memorial
118 Sun Lake Dr. Hospital, Belleville, Illinois
Belleville, IL 62221
Neil Seitz (55) Trustee Dean, School of Business, Saint
School of Business Louis University; Professor, Saint
Saint Louis University Louis University (until 1993)
3674 Lindell Blvd.
St. Louis, MO 63108
</TABLE>
6
<PAGE> 26
<TABLE>
<S> <C> <C>
Walter B. Grimm (53) President Senior Vice President, BISYS Fund
BISYS Fund Services Services, Limited Partnership;
3435 Stelzer Road President, Leigh Investments
Columbus, Ohio 43219 Consulting (investments firm)
William J. Tomko (39) Vice President Executive Vice President and Chief
BISYS Fund Services Operating Officer, BISYS Fund
3435 Stelzer Road Services, Inc.
Columbus, Ohio 43219
Alaina V. Metz (31) Assistant Secretary Chief Administrator, Administrative
BISYS Fund Services and Regulatory Services, BISYS Fund
3435 Stelzer Road Services, Limited Partnership
Columbus, Ohio 43219
Chuck L. Booth (38) Vice President Vice President, BISYS Fund
BISYS Fund Services Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Paul T. Kane (42) Treasurer From December 1997 to present,
3435 Stelzer Road employee of BISYS Fund Services;
Columbus, Ohio 43219 from March 1995 to December 1997,
employee of Fidelity Service
Company
Robert L. Tuch (47) Secretary Vice President, BISYS Fund
BISYS Fund Services Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
</TABLE>
- -----------------------
* Trustee or Nominee who is an "interested person" (as defined in the 1940 Act)
of the Trust. Mr. Maier and Mr. Badgley are "interested persons" by reason of
owning shares of Union Planters Corporation, the ultimate parent company of
Union Planters.
Previous positions of officers of the Trust during the past five years
with BISYS or its affiliates are omitted if not materially different from their
current positions. Mr. Grimm and Mr. Tomko were first elected by the Trustees to
serve in the offices noted above in January 1997. All other officers of the
Trust noted above were first elected by the Trustees to serve in the offices
noted above in October 1997. Each officer of the Trust serves at the pleasure of
the Trustees until
7
<PAGE> 27
his or her successor is elected or qualified, or until he or she sooner dies,
resigns, is removed or becomes disqualified.
The Trust pays no compensation to its officers. Each trustee is
compensated at the rate of $5,000 per annum plus $500 for each meeting of the
trustees he attends. The Trust provides no pension or retirement benefits to
Trustees, but has adopted a deferred payment arrangement under which each
Trustee may elect not to receive fees from the Trust on a current basis but to
receive in a subsequent period an amount equal to the value that such fees would
have if they had been invested in each Fund of the Trust on the normal payment
date for such fees. As a result of this method of calculating the deferred
payments, each Fund, upon making the deferred payments, will be in the same
financial position as if the fees had been paid on the normal payment dates.
The following table sets forth the amount of the compensation paid (or
deferred in lieu of current payment) by the Trust during its fiscal year ended
August 31, 1998 to the persons who served as Trustees during all or any portion
of such fiscal year:
<TABLE>
<CAPTION>
AGGREGATE TOTAL
COMPENSATION COMPENSATION
PERSON FROM TRUST FROM TRUST
- ------ ---------- ----------
<S> <C> <C>
Robert R. Archibald $6000 $6000
Brad L. Badgley $7000 $7000
Earl E. Lazerson $6500 $6500
Harry R. Maier $7000 $7000
Robert E. Saur $7000 $7000
Neil Seitz $7000 $7000
</TABLE>
8
<PAGE> 28
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
Under an investment advisory agreement with the Trust, on behalf of the
Fund, Union Planters provides investment advice for, and supervises the
investment program of, the Fund. Union Planters, located at 1401 South Brentwood
Boulevard, St. Louis, Missouri 63144, is a wholly-owned subsidiary of Union
Planters Holding Corporation, itself a wholly-owned subsidiary of Union Planters
Corporation, a Tennessee corporation and a bank holding company. Union Planters
Corporation, headquartered in Memphis, Tennessee, is one of the 30 largest
banking organizations in the country, with total assets of approximately $30
billion. Through their offices in twelve states, Union Planters Corporation and
its subsidiaries provide a broad range of financial services to individuals and
businesses.
The Fund pays Union Planters an annual investment advisory fee based on
a percentage of the Fund's average daily net assets. Pursuant to Union Planters'
voluntary reduction of its advisory fees through [August 31, 2000], such fee is
0.20%. Without such voluntary reduction, such fee would be 0.40%.
The Fund's advisory agreement provides that it will continue in effect
for two years from its date of execution and thereafter from year to year if its
continuance is approved at least annually (i) by the board of trustees of the
Trust or by vote of a majority of the outstanding voting securities of the Fund
and (ii) by vote of a majority of the trustees who are not "interested persons"
of the Trust, as that term is defined in the 1940 Act, cast in person at a
meeting called for the purpose of voting on such approval. Any amendment to the
advisory agreement must be approved (i) by vote of a majority of the outstanding
voting securities of the Fund and (ii) by vote of a majority of the trustees who
are not such interested persons, cast in person at a meeting called for the
purpose of voting on such approval. The agreement may be terminated without
penalty by vote of the board of trustees or by vote of a majority of the
outstanding voting securities of the Fund, upon sixty days' written notice, or
by Union Planters upon ninety days' written notice, and terminates automatically
in the event of its assignment. In addition, the agreement will automatically
terminate if the Trust or the Fund shall at any time be required by Union
Planters to eliminate all reference to the word "Magna" in the name of the Trust
or the Fund, unless the continuance of the agreement after such change of name
is approved by a majority of the outstanding voting securities of the Fund and
by a majority of the trustees who are not interested persons of the Trust or
Union Planters.
The advisory agreement provides that Union Planters shall not be
subject to any liability in connection with the performance of its services
thereunder in the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
Union Planters and its affiliates also provide investment advice to
numerous other corporate and fiduciary clients. These other clients sometimes
invest in securities in which the Fund also
9
<PAGE> 29
invests. If the Fund and such other clients desire to buy or sell the same
portfolio securities at the same time, purchases and sales may be allocated, to
the extent practicable, on a pro rata basis in proportion to the amounts desired
to be purchased or sold for each. It is recognized that in some cases the
practices described in this paragraph could have a detrimental effect on the
price or amount of the securities which the Fund purchases or sells. In other
cases, however, it is believed that these practices may benefit the Fund. It is
the opinion of the trustees that the desirability of retaining Union Planters as
adviser for the Fund outweighs the disadvantages, if any, which might result
from these practices.
ADMINISTRATOR
BISYS Fund Services ("BISYS"), under an agreement with the Trust,
provides management and administrative services to the Fund, and, in general,
supervises the operations of the Trust. BISYS does not provide investment
advisory services. As part of its duties, BISYS provides office space, equipment
and clerical personnel for managing and administering the affairs of the Trust.
BISYS supervises the provision of custodial, auditing, valuation, bookkeeping,
legal, and dividend disbursing services and provides other management and
administrative services. The Trust pays BISYS a fee for its services to each
Fund of the Trust at the annual rate of 0.20% of the Trust's average daily net
assets.
