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Registration Nos. 33-82256
811-8680
As filed with the Securities and Exchange Commission on
September [ 3 ], 1996
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 1 /X/
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 2 /X/
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(Check appropriate box or boxes)
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AAHSA TRUST
(Exact Name of Registrant as Specified in Charter)
901 E Street, N.W., Suite 500, Washington, D.C. 20004-2037
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code:
(202) 508-9425
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Sheldon Goldberg
901 E Street, N.W.
Suite 500
Washington, D.C. 20004-2037
(Name and Address of Agent for Service)
Copies to:
Jane A. Kanter Cynthia Surprise
Katten Muchin & Zavis State Street Bank and Trust Company
1025 Thomas Jefferson Street, N.W. 1776 Heritage Drive, A4N
Suite 700 - East Lobby North Quincy, MA 02171
Washington, D.C. 20007
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: IT IS PROPOSED THAT THIS FILING
WILL BECOME EFFECTIVE:
ON ____________ PURSUANT TO PARAGRAPH (a) OF RULE 485
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X 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a) OF RULE 485
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IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485
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ON ____________ PURSUANT TO PARAGRAPH (b) OF RULE 485
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THE REGISTRANT HAS PREVIOUSLY ELECTED TO AND HEREBY CONTINUES ITS ELECTION TO
REGISTER AN INDEFINITE NUMBER OF SHARES PURSUANT TO RULE 24f-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940.
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AAHSA TRUST
CROSS-REFERENCE SHEET
Form N-1A Item No. Caption in Prospectus
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1. Cover Page Cover Page
2. Synopsis Cover Page; Introduction to the Funds
3. Condensed Financial
Information Not Applicable
4. General Description of Introduction; Money Market Fund;
Registrant Short-Term Bond Fund; Risk Factors,
Other Investment Practices, and
Policies of the Funds
5. Management of the Fund How the AAHSA Trust is Managed
6. Capital Stock and Other Organization of the AAHSA Trust; Dividends,
Securities Distributions, and Taxes; How to
Purchase Shares
7. Purchase of Securities How to Purchase Shares; Shareholder
Being Offered Service; How Each Fund's Net Asset
Value is Determined
8. Redemption or Repurchase Shareholder Services; How to
Redeem Shares
9. Pending Legal Proceedings Not Applicable
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and General Information and History
History
13. Investment Objectives and Investment Restrictions; Description
Policies of Certain Investments
14. Management of the Fund Management of the AAHSA Trust
15. Control Persons and Principal Holders of Securities
Principal Holders of
Securities
16. Investment Advisory and Investment Management and Other
Other Services Services
17. Brokerage Allocation and Brokerage Allocation and Other
Other Practices Practices
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Caption in Statement of
Form N-1A Item No. Additional Information
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18. Capital Stock and Other Organization of the Trust
Securities
19. Purchase, Redemption and Purchase and Redemption of Securities
Pricing of Securities Being Offered; Determination of Net
Being Offered Asset Value
20. Tax Status Taxes
21. Underwriters Distribution of Shares
22. Calculation of Performance Performance Information
Data About the Funds
23. Financial Statements Independent Auditors
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AAHSA TRUST
901 E Street, N.W.
Suite 500
Washington, D.C. 20004-2037
INVESTMENT OBJECTIVE OF EACH FUND
The MONEY MARKET FUND seeks to maximize current income, consistent with
stability of principal and preservation of capital, by investing in high-quality
money market securities. SHARES IN THE MONEY MARKET FUND ARE NEITHER INSURED
NOR GUARANTEED BY THE U.S. GOVERNMENT. THERE IS NO ASSURANCE THAT THE MONEY
MARKET FUND WILL MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
The SHORT-TERM BOND FUND seeks to provide current income consistent with minimum
fluctuation of principal by investing in high-grade short-term debt securities.
There can be no assurance that the objectives of each Fund will be realized.
For general information about the AAHSA Trust please call toll-free 1-800-_____.
ABOUT THIS PROSPECTUS
This Prospectus sets forth concisely the information about each Fund that you
should know before investing. It should be retained for future reference. A
Statement of Additional Information, dated October , 1996, about each Fund has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. You may obtain a copy of the Statement of Additional
Information at no charge by calling 1-800- .
TABLE OF CONTENTS Page
Introduction to the Funds 2
Money Market Fund 3
Short-Term Bond Fund 4
Risk Factors, Other Investment Practices,
and Policies of the Funds 5
Dividends, Distributions, and Taxes 8
How to Purchase Shares 9
Shareholder Services 10
How Each Fund's Net Asset
Value is Determined 11
How to Redeem Shares 12
How the AAHSA Trust is Managed 13
Portfolio Transactions and Brokerage Practices 15
Organization of the AAHSA Trust 16
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
PROSPECTUS
OCTOBER , 1996
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INTRODUCTION TO THE FUNDS
FEE SUMMARY. The Fee Table, including the Examples below, is included to assist
your understanding of the various costs and expenses to which an investment in
each Fund would be subject. Certain fees and expenses of each Fund stated below
are estimates for their first year of operations, based upon assumed average
daily net assets of $25,000,000. Actual fees and expenses for each Fund for the
current year may be more or less than those shown below. A more complete
description of all fees and expenses is included in this prospectus under the
section "How the AAHSA Trust is Managed."
Money Market Short-Term
Shareholder Transaction Expenses Fund Bond Fund
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Sales Load Imposed on Purchase None None
Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load Imposed on Redemptions None None
Redemption Fee None None
Exchange Fee None None
Annual Fund Operating Expenses
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(as a percentage of average net assets)
Investment Management Fee (after fee waiver)(1)
[. %] [. %]
12b-1 Fees (after fee waiver) [. %] [. %]
Other Estimated Expenses (after fee waiver)(1) [. %] [. %]
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Total Fund Operating Expenses [. %] [. %]
EXAMPLES: An investor in each Fund would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) redemption at the end of
each future time period.**
1 Year 3 Years
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Money Market Fund $ 5 $ 14
Short-Term Bond Fund $ 7 $ 21
** There are no charges imposed upon redemption.
THESE EXAMPLES SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR FUTURE
FEES OR EXPENSES FOR EACH FUND. ACTUAL FEES AND EXPENSES MAY BE GREATER OR LESS
THAN THOSE SHOWN ABOVE. Similarly, the annual rate of return assumed in the
Example is not an estimate or guarantee of future investment performance, but is
included for illustrative purposes.
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(1) The Investment Manager, the Sub-Adviser and the Association have
agreed to waive or limit their fees to the extent necessary to limit Total
Fund Operating Expenses to the lesser of .45% for the Money Market Fund and
.65% for the Short-Term Bond Fund subject to possible reimbursement by the
Funds in future years if such reimbursement can be achieved within the
foregoing expense limits. Consequently, the Investment Management Fees, the
Sub-Advisory Fees, the Sub-Administrator Fees and the 12b-1 Fee actually
charged by the Investment Manager, the Sub-Adviser and the Sub-Administrator
will in the future be higher than shown above, if consistent with the limits
on Total Fund Operating Expenses. Absent the waiver or limitation of fees,
Investment Management Fees, Other Estimated Expenses and Total Fund Operating
Expenses would be .__%, .__% and .__% respectively, for the Money Market Fund
and .__%, .__% and .__%, respectively, for the Short-Term Bond Fund
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OVERVIEW OF THE AAHSA TRUST. The AAHSA Trust is a Delaware business trust
registered with the Securities and Exchange Commission ("SEC") as a no-load,
open-end diversified management investment company, commonly known as a
"mutual fund." The AAHSA Trust currently consists of two funds: the Money
Market Fund and the Short-Term Bond Fund ("Fund" or "Funds"). Each Fund in
the AAHSA Trust is a separate investment portfolio with distinct investment
objectives, investment programs, policies, and restrictions. Each Fund is
managed by CRSA Investment Advisors, Inc. ("CRSA Advisors" or "Investment
Manager"), which directs the day-to-day operations of each Fund. Wainwright
Asset Management serves as the sub-adviser ("Sub-Adviser") to each Fund and
directs the investment of each Fund's assets. H.C. Wainwright & Co. Inc., an
affiliate of the Sub-Adviser, serves as the distributor for the AAHSA Trust
(the "Distributor"). State Street Bank and Trust Company ("State Street")
serves as the administrator, the custodian, the accounting services agent,
the transfer agent, and the dividend disbursing agent for the AAHSA Trust.
The American Association of Homes and Services for the Aging (the
"Association" or the "Sub-Administrator") serves as the sub-administrator for
the AAHSA Trust.
The Association, which provided the initial capitalization for the AAHSA Trust,
is the national association representing approximately [7,000] not-for-profit
organizations dedicated to providing high-quality health care, housing and
services to the nation's elderly. Shares of the Funds will be initially offered
principally to members of the Association.
No sales charges or redemption fees or penalties are charged by the AAHSA Trust
with respect to an investment in the Funds. This means that all of the money
you invest will be credited to your account(s) in the Fund(s) and immediately go
to work for you.
MONEY MARKET FUND
INVESTMENT OBJECTIVE: The Money Market Fund seeks to maximize current income,
consistent with stability of principal and preservation of capital, by investing
in high-quality money market securities.
INVESTMENT PROGRAM: In seeking to achieve its objective, the Money Market
Fund will invest all of its assets in high-quality money market instruments
that present minimal credit risks and are, at the time of acquisition,
considered to be "first tier securities" for purposes of Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act"). The instruments in which the
Fund may invest include:
- short-term obligations of the U.S. Government (such as United States
Treasury bills), its agencies (such as the Government National
Mortgage Association), and instrumentalities (such as the Federal
National Mortgage Association);
- variable or floating rate securities, including variable rate
securities issued or guaranteed by the U.S. Government or any agency
or instrumentality thereof; and
- repurchase agreements collateralized by short-term obligations of the
U.S. Government, its agencies and instrumentalities.
MATURITY: The Fund will invest in money market instruments having a
maturity of 397 days or less and will maintain a dollar-weighted average
portfolio maturity of 90 days or less. These practices are designed to minimize
any price fluctuation in the Fund's portfolio securities.
PRICE: The Fund seeks to maintain a constant net asset value of $1.00 per
share, although in certain circumstances this may not be possible. The Fund
will use the amortized cost method of valuing its portfolio securities.
PORTFOLIO MANAGEMENT: The Fund's Sub-Adviser actively manages the Fund,
adjusting the composition of investments and the average maturity of the Fund's
portfolio according to its outlook for short-term interest rates. During
periods of rising interest rates, a shorter average maturity may be expected,
while a longer maturity may be more appropriate when interest rates are falling.
SUITABILITY: The Fund is designed to be a convenient and economical medium for
investing short-term funds, while seeking to provide maximum current income
consistent with safety of principal. In addition, the Fund is also useful as a
component of a long-term, balanced investment program for the conservative
investor. The Fund's investment performance will vary depending on changes in
short-term interest rates or in the creditworthiness of the issuers of its
portfolio securities. Both the financial and market risks of an investment in
the Fund may be expected to be less than for the Short-Term Bond Fund.
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SHORT-TERM BOND FUND
INVESTMENT OBJECTIVE: The Short-Term Bond Fund seeks to provide current income
consistent with minimum fluctuation of principal by investing in high-grade
short-term debt securities.
INVESTMENT PROGRAM: In seeking to achieve its objective, the Short-Term Bond
Fund will invest primarily (i.e., at least 65% of its total assets) in a
diversified portfolio of short-term U.S. Government securities. Such U.S.
Government securities are either issued or guaranteed as to the timely payment
of principal or interest by the U.S. Government or one of its agencies or
instrumentalities. These securities include but are not limited to:
- direct obligations of the U.S. Treasury such as U.S. Treasury
bills, notes and bonds;
- obligations of U.S. Government agencies, such as the Government
National Mortgage Association ("GNMA");
- obligations of U.S. Government instrumentalities such as the Federal
National Mortgage Association ("FNMA");
- variable or floating rate securities, including variable rate
securities issued or guaranteed by the U.S. Government or any agency
or instrumentality thereof; and
- repurchase agreements collateralized by short-term obligations of the
U.S. Government, its agencies or instrumentalities.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. Government, such as GNMA participation certificates, are backed by the
full faith and credit of the U.S. Treasury. No assurances can be given that
the U.S. Government will provide financial support to certain of its other
agencies or instrumentalities, since it is not obligated to do so. Such
agencies or instrumentalities are supported by:
- the issuer's right to borrow an amount limited to a specific
line of credit from the U.S. Treasury;
- discretionary authority of the U.S. Government to purchase
certain obligations of an agency or instrumentality; or
- the credit of the agency or instrumentality.
To the extent the Fund is not invested as described above, it may invest
in the money market instruments in which the Money Market Fund may invest.
For temporary defensive purposes, the Fund may invest in such money market
instruments without limitation.
The Fund may purchase its portfolio securities on a when-issued or delayed
delivery basis. Certain of these securities may have adjustable rates of
interest with periodic demand features.
MATURITY: The dollar weighted average maturity of the Fund's portfolio is not
expected to exceed three years. Within this limitation, the Fund may purchase
individual securities with final maturities greater than three years.