TRUST EXPENSES
The Trust pays the compensation of its trustees; registration, filing
and other fees in connection with requirements of regulatory authorities; all
charges and expenses of its custodian and transfer agent; the charges and
expenses of its independent accountants; all brokerage commissions and transfer
taxes in connection with portfolio transactions; all taxes and fees payable to
governmental agencies; the expenses of meetings of the shareholders and trustees
of the Trust; the charges and expenses of the Trust's legal counsel; interest on
any borrowings by the Funds; the cost of services, including services of
counsel, required in connection with the preparation of, and the cost of
printing, the Trust's registration statements and prospectuses, including
amendments and revisions thereto, annual, semiannual and other periodic reports
of the Trust, and notices and proxy solicitation material furnished to
shareholders or regulatory authorities, to the extent that any such materials
relate to the Trust or its shareholders; and the Trust's expenses of
bookkeeping, accounting, auditing and financial reporting, including related
clerical expenses.
Custodial Arrangements. Fifth Third Bank, Fifth Third Center,
Cincinnati, Ohio 45263, became the Trust's custodian on June 2, 1997. As such,
Fifth Third Bank holds in safekeeping securities and cash belonging to the Fund
and, in such capacity, is the registered owner of securities held in book entry
form belonging to the Fund. Upon instruction, Fifth Third Bank receives and
delivers cash and securities of the Fund in connection with the Fund's
transactions and collects all dividends and other distributions made with
respect to Fund portfolio securities. Pursuant to an
10
<PAGE> 30
agreement with the Trust, the Custodian receives compensation from the Fund for
such services based upon a percentage of the Fund's average daily net assets.
Independent Accountants. The Trust's independent accountants are
PricewaterhouseCoopers LLP, 100 East Broad Street, Columbus, Ohio 43215.
PricewaterhouseCoopers LLP conducts an annual audit of the Fund's financial
statements, assists in the preparation of the Fund's federal and state income
tax returns and consults with the Fund as to matters of accounting and federal
and state income taxation.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Transactions on U.S. stock exchanges and other agency transactions for
the account of a Fund 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. 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 markup. 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 Money Market Fund will be
with the issuer or with underwriters of or dealers in those securities, acting
as principal. Accordingly, the Fund will not ordinarily pay significant
brokerage commissions with respect to securities 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 (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. Union Planters or its
affiliates receive brokerage and research services and other similar services
from many broker-dealers with which Union Planters 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, newspapers,
magazines, pricing services, quotation services, news services, timing services
and personal computers utilized by Union Planters' or its affiliates' portfolio
managers and analysts. Some of these services are of value to Union Planters and
its affiliates in advising various of their clients (including the Fund),
although not all of these services are necessarily useful and of value in
managing the Fund. The management fees paid by the Fund are not reduced because
Union Planters and its affiliates receive these services, even though Union
Planters might otherwise be required to purchase some of these services for
cash.
Union Planters places all orders for the purchase and sale of portfolio
investments for the Fund. In doing so, Union Planters uses its best efforts to
obtain for the Fund the most favorable
11
<PAGE> 31
price and execution available, except to the extent it may be permitted to pay
higher brokerage commissions as described below. In seeking the most favorable
price and execution, Union Planters, having in mind the Fund's best 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.
As permitted by Section 28(e) of the 1934 Act, Union Planters may cause
the Fund to pay a broker-dealer which provides "brokerage and research services"
(as defined in the 1934 Act) to Union Planters or its affiliates 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 would have charged for effecting that
transaction. Union Planters' authority to cause the Fund to pay any such greater
commissions is also subject to such policies as the Trust's trustees may adopt
from time to time. It is the position of the staff of the SEC that Section 28(e)
does not apply to the payment of such greater commissions in "principal"
transactions. Accordingly, Union Planters will use its best effort to obtain the
most favorable price and execution available with respect to such transactions,
as described above.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Trust's trustees may
determine, Union Planters considers sales of shares of the Fund as a factor in
the selection of broker-dealers to execute portfolio transactions for the Fund.
Under the 1940 Act, persons affiliated with the Trust are prohibited
from dealing with the Fund as a principal in the purchase and sale of
securities. Since transactions in the over-the-counter market usually involve
transactions with dealers acting as principals for their own accounts,
affiliated persons of the Trust, such as BISYS, may not serve as the Fund's
dealer in connection with such transactions.
DESCRIPTION OF THE TRUST
The Trust, registered as a diversified open-end management investment
company, is organized as a Massachusetts business trust under the laws of
Massachusetts by an Agreement and Declaration of Trust (the "Declaration of
Trust") dated April 28, 1994. The Trust is currently divided into three separate
series -- one for the Fund, and one for each of the Magna Growth & Income Fund
and the Magna Intermediate Government Bond Fund.
SERIES AND CLASSES OF SHARES
The Declaration of Trust currently permits the trustees to issue an
unlimited number of full and fractional shares, in multiple series. Each Fund
represents a separate series of shares. Each share of each Fund represents an
equal proportionate interest in such Fund with each other share
12
<PAGE> 32
of that Fund and is entitled to a proportionate interest in the dividends and
distributions from that Fund. The shares of each Fund do not have any preemptive
rights. Upon termination of any Fund, whether pursuant to liquidation of the
Trust or otherwise, shareholders of that Fund are entitled to share pro rata in
the net assets of that Fund available for distribution to shareholders. The
Declaration of Trust also permits the trustees to charge shareholders directly
for custodial, transfer agency and servicing expenses.
The assets received by each Fund for the issue or sale of its shares
and all income, earnings, profits, losses and proceeds therefrom, subject only
to the rights of creditors, are allocated to, and constitute the underlying
assets of, that Fund. The underlying assets are segregated and are charged with
the expenses with respect to that Fund and with a share of the general expenses
of the Trust. Any general expenses of the Trust that are not readily
identifiable as belonging to a particular Fund are allocated by or under the
direction of the trustees in such manner as the trustees determine to be fair
and equitable. Although the expenses of the Trust are allocated to the separate
books of account of each Fund, certain expenses may be legally chargeable
against the assets of two or more Funds.
The Declaration of Trust also permits the trustees, without shareholder
approval, to subdivide any series of shares into various sub-series or classes
of shares with such dividend preferences and other rights as the trustees may
designate. The Trust may at a future date offer different classes of shares of
each Fund with different sales charge arrangements. The trustees may also,
without shareholder approval, establish one or more additional separate
portfolios for investments in the Trust or merge two or more existing
portfolios. Shareholders' investments in such an additional or merged portfolio
would be evidenced by a separate series of shares (i.e., a new "Fund").
The Declaration of Trust provides for the perpetual existence of the
Trust. The Trust or any Fund, however, may be terminated at any time by a vote
of at least two-thirds of the outstanding shares of each Fund affected. The
Declaration of Trust further provides that the trustees may also terminate the
Trust or any Fund upon written notice to the shareholders.
VOTING RIGHTS
As summarized in the Prospectus, shareholders are entitled to one vote
for each full share held (with fractional votes for each fractional share held)
and may vote (to the extent provided in the Declaration of Trust) in the
election of trustees and the termination of the Trust and on other matters
submitted to the vote of shareholders.
The Declaration of Trust provides that on any matter submitted to a
vote of all Trust shareholders, all Trust shares entitled to vote shall be voted
together irrespective of series or sub-series unless the rights of a particular
series or sub-series would be adversely affected by the vote, in which case a
separate vote of that series or sub-series shall also be required to decide the
question. Also, a separate vote shall be held whenever required by the 1940 Act
or any rule
13
<PAGE> 33
thereunder. Rule l8f-2 under the 1940 Act provides in effect that a class shall
be deemed to be affected by a matter unless it is clear that the interests of
each class in the matter are substantially identical or that the matter does not
affect any interest of such class. On matters affecting an individual series,
only shareholders of that series are entitled to vote. Consistent with the
current position of the SEC, shareholders of all series vote together,
irrespective of series, on the election of trustees and the selection of the
Trust's independent accountants, but shareholders of each series vote separately
on other matters requiring shareholder approval, such as certain changes in
investment policies of that series or the approval of the investment advisory
agreement relating to that series.
There will normally be no meetings of shareholders for the purpose of
electing trustees except that, in accordance with the 1940 Act, (i) the Trust
will hold a shareholders' meeting for the election of trustees at such time as
less than a majority of the trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy on the board of trustees,
less than two-thirds of the trustees holding office have been elected by the
shareholders, that vacancy may be filled only by a vote of the shareholders. In
addition, trustees may be removed from office by a written consent signed by the
holders of two-thirds of the outstanding shares and filed with the Trust's
custodian or by a vote of the holders of two-thirds of the outstanding shares at
a meeting duly called for that purpose, which meeting shall be held upon the
written request of the holders of not less than 10% of the outstanding shares.
Upon written request by the holders of shares having a net asset value
constituting 1% of the outstanding shares stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Trust has undertaken to provide a list of shareholders or to disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as set forth above, the trustees shall continue to hold office
and may appoint successor trustees. Voting rights are not cumulative.
No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust, except
(i) to change the Trust's name or to cure technical problems in the Declaration
of Trust and (ii) to establish, change or eliminate the par value of any shares
(currently all shares have no par value).
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, Fund shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of each Fund 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 Declaration of Trust provides for indemnification out of
Fund property for all loss and expense of any shareholder held personally liable
for the obligations of the Fund. Thus, the
14
<PAGE> 34
risk of a Fund shareholder incurring financial loss on account of shareholder
liability is considered remote since it is limited to circumstances in which the
disclaimer is inoperative and the Fund itself would be unable to meet its
obligations.
The Declaration of Trust further provides that the trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a trustee against any liability to which the
trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. The By-Laws of the Trust provide for indemnification by the Trust of
the trustees and officers of the Trust except with respect to any matter as to
which any such person did not act in good faith in the reasonable belief that
such action was in or not opposed to the best interests of the Trust. No officer
or trustee may be indemnified against any liability to the Trust or the Trust's
shareholders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
HOW TO BUY SHARES
The procedures for purchasing shares of the Funds are summarized in the
Prospectus under "How to Purchase Shares."
NET INCOME, DIVIDENDS AND VALUATION
Determination of Net Income
- ---------------------------
The Fund's net income is determined as of the close of regular trading
on the New York Stock Exchange (the "NYSE") on each day that the NYSE is open
for trading. The NYSE is expected to be closed on the following holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Net income
includes (i) all interest accrued and discount earned on the Fund's portfolio
investments, minus (ii) amortized premium on such investments, plus or minus
(iii) all realized gains and losses on such investments, and minus (iv) all
expenses of the Fund.
Daily Dividends
- ---------------
As described in the Prospectus, the Fund's net income is declared as a
dividend, at the closing of regular trading on the NYSE each day that the NYSE
is open. Dividends will be paid in cash to the shareholder if the shareholder
has notified the Fund in writing of the election on or before payable date. The
net income for Saturdays, Sundays and other days on which the NYSE is closed is
declared as a dividend on the immediately preceding business day. Although the
Fund does not expect to realize any long-term capital gains, if such gains are
realized they will be distributed once a year.
15
<PAGE> 35
Valuation of the Fund's Portfolio Investments
- ---------------------------------------------
The total net asset value of the Fund (the excess of the Fund's assets
over its liabilities) is determined by BISYS as of the close of regular trading
on the NYSE on each day the Exchange is open for trading. (See "Determination of
Net Income.") The portfolio securities of the Fund are valued at their fair
value as determined in good faith by the Trust's board of trustees or person
acting at their direction. Under normal market conditions, portfolio securities
will be valued at amortized cost as described below. Fund expenses are paid or
accrued each day.
Under the amortized cost method of valuation, securities are valued at
cost on the date of purchase. Thereafter, the value of securities purchased at a
discount or premium is increased or decreased incrementally each day so that at
the maturity the purchase discount or premium is fully amortized and the value
of the security is equal to its principal amount. Due to fluctuations in
interest rates, the amortized cost value of the securities of the Fund may at
times be more or less than their market value.
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. The yield on a shareholder's investment may
be more or less than that which would be recognized if the net asset value per
share were not constant and were permitted to fluctuate with the market value.
It is believed that any difference will normally be minimal. The trustees
monitor quarterly the deviation between the Fund's net asset value per share as
determined by using available market quotations and its amortized cost price per
share. Union Planters makes such comparisons at least weekly and will advise the
trustees promptly in the event of any significant deviation. If the deviation
exceeds 1/2 of 1% for the Fund, the board of trustees will consider what action,
if any, should be initiated to provide fair valuation of the portfolio
securities of the Fund and prevent material dilution or other unfair results to
shareholders. Such action may include redemption of shares in kind; selling
portfolio securities prior to maturity; withholding dividends; or using a net
asset value per share as determined by using available market quotations. There
is no assurance that the Fund will be able to maintain its net asset value at
$1.00.
SHAREHOLDER SERVICES
OPEN ACCOUNTS
A shareholder's investment in any Fund is automatically credited to an
open account maintained for the shareholder by BISYS Fund Services, Inc.
("BISYS"), the shareholder servicing agent for Trust. Following each transaction
in the account, a shareholder will receive an account statement disclosing the
current balance of shares owned and the details of recent transactions in the
account. After the close of each calendar year, BISYS will send each shareholder
a statement providing federal tax information on dividends and distributions
paid to the shareholder during the year. This should be retained as a permanent
record. Shareholders will be charged a fee for duplicate information.
16
<PAGE> 36
The open account system permits the purchase of full and fractional
shares and, by making the issuance and delivery of certificates representing
shares unnecessary, eliminates the problems of handling and safekeeping
certificates, and the cost and inconvenience of replacing lost, stolen,
mutilated or destroyed certificates.
The costs of maintaining the open account system are borne by the
Trust, and no direct charges are made to shareholders. Although the Trust has no
present intention of making such direct charges to shareholders, it reserves the
right to do so. Shareholders will receive prior notice before any such charges
are made.
SYSTEMATIC WITHDRAWAL PLAN
A Systematic Withdrawal Plan, referred to in the Prospectus under
"Shareholder Services-- Systematic Withdrawal Plan," provides for monthly,
quarterly, semiannual or annual withdrawal payments of $100 or more from the
account of a shareholder provided that the account has a value of at least
$10,000 at the time the plan is established.