PORTFOLIO TURNOVER: The portfolio turnover rate for the Fund will vary and when
circumstances warrant, securities may be sold without regard to the length of
time held. Although the Fund cannot accurately predict its annual portfolio
turnover rate, it is not expected to exceed 100%.
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PORTFOLIO MANAGEMENT: To meet the Fund's objectives, the Fund's Sub-Adviser
actively manages the Fund, adjusting the composition of investments and the
average maturity of the Fund's portfolio based on general economic and financial
trends, such as the level of interest rates and inflation, and the supply and
demand of debt securities.
SUITABILITY: The Fund is designed for investors who seek a greater and more
stable level of income than normally provided by money market investments and
less principal fluctuation than that experienced by long-term bond funds. The
Short-Term Bond Fund is not a money market fund and its share price is expected
to fluctuate with changes in interest rates and bond market conditions (unlike a
money market fund which seeks to maintain a stable net asset value), although
this fluctuation should be more moderate than that of a fund with a longer
average maturity. Both the financial and market risks of an investment in the
Fund may be expected to be greater than those for the Money Market Fund.
RISK FACTORS, OTHER INVESTMENT PRACTICES, AND POLICIES OF THE FUNDS
REPURCHASE AGREEMENTS. Each Fund may utilize repurchase agreements through
which they may purchase a security (the "underlying security") from a well
established domestic securities dealer or bank that is a member of the Federal
Reserve System and the seller of the repurchase agreement (I.E., the securities
dealers or bank) agrees to repurchase the underlying security at a mutually
agreed upon time and price. In these repurchase transactions, the underlying
security is held by each Fund's custodian through the federal book entry system
as collateral and marked-to-market on a daily basis to ensure full
collateralization of the repurchase agreement. The underlying security must be
a high-quality security and must be determined to present minimal credit risks.
In the event of bankruptcy or default of certain sellers of repurchase
agreements, the Funds could experience costs and delays in liquidating the
underlying security held as collateral and might incur a loss if such collateral
declines in value during this period.
BONDS. As described above, the Short-Term Bond Fund invests in short-term debt
securities or bonds. A bond is a contractual debt obligation to repay a stated
debt amount (the principal) on a specified date (the maturity) plus a specified
rate of interest for the use of the money. Most bonds pay a fixed rate of
interest known as the coupon rate, which is fixed for the term of the bond. A
bond's yield reflects the fixed annual interest as a percent of its current
price. This price (the bond's market value) must increase or decrease in order
to adjust the bond's yield to current interest rate levels. Therefore, bond
prices generally move in the opposite direction of interest rates. Bonds have
varying degrees of quality and varying levels of sensitivity to changes in
interest rates. Longer-term bonds are generally more sensitive to interest rate
changes than short-term bonds.
VARIABLE OR FLOATING RATE SECURITIES. Both Funds may invest in securities
which offer a variable or floating rate of interest. Such securities
typically bear interest at a rate that is intended to cause such securities
to trade at their par value. Variable-rate securities provide for automatic
establishment of a new interest rate at fixed intervals (e.g., daily,
monthly, semi-annually, etc.). Floating rate securities provide for
automatic adjustment of the interest rate whenever some specified interest
rate changes. The interest rate on variable- or floating-rate securities is
ordinarily determined by reference to, or is a percentage of, a bank's prime
rate, the 90-day U.S. Treasury bill rate, the rate of return on commercial
paper on bank certificates of deposit, an index of short term interest rates,
or some other objective measure. Both Funds treat the variable rate notes as
maturing at the interest reset date.
MORTGAGE PASS-THROUGH SECURITIES. The Short-Term Bond Fund may invest in
mortgage pass-through securities, which are securities representing interests in
pools of mortgages issued or guaranteed by the U.S. government, its agencies or
instrumentalities. Principal and interest payments made on the mortgages in the
pools are passed through to the holder of such securities. Mortgage pass-
through securities may be classified into the following categories, according to
the issuer or guarantor:
- Governmental mortgage pass-through securities that are backed by the
full faith and credit of the U.S. Government. GNMA, the principal
U.S. Government guarantor of such securities, is a wholly-owned U.S.
Government corporation within the Department of Housing and Urban
Development. GNMA is authorized to guarantee, with the full faith and
credit of the United States, the timely payment of principal
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interest on securities issued by approved institutions and backed by
pools of Federal Housing Authority ("FHA") insured or Veterans
Administration ("VA") guaranteed mortgages.
- Government-related mortgage pass-through securities that are not
backed by the full faith and credit of the U.S. Government. Issuers
include FNMA and the Federal Home Loan Mortgage Corporation ("FHLMC").
FNMA is a U.S. Government-sponsored corporation owned entirely by
private stockholders. Pass-through securities issued by FNMA are
guaranteed as to timely payment of principal and interest by FNMA.
FHLMC issues mortgage pass-through securities representing interests
in residential mortgage loans pooled by it. FHLMC is a U.S.
Government-sponsored corporation and guarantees the timely payment of
interest and timely or ultimate payment of principal.
Mortgage pass-through securities created by non-governmental issuers will not be
purchased by the Short-Term Bond Fund.
Unscheduled or early repayment of principal on mortgage pass-through securities
(arising from prepayments of principal due to the sale of the underlying
property, refinancing or foreclosure, net of fees and costs which may be
incurred) may expose the Short-Term Bond Fund to a lower rate of return upon
reinvestment of principal. Like other fixed income securities, when interest
rates rise, the value of a mortgage-related security generally will decline, and
may result in a loss of the holder's principal if such securities were purchased
at a premium; however, when interest rates are declining, the value of mortgage-
related securities with prepayment features may not increase as much as other
fixed-income securities.
ADJUSTABLE RATE MORTGAGE SECURITIES. The Short-Term Bond Fund may invest in
adjustable rate mortgage securities ("ARMS"). ARMS are pass-through mortgage
securities with adjustable rather than fixed interest rates. The ARMS in which
the Short Term Bond Fund may invest are issued by GNMA, FNMA, and FHLMC, and are
actively traded. The underlying mortgages which collateralize ARMS issued by
GNMA are fully guaranteed by the FHA or VA, while those collateralizing ARMS
issued by FHLMC or FNMA are typically conventional residential mortgages
conforming to strict underwriting size and maturity constraints.
Unlike conventional bonds, ARMS pay back principal over the life of the ARMS
rather than at maturity. Thus, a holder of the ARMS, such as the Short Term
Bond Fund, would receive monthly scheduled payments of principal and interest
and may receive unscheduled principal payments representing payments on the
underlying mortgages. At the time that a holder of the ARMS reinvests the
payments and any unscheduled prepayments of principal that it receives, the
holder may receive a rate of interest which is actually lower than the rate of
interest paid on the existing ARMS. As a consequence, ARMS may be less
effective means of "locking in" long-term interest rates than other types of
U.S. Government securities.
Not unlike other U.S. Government securities, the market value of ARMS will
generally vary inversely with changes in market interest rates. Thus, the
market value of ARMS generally declines when interest rates rise and generally
rises when interest rates decline.
While ARMS generally entail less risk of a decline during periods of rapidly
rising rates, ARMS may also have less potential for capital appreciation than
other similar investments (e.g., investments with comparable maturities)
because, as interest rates decline, the likelihood increases that mortgages will
be prepaid. Furthermore, if ARMS are purchased at a premium, mortgage
foreclosures and unscheduled principal payments may result in some loss of a
holder's principal investment to the extent of the premium paid. Conversely, if
ARMS are purchased at a discount, both a scheduled payment of principal and an
unscheduled prepayment of principal would increase current and total returns and
would accelerate the recognition of income, which would be taxed as ordinary
income when distributed to shareholders.
WHEN-ISSUED SECURITIES. Each Fund may purchase securities on a when-issued or
delayed delivery basis. When such transactions are negotiated, the price of
such securities is fixed at the time of the commitment, but delivery and payment
for the securities may take place up to 90 days after the date of the commitment
to purchase. The securities are subject
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to the market fluctuation and the market value of such securities may vary from
the purchase price. When-issued securities involve a risk of loss if the value
of the security to be purchased declines prior to the settlement date. In when-
issued and delayed delivery transactions, the Funds rely on the seller to
complete the transaction. The seller's failure to complete the transaction may
cause the Funds to miss a price or yield considered to be advantageous. The
Funds may dispose of a commitment prior to settlement if the Sub-Adviser deems
it appropriate to do so. In addition, the Funds may enter in transactions to
sell their purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Funds may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate income, each Fund may
lend portfolio securities on a short-term or a long-term basis, up to one-third
of the value of its total assets to broker-dealers, banks, or other
institutional borrowers of securities. Since this technique may be considered a
form of leverage, each Fund will only enter into loan arrangements with broker-
dealers, banks, or other institutions which the Sub-Adviser for each Fund has
determined are creditworthy under guidelines established by the Trustees, and
will receive collateral in the form of cash (which may be invested in accordance
with each Fund's investment program) or U.S. Government securities, equal to at
least 100% of the value of the securities loaned at all times. A Fund will
continue to receive the equivalent of the interest or dividends paid by the
issuer of the securities lent. A Fund may also receive interest on the
investment of the collateral or a fee from the borrower as compensation for the
loan. A Fund will retain the right to call, upon notice, the securities lent.
While there may be delays in recovery, or even loss of rights in the collateral
should the borrower fail financially, the Sub-Adviser reviews the
creditworthiness of the entities to which loans are made to evaluate those
risks.
CONCENTRATION OF INVESTMENTS. Each Fund may invest more than 25% of the value
of its total assets in cash or cash items, securities issued or guaranteed by
the U.S. Government, its agencies, or instrumentalities, or instruments secured
by these securities, such as repurchase agreements.
OTHER INVESTMENT COMPANIES. Each Fund may invest in other investment companies.
The Money Market Fund's investment in other investment companies is limited in
amount so that no more than 5% of the Fund's total assets will be invested in
any one investment company or in all other investment companies in the
aggregate. The Short-Term Bond Fund may invest in other investment companies,
limited in amount so that no more than 5% of the Fund's total assets will be
invested in any one investment company or 10% of the Fund's total assets will be
invested in all other investment companies in the aggregate. Each Fund's
investment in such other investment companies will reflect the operating
expenses of these companies as well as its own expenses.
CERTAIN POLICIES TO REDUCE RISK. Each Fund has adopted certain fundamental
investment policies in managing its portfolio that are designed to maintain the
portfolio's diversity and reduce risk. Each Fund will not: (i) with respect to
75% of each Fund's total assets, invest in more than 5% of its total assets in
the securities of a single issuer or purchase more than 10% of the outstanding
voting securities of any one issuer; and (ii) borrow more than one-third of that
Fund's total assets. As a matter of operating policy, the Money Market Fund
will not purchase additional portfolio securities if its borrowings exceed 5% of
its total assets. The Funds will not borrow in order to increase income, but
only to facilitate redemption requests that might otherwise require untimely
disposition of portfolio securities. If a Fund borrows money, its share price
may be subject to greater fluctuation until the borrowing is paid off. If the
Fund makes additional investments while borrowings are outstanding, this may be
considered a form of leverage. Limitation (i) does not apply to obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
These investment policies are fundamental and may be changed for a Fund only by
approval of that Fund's shareholders.
FURTHER INFORMATION. Each Fund's investment program is subject to further
restrictions as described in the Statement of Additional Information. Each
Fund's investment program, unless otherwise specified, is not fundamental and
may be changed without shareholder approval by the Trust's Board of Trustees.
Each Fund's investment objectives are fundamental and may be changed only
with approval of that Fund's shareholders.
INVESTMENT PERFORMANCE. Each Fund may illustrate in advertisements its average
annual total return, which is the rate of growth of the Fund that would be
necessary to achieve the ending value of an investment kept in the Fund for the
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period specified and is based on the following assumptions: (1) all dividends
and distributions by the Fund are reinvested in shares of the Fund at net asset
value, and (2) all recurring fees are included for applicable periods.
Each Fund may also illustrate in advertisements its cumulative total return for
several time periods throughout the Fund's life based on an assumed initial
investment of $1,000. Any such cumulative total return for each Fund will
assume the reinvestment of all income dividends and capital gains distributions
for the indicated periods and will include all recurring fees.
The Money Market Fund may illustrate in advertisements its yield and effective
yield. The Money Market Fund's yield refers to income generated by an
investment in the Fund over a seven (7) day period, expressed as an annual
percentage rate. The Money Market Fund's effective yield is calculated
similarly but assumes that income earned from the investment is reinvested. The
Fund's effective yield will be slightly higher than its yield because of the
compounding effect of this assumed reinvestment.
The Short-Term Bond Fund may illustrate in advertisements its yield based on a
recent thirty (30) day period, which reflects the income per share earned by the
Fund's portfolio investments. The yield is calculated by dividing the Fund's
net investment income per share during that period by the net asset value on the
last day of that period and annualizing the result. Further information on each
Fund's performance calculations is described in the Statement of Additional
Information.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
Each Fund has elected to be treated and to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code") in which case it will not be subject to federal income tax on
any income and capital gains distributed to its shareholders.