Payments will be made either to the shareholder or to any other person
designated by the shareholder. If payments are issued to an individual other
than the registered owner(s), a signature guarantee will be required on the Plan
application. All shares in an account that is subject to a Systematic Withdrawal
Plan must be held in an open account rather than in certificated form. Income
dividends and capital gain distributions will be reinvested at the net asset
value determined as of the close of regular trading on the New York Stock
Exchange on the record date for the dividend or distribution.
Since withdrawal payments represent proceeds from the liquidation of
shares, the shareholder should recognize that withdrawals may reduce and
possibly exhaust the value of the account, particularly in the event of a
decline in net asset value. Accordingly, the shareholder should consider whether
a Systematic Withdrawal Plan and the specified amounts to be withdrawn are
appropriate in the circumstances. The Fund makes no recommendations or
representations in this regard. It may be appropriate for the shareholder to
consult a tax adviser before establishing such a plan. See "Redemptions" and
"Income Dividends, Capital Gain Distributions and Tax Status" below for certain
information as to federal income taxes.
IRAS
Under "Shareholder Services--Retirement Plans," the Prospectus refers
to IRAs established under a prototype plan made available by Union Planters.
These plans may be funded with shares of the Fund.
All income dividends and capital gain distributions of plan
participants must be reinvested. Plan documents and further information can be
obtained from Union Planters.
17
<PAGE> 37
Check with your financial or tax adviser as to the suitability of Fund
shares for your retirement plan.
CHECK WRITING
A shareholder may select the check writing option by completing the
relevant section of the application, the signature card and the other related
materials included in or attached to the application. Existing shareholders may
add check writing to an existing account by contacting BISYS at 1-800-219-4182
to receive the application and related materials. The Fund will send you checks
drawn on Fifth Third Bank, the Trust's custodian. You will continue to earn
dividends on shares redeemed by check until the check clears. Each check must be
written for $250 or more, except that qualified corporate retirement plans and
certain other corporate accounts may write checks for any amount.
If you use withdrawal checks, you will be subject to Fifth Third Bank's
rules governing checking accounts. The Fund, Union Planters, BISYS and their
respective affiliates are in no way responsible for any check writing account
established with Fifth Third Bank.
A shareholder may not close its Fund account by withdrawal check,
because the exact balance of the shareholder's account will not be known until
after the check is received by Fifth Third Bank.
AUTOMATIC INVESTMENT
The Trust has an automatic investment plan. A shareholder may authorize
automatic monthly transfers of $100 or more from its bank checking or savings
account to purchase shares of the Fund (or any other fund of the Trust).
For an initial investment, shareholders should indicate that they would
like to begin an automatic investment plan in the appropriate section of the
application. Please indicate the amount of the monthly investment and enclose a
check marked "Void" or a deposit slip from your bank account.
To add the automatic investment plan option to an existing account,
please call BISYS at 1-800-219-4182 for an application.
REDEMPTIONS
The procedures for redemption of Fund shares are summarized in the
Prospectus under "How to Redeem Shares."
Except as noted below, signatures on redemption requests must be
guaranteed by commercial banks, trust companies, savings associations, credit
unions or brokerage firms that are
18
<PAGE> 38
members of domestic securities exchanges. Signature guarantees by notaries
public are not acceptable. However, as noted in the Prospectus, a signature
guarantee will not be required if the proceeds of the redemption do not exceed
$10,000 and the proceeds check is made payable to the registered owner(s) and
mailed to the record address.
If a shareholder selects the telephone redemption service in the manner
described in the next paragraph, Fund shares may be redeemed by making a
telephone call directly to BISYS at (800) 219-4182. When a telephonic redemption
request is received, the proceeds are wired to the bank account previously
chosen by the shareholder and a nominal wire fee (currently $5.00) is deducted.
Telephonic redemption requests must be received by BISYS prior to the close of
regular trading on the NYSE on a day when the NYSE is open for business.
Requests made after that time or on a day when the NYSE is not open for business
will receive the net asset value per share next determined after the redemption
request is received in good order.
In order to redeem shares by telephone, a shareholder must either
select this service when completing the Fund application or must do so
subsequently on the Service Options Form available from BISYS. When selecting
the service, a shareholder must designate a bank account to which the redemption
proceeds should be wired. Any change in the bank account so designated must be
made by furnishing to BISYS a completed Service Options Form with a signature
guarantee. Whenever the Service Options Form is used, the shareholder's
signature must be guaranteed as described above. Telephone redemptions may only
be made if an investor's bank is a member of the Federal Reserve System or has a
correspondent bank that is a member of the System. If the account is with a
savings bank, it must have only one correspondent bank that is a member of the
System. The Trust, BISYS and Fifth Third Bank are not responsible for the
authenticity of withdrawal instructions received by telephone.
The redemption price will be the net asset value per share next
determined after the redemption request and any necessary special documentation
are received by BISYS in proper form. Proceeds resulting from a written
redemption request will normally be mailed to you within seven days after
receipt of your request in good order. Telephonic redemption proceeds will
normally be wired on the first business day following receipt of a proper
redemption request. In those cases where you have recently purchased your shares
by check and your check was received less than 15 days prior to the redemption
request, the Fund may withhold redemption proceeds until your check has cleared,
which may take up to 15 days from the purchase date.
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
board of trustees of the Trust determines 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. However, the Trust has elected to be
governed by Rule l8f-l under the 1940 Act pursuant to which the Trust is
obligated to redeem shares solely in cash for any shareholder during any 90-day
period up to the lesser of $250,000 or 1% of the total net asset value of the
Trust at the beginning of such period.
19
<PAGE> 39
A redemption constitutes a sale of the shares for federal income tax
purposes on which the investor may realize a long- or short-term capital gains
or loss. See "Income Dividends, Capital Gains Distributions and Tax Status."
TAX STATUS
As required by federal law, detailed federal tax information will be
furnished to each shareholder for each calendar year on or before January 31 of
the succeeding year.
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). In order so to qualify, the Fund must, among other things, (i) derive
at least 90% of its gross income from dividends, interest, payments with respect
to certain securities loans, gains from the sale or other disposition of stock
or securities, or 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 or securities; (ii) distribute with respect to each taxable year
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; and (iii) at the end of each fiscal
quarter maintain at least 50% of the value of its total assets in cash, U.S.
government securities, securities of other regulated investment companies, and
other securities of issuers which represent, with respect to each issuer, no
more than 5% of the value of the Fund's total assets and 10% of the outstanding
voting securities of such issuer, with no more than 25% of its assets invested
in the securities (other than those of the U.S. government or other regulated
investment companies) of any one issuer or of two or more issuers which the Fund
controls and which are engaged in the same, similar or related trades and
businesses. To satisfy these conditions, the Fund may be limited in its ability
to use certain investment techniques and may be required to liquidate assets to
distribute income. Moreover, some investment techniques used by the Fund may
change the character and amount of income recognized by the Fund. As a regulated
investment company, the Fund will not be subject to federal income tax on income
paid on a timely basis to its shareholders in the form of dividends or capital
gain distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any,
of the Fund's "required distribution" (as defined in the Code) 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 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.
Shareholders of the Fund will be subject to federal income taxes on
distributions made by the Fund, whether received in cash or additional shares of
the Fund. Distributions by the Fund of
20
<PAGE> 40
net income and short-term capital gains, if any, will be taxable to shareholders
as ordinary income. Distributions designated by the Fund as deriving from net
gains on securities held for more than one year will be taxable to shareholders
as long-term capital gain (generally at a 20% rate for noncorporate
shareholders), regardless of how long a shareholder has held shares in the Fund.
A loss on the sale of shares held for six months or less will be treated as a
long-term capital loss to the extent of any long-term capital gain dividend paid
to the shareholder with respect to such shares.
Dividends and distributions on the Fund's shares are generally subject
to a federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares purchased at a time
when a Fund's net asset value reflects gains that are either unrealized, or
realized but not distributed. Such realized gains may be required to be
distributed even when a Fund's net asset value also reflects unrealized losses.
Redemptions, sales and exchanges of the Fund's shares are taxable
events and, accordingly, shareholders may realize gains and losses on these
transactions. Provided the shareholder holds the shares as a capital asset, any
gain realized upon a taxable disposition of shares will be treated as long-term
capital gain if the shares have been held for more than 12 months. Otherwise,
the gain on the redemption, sale or exchange of fund shares will be treated as
short-term capital gain. In general, any loss realized upon a taxable
disposition of shares will be treated as a long-term capital loss if the shares
have been held for more than 12 months, and otherwise as short-term capital
loss. No loss will be allowed on the sale of Fund shares to the extent the
shareholder acquired other shares of the same Fund within 30 days prior to the
sale of the loss shares or 30 days after such sale.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and 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 action.
Dividends and distributions also may be subject to state and local
taxes. Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state or local taxes.
The foregoing discussion relates solely to U.S. investors. Non-U.S.
investors should consult their tax advisers concerning the tax consequences of
ownership of shares of the Fund, including the possibility that distributions
may be subject to a 30% United States withholding tax (or a reduced rate of
withholding provided by treaty).
21
<PAGE> 41
PERFORMANCE INFORMATION
The Fund may from time to time include its total return and/or yield in
advertisements or in information furnished to present or prospective
shareholders. The Fund may from time to time include in advertisements its total
return and the ranking of those performance figures relative to such figures for
groups of mutual funds categorized by Morningstar, Donoghue, or Lipper
Analytical Services as having the same investment objective.
The Fund may make reference in its advertising and sales literature to
awards, citations and honor bestowed on it or Union Planters by industry
organizations and other observers and raters, including, but not limited to
Dalbar's Quality Tested Service Seal and Key Honors Award. Such reference may
explain the criteria for the award, indicate the nature and significance of the
honor and provide statistical and other information about the award and the
selection process, including, but not limited to, the scores and categories in
which the Fund excelled, the names of funds and fund companies that have
previously won the award and comparative information and data about those
against whom the Fund competed for the award, honor or citation.
Total Return. Quotations of average annual total return for the Fund will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in the Fund or class over periods of one, five, and ten
years (or for such shorter periods as shares of the Fund have been offered),
calculated pursuant to the following formula: P (1 + T) [n exponent]= ERV (where
P = a hypothetical initial payment of $1,000, T = the average annual total
return, n = the number of years, and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period). Except as
noted below, all total return figures reflect the deduction of a proportional
share of Fund expenses on an annual basis, and assume that (i) the maximum sales
load (or other charges deducted from payments) is deducted from the initial
$1,000 payment and (ii) all dividends and distributions are reinvested when
paid. Quotations of total return may also be shown for other periods. The Fund
may also, with respect to certain periods of less than one year, provide total
return information for that period that is unannualized. Any such information
would be accompanied by standardized total return information.
Yield. The Fund's yield, as it may appear in advertisements or written sales
material, represents the net change, exclusive of capital changes, in the value
of a hypothetical account having a balance of one share at the beginning of the
period for which yield is determined (the "base period"). Current yield for the
base period (for example, seven calendar days) is calculated by dividing (i) the
net change in the value of the account for the base period by (ii) the number of
days in the base period. The resulting number is then multiplied by 365 to
determine the net income on an annualized basis. This amount is divided by the
value of the account as of the beginning of the base period, normally $1, in
order to state the current yield as a percentage. Yield may also be calculated
on a compound basis ("effective" or "compound" yield) which assumes continual
reinvestment throughout an entire year of net income earned at the same rate as
net income is earned by the account for the base period.
22
<PAGE> 42
Yield is calculated without regard to realized and unrealized gains and
losses. The Fund's yield will vary depending on prevailing interest rates,
operating expenses and the quality, maturity and type of instruments held in the
Fund's portfolio. Consequently, no yield quotation should be considered as
representative of what the Fund's yield may be for any future period. The Fund's
yields are not guaranteed.
Shareholders comparing Fund yield with that of alternative investments
(such as savings accounts, various types of bank deposits, and other money
market funds) should consider such things as liquidity, minimum balance
requirements, check writing privileges, the differences in the periods and
methods used in the calculation of the yields being compared, and the impact of
taxes on alternative types of investments.
Yield information may be useful in reviewing the Fund's performance and
providing a basis for comparison with other investment alternatives. However,
unlike bank deposits, traditional corporate or municipal bonds or other
investments which pay a fixed yield for a stated period of time, money market
and tax exempt money market fund yields fluctuate.
23
<PAGE> 43
APPENDIX A
----------
DESCRIPTION OF CERTAIN FUND INVESTMENTS
---------------------------------------
Obligations Backed by Full Faith and Credit of the U.S. Government --
are bills, certificates of indebtedness, notes and bonds issued by (i) the U.S.
Treasury or (ii) agencies, authorities and instrumentalities of the U.S.
Government. Such obligations include, but are not limited to, obligations issued
by the Government National Mortgage Association, the Farmers' Home
Administration and the Small Business Administration.
Other U.S. Government Obligations -- are bills, certificates of
indebtedness, notes and bonds issued by agencies, authorities and
instrumentalities of the U.S. Government which are supported by the right of the
issuer to borrow from the U.S. Treasury or by the credit of the agency,
authority or instrumentality itself. Such obligations include, but are not
limited to, obligations issued by the Tennessee Valley Authority, the Bank for
Cooperatives, Federal Home Loan Banks, Federal Intermediate Credit Banks,
Federal Land Banks and the Federal National Mortgage Association.
Repurchase Agreements -- are agreements by which the Fund purchases a
security (usually a U.S. Government Obligation) and obtains a simultaneous
commitment from the seller (a member bank of the Federal Reserve System) to
repurchase the security at an agreed upon price and date. The resale price is in
excess of the purchase price and reflects an agreed upon market rate unrelated
to the coupon rate on the purchased security. Such transactions afford an
opportunity for the Fund to earn a return on temporarily available cash at
minimal market risk, although the Fund may be subject to various delays and
risks of loss if the seller is unable to meet its obligation to repurchase.
Certificates of Deposit -- are certificates issued against funds
deposited in a bank, are for a definite period of time, earn a specified rate of
return and are normally negotiable.