As a result, it is the policy of each Fund to declare and distribute to its
shareholders as income dividends or capital gains distributions, at least
annually, substantially all of its ordinary income and capital gains realized
from the sale of its portfolio securities, if any.
Income dividends for each Fund will be declared daily and paid monthly. You
will receive monthly statements concerning all income dividends and other
distributions made to you by each Fund. All distributions of capital gains of
each Fund, if any, realized during the fiscal year, will be declared and
distributed no less frequently than annually. Income dividends are derived from
each Fund's net investment income, including any net short-term capital gains
and dividends received by a Fund, and are taxable to you as ordinary income.
Distributions of capital gains by each Fund are derived from each Fund's long-
term capital gains and are taxable to you as long-term capital gains, regardless
of how long you have held your shares. Income dividends and distributions of
capital gains income declared in October, November or December and paid in
January are taxable in the year they are declared. The AAHSA Trust will mail
you a Form 1099 by the end of January indicating the federal tax status of your
income dividends and capital gains distributions.
BACKUP WITHHOLDING. Each Fund is required by federal law to withhold 31% of
reportable payments (which may include income dividends, capital gains
distributions, and share redemption proceeds) paid to shareholders who have not
complied with IRS regulations. In order to avoid this back-up withholding
requirement, you must certify on your Purchase Application Form ("Application"),
or on a separate W-9 Form supplied by the AAHSA Trust's transfer agent, that
your Social Security or Taxpayer Identification Number is correct (or that you
have applied for such a number and are waiting for it to be issued) and that you
are not currently subject to backup withholding, or you are exempt from backup
withholding.
REINVESTMENT OF INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. Unless you
elect otherwise, as permitted on the Application, income dividends and
distributions of capital gains income with respect to a particular Fund will be
reinvested in additional shares of that Fund and will be credited to your
account with that Fund at the net asset value per share next determined as of
the ex-dividend date. Both income dividends and distributions of capital gains
income are
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paid by the Funds on a per share basis. As a result, at the time of such
payment, the net asset value per share of the Short-Term Bond Fund will be
reduced by the amount of such payment. Payment of dividends and distributions
by the Money Market Fund will not affect the Fund's net asset value, but will
reduce the Fund's yield. Payments from each Fund to shareholders of income
dividends and capital gains distributions are taxable to shareholders of each
Fund when such dividends and distributions are declared, regardless of whether
they are taken in cash or reinvested in shares of the Funds.
HOW TO PURCHASE SHARES
The initial minimum investment is $50,000 per Fund. Such minimum investment
amount may, in certain cases, be waived or lowered by the AAHSA Trust.
OPENING AN ACCOUNT. You may make an initial purchase of shares of each Fund
through the Distributor or its selling group members or by mail or wire. Shares
of the Funds may be purchased on any day the Funds are open for business.
A COMPLETED AND SIGNED APPLICATION IS REQUIRED FOR EACH NEW ACCOUNT YOU OPEN
WITH EACH FUND REGARDLESS OF HOW YOU CHOOSE TO MAKE YOUR INITIAL PURCHASE OF
SHARES.
PURCHASES THROUGH SELLING GROUP MEMBERS. Securities dealers, banks, or other
financial service firms having Selected Dealer Agreements with the Distributor
(collectively, "Selling Group Members") are authorized to sell you shares of the
Funds. If you purchase shares through a Selling Group Member, such dealer must
receive your order before the close of regular trading on the New York Stock
Exchange ("Exchange"), which normally is 4:00 p.m. Eastern time, and transmit it
to the Distributor by 5:00 p.m., Eastern time, to receive that day's share
price. (See "Share Price" below.) Selling Group Members are responsible for
promptly transmitting purchase orders to the Distributor.
BY MAIL. You may purchase shares of the Funds by mailing the completed
Application, with your check made payable to the AAHSA Trust, to: [ ]
BY WIRE. You may also purchase shares of each Fund by wiring funds to the
wire bank account for each Fund. Before wiring funds, please call the AAHSA
Trust toll free at 1-800-_______ to advise the AAHSA Trust of your intention
to invest in one or both of the Funds and to receive instructions as to how
and where to wire your investment. Please remember to return your completed
Application to the AAHSA Trust as described in the prior paragraph. Your
bank may charge you a fee for the wire.
SUBSEQUENT INVESTMENTS. Minimum $5,000 per Fund, except for reinvestment of
dividends and distributions. Subsequent purchases of shares of the Funds may be
made (i) through the Distributor by mail or by wire (see instructions above),
(ii) through Selling Group Members or (iii) through means of certain services
available to shareholders of the Funds, such as the Telephone Investment
Privilege and the Exchange Privilege described below under "Shareholder
Services."
SHARE PRICE. To make an initial purchase of Fund shares, except by wire
transfer, a completed and signed Application must first be received and
accepted. Your shares in each Fund will be priced at the net asset value per
share of that Fund next determined after your purchase order has been received
by the AAHSA Trust in "good order."
With respect to the Money Market Fund, if your purchase payment is transmitted
by federal funds wire or bank wire, the purchase order will be considered in
"good order" upon receipt of the wire payment by the AAHSA Trust. If your
purchase payment as transmitted to the AAHSA Trust is not in federal funds
(I.E., monies credited by a Federal Reserve Bank), your payment must first be
converted to federal funds before your purchase order will be considered in
"good order." If your purchase payment is by a check drawn on a member bank of
the Federal Reserve System, conversion to federal funds usually occurs within
one business day of receipt of the check by the AAHSA Trust. Checks drawn on
banks which are not members of the Federal Reserve System may take up to five
(5) business days to convert into
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federal funds. During the period prior to receipt of federal funds, your money
will not be invested in the Money Market Fund.
With respect to the Short-Term Bond Fund receipt of federal funds by the AAHSA
Trust is not necessary for a purchase order to be considered in "good order".
SHARE CERTIFICATES. Share certificates will not be issued to you for shares
that you purchase in the Funds.
CONDITIONS OF YOUR PURCHASE. The AAHSA Trust and the Distributor each reserve
the right to reject any purchase for any reason and to cancel any purchase due
to nonpayment. Purchases are not binding on the AAHSA Trust or the Distributor
or considered received until such purchase orders are received by the AAHSA
Trust in good order. All purchases must be made in United States dollars and,
to avoid fees and delays, all checks must be drawn only on United States banks.
No cash will be accepted. As a condition of this offering, if your purchase is
canceled due to nonpayment or because your check does not clear (and, therefore,
your account is required to be redeemed), you will be responsible for any loss
the Funds incur.
SHAREHOLDER SERVICES
SHAREHOLDER INQUIRIES AND SERVICES OFFERED. If you have any questions about the
AAHSA Trust or the following services, please call 1-800-______ and ask about
the AAHSA Trust or write the AAHSA Trust, [ ]. The AAHSA Trust reserves the
right to amend the shareholder services described below or to change their terms
or conditions upon sixty (60) days notice to shareholders.
SHAREHOLDER STATEMENTS AND REPORTS. Each time you buy or sell shares or
reinvest a dividend or distribution in any Fund, you will receive an account
statement with respect to that Fund confirming such transaction and listing your
current share balance with that Fund. Since the Funds make monthly
distributions of income dividends to shareholders, you will receive, at a
minimum, monthly account statements. The AAHSA Trust also will send you annual
and semi-annual shareholder reports that contain certain financial information
concerning the Funds. In addition, you will receive year-end tax information
about your accounts with each Fund.
TELEPHONE PRIVILEGES. For your convenience, the AAHSA Trust provides
telephone privileges that allow you by telephone authorization to (i)
purchase shares in each Fund; (ii) exchange shares from your account in one
Fund for shares in the other Fund; and (iii) redeem shares in each Fund. To
utilize these telephone privileges, you must select such services by checking
the appropriate boxes on the Application and supply us with the information
required. Procedures have been established by the AAHSA Trust and its
transfer agent that are considered to be reasonable and are designed to
confirm personal identification information prior to acting on telephone
instructions, including tape recording telephone communication and providing
written confirmation of instructions communicated by telephone. If the AAHSA
Trust or transfer agent does not employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, it may be liable for any
losses arising out of any action on its part or any failure or omission to
act as a result of its own negligence, lack of good faith, or willful
misconduct. In light of the procedures established, neither the AAHSA Trust
nor the transfer agent will be liable for following telephone instructions
that it believes to be genuine. During periods of extreme economic
conditions or market changes, requests by telephone may be difficult to make
due to heavy volume. During such times, please consider placing your order
by mail.
The telephone privileges are not available with respect to redemptions for
accounts requiring supporting legal documents.
TELEPHONE INVESTMENT PRIVILEGE. After your account with the AAHSA Trust has
been opened, you may make additional investments in your account of $5,000 or
more by telephoning the AAHSA Trust at 1-800______ between 8:30 a.m. and 4:00
p.m. Eastern time on any day the AAHSA Trust is open. Telephone investment
requests made after 4:00 p.m. Eastern time will be processed as of the close
of business on the next business day. In accordance with your instructions,
we will electronically transfer monies from your bank account designated on
the Application, to your account with the AAHSA Trust. Your designated bank
must be a member of the Automated Clearing House ("ACH") network and able to
make electronic transfers in order for you to use this privilege.
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TELEPHONE EXCHANGE PRIVILEGE. The Telephone Exchange Privilege permits you
to exchange shares from your account in one Fund for shares in the other Fund
(if the accounts in each Fund are identically registered) by telephoning the
AAHSA Trust at 1-800______ between 8:30 a.m. and 4:00 p.m. Eastern time on
any day the AAHSA Trust is open. In establishing a new account by exchange,
the shares being exchanged must have a value of at least $50,000. All
subsequent purchases by shares exchanged must have a value of $5,000 or more.
Shares exchanged will be valued at their respective net asset value next
determined after a telephone exchange request is received. Telephone
exchange requests made after 4:00 p.m. Eastern time will be processed as of
the close of business on the next business day. Please notify the AAHSA
Trust in writing of all shareholder service privileges you wish to continue
in any new account opened by a telephone exchange request. See "Exchange
Privilege" below for further information concerning exchanges.
TELEPHONE REDEMPTION PRIVILEGE. The Telephone Redemption Privilege permits
you to authorize the redemption of some ($5,000 minimum) or all shares in
your account with the AAHSA Trust by telephoning the AAHSA Trust at
1-800-______ between 8:30 a.m. and 4:00 p.m. Eastern time on any day the
AAHSA Trust is open. In accordance with your telephone instructions, we will
redeem your Fund shares at their net asset value next determined after your
telephone redemption request is received. Telephone redemption requests made
after 4:00 p.m. Eastern time will be processed as of the close of business on
the next business day. Redemption proceeds will, in accordance with your
prior election, be mailed to you at your current address or electronically
transmitted to your designated bank account.
EXCHANGE PRIVILEGE. The exchange privilege is a convenient way to buy shares in
each Fund in order to respond to changes in your investment goals or in market
conditions. In addition to the Telephone Exchange Privilege described above,
shareholders in each Fund may exchange their shares for shares in the other Fund
by a written request, in proper form, sent to the AAHSA Trust, as described
under "Purchase By Mail" above. Such shares exchanged will be valued at their
respective net asset values next determined after the receipt of the written
exchange request. When making a written exchange request, please provide your
current Fund's name, your account name(s) and number(s), the name of the Fund
into which you wish to exchange your investment, the amount you wish to
exchange, and specify all current shareholder service privileges you wish to
continue in your new account (E.G., Telephone Privileges). For written exchange
requests, the signatures of all registered owners are required. Signature
guarantees are also required if the accounts will not be identically registered.
(See "How to Redeem Shares" concerning requirements relating to signature
guarantees.) No sales charge, redemption fee or penalty is imposed on
exchanges. The minimum initial investment in each Fund, whether by exchange or
purchase, is $50,000. All subsequent amounts exchanged must be $5,000 or more
per Fund. Please note that, for tax purposes, depending on your tax status, an
exchange may involve a taxable transaction. The exchange privilege is available
to shareholders in all states where it is legally permitted. Currently all
states permit such exchanges. The exchange privilege may be modified or
terminated upon 60 days written notice to shareholders.
CHECKWRITING SERVICE. Checkwriting is available only for shareholders of the
Money Market Fund. You may write an unlimited number of checks. The minimum
amount of each check must be $5,000 or more. Shares will be redeemed to cover
the amount of the check upon receipt of the check by the AAHSA Trust's transfer
agent. Checks written on amounts subject to the ten (10) day check clearing
period, described below under "How to Redeem Shares," will be returned, marked
"uncollected." This checkwriting service is subject to the AAHSA Trust's rules
and regulations and is governed by the Laws of Delaware. All notices with
respect to checks drawn on the Money Market Fund must be sent to the AAHSA Trust
c/o [ ]. Any stop payment instructions must be given to the AAHSA
Trust by calling 1-800-______.