Bankers' Acceptances -- are short-term credit instruments used to
finance the import, export, transfer or storage of goods. They are termed
"accepted" when a bank guarantees their payment at maturity.
Yankee dollar Obligations -- obligations of U.S. branches of foreign
banks.
Commercial Obligations -- include bonds and notes issued by
corporations in order to finance longer-term credit needs. (See Appendix B.)
A-1
<PAGE> 44
APPENDIX B
----------
RATINGS OF CORPORATE AND COMMERCIAL PAPER
-----------------------------------------
Set forth below are descriptions of the highest ratings of Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation ("S&P")
for corporate bonds and commercial paper. Ratings for commercial paper have been
included since certain of the obligations which the Fund is authorized to
purchase have characteristics of commercial paper and have been rated as such by
Moody's and S&P.
MOODY'S RATINGS
- ---------------
Corporate Bonds
- ---------------
Aaa -- bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
Commercial Paper
- ----------------
The rating P-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the management
of obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations.
Issuers rated Prime-1 are judged to be of the best quality. Their
short-term debt obligations carry the smallest degree of investment risk.
Margins of support for current indebtedness are large or stable with cash flow
and asset protection well assured. Current liquidity provides ample coverage of
near-term liabilities and unused alternative financing arrangements are
generally
B-1
<PAGE> 45
available. While protective elements may change over the intermediate or long
term, such changes are most unlikely to impair the fundamentally strong position
of short-term obligations.
S&P RATINGS
- -----------
Corporate Bonds
- ---------------
AAA -- this is the highest rating assigned by S&P to a debt obligation
and indicates an extremely strong capacity to pay principal and interest.
AA -- Bonds rated AA also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
Commercial Paper
- ----------------
Commercial paper rated A-1 by S&P has the following characteristics:
Liquidity ratios are adequate to meet cash requirements. Long-term senior debt
is rated "A" or better. The issuer has access to at least two additional
channels of borrowing. Basic earnings and cash flow have an upward trend with
allowance made for unusual circumstances. Typically, the issuer's industry is
well established and the issuer has a strong position within the industry. Their
reliability and quality of management are unquestioned. Commercial paper within
the A-1 category which has overwhelming safety characteristics is denoted
"A-1+."
B-2
<PAGE> 46
Part C. OTHER INFORMATION (Magna Money Market Fund only)
-----------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements: Not Applicable
(b) Exhibits:
1. Agreement and Declaration of Trust.(1)
2. By-Laws.(1)
3. None.
4. Form of Share Certificate.(2)
5. Form of Investment Advisory Agreement.
6. Form of Distribution Agreement.(2)
7. None.
8. Form of Custodian Agreement.(2)
9.(a) Form of Administration Agreement.(2)
9.(b) Form of Transfer Agent Agreement.(2)
9.(c) Form of Fund Accounting Agreement.(2)
9.(d) Form of Organizational Expense Reimbursement
Agreement.(2)
10. Opinion and Consent of Counsel.(2)
11. Not Applicable.
- -----------------------
(1) Incorporated by reference to Post-Effective Amendment No. 3 to
Registrant's Registration Statement (File No. 33-78408) filed electronically
with the Securities and Exchange Commission on December 20, 1996.
(2) Incorporated by reference to Post-Effective Amendment No. 4 to
Registrant's Registration Statement (File No. 33-78408) filed electronically
with the Securities and Exchange Commission on December 18, 1997.
<PAGE> 47
12. None.
13. Letter regarding sale of initial shares.(2)
14. Not Applicable.
15. Rule 12b-1 Plan.
16. Computations of Performance Data.(2)
17. Not Applicable.
18. Not Applicable.
19. Powers of Attorney of Robert A. Archibald, Earl E.
Lazerson, Robert E. Saur, Harry R. Maier, Neil Seitz
and Brad L. Badgley.(3)
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
None.
Item 26. Number of Holders of Securities
-------------------------------
None.
Item 27. Indemnification
---------------
See Item 27 of Pre-Effective Amendment No. 2 to the
Registration Statement on Form N-1A (File No. 33-78408) filed
on July 15, 1994, which is hereby incorporated by reference.
- -----------------------
(3) Incorporated by reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement (File No. 33-78408) filed electronically
with the Securities and Exchange Commission on November 30, 1998.
-2-
<PAGE> 48
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
(a) Union Planters Bank, National Association ("Union
Planters"), the adviser of the Registrant, is a
national bank. Union Planters operates as a community
bank providing various financial services to
customers and mid-sized businesses in its immediate
geographic area. Union Planters serves as investment
adviser to one other registered investment company,
"The Planters Funds Tennessee Tax Free."
(b) The name, address and principal occupation of Union
Planters' directors and principal executive officers
are as follows:
<TABLE>
<CAPTION>
Name and Business Address Title Principal Occupation
- ------------------------- ----- --------------------
<S> <C> <C>
Albert M. Austin Director Chairman, Cannon, Austin
Cannon, Austin & Cannon, Inc. & Cannon, Inc.
6685 Poplar Avenue, #200
Germantown, TN 38138
Marvin E. Bruce Director Retired
3260 Habersham Road
Atlanta, GA 30305
George W. Bryan Director Senior Vice President,
Sara Lee Corporation Sara Lee Corporation
8000 Centerview Parkway
Suite 300
Cordova, TN 38018
James E. Harwood Director President, Sterling
Sterling Equities Equities
845 Crossover Lane, Suite 124
Memphis, TN 38117
</TABLE>
-3-
<PAGE> 49
<TABLE>
<CAPTION>
Name and Business Address Title Principal Occupation
- ------------------------- ----- --------------------
<S> <C> <C>
Parnell S. Lewis, Jr. Director President, Anderson-Tully
Anderson-Tully Company Company
1242 N. Second Street
Memphis, TN 38101
C.J. Lowrance, III Director President, Lowrance
Lowrance Brothers & Company, Inc. Brothers & Company, Inc.
Highway 61
Driver, AR 72329
Jackson W. Moore Director, President and Chief
Union Planters Corporation President and Operating Officer, Union
7130 Goodlett Farms Pkwy. Chief Operating Planters Corporation and
Memphis, TN 38017 Officer Union Planters Bank, N.A.
Stanley D. Overton Director Retired
#7 Warwick Lane
Nashville, TN 37205
Benjamin W. Rawlins, Jr. Director, Chairman and Chief
Union Planters Corporation Chairman and Executive Officer, Union
7130 Goodlett Farms Parkway Chief Executive Planters Corporation and
Memphis, TN 38017 Officer Union Planters Bank, N.A.
Dr. V. Lane Rawlins Director President, University of
University of Memphis 341 Memphis
Administration Building
Campus Box 526643
Memphis, TN 38152-6643
Donald F. Schuppe Director Retired
6448 Wynfrey Place
Memphis, TN 38120
David M. Thomas Director Retired
1765 Camellia Drive
Greenville, MS 38701
</TABLE>
-4-
<PAGE> 50
<TABLE>
<S> <C> <C>
Richard A. Trippeer, Jr. Director President, R.A. Trippeer,
R.A. Trippeer, Inc. Inc.
5865 Ridgeway Center Pkwy.
Suite 300
Memphis, TN 38120
Spence L. Wilson Director President, Kemmons
Kemmons Wilson, Inc. Wilson, Inc.
1629 Winchester Road
Memphis, TN 38116
C.E. Heiligenstein Director Attorney, Heiligenstein &
Heiligenstein & Badgley, P.C. Badgley, P.C.
30 Public Square
Belleville, IL 62220
Carl G. Hogan, Sr. Director Chairman and Chief
Hogan Motor Leasing, Inc. Executive Officer, Hogan
1000 North 14th Street Motor Leasing, Inc.
P.O. Box 7521
St. Louis, MO 63106
S. Lee Kling Director Chairman of the Board,
Kling Rechter & Co. Kling Rechter & Co.
1401 S. Brentwood Blvd. (merchant banking
Suite 800 company)
St. Louis, MO 63144
</TABLE>
Item 29. Principal Underwriters
----------------------
BISYS Fund Services ("BISYS") acts as distributor and
administrator for Registrant. BISYS also distributes the
securities of the following investment companies:
Alpine Equity Trust
The ARCH Fund, Inc.
American Performance Funds
AmSouth Mutual Funds
The BB&T Mutual Funds Group
The Coventry Group
ESC Strategic Funds, Inc.
The Eureka Funds
Fountain Square Funds
-5-
<PAGE> 51
Hirtle Callaghan Trust
HSBC Family of Funds
INTRUST Funds Trust
The Infinity Mutual Funds, Inc.
The Kent Funds
Magna Funds
Meyers Investment Trust
MMA Praxis Mutual Funds
M.S.D. & T Funds
Pacific Capital Funds
Parkstone Group of Funds
The Parkstone Advantage Funds
Pegasus Funds
The Republic Advisors Funds Trust
Puget Sound Alternative Investment Series Trust
The Republic Funds Trust
The Riverfront Funds, Inc.
Sefton Funds
The Sessions Group
Summit Investment Trust
Variable Insurance Funds
The Victory Portfolios
The Victory Variable Funds
Vintage Funds, Inc.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Distributor with Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
BISYS Fund Services, Inc. Sole General Partner None
150 Clove Road
Little Falls, NJ 07424
WC Subsidiary Corporation Sole Limited Partner None
150 Clove Road
Little Falls, NJ 07424
</TABLE>
Each of these corporations is a subsidiary of The BISYS Group, Inc., 150 Clove
Road, Little Falls, NJ 07424.
-6-
<PAGE> 52
* The mailing address of each of the directors and officers is c/o BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio 43219 unless otherwise indicated.
Item 30. Location of Accounts and Records
--------------------------------
The following companies maintain possession of the documents
required by the specified rules:
(a) Union Planters Bank, National Association
Rule 31a-1(b)(9),(10),(11) and
(12),(e) and (f)
Rule 31a-2(d) and (e)
(b) Fifth Third Bank
Rule 31a-1(b)(1) - (3), (5) - (9)
Rule 31a-2(c)
(c) BISYS Fund Services
Rule 31a-1(a), (b)(4), (12), (c) and (d)
Rule 31a-2(a) and (c)
Item 31. Management Services
-------------------
Not applicable.
Item 32. Undertakings
------------
(a) The Registrant hereby undertakes to furnish each person to
whom a Prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders containing the
information required by Item 5A of Form N-1A omitted from the
Prospectus, upon request and without charge.
-7-
<PAGE> 53
********************
NOTICE
A copy of the Agreement and Declaration of Trust of Magna Funds (the
"Trust") is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this Registration Statement has
been executed on behalf of the Trust by an officer of the Trust as an officer
and by its Trustees as trustees and not individually and the obligations of or
arising out of this Registration Statement are not binding upon any of the
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Trust.
-8-
<PAGE> 54
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Magna Funds, has duly caused
this Post-Effective Amendment No. 6 to the Trust's Registration Statement under
the Securities Act of 1933 and Post-Effective Amendment No. 8 to the Trust's
Registration Statement under the Investment Company Act of 1940, to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Columbus and the State of Ohio, on the 11th day of March, 1999.
MAGNA FUNDS
By: /S/ WALTER B. GRIMM
------------------------------
Walter B. Grimm
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/S/ WALTER B. GRIMM
- ------------------------------------
Walter B. Grimm
President
Date: March 11, 1999
/S/ PAUL T. KANE
- ------------------------------------
Paul T. Kane
Treasurer (Chief Accounting Officer)
Date: March 11, 1999
*BRAD L. BADGLEY
- ----------------------
Brad L. Badgley
Trustee
*EARL E. LAZERSON *ROBERT E. SAUR *NEIL SEITZ
- ---------------------- ---------------------- ----------------------
Earl E. Lazerson Robert E. Saur Neil Seitz
Trustee Trustee Trustee
*ROBERT R. ARCHIBALD *HARRY R. MAIER *By:/S/ WALTER B. GRIMM
- ---------------------- ---------------------- ----------------------
Robert R. Archibald Harry R. Maier Walter B. Grimm
Trustee Trustee Attorney in Fact
Date: March 11, 1999
-9-
<PAGE> 55
EXHIBIT INDEX
-------------
Exhibit No. Name of Exhibit
- ----------- ---------------
5 Form of Investment Advisory Agreement
15 Form of Rule 12b-1 Plan
-10-
<PAGE> 1
EXHIBIT 5
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of ___________, 1998 between MAGNA FUNDS, a
Massachusetts business trust (herein called the "Trust"), and Union Planters
Bank, National Association, a national bank (herein called the "Investment
Adviser").
WHEREAS, the Trust is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish
investment advisory services to the Magna Intermediate Government Bond Fund (the
"Fund"), an investment portfolio of the Trust, and the Investment Adviser
represents that it is willing and possesses legal authority to furnish such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. Appointment. The Trust hereby appoints the Investment Adviser to act
as investment adviser to the Fund for the period and on the terms set forth in
this Agreement. The Investment Adviser accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Management. Subject to the supervision of the Trust's Board of
Trustees, the Investment Adviser will provide a continuous investment program
for the Trust, including investment research and management with respect to all
securities and investments and cash equivalents of the Fund. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained or sold by the Trust with respect to the Fund. The
Investment Adviser will provide the services under this Agreement in accordance
with the Trust's investment objective, policies and restrictions as stated in
the Prospectus and resolutions of the Trust's Board of Trustees. The Investment
Adviser further agrees that it:
(a) will use the same skill and care in providing such
services as it uses in providing services to any fiduciary accounts for
which it has investment responsibilities;
(b) will conform with all applicable Rules and Regulations of
the Securities and Exchange Commission and in addition will conduct its
activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the investment
advisory activities of the Investment Adviser;
(c) will place orders pursuant to its investment
determinations for the Trust either directly with the issuer or with
any broker or dealer. In placing orders with brokers and dealers, the
Investment Adviser will attempt to obtain prompt execution of orders in
an effective manner at the most favorable price. Consistent with this
obligation, when the execution and price offered by two or more brokers
or dealers are comparable, the Investment Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers
and dealers who provide the Investment Adviser with research advice and
other services. Unless and until appropriate procedures are adopted by
the Trustees of the Trust under Rule 17e-1 of the 1940 Act and unless
the provisions of such Rule are complied with, portfolio securities
will not be purchased from or sold to BISYS Fund Services, the
Investment Adviser, or any affiliated person of the Trust, BISYS Fund
Services, or the Investment Adviser;
<PAGE> 2
(d) will maintain all books and records with respect to the
Trust's securities transactions and will furnish the Trust's Board of
Trustees such periodic and special reports as the Board may request;
and
(e) will treat confidentially and as proprietary information
of the Trust all records and other information relative to the Trust
and prior, present or potential interestholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification
to and approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld where the Investment
Adviser may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
3. Services Not Exclusive. The investment management services furnished
by the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to furnish similar services to others so long
as its services under this Agreement are not impaired thereby.