HOW EACH FUND'S NET ASSET VALUE IS DETERMINED
The net asset value per share of each of the Funds is normally calculated as of
the close of regular trading on the Exchange, currently 4:00 p.m. Eastern time,
every day the Exchange is open for trading. The per share net asset value,
calculated as described below, is effective for all orders received in "good
order" (as previously described) prior to the
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close of trading on the Exchange for that day. Orders received after the close
of trading on the Exchange or on a day when the Exchange is not open for
business will be priced at the per share net asset value next computed.
The net asset value of each Fund's shares is determined by adding the value of
all securities, cash and other assets of the Fund, subtracting liabilities
(including accrued expenses and dividends payable) and dividing the result by
the total number of outstanding shares in the Fund.
For purposes of calculating the Money Market Fund's net asset value per
share, portfolio securities are valued on the basis of amortized cost. This
method of valuation does not take into account unrealized gains or losses on
the Fund's portfolio securities. Amortized cost valuation involves initially
valuing a security at its cost, and thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the impact
of fluctuating interest rates on the market value of the portfolio security.
While this method provides certainty in valuation, it may result in periods
during which the value of the security, as determined by amortized cost, may
be higher or lower than the price the Money Market Fund would receive if it
sold the security.
For purposes of calculating the Short-Term Bond Fund's net asset value per
share, portfolio securities are valued primarily based on market quotations,
or if market quotations are not available, by a method that the Trust's Board
of Trustees believes accurately reflects fair value. State Street will
perform the above described valuation functions and the Sub-Adviser and Board
of Trustees will monitor the performance of those functions.
HOW TO REDEEM SHARES
Shareholders have the right to redeem (subject to the restrictions outlined
below) all or any part of their shares in the Funds at a price equal to the
net asset value of such shares next computed following receipt and acceptance
of the redemption request by the AAHSA Trust. Unless you have selected the
Telephone Redemption Privilege and provided the required information, in
order to redeem shares in the Funds, a written request in "proper form" (as
explained below) must be sent directly to the AAHSA Trust, [ ]. You
cannot redeem shares by telephone unless you are eligible to use the
Telephone Redemption Privilege. In addition, the AAHSA Trust cannot accept
requests which specify a particular date for redemption or which specify any
other special conditions.
PROPER FORM FOR ALL REDEMPTION REQUESTS. Your redemption request must be
in proper form. To be in proper form, your redemption request must include:
(1) for written redemption requests, a "letter of instruction," which is a
letter specifying the name of the Fund, the number of shares to be sold, the
name(s) in which the account is registered, and your account number. The
letter of instruction must be signed by all registered shareholders for the
account using the exact names in which the account is registered; (2) other
supporting legal documents, as may be necessary, for redemption requests by
corporations, trusts, and partnerships; and (3) any signature guarantees that
are required by the AAHSA Trust where the value of the shares being redeemed
is $50,000 or greater, or where the redemption proceeds are to be sent to an
address other than the address of record or to a person other than the
registered shareholder(s) for the account. Signature guarantees are required
if the amount being redeemed is $50,000 or more but are not required for
redemptions made using the Telephone Redemption Privilege, unless redemption
proceeds are to be sent to a person other than the registered shareholders
for the account or to an address or account other than that of record.
Signature guarantees, when required, can be obtained from any one of the
following institutions: (i) a bank; (ii) a securities broker or dealer,
including a Government or municipal securities broker or dealer, that is a
member of a clearing corporation or has net capital of at least $100,000; (iii)
a credit union having authority to issue signature guarantees; (iv) a savings
and loan association, a building and loan association, a cooperative bank, a
federal savings bank or association; or (v) a national securities exchange, a
registered securities exchange or a clearing agency. Notary publics are not
acceptable guarantors.
YOUR REQUEST FOR REDEMPTION WILL NOT BE PROCESSED AND WILL BE HELD UNTIL IT IS
IN PROPER FORM, AS DESCRIBED ABOVE.
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RECEIVING YOUR REDEMPTION PAYMENT. Except under certain emergency conditions,
your redemption payment will be sent to you within seven (7) days after receipt
of your telephone or written redemption request, in proper form, by the AAHSA
Trust. No charge of any kind is imposed on any redemption request.
If your redemption request is with respect to shares purchased by a personal,
corporate, or government check within ten (10) days of the purchase date, the
redemption payment will be held until the purchase check has cleared (which may
take up to ten (10) days from the purchase date), although the shares redeemed
will be priced for redemption upon receipt of your redemption request. You can
avoid the inconvenience of this ten (10) day check clearing period by purchasing
shares with a certified, treasurer's or cashier's check, or with a federal funds
or bank wire.
MINIMUM ACCOUNT SIZE. Due to the relatively high cost of maintaining accounts,
the AAHSA Trust reserves the right to redeem shares in any account if, as the
result of the redemptions, the value of that account drops below $50,000. You
will be allowed at least sixty (60) days, after written notice by the AAHSA
Trust, to make an additional investment to bring your account value up to at
least $50,000 before the redemption is processed.
HOW THE AAHSA TRUST IS MANAGED
BOARD OF TRUSTEES. The management of the AAHSA Trust's business and affairs is
the responsibility of its Board of Trustees (the "Board"). Although the Board
is not involved in the day-to-day operations of each Fund, the Board has the
responsibility for establishing broad operating policies and supervising the
overall performance of each Fund.
INVESTMENT MANAGER. The AAHSA Trust is managed by CRSA Advisors, 6075 Poplar
Avenue, Suite 600, Memphis, Tennessee 38119. CRSA Advisors was founded in
1996 and is registered with the SEC as an investment adviser. CRSA Advisors
has no prior experience in managing investment companies. CRSA Advisors is a
subsidiary of CRSA Holdings, Inc. which provides management marketing,
development and financial consulting services to the retirement housing
community. CRSA Holdings, Inc. and Messrs. Michael E. Wade, Martin R. Satava
and Edward P. Crouch are control persons of CRSA Advisors. Mr. Marshall,
President of the Sub-Adviser, is a member of the Investment Policy Committee
of CRSA Advisors.
Subject to the authority of the Board, CRSA Advisors supervises and directs the
day-to-day operation of the AAHSA Trust in accordance with each Fund's
investment objective, investment program, policies, and restrictions. In
addition, CRSA Advisors monitors the implementation of any continuing investment
programs formulated with the assistance of the Sub-Adviser for each Fund. CRSA
Advisors also supervises the overall administration of the AAHSA Trust. CRSA
Advisors employs staff necessary to provide these services to the AAHSA Trust
and also furnishes the AAHSA Trust with office facilities, furnishings, and
office equipment necessary for the performance of its duties under the
separate Investment Management Agreements between CRSA Advisors and the AAHSA
Trust on behalf of each Fund.
SUB-ADVISER. The Sub-Adviser is responsible for the selection and management
of each Fund's portfolio investments in accordance with each Fund's
investment objective, investment program, policies, and restrictions pursuant
to Sub-Advisory Agreements by and among CRSA Advisors, the Sub-Adviser and
the AAHSA Trust on the behalf of each Fund (the "Sub-Advisory Agreements").
The principal business address of the Sub-Adviser is 966 Hungerford Drive,
#26B, Rockville, Maryland 20850. The Sub-Adviser is a partnership organized
in 1995, and is a registered investment adviser under the Investment Advisers
Act of 1940. The Sub-Adviser serves as investment adviser to a number of
private accounts and as of the date of this prospectus had in excess of
($___) in assets under management. An affiliate of the Distributor is a
general partner of the Sub-Adviser. The Sub-Adviser has experience as an
investment adviser, however, it has no experience as an adviser to a
registered investment company. R.W. Marshall & Associates, Inc. ("RWMA"),
Queenstown Investments, Inc. ("QII"), and H.C. Wainwright Asset Management
Holding Co. ("AMHC"), the general partners of the Sub-Adviser are control
persons of the Sub-Adviser. AMHC is a wholly-owned subsidiary of H.C.
Wainwright Holding Corp. Mr. Roger W. Marshall, President of RWMA and the
Sub-Adviser; Mr. Kevin Quinn, President of QII, Vice President of the
Sub-Adviser and a Director of H.C. Wainwright & Co., Inc.; Mr. Stephen D.
Barrett, Chief Executive Officer and Chairman of the Board of H.C. Wainwright
& Co., Inc.; and Mr. Saro J. Picciotto, Chief Financial Officer and Chief
Operating Officer of H.C. Wainwright & Co., Inc. and Principal of the
Sub-Adviser are also control persons of the Sub-Adviser. The Sub-Adviser has
an agreement (independent of the Sub-Advisory Agreements) with CRSA Advisors
pursuant to which Mr. Marshall provides
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portfolio management services for, and serves on the Investment Policy
Committee of, CRSA Advisors. The agreement further provides that CRSA
Advisors will pay the Sub-Adviser a fee equal to 50% of the advisory fees
CRSA Advisors receives from its clients.
The Sub-Adviser employs staff necessary to provide investment
advisory services to the AAHSA Trust and also furnishes the AAHSA Trust with all
office facilities, furnishings, and office equipment necessary for the
performance of its duties under its Sub-Advisory Agreements with the AAHSA
Trust.
Roger W. Marshall, President of the Sub-Adviser, serves as portfolio manager
of the Money Market Fund and the Short-Term Bond Fund. Prior to joining the
Sub-Adviser, Mr. Marshall was President and Managing Director of Riggs
Investment Management Corp. a _______ from 1988 to 1994. Mr. Marshall
received his B.A. and M.A. in Economics from S.U.N.Y. at Binghamton.
ADMINISTRATOR. State Street serves as the administrator of the AAHSA Trust.
State Street's principal business address is 225 Franklin Street, Boston,
Massachusetts 02110.
State Street provides each Fund with administrative services pursuant to
an Administration Agreement. The services under this Agreement are subject
to the supervision of the Board and the officers of the Trust, and include
the day-to-day administration of matters necessary to each Fund's operations,
maintenance of its records and the books of the AAHSA Trust, preparation of
reports, compliance monitoring of its activities, and preparation of its
registration statement.
THE SUB-ADMINISTRATOR. The Association serves as the Sub-Administrator
for the AAHSA Trust pursuant to a Sub-Administrative Agreement by
and between the Association and the AAHSA Trust. The principal business
address of the Association is 901 E Street, Suite 500, N.W., Washington, D.C.
20004-2037. The Association assists its members in their communications with
the AAHSA Trust and its other service providers and renders certain
administrative services to the AAHSA Trust.
INVESTMENT MANAGEMENT, SUB-ADVISORY, ADMINISTRATIVE AND SUB-ADMINISTRATIVE FEES.
The AAHSA Trust pays CRSA Advisors, on a monthly basis, an investment management
fee based on each Fund's average daily net assets at the following annualized
rates: with respect to the Money Market Fund, [ ]% of the average daily net
assets; and, with respect to the Short-Term Bond Fund, [ ]% of the average
daily net assets.
On a monthly basis, the Sub-Adviser receives a sub-advisory fee, paid by CRSA
Advisors, based on each Fund's average daily net assets at the following
annualized rates: with respect to the Money Market Fund [ ]; and with
respect to the Short-Term Bond Fund [ ]. The AAHSA Trust has no
responsibility to pay any fees to the Sub-Adviser.
For providing administrative services to the Funds, State Street will receive
from each Fund a monthly fee at the annual rate of [ ]%: .08% of the first
$100 million of each Fund's average daily net assets, plus .06% of the next
$100 million of each Fund's average daily net assets, plus .04% of each
Fund's average daily net assets in excess of $200 million (with a minimum
annual fee of $95,000 for each Fund).
The Association will receive a fee at the annual rate of .07% of each Fund's
average net assets for providing administrative services to the Funds.
In the interest of limiting the expenses of the Funds, the Investment
Manager, the Sub-Adviser and the Association each have entered into expense
limitation agreements with the AAHSA Trust pursuant to which the Investment
Manager, the Sub-Adviser and the Association each agreed to waive or limit
their fees to the extent necessary to limit the total operating expenses
(expressed as a percentage of average net assets on an annual basis) of the
Money Market Fund and the Short-Term Bond Fund to .[ ]% and .[ ]%,
respectively (the "expense limitation").
Reimbursement by a Fund of the Investment Manager, the Sub-Adviser or the
Association for fees waived or other expenses paid by certain of them
pursuant to the expense limitation agreements may be made at a later date
when the Fund has reached a sufficient asset size to permit reimbursement to
be made without causing the annual expense ratio of a Fund to exceed the
amount of the relevant expense limitation. Consequently, no reimbursement by
a Fund would be made unless a Fund's actual annual operating expense ratio
were less than .[ ]% in the case of the Money Market Fund and .[ ]% in
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the case of the Short-Term Bond Fund and payment of such reimbursement was
approved by the Board on a quarterly basis.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT. State Street serves as
the Trust's custodian and holds all portfolio securities and cash assets of
the Trust. State Street is authorized to deposit securities in securities
depositories or to use the services of subcustodians. State Street also
provides accounting services including daily valuation of the shares of each
Fund. State Street also serves as the Trust's transfer agent and dividend
disbursing agent and maintains the Trust's shareholder records.
DISTRIBUTOR. The Distributor serves as the distributor of the shares of each
Fund pursuant to a Distribution Agreement between the Distributor and the
AAHSA Trust. The Distributor's principal business address is One Boston
Place, Boston, Massachusetts 02108. The AAHSA Trust's shares are sold on a
no-load basis and, therefore, the Distributor receives no front-end or
contingent deferred sales commission or sales load for providing such
services to the AAHSA Trust under the Distribution Agreement. However,
pursuant to a Service Plan adopted pursuant to Rule 12b-1 ("Service Plan")
under the 1940 Act and a Rule 12b-1 Agreement, the Funds are authorized to
use a portion of their assets to finance certain activities relating to the
distribution of their shares to investors. The Service Plan permits payments
to be made by each Fund to the Distributor to compensate the Distributor for
its activities in connection with the distribution of shares to investors.
These activities include, but are not limited to preparation and distribution
of sales literature and prospectuses to prospective investors, implementing
and operating the Service Plan and performing other promotional or
administrative activities. No payments may be made under the Service Plan in
contemplation of activities for future fiscal years.
Under the Service Plan, each Fund will compensate the Distributor for its
activities in promoting the sale of each Fund's shares and for other
distribution costs and expenses, including among other things those necessary
to compensate certain persons for (i) preparing, printing and distributing
advertisements, sales materials, prospectuses and annual and semi-annual
reports for potential investors and (ii) providing distribution assistance and
administrative support services for the Funds. Such compensation will not be
limited to expenditures actually incurred by the Distributor in connection
with the distribution of each Fund's shares. The Service Plan provides for
payment at an annualized rate not to exceed: __% of each Fund's net assets in
those instances in which no other recipient receives compensation pursuant to
the Service Plan, and at an annualized rate not to exceed .__% of each Fund's
net assets in those instances in which other recipients receive
compensation pursuant to the Service Plan. The Service Plan will continue in
effect, if not sooner terminated in accordance with its terms, for successive
one-year periods, provided that its continuance is specifically approved by
the vote of the Board, including a majority of the Trustees who
are not interested persons of the AAHSA Trust and do not have a direct or
indirect financial interest in the Service Plan. For further
information regarding the Service Plan, see the Statement of Additional
Information.
PORTFOLIO TRANSACTIONS AND BROKERAGE PRACTICES
Although it is expected that transactions in the debt securities utilized by the
Funds will generally be conducted with dealers acting as principals, purchase
and sale orders for portfolio securities of the Funds may be effected through
brokers. Portfolio transactions for the Funds will not be effected through the
Distributor or any of its affiliates.
Allocations of portfolio transactions for the Funds, including their frequency,
to various brokers is determined by the Sub-Adviser in its best judgment and in
a manner deemed fair and reasonable to shareholders. The primary consideration
is prompt and efficient execution of orders in an effective manner at the most
favorable price. The Sub-Adviser may also consider sales of the Funds' shares
as a factor in the selection of broker-dealers, subject to the policy of
obtaining best price and execution. For further information regarding the
allocation of portfolio transactions and brokerage, see the Statement of
Additional Information.
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ORGANIZATION OF THE AAHSA TRUST
The AAHSA Trust, a Delaware business trust, organized in July 1994, currently
consists of two portfolios (i.e. the Funds), each of which represents a
separate series of beneficial interests in the AAHSA Trust having different
investment objectives, investment programs, policies and restrictions.
Neither Fund commenced operations until the date of this Prospectus. Each
share of each Fund represents an equal proportionate interest in that Fund
with each other share, and each share is entitled to such dividends and
distributions of income belonging to that Fund as are declared by the Board.
In the event of the liquidation of a Fund, each share of that Fund is
entitled to a pro rata share of the net assets of that Fund.
Shareholders having at least two-thirds of the outstanding shares of the
AAHSA Trust may remove a Trustee from office by a vote cast in person or by
proxy at a meeting of shareholders called for that purpose at the request of
holders of 10% or more of the outstanding shares of the AAHSA Trust. The
AAHSA Trust has an obligation to assist in such shareholder communications.
The AAHSA Trust does not routinely hold annual meetings of shareholders.
Each share of the AAHSA Trust is entitled to one vote on all matters
submitted to a vote of all shareholders of the AAHSA Trust. Fractional
shares, when issued, have the same rights, proportionately, as full shares.
Shares of a particular Fund will be voted separately from shares of the other
Fund on matters affecting only that Fund, including approval of the
Investment Management Agreement, Sub-Advisory Agreement and Rule 12b-1
Service Plan for that Fund and changes in the fundamental objective, policies
or restrictions of that Fund. All shares are fully paid and nonassessable
when issued and have no preemptive, conversion or cumulative voting rights.
As of the date of this Prospectus, the Association provided the initial seed
capital for the AAHSA Trust and owned 100% of the outstanding voting shares of
the Money Market Fund and the Short-Term Bond Fund. Furthermore, as ownership
of more than 25% of the outstanding voting securities of a fund may result in a
person being deemed a controlling entity of that fund, the Association may be
deemed a control person of the Money Market Fund and the Short-Term Bond Fund.
Such control by the Association will dilute the effect of the votes of other
shareholders.
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AAHSA TRUST
901 E Street, N.W.
Suite 500
Washington, D.C. 20004-2307
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectus about the AAHSA Trust dated October , 1996,
which may be obtained by telephoning 1-800- ______ and asking about the AAHSA
Trust.
The date of this Statement of Additional Information is October , 1996.
TABLE OF CONTENTS
ITEM PAGE
- ---- ----
General Information and History 2
Investment Restrictions 2
Description of Certain Investments 4
Management of the AAHSA Trust 7
Committees of the Board of Trustees 8
Principal Holders of Securities 9
Investment Management and Other Services 9
Administrator 10
Sub-Administrator 11
Custodian 11
Transfer Agent Services 11
Distribution of Shares 11
Brokerage Allocation and Other Practices 13
Purchase and Redemption of Securities Being Offered 14
Determination of Net Asset Value 14
Taxes 15
Organization of the Trust 16
Performance Information About the Funds 16
Independent Auditors 19
Legal Matters 19
<PAGE>
GENERAL INFORMATION AND HISTORY
The AAHSA Trust is a Delaware business trust registered with the Securities
and Exchange Commission ("SEC") under the Investment Company Act of 1940 (the
"1940 Act") as a no-load, open-end diversified management investment company,
commonly known as a "mutual fund."
The AAHSA Trust currently consists of two portfolios, the Money Market Fund and
the Short-Term Bond Fund, each of which represents a separate series of
beneficial interest in the AAHSA Trust having different investment objectives,
investment programs, policies and restrictions. The Money Market Fund and the
Short-Term Bond Fund are sometimes referred to individually as the "Fund" and
collectively as the "Funds."
Each Fund is managed by CRSA Investment Advisors, Inc. ("CRSA Advisors" or
"Investment Manager"), which directs the day-to-day operations of each Fund.
Wainwright Asset Management (the "Sub-Adviser") serves as the sub-adviser
("Sub-Adviser") to each Fund and directs the investment of each Fund's
assets. State Street Bank and Trust Company ("State Street") is the
administrator, custodian, accounting pricing agent, transfer agent and
dividend disbursing agent for the AAHSA Trust. The American Association of
Homes and Services for the Aging (the "Association" or "Sub-Administrator")
serves as the sub-administrator for the AAHSA Trust. H.C. Wainwright & Co.,
Inc. (the "Distributor") is the distributor for the AAHSA Trust.
INVESTMENT RESTRICTIONS
In addition to the restrictions set forth in the Prospectus with respect to each
Fund, which are described as fundamental investment policies, investment
restrictions (1), (2), (3), (5), (7), (11), (14), (16) and (17) described below,
have been adopted as fundamental investment policies of each Fund. Such
fundamental investment policies may be changed only with the consent of a
"majority of the outstanding voting securities" of the particular Fund. As used
in the Prospectus and in this Statement of Additional Information, the term
"majority of the outstanding voting shares" means the lesser of (1) 67% of the
shares of a Fund present at a meeting where the holders if more than 50% of the
outstanding shares of a Fund are present in person or by proxy, or (2) more than
50% of the outstanding shares of a Fund. Shares of each Fund will be voted
separately on matters affecting only that Fund, including approval of changes in
the fundamental objectives, policies, or restrictions of that Fund.
The following investment restrictions apply to each Fund except as indicated to
the contrary. Except with respect to borrowing money, as described in (2)
below, if a percentage limitation is adhered to at the time of investment, a
later increase or decrease in that percentage amount resulting from any change
in value of the portfolio securities or each Fund's net assets will not result
in a violation of such investment restriction.
A Fund will not:
(1) MARGIN AND SHORT SALES: Purchase securities on margin or sell
securities short, except the Short-Term Bond Fund may make margin deposits in
connection with permissible options and futures transactions subject to (5) and
(8) below, may make short sales against the box and may obtain short-term
credits as may be necessary for clearance of transactions. As a matter of
operating policy, the Short-term Bond Fund has no current intention, in the
foreseeable future (i.e., the next year), of utilizing options or futures
contracts or of making short sales against the box;
(2) SENIOR SECURITIES AND BORROWING: Issue any class of securities senior
to any other class of securities, although each Fund may borrow from a bank for
temporary, extraordinary or emergency purposes or through the use of reverse
repurchase agreements. Each Fund may borrow up to one-third of the value of its
total assets, including any amount borrowed, in order to meet redemption
requests. No securities will be purchased for any Fund when borrowed money
exceeds one-third of the value of the Fund's total assets. As a matter of
operating policy, the Money Market Fund will not purchase additional portfolio
securities if its borrowings exceed 5% of its total assets. The Short-Term Bond
Fund may enter into futures contracts subject to (5) below;
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(3) REAL ESTATE: Purchase or sell real estate, or invest in real estate
limited partnerships, except each Fund may, as appropriate and consistent with
its respective investment objective, investment program, policies and other
investment restrictions, buy securities of issuers that engage in real estate
operations and securities that are secured by interests in real estate
(including shares of real estate mortgage investment conduits, mortgage pass-
through securities, mortgage-backed securities and collateralized mortgage
obligations) and may hold and sell real estate acquired as a result of ownership
of such securities;
(4) CONTROL OF PORTFOLIO COMPANIES: Invest in portfolio companies for the
purpose of acquiring or exercising control of such companies;
(5) COMMODITIES: Purchase or sell commodities and invest in commodities
futures contracts, except that the Short-Term Bond Fund may enter into futures
contracts and options thereon that are listed on a national securities or
commodities exchange where, as a result thereof, no more than 5% of the total
assets for that Fund (taken at market value at the time of entering into the
futures contracts) would be committed to margin deposits on such futures
contracts and premiums paid for unexpired options on such futures contracts;
provided that, in the case of an option that is "in-the-money" at the time of
purchase, the "in-the-money" amount, as defined under Commodity Futures Trading
Commission regulations, may be excluded in computing such 5% limit. The Short-
Term Bond Fund will utilize only listed futures contracts and options thereon.
As a matter of operating policy, Short-Term Bond Fund has no current intention,
in the foreseeable future (i.e. the next year), of entering into futures
contracts or options thereon;
(6) INVESTMENT COMPANIES: Invest in the securities of other open-end
investment companies, except that each Fund may purchase securities of other
open-end investment companies provided that such investment is in connection
with a merger, consolidation, reorganization, or acquisition or by purchase in
the open market of such securities where no sponsor or dealer commission or
profit, other than a customary brokerage commission, is involved and only if
immediately thereafter each such Fund (i) owns no more than 3% of the total
outstanding voting securities of any one investment company and (ii) invests no
more than 5% of its total assets (taken at market value) in the securities of
any one investment company or 10% of its total assets (taken at market value) in
the securities of all other investment companies in the aggregate. Further, as
a matter of operating policy, the Money Market Fund will limit its investments
in other investment companies in accordance with the diversification
requirements for money market funds specified in (16) below;
(7) UNDERWRITING: Underwrite securities issued by other persons, except
to the extent that a Fund may be deemed to be an underwriter, within the meaning
of the Securities Act of 1933, in connection with the purchase of securities
directly from an issuer in accordance with each Fund's investment objectives,
investment program, policies, and restrictions;
(8) OPTIONS, STRADDLES AND SPREADS: Invest in puts, calls, straddles,
spreads or any combination thereof, except that the Short-Term Bond Fund may
invest in and commit its assets to writing and purchasing only put and call
options that are listed on a national securities exchange and issued by the
Options Clearing Corporation to the extent permitted by the Prospectus and this
Statement of Additional Information. In order to comply with the securities
laws of several states, the Short-Term Bond Fund (as a matter of operating
policy) will not write a covered call option if, as a result, the aggregate
market value of all portfolio securities covering call options or subject to put
options for that Fund exceeds 25% of the market value of that Fund's net assets.