4. Books and Records. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Investment Adviser hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Investment Adviser further agrees to preserve for the periods prescribed by
Rule 3la-3 under the 1940 Act the records required to be maintained by Rule
3la-1 under the 1940 Act.
5. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Trust.
6. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Trust will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee computed
daily and paid monthly at the applicable annual rate of 0.40% of average daily
net assets.
7. Limitation of Liability. The Investment Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the performance of this Agreement, except a loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its
duties or from reckless disregard by the Investment Adviser of its obligations
and duties under this Agreement.
8. Duration and Termination. This Agreement will become effective as to
the Trust as of the date first written above, provided that it shall have been
approved by vote of a majority of the outstanding voting securities of the Fund,
in accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, shall continue in effect until September 30,
2000.
Thereafter, if not terminated, this Agreement shall continue in effect
for successive periods of twelve months each ending on September 30th of each
year, provided such continuance is specifically approved at least annually (a)
by the vote of a majority of those members of the Trust's Board of Trustees who
are not parties to this Agreement or interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the vote of a majority of the Trust's Board of Trustees or
by the vote of a majority of the outstanding voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated at any time on
sixty days' written notice, without the payment of any penalty, by the Trust (by
vote of the Fund's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Fund) or by the Investment Adviser. This Agreement will
immediately terminate in the event of its assignment. If the Investment Adviser
requires the Trust or the Fund to change its name so as to eliminate all
2
<PAGE> 3
references to the word "Magna," then this Agreement shall automatically
terminate at the time of such change unless the continuance of this Agreement
after such change shall have been specifically approved by vote of a majority of
the outstanding voting securities of the Fund and by vote of a majority of the
Trustees of the Trust who are not interested persons of the Trust or the
Investment Adviser, cast in person at a meeting called for the purpose of voting
on such approval. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning of such terms in the 1940 Act.)
9. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
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 decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the law of the Commonwealth of Massachusetts.
A copy of the Agreement and Declaration of Trust establishing the Trust
is on file with the Secretary of State of the Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed with respect to the Fund
on behalf of the Trust by officers of the Trust as officers and not individually
and that the obligations of or arising out of this Agreement are not binding
upon any of the Trustees, officers or shareholders individually but are binding
only upon the assets and property belonging to the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
MAGNA FUNDS
Seal By:
------------------------
Title:
------------------------
UNION PLANTERS BANK,
NATIONAL ASSOCIATION
Seal By:
------------------------
Title:
------------------------
3
<PAGE> 1
EXHIBIT 15
MAGNA GROWTH AND INCOME FUND
CLASS A SERVICE PLAN
This Plan (the "Plan") constitutes the Service Plan relating to the
Class A shares of MAGNA MONEY MARKET FUND (the "Series"), a series of Magna
Funds, a Massachusetts business trust (the "Trust").
Section 1. The Trust, on behalf of the Series, will pay to BISYS Fund
Services Limited Partnership, a limited partnership that acts as the Principal
Distributor of the Series' shares, or such other entity as shall from time to
time act as the Principal Distributor of the Series' shares (the "Distributor"),
a fee (the "Service Fee") for expenses borne by the Distributor in connection
with the provision of personal services provided to investors in Class A shares
of the Series and/or the maintenance of shareholder accounts, at an annual rate
not to exceed 0.25% of the Series' average daily net assets attributable to the
Class A shares. Subject to such limit and subject to the provisions of Section 7
hereof, the Service Fee shall be as approved from time to time by (a) the
Trustees of the Trust and (b) the Independent Trustees of the Trust. The Service
Fee shall be accrued daily and paid monthly or at such other intervals as the
Trustees shall determine. The Distributor may pay all or any portion of the
Service Fee to securities dealers or other organizations (including, but not
limited to, any affiliate of the Distributor) as service fees pursuant to
agreements with such organizations for providing personal services to investors
in Class A shares of the Series and/or the maintenance of shareholder accounts,
and may retain all or any portion of the Service Fee as compensation for
providing personal services to investors in Class A shares of the Series and/or
the maintenance of shareholder accounts. All payments under this Service Plan
are intended to qualify as "service fees" as defined in National Association of
Securities Dealers, Inc. ("NASD") Conduct Rule 2830 (or any successor provision)
as in effect from time to time.
Section 2. This Plan shall not take effect until it has been approved
by votes of the majority of both (a) the Trustees of the Trust, and (b) the
Independent Trustees of the Trust, in each case cast in person at a meeting
called for the purpose of voting on this Plan, and by vote of a majority of the
outstanding Class A shares of this Series, and shall in no event take effect
before the effective date under the Securities Act of 1933 of the Trust's
registration statement on Form N-1A relating to the Shares. This Plan shall
continue in effect for a period of more than one year after the date this Plan
takes effect, but only so long as such continuance is specifically approved at
least annually by votes of the majority (or whatever other percentage may, from
time to time, be required by Section 12(b) of the Investment Company Act of 1940
(the "Act") or the rules and regulations thereunder) of both (a) the Trustees of
the Trust, and (b) the Independent Trustees of the Trust, cast in person at a
meeting called for the purpose of voting on this Plan.
<PAGE> 2
Section 3. Any person authorized to direct the disposition of monies
paid or payable by the Trust pursuant to this Plan or any related agreement
shall provide to the Trustees of the Trust, and the Trustees shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
Section 4. This Plan may be terminated at any time by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding Class A shares of the Series.
Section 5. All agreements with any person relating to implementation of
this Plan shall be in writing, and any agreement related to this Plan shall
provide:
A. That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the
Independent Trustees or by vote of a majority of the
outstanding Class A shares of the Series, on not more than 60
days' written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event
of its assignment.
Section 6. This Plan may not be amended to increase materially the
amount of expenses permitted pursuant to Section 1 hereof without approval by a
vote of at least a majority of the outstanding Class A shares of the Series, and
all material amendments of this Plan shall be approved in the manner provided
for continuation of this Plan in Section 2.
Section 7. As used in this Plan, (a) the term "Independent Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it, (b) the terms "assignment" and
"interested person" shall have the respective meanings specified in the Act and
the rules and regulations thereunder, and (c) the term "majority of the
outstanding Class A shares of the Series" shall mean the lesser of the 67% or
the 50% voting requirements specified in clauses (A) and (B), respectively, of
the third sentence of Section 2(a)(42) of the Act, all subject to such
exemptions as may be granted by the Securities and Exchange Commission.
-2-