In addition, the Short-Term Bond Fund will utilize only listed options issued by
the Options Clearing Corporation. The Short-Term Bond Fund has no current
intention, in the foreseeable future (I.E., the next year), of investing in
options, straddles and spreads;
(9) OIL AND GAS PROGRAMS: Invest in interests in oil, gas, or other
mineral exploration or development programs or oil, gas and mineral leases,
although investments may be made in the securities of issuers engaged in any
such businesses;
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(10) OWNERSHIP OF PORTFOLIO SECURITIES BY OFFICERS AND TRUSTEES: Purchase
or retain the securities of any issuer if those officers and Trustees of the
AAHSA Trust, CRSA Advisors or the Sub-Adviser who individually own more than
1/2 of 1% of the securities of such issuer collectively own more than 5% of
the securities of such issuer;
(11) LOANS: Make loans, except that each Fund in accordance with that Fund's
investment objectives, investment program, policies, and restrictions may: (i)
invest in a portion of an issue of publicly issued or privately placed bonds,
debentures, notes, and other debt securities for investment purposes; (ii)
purchase money market securities and enter into repurchase agreements, provided
such repurchase agreements are fully collateralized and marked to market daily;
and (iii) lend its portfolio securities in an amount not exceeding one-third the
value of that Fund's total assets.
(12) UNSEASONED ISSUERS: Invest more than 5% of its total assets in securities
of issuers, including their predecessors and unconditional guarantors, which, at
the time of purchase, have been in operation for less than three years, other
than obligations issued or guaranteed by the United States Government, its
agencies, and instrumentalities;
(13) RESTRICTED SECURITIES, ILLIQUID SECURITIES AND SECURITIES NOT
READILY MARKETABLE: Knowingly purchase or otherwise acquire any security or
invest in a repurchase agreement if, as a result, more than 15% of the net
assets of the Short-Term Bond Fund and 10% of the net assets of the Money
Market Fund would be invested in securities that are illiquid or not readily
marketable, including repurchase agreements maturing in more than seven days
and non-negotiable fixed time deposits with maturities over seven days. Each
Fund may invest without limitation in restricted securities provided such
securities are considered to be liquid. As a matter of operating policy, in
compliance with certain state regulations, no more than 15% of any Fund's
total assets will be invested in restricted securities;
(14) MORTGAGING: Mortgage, pledge, or hypothecate in any other manner, or
transfer as security for indebtedness any security owned by a Fund, except (i)
as may be necessary in connection with permissible borrowings (in which event
such mortgaging, pledging, and hypothecating may not exceed 15% of each Fund's
total assets in order to secure such borrowings) and (ii) with respect to the
Short-Term Bond Fund as may be necessary, in connection with the use of options
and futures contracts;
(15) WARRANTS: The Money Market Fund and the Short-Term Bond Fund will not
invest in warrants;
(16) DIVERSIFICATION: Make an investment unless 75% of the value of that
Fund's total assets is represented by cash, cash items, U.S. Government
securities, securities of other investment companies and other securities. For
purposes of this restriction, the purchase of "other securities" is limited so
that the Fund will invest no more than 5% of the value of its total assets in
any one issuer or purchase more than 10% of the outstanding voting securities of
any one issuer. As a matter of operating policy, each Fund will not consider
repurchase agreements to be subject to the above-stated 5% limitation if all the
collateral underlying the repurchase agreements are U.S. Government securities
and such repurchase agreements are fully collateralized. Further, as a matter
of operating policy, the Money Market Fund will invest no more than 5% of the
value of that Fund's total assets in securities of any one issuer, other than
U.S. Government securities, except that the Money Market Fund may invest up to
25% of its total assets in First Tier Securities (as defined in Rule 2a-7 under
the 1940 Act) of a single issuer for a period of up to three business days after
the purchase of such security. Further, as a matter of operating policy, the
Money Market Fund will not invest more than (i) the greater of 1% of its total
assets or $1,000,000 in Second Tier Securities (as defined in Rule 2a-7 under
the 1940 Act) of a single issuer and (ii) 5% of the Money Market Fund's total
assets, when acquired, in Second Tier Securities (as defined in Rule 2a-7 under
the 1940 Act); and
(17) CONCENTRATION: Invest 25% or more of the value of its total assets in any
one industry, except that each Fund may invest 25% or more of the value of its
total assets in cash or cash items, securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or instruments secured by these
money market instruments, such as repurchase agreements.
DESCRIPTION OF CERTAIN INVESTMENTS
The following is a description of certain types of investments which may be made
by the Funds.
UNITED STATES GOVERNMENT OBLIGATIONS: These consist of various types of
marketable securities issued by the United States Treasury, i.e., bills, notes
and bonds. Such securities are direct obligations of the United States
Government and differ mainly in the length of their maturity. Treasury bills,
the most frequently issued marketable Government security, have a maturity of up
to one year and are issued on a discount basis.
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UNITED STATES GOVERNMENT AGENCY SECURITIES: These consist of debt securities
issued by agencies and instrumentalities of the United States Government,
including the various types of instruments currently outstanding or which may
be offered in the future. Agencies include, among others, the Federal
Housing Administration, Government National Mortgage Association ("GNMA"),
Farmer's Home Administration, Export-Import Bank of the United States,
Maritime Administration, and General Services Administration.
Instrumentalities include, for example, each of the Federal Home Loan Banks,
the National Bank for Cooperatives, the Federal Home Loan Mortgage
Corporation ("FHLMC"), the Farm Credit Banks, the Federal National Mortgage
Association ("FNMA"), and the United States Postal Service. These securities
are either; (i) backed by the full faith and credit of the United States
Government (e.g., United States Treasury Bills); (ii) guaranteed by the United
States Treasury (e.g., GNMA mortgage-backed securities); (iii) supported by the
issuing agency's or instrumentality's right to borrow from the United States
Treasury (e.g., FNMA Discount Notes); or (iv) supported only by the issuing
agency's or instrumentality's own credit (e.g., Tennessee Valley Association).
REPURCHASE AGREEMENTS: The Funds may invest in repurchase agreements. A
repurchase agreement is an instrument under which the investor (such as the
Fund) acquires ownership of a security (known as the "underlying security") and
the seller (i.e., a bank or primary dealer) agrees, at the time of the sale, to
repurchase the underlying security at a mutually agreed upon time and price,
thereby determining the yield during the term of the agreement. This results in
a fixed rate of return insulated from market fluctuations during such period,
unless the seller defaults on its repurchase obligations. The underlying
securities will consist of high-quality securities and must be determined to
present minimal credit risks. Repurchase agreements are, in effect,
collateralized by such underlying securities, and, during the term of a
repurchase agreement, the seller will be required to mark to market such
securities every business day and to provide such additional collateral as is
necessary to maintain the value of all collateral at a level at least equal to
the repurchase price. Repurchase agreements usually are for short periods,
often under one week, and will not be entered into by a Fund for a duration of
more than seven days if, as a result, more than 15% of the net asset value of
the Short-Term Bond Fund or 10% of the net asset value of the Money Market Fund
would be invested in such agreements or other securities which are not readily
marketable.
The Funds will assure that the amount of collateral with respect to any
repurchase agreement is adequate. As with a true extension of credit, however,
these is risk of delay in recovery or the possibility of inadequacy of the
collateral should the seller of the repurchase agreement fail financially. In
addition, a Fund could incur costs in connection with the disposition of the
collateral if the seller were to default. The Funds will enter into repurchase
agreements only with sellers deemed to be creditworthy by the AAHSA Trust's
Board of Trustees and only when the economic benefit to the Funds is believed to
justify the attendant risks. The Funds have adopted standards for the sellers
with whom they will enter into repurchase agreements. The Board of Trustees
believe these standards are designed to reasonably assure that such sellers
present no serious risk of becoming involved in bankruptcy proceedings within
the time frame contemplated by the repurchase agreement. The Funds may enter
into repurchase agreements only with member banks of the Federal Reserve System
or primary dealers in U.S. Government securities.
ADJUSTABLE RATE SECURITIES: Adjustable rate securities (i.e., variable rate and
floating rate instruments) are securities that have interest rates that are
adjusted periodically, according to a set formula. The maturity of some
adjustable rate securities may be shortened under certain special conditions
described more fully below.
Variable rate instruments are obligations that provide for the adjustment of
their interest rates on predetermined dates or whenever a specific interest
rate changes. A variable rate instrument whose principal amount is scheduled
to be paid in 397 days or less is considered to have a maturity equal to the
period remaining until the next readjustment of the interest rate. Many
variable rate instruments are subject to demand features which entitle the
purchaser to resell such securities to the issuer or another designated
party, either (1) at any time upon notice of usually 397 days or less, or (2)
at specified intervals, not exceeding 397 days, and upon 30 days notice. A
variable rate instrument subject to a demand feature is considered to have a
maturity equal to the longer of the period remaining until the next
readjustment of the interest rate or the period remaining until the principal
amount can be recovered through demand, if final maturity exceeds 397 days or
the shorter of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand if final maturity is within 397 days.
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Floating rate instruments have interest rate reset provisions similar to those
for variable rate instruments and may be subject to demand features like those
for variable rate instruments. The interest rate is adjusted, periodically
(e.g., daily, monthly, semi-annually), to the prevailing interest rate in the
marketplace. The interest rate on floating rate securities is ordinarily
determined by reference to the 90-day U.S. Treasury bill rate, the rate of
return on commercial paper or bank certificates of deposit or an index of short-
term interest rates. The maturity of a floating rate instrument is considered
to be the period remaining until the principal amount can be recovered through
demand.
DEBT SECURITIES. As noted in the Prospectus, the Short-Term Bond Fund invests
primarily in a managed portfolio of U.S. Government and agency notes and
bonds (described above), including certain mortgage pass through securities
(described below).
MORTGAGE PASS-THROUGH SECURITIES. Interests in pools of mortgage pass-through
securities differ from other forms of debt securities (which normally provide
periodic payments of interest in fixed amounts and the payment of principal in a
lump sum at maturity or on specified call dates). Instead, mortgage pass-
through securities provide monthly payments consisting of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on the underlying residential
mortgage loans, net of any fees paid to the issuer or guarantor of such
securities. Unscheduled payments of principal may be made if the underlying
mortgage loans are repaid, refinanced or the underlying properties are
foreclosed, thereby shortening the securities' weighted average life. Some
mortgage pass-through securities (such as securities guaranteed by GNMA) are
described as "modified pass-through securities." These securities entitle the
holder to receive all interest and principal payments owed on the mortgage pool,
net of certain fees, on the scheduled payment dates regardless of whether the
mortgagor actually makes the payment.
The principal governmental guarantor of mortgage pass-through securities is
GNMA. GNMA is authorized to guarantee, with the full faith and credit of the
U.S. Treasury, the timely payment of principal and interest on securities issued
by lending institutions approved by GNMA (such as savings and loan institutions,
commercial banks and mortgage bankers) and backed by pools of mortgage loans.
These mortgage loans are either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgage
loans is assembled and after being approved by GNMA, is offered to investors
through securities dealers.
Government-related guarantors of mortgage pass-through securities (i.e., not
backed by the full faith and credit of the U.S. Treasury) include FNMA and
FHLMC. FNMA is a Government-sponsored corporation owned entirely by private
stockholders. It is subject to general regulation by the Secretary of Housing
and Urban Development. FNMA purchases conventional (i.e., not insured or
guaranteed by any Government agency) residential mortgages from a list of
approved seller/services which include state and federally chartered savings and
loan associations, mutual savings banks, commercial banks and credit unions and
mortgage bankers. Mortgage pass-through securities issued by FNMA are
guaranteed as to timely payment of principal and interest by FNMA but are not
backed by the full faith and credit of the U.S. Treasury.
FHLMC was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. It is a U.S.
Government-sponsored corporation formerly owned by the twelve Federal Home Loan
Banks and now owned entirely by private stockholders. FHLMC issues
Participation Certificates ("PCs") which represent interests in conventional
mortgages from FHLMC's national portfolio. FHLMC guarantees the timely payment
of interest and ultimate collection of principal, but PCs are not backed by the
full faith and credit of the U.S. Treasury.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create pass-
through pools of conventional residential mortgage loans. Such issuers may, in
addition, be the originators and/or servicers of the underlying mortgage loans
as well as the guarantors of the mortgage pass-through securities. The Short-
Term Bond Fund does not purchase interests in pools created by such non-
governmental issuers.
RESETS. The interest rates paid on the Adjustable Rate Mortgage Securities
("ARMs") in which the Short-Term Bond Fund invests generally are readjusted or
reset at intervals of one year or less to an increment over some predetermined
interest rate index. There are two main categories of indices: those based on
U.S. Treasury securities and those derived from a calculated measure, such as a
cost of funds index or a moving average of mortgage rates. Commonly utilized
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indices include the one-year and five-year constant maturity Treasury Note
rates, the three-month Treasury Bill rate, the 180-day Treasury Bill rate, rates
on longer-term Treasury securities, the National Median Cost of Funds, the one-
month or three-month London Interbank Offered Rate (LIBOR), the prime rate of a
specific bank, or commercial paper rates. Some indices, such as the one-year
constant maturity Treasury Note rate, closely mirror changes in market interest
rate levels. Others tend to lag changes in market rate levels and tend to be
somewhat less volatile.
CAPS AND FLOORS. The underlying mortgages which collateralize the ARMs in which
the Short-Term Bond Fund invests will frequently have caps and floors which
limit the maximum amount by which the loan rate to the residential borrower may
change up or down: (1) per reset or adjustment interval and (2) over the life
of the loan. Some residential mortgage loans restrict periodic adjustments by
limiting changes in the borrower's monthly principal and interest payments
rather than limiting interest rate changes. These payment caps may result in
negative amortization.
The value of mortgage securities in which the Short-Term Bond Fund invests may
be affected if market interest rates rise or fall faster and farther than the
allowable caps or floors on the underlying residential mortgage loans.
Additionally, even though the interest rates on the underlying residential
mortgages are adjustable, amortization and prepayments may occur, thereby
causing the effective maturities of the mortgage securities in which the Short-
Term Bond Fund invests to be shorter than the maturities stated in the
underlying mortgages.
MATURITY OF DEBT SECURITIES
The maturity of debt securities may be considered long (10 or more years),
intermediate (3 to 10 years), or short-term (1 to 3 years). In general, the
principal values of longer-term securities fluctuate more widely in response to
changes in interest rates than those of shorter-term securities, providing
greater opportunity for capital gain or risk of capital loss. A decline in
interest rates usually produces an increase in the value of debt securities,
while an increase in interest rates generally reduces their value.
WHEN-ISSUED SECURITIES
Each Fund may, from time to time, purchase securities on a "when-issued" or
delayed delivery basis. The price for such securities, which may be expressed
in yield terms, is fixed at the time the commitment to purchase is made, but
delivery and payment for the when-issued securities take place at a later date.
Normally, the settlement date occurs within one month of the purchase, but may
take up to three months. During the period between purchases and settlement, no
payment is made by a Fund to the issuer and no interest accrues to a Fund. At
the time a Fund makes the commitment to purchase a security on a when-issued
basis, it will record the transaction and reflect the value of the security in
determining its net asset value. Each Fund will maintain, in a segregated
account with the custodian, cash and liquid high-quality debt securities equal
in value to commitments for when-issued securities.
MANAGEMENT OF THE AAHSA TRUST
TRUSTEES AND OFFICERS
Trustees and officers of the AAHSA Trust, together with information as to their
principal business occupations during the last five years, are shown below.
Each AAHSA Trustee who is considered an "interested person" of the AAHSA Trust
(as defined in Section 2(a)(19) of the 1940 Act) is indicated by an asterisk
next to his name. The address for all interested persons, unless otherwise
indicated, is 901 E Street, N.W., Suite 500, Washington, D.C. 20004-2037.
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Name, Position with the AAHSA Trust and
Business Address Principal Occupation within
and Age the Past Five Years
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Carol A. Berster [Age] TRUSTEE AND VICE PRESIDENT. President,
1010 North Broom Street Ingleside Homes Inc., 1995 - present;
Wilmington, Delaware 19806 Vice President and Chief Financial Officer,
Peninsula United Methodist Homes, Inc.
- 1995; Director, American Association
of Homes and Services for the Aging.
James E. Dewhirst [Age] TRUSTEE AND VICE PRESIDENT. President and
3156 East Avenue Chief Executive Officer, The Friendly Home
Rochester, New York 14618 and Rochester Friendly Senior Services, 1989-
present; Director, American Association of
Homes and Services for the Aging, 1990-
present.
*Sheldon L. Goldberg [Age] TRUSTEE AND TREASURER. President, American
901 E Street, N.W. Association of Homes and Services for the
Suite 500 Aging, AAHSA Development Corporation,
Washington, D.C. 20004 International Association of Homes and
Services for the Aging, AAHSA Assurances,
Ltd., and AAHSA Services Corporation.
James I. Melhorn [Age] TRUSTEE AND PRESIDENT. President and Chief
7200 Third Avenue Executive Officer of Episcopal Ministries to
Sykesville, Maryland 21784 the Aging, Inc; Secretary, American
Association of Homes and Services for the
Aging, 1990-1993; and Director, American
Association of Homes and Services for the
Aging, 1991-present.
*Edward Crouch [36] SECRETARY. President and Director, CRSA
6075 Poplar Avenue, Suite Advisors Investment Advisors, Inc.; Senior
600 Vice President, CRSA Advisors, Inc.,
Memphis, TN 38119 (management, marketing and financial
consulting firm) 1995 - present; Executive
Vice President, A. Webster Dougherty & Co.
(investment banking firm)1994; Principal,
Alex. Brown & Sons, Inc. (investment
banking firm) 1990 - 1994.
*Roger Marshall [Age] ASSISTANT SECRETARY. President, Wainwright
966 Hungerford Drive, #26B Asset Management, 1995 - present; President,
Rockville, MD 20850 R.W. Marshall & Associates, Inc., (holding
company) 1995 - present; Senior Vice
President, A. Webster Dougherty & Co., Inc.,
(investment banking firm) 1994; President and
Managing Director, Riggs Investment Management
Corp. (xxxx), 1988 - 1994.
Ms. Berster and Messrs. Dewhirst and Melhorn are each Directors of the
Association, the sub-administrator for the AAHSA Trust. Mr. Goldberg is the
President of the Association. Ms. Berster and Messrs. Dewhirst and Melhorn do
not receive any compensation, direct or indirect, for their services to the
Association. In addition, the Trustees do not receive any compensation as
Trustees of the AAHSA Trust. However, the AAHSA Trust will reimburse the
Trustees for travel and other expenses incurred in attending meetings of the
Board of Trustees (the "Board").
COMMITTEES OF THE BOARD OF TRUSTEES
The AAHSA Trust has an Audit Committee and an Executive Committee. The duties
of these two committees and their present membership are as follows:
AUDIT COMMITTEE: The members of the Audit Committee will consult with the AAHSA
Trust's independent public accountants if the accountants deem it desirable, and
will meet with the AAHSA Trust's independent public accountants at least once
annually to discuss the scope and results of the annual audit of the Funds and
such other matters as the
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Audit Committee members may deem appropriate or desirable. Carol A. Berster,
James E. Dewhirst and James I. Melhorn are members of the Audit Committee.
EXECUTIVE COMMITTEE: During intervals between Board Meetings, the Executive
Committee possesses and may exercise all of the powers of the Board in the
management of the AAHSA Trust except as to matters where action of the full
Board is specifically required. Included within the scope of such powers are
matters relating to valuation of securities held in each Fund's portfolio and
the pricing of each Fund's shares for purchase and redemption. Sheldon L.
Goldberg and James I. Melhorn are members of the Executive Committee.
PRINCIPAL HOLDERS OF SECURITIES
Trustees and officers of the AAHSA Trust, as a group, owned less than 1% of each
Funds outstanding voting securities as of the date of the Statement of
Additional Information.
INVESTMENT MANAGEMENT AND OTHER SERVICES
CRSA ADVISORS
CRSA Advisors, 6075 Poplar Avenue, Suite 600, Memphis, Tennessee
38119, serves as Investment Manager of the Money Market Fund and the
Short-Term Bond Fund pursuant to separate Investment Management Agreements
that have been approved by the Board of the AAHSA Trust, including a majority
of independent Trustees. The initial term of each Investment Management
Agreement is one year. However, the Investment Management Agreements for each
Fund may continue in effect from year to year if approved at least annually
by a vote of a majority of the Board (including a majority of the Trustees
who are not parties to the Investment Management Agreement or interested
persons of any such parties) cast in person at a meeting called for the
purpose of voting on such renewal, or by the vote of a majority of the
outstanding shares of the particular Fund.
The directors and the principal executive officers of CRSA Advisors are: Edward
P. Crouch, President and Director; Martin R. Satava, Director; and Michael E.
Wade, Director. CRSA Advisors is a subsidiary of CRSA Holdings, Inc.
In addition to the duties set forth in the Prospectus under "How the AAHSA Trust
is Managed - Investment Manager", CRSA Advisors, in furtherance of such duties
and responsibilities, is authorized in its discretion to engage in the following
activities or to cause or permit the Sub-Adviser to engage in the following
activities: (i) develop a continuing program for the management of the assets
of each Fund; (ii) buy, sell, exchange, convert, lend, or otherwise trade in
portfolio securities and other assets; (iii) place orders and negotiate the
commissions (if any) for the execution of transactions in securities with or
through broker-dealers, underwriters, or issuers; (iv) prepare and supervise
the preparation of shareholder reports and other shareholder communications; and
(v) obtain and evaluate business and financial information in connection with
the exercise of its duties.
In its administration of the AAHSA Trust, CRSA Advisors is responsible for
(i) assisting the Trust in selecting, coordinating and overseeing the
activities of, supervising, and acting as liaison with, the other agents to
the Trust, including any sub-advisor, the transfer agent, the custodian, any
distributors, and any administrators; (ii) assisting with the registration of
the shares of the Trust under applicable federal and state securities laws;
(iii) responding to inquiries from shareholders and overseeing responses to
shareholders by other agents to the Trust; (iv) coordinating, assisting in
the preparation for, and attending all meetings of the Board and shareholders
of the Trust; and (v) assisting in the development of a marketing plan for
the distribution of the shares of the Trust and overseeing the execution of
the plan.
CRSA Advisors will also furnish to or place at the disposal of the Funds such
information and reports as requested by or as CRSA Advisors believes would be
helpful to the Funds. CRSA Advisors has agreed to permit individuals who are
among its officers or employees to serve as Trustees, officers, and members of
any committee or advisory board of the AAHSA Trust without cost to the AAHSA
Trust. CRSA Advisors has agreed to pay all salaries, expenses, and fees of any
Trustees or officers of the AAHSA Trust who are affiliated with CRSA Advisors.
WAINWRIGHT ASSET MANAGEMENT
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The Sub-Adviser serves as sub-adviser of each Fund pursuant to separate
Sub-Advisory Agreements by and among the AAHSA Trust, CRSA Advisors and
the Sub-Adviser. The principal business address of the Sub-Adviser is
966 Hungerford Drive #26B, Rockville, MD 20850.
In addition to the duties set forth in the Prospectus, the Sub-Adviser, in
furtherance of such duties and responsibilities, is authorized and has agreed
to provide or perform the following functions: (1) formulate and implement a
continuing investment program for use in managing the assets and resources of
each Fund in a manner consistent with each Fund's investment objectives,
investment program, policies, and restrictions, which program may be amended
and updated from time to time to reflect changes in financial and economic
conditions; (2) make all determinations with respect to the investment of
each Fund's assets in accordance with (a) applicable law, (b) each Fund's
investment objectives, investment program, policies, and restrictions as
provided in the AAHSA Trust's Prospectus and Statement of Additional
Information, as amended from time to time, (c) provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), relating to regulated
investment companies, and (d) such other limitations as the Board may impose
by written notice; (3) make all determinations as to the purchase or sale of
portfolio securities, including advising the Board as to certain matters
involving each Fund's portfolio securities that are not in the nature of
investment decisions; (4) buy, sell, exchange, convert for each Fund's use,
and otherwise trade in portfolio securities and other assets; (5) furnish to
the Board periodic reports concerning the Sub-Adviser's economic
outlook and investment strategy, as well as information concerning each
Fund's portfolio activity and investment performance; (6) place orders for
the execution of portfolio transactions with such broker-dealers,
underwriters or issuers, and negotiate the commissions (if any) for the
execution of transactions in securities with or through such broker-dealers,
underwriters or issuers selected by the Sub-Adviser; (7) obtain and evaluate
business and financial information in connection with the exercise of its
duties; (8) determine the credit quality of the Money Market Fund's portfolio
securities; (9) determine the creditworthiness of the issuers, obligors, or
guarantors of portfolio securities; and (10) evaluate the creditworthiness of
any entities with which the Funds propose to engage in repurchase
transactions.
ADMINISTRATOR
State Street is the administrator of the AAHSA Trust. State Street is a
Massachusetts trust company with a principal office at 225 Franklin Street,
Boston, Massachusetts 02111. State Street serves as administrator of other
mutual funds.
Pursuant to the Administration Agreement with the AAHSA Trust, State Street
provides all administrative services reasonably necessary for the AAHSA Trust,
other than those provided by CRSA Advisors or the Association, subject to the
supervision of the Board.
Under the Administration Agreement with the AAHSA Trust, State Street
provides administrative services including, without limitation: (i) services
of personnel competent to perform such administrative and clerical functions
as are necessary to provide effective administration of the Trust; (ii)
maintaining the AAHSA Trust's books and records (other than financial and
accounting books and records and records maintained by the AAHSA Trust's
custodian or transfer agent); (iii) overseeing the AAHSA Trust's insurance
relationships; (iv) preparing or assisting in the preparation of all required
tax returns, proxy statements and reports to the AAHSA Trust's shareholders
and Trustees and reports to and filings with the SEC and any other
governmental agency; (v) preparing or assisting in the preparation of such
applications and reports as may be necessary to register or maintain the
registration of the AAHSA Trust's shares under applicable state securities
laws; (vi) preparing or assisting in the preparation of, and coordinating the
distribution of all materials for meetings of the Board;(vii) monitoring
daily and periodic compliance with respect to all requirements and
restrictions of the 1940 Act, the Internal Revenue Code and the Prospectus;
(viii) monitoring the Trust's accounting services agent's calculation of all
income and expense accruals, sales and redemptions of capital shares
outstanding; (ix) evaluating expenses, projecting futures expenses, and
processing payments of expenses; and (x) monitoring and evaluating
performance of bookkeeping and related services by the bookkeeping agent for
the Trust.
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The Administration Agreement has an initial term which extends to [ ].
Thereafter the Agreement is terminable at any time, without the payment of any
penalty, by the Fund or State Street on sixty days' written notice.
SUB-ADMINISTRATOR
The Association serves as the sub-administrator for the AAHSA Trust pursuant
to a Sub-Administrative Services Agreement between the Association and the
AAHSA Trust. The Association is the national association of not-for-profit
organizations dedicated to providing high-quality health care, housing and
community services primarily to the elderly. The principal business address
of the Association is 901 E Street, N.W., Suite 500, Washington, D.C.
20004-2037. The Association will assist its members in their communications
with the AAHSA Trust and the other service providers to the AAHSA Trust and
provide certain administrative services to the AAHSA Trust and its
shareholders.
CUSTODIAN
State Street serves as the custodian of the Trust's assets pursuant to a
Custodian Contract by and between State Street and the AAHSA Trust. State
Street's responsibilities include safeguarding and controlling the Trust's cash
and securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Trust's investments. Pursuant to the Custodian
Contract, State Street also provides certain accounting and pricing services to
the AAHSA Trust, including calculating the daily net asset value per share for
each Fund; maintaining original entry documents and books of record and general
ledgers; posting cash receipts and disbursements; reconciling bank account
balances monthly; recording purchase and sales based upon communication from the
Sub-Adviser; and preparing monthly and annual summaries to assist in the
preparation of financial statements of, and regulatory reports for, the AAHSA
Trust.
TRANSFER AGENT SERVICES
State Street provides transfer agent and dividend disbursing services to each
Fund pursuant to the terms of a Transfer Agency and Service Agreement, by and
between State Street and the AAHSA Trust.
DISTRIBUTION OF SHARES
The Distributor serves as the distributor of the shares of each Fund pursuant
to a Distribution Agreement between the Distributor and the AAHSA Trust. The
Distributor's principal business address is One Boston Place, Boston,
Massachusetts 02108. The AAHSA Trust's shares are sold on a no-load basis
and, therefore, the Distributor receives no front-end or contingent deferred
sales commission or sales load for providing such services to the AAHSA Trust
under the Distribution Agreement. However, pursuant to a written Service Plan
adopted under Rule 12b-1 under the 1940 Act ("Service Plan") and Rule 12b-1
Agreement, the Funds are authorized to use a portion of their assets to
finance certain activities relating to the distribution of their shares to
investors.
The Service Plan authorizes payments to the Distributor pursuant to a
Distribution Agreement with the AAHSA Trust, as compensation for services,
costs and expenses in connection with the distribution of the AAHSA Trust's
shares. In addition, the Service Plan authorizes the Distributor to make
payments to certain securities dealers or brokers, administrators and others
("Recipients") that have rendered assistance either direct, administrative or
both, in the distribution of shares of the AAHSA Trust or has provided
support services in connection therewith. Further, the Service Plan
authorized the Distributor to compensate certain Recipients for preparing,
printing and distributing advertisements, sales materials, prospectuses and
annual and semi-annual reports to potential investors.
The AAHSA Trust will pay the Distributor quarterly at the rates described in
the Prospectus. Each Fund will bear its own costs of distribution under the
Service Plan.
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No such payment will be made by the Distributor to any Recipient in any
quarter for distribution, assistance or administrative support services if
the aggregate net asset value of each Fund's shares held by the Recipient or
its customers at the end of such quarter, taken without regard to the minimum
holding period, does not exceed a minimum amount specified by the Board. The
minimum holding period and the minimum level of holdings, if any, will be
determined from time to time by a majority of the Trustees who are not
"interested persons" of the AAHSA Trust and do not have a direct or indirect
financial interest in the Service Plan ("Rule 12b-1 Trustees"). The services
to be provided by Recipients may include, but are not limited to, the
following: answering routine inquiries concerning a Fund; assisting in the
establishment and maintenance of accounts or sub-accounts in a Fund and in
processing purchase and redemption transactions; making a Fund's investment
plans and shareholder services available; and providing such other
information and services in connection with the distribution of shares of a
Fund as the Distributor or the AAHSA Trust, on behalf of a Fund, may
reasonably request.
In the event that either the Distributor or the Board has reason to believe
that a Recipient may not be rendering appropriate distribution assistance or
administrative support services in connection with the sale of shares of the
AAHSA Trust, then the Distributor, at the request of the Board, will require
the Recipient provide a written report or other information to verify that
said Recipient is providing appropriate distribution services to the Funds.
However, Recipients preparing, printing and distributing advertisements,
sales materials, prospectuses and annual and semi-annual reports to potential
investors need not have any minimum level of customer holdings or minimum
holding period for shares of the Funds.
In addition to being compensated by the AAHSA Trust for any payments to
Recipients, the Distributor may also be compensated for its activities in
distributing the shares of each Fund, including the preparation and
distribution of sales literature, advertising and the cost of distributing
prospectuses (other than those furnished to potential investors). For any
quarter, the Distributor's compensation for all purposes, including payments
made to Recipients, may not exceed: for the Money Market Fund, [ ]% of the
aggregate net asset value of the Fund at the end of that quarter; for the
Short-Term Bond Fund, [ ]% of the aggregate net asset value of the Fund
at the end of that quarter.
The Distributor is required to provide a written report, at least
quarterly to the Board, which the Trustees will review, specifying in
reasonable detail the amounts expended pursuant to the Service Plan and the
purposes for which such expenditures were made. Further, the Distributor
will inform the Board of any Rule 12b-1 fees to be paid by the Distributor to
Recipients.
The initial term of the Service Plan is one year and it will continue in
effect from year to year thereafter, provided such continuance is
specifically approved at least annually by a majority of the Board and a
majority of the Rule 12b-1 Trustees by votes cast in person at a meeting
called for the purpose of voting on the Service Plan. The Service Plan may
be terminated at any time by vote of a majority of the Rule 12b-1 Trustees or
by vote of a majority of the outstanding voting securities of the AAHSA
Trust. The Service Plan will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
The Service Plan may not be amended to increase materially the amount of
the Distributor's compensation, unless such amendment is approved by the vote
of a majority of the outstanding voting securities of the AAHSA Trust (as
defined in the 1940 Act). All material amendments must be approved by a
majority of the Board and a majority of the Rule 12b-1 Trustees by votes cast
in person at a meeting called for the purpose of voting on the Service Plan.
During the term of the Service Agreement, the selection and nomination of
non-interested Trustees of the AAHSA Trust will be committed to the
discretion of current non-interested Trustees. The Distributor will preserve
copies of the Service Plan, any related agreements, and all reports, for
a period of not less than six years from the date of such document and for at
least the first two years in an easily accessible place.
Any agreement related to the Service Plan will be in writing and provide
that: (a) it may be terminated at any time upon sixty (60) days' written
notice, without the payment of any penalty, by vote of a majority of the Rule
12b-1 Trustees, or by vote of a majority of the outstanding voting securities of
the AAHSA Trust; (b) it will automatically terminate in the event of its
assignment (as defined in the 1940 Act); and (c) it will continue in effect for
a period of
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more than one year from the date of its execution or adoption only so long
as such continuance is specifically approved at least annually by a majority
of the Board and a majority of the Rule 12b-1 Trustees by votes cast in
person at a meeting called for the purpose of voting on such agreement.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Subject to the general supervision of the Board, the Sub-Adviser is
responsible for making decisions with respect to the purchase and sale of
portfolio securities on behalf of each Fund. The Sub-Adviser is also
responsible for the implementation of those decisions, including the selection
of broker-dealers to effect portfolio transactions, the negotiation of
commissions, and the allocation of principal business and portfolio brokerage.
The purchase of money market instruments and other debt securities traded in the
over-the-counter market usually will be on a principal basis directly from
issuers or dealers serving as primary market makers. The price of such money
market instruments and debt securities is usually negotiated, on a net basis,
and no brokerage commissions are paid. Although no stated commissions are paid
for securities traded in the over-the-counter market, transactions in such
securities with dealers usually include the dealer's "mark-up" or "mark-down."
Money market instruments and other debt securities may also be purchased in
underwritten offerings, which include a fixed amount of compensation to the
underwriter, generally referred to as the underwriting discount or concession.
In selecting brokers and dealers to execute transactions for each Fund, the
primary consideration is to seek to obtain the best execution of the
transactions, at the most favorable overall price, and in the most effective
manner possible, considering all the circumstances. Such circumstances include:
the price of the security; the rate of the commission or broker-dealer's
"spread;" the size and difficulty of the order; the reliability, integrity,
financial condition, general execution and operational capabilities of competing
broker-dealers; and the value of research and other services provided by the
broker-dealer. The Sub-Adviser may also rank broker-dealers based on the value
of their research services and may use this ranking as one factor in its
selection of broker-dealers. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. and subject to the policy of
seeking the best price and execution as stated above, sales of shares of the
Funds by a broker-dealer may be considered by the Sub-Adviser in the selection
of broker-dealers to execute portfolio transactions for the Funds.
Under no circumstances will the Funds deal with the Distributor or its
affiliates in any transaction in which the Distributor or its affiliates act as
a principal. Brokerage transactions will not be placed with the Sub-Adviser or
its affiliates, nor will the Funds deal with the Sub-Adviser or its affiliates
in any transaction in which the Sub-Adviser or its affiliates act as a
principal.
In placing orders for each Fund, the Sub-Adviser, subject to seeking best
execution, is authorized pursuant to the Sub-Advisory Agreements to cause each
Fund to pay broker-dealers that furnish brokerage and research services (as such
services are defined under Section 28(e) of the Securities Exchange Act of 1934,
as amended (the "1934 Act")) a higher commission than that which might be
charged by another broker-dealer that does not furnish such brokerage and
research services or who furnishes services of lesser value. However, such
higher commissions must be deemed by the Sub-Adviser as reasonable in relation
to the brokerage and research services provided by the broker-dealer, viewed in
terms of either that particular transaction or the overall decision-making
responsibilities of the Sub-Adviser with respect to the AAHSA Trust or other
accounts, as to which it exercises investment discretion (as such term is
defined under Section 3(a)(35) of the 1934 Act).
The Sub-Adviser currently provides investment advice to private advisory
accounts that have investment objectives and programs similar to the AAHSA
Trust. Accordingly, occasions may arise when the Sub-Adviser may engage in
simultaneous purchase and sale transactions of securities that are consistent
with the investment objectives and programs of the AAHSA Trust, and other
accounts.
On those occasions when such simultaneous investment decisions are made, the
Sub-Adviser will allocate purchase and sale transactions in an equitable manner
according to written procedures approved by the Board.
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Specifically, such written procedures provide that, in allocating purchase
and sale transactions made on a combined basis, the Sub-Adviser will seek to
achieve the same average unit price of securities for each entity and will
seek to allocate, as nearly as practicable, such transactions on a pro-rata
basis substantially in proportion to the amounts ordered to be purchased or
sold by each entity. Such procedures may, in certain instances, be either
advantageous or disadvantageous to the AAHSA Trust.
PURCHASE AND REDEMPTION OF SECURITIES BEING OFFERED
The shares of each Fund are offered to the public for purchase directly
through the Distributor, which serves as the principal underwriter and
distributor for the AAHSA Trust.
The offering and redemption price of the shares of each Fund is based upon that
Fund's net asset value per share next determined after a purchase order or
redemption request has been received in good order by the AAHSA Trust. See
"Determination of Net Asset Value" below. Each Fund intends to pay all
redemptions of its shares in cash. However, each Fund may make full or partial
payment of any redemption request by the payment to shareholders of portfolio
securities of the applicable Fund (i.e., by redemption-in-kind), at the value of
such securities used in determining the redemption price. The Funds,
nevertheless, pursuant to Rule 18f-1 under the 1940 Act, have filed a
notification of election under which each Fund is committed to pay in cash to
any shareholder of record, all such shareholder's requests for redemption made
during any 90-day period, up to the lesser of $250,000 or 1% of the applicable
Fund's net asset value at the beginning of such period. The securities to be
paid in-kind to any shareholders will be readily marketable securities selected
in such manner as the Board deems fair and equitable. If shareholders were
to receive redemptions-in-kind, they would incur brokerage costs should they
wish to liquidate the portfolio securities received in such payment of their
redemption request. The AAHSA Trust does not anticipate making
redemptions-in-kind.
The right to redeem shares or to receive payment with respect to any redemption
of shares of the Funds may only be suspended (1) for any period during which
trading on the New York Stock Exchange ("Exchange") is restricted or such
Exchange is closed, other than customary weekend and holiday closings, (2) for
any period during which an emergency exists as a result of which disposal of
securities or determination of the net asset value of the Fund is not reasonably
practicable, or (3) for such other periods as the SEC may by order permit for
protection of shareholders of the Funds.
DETERMINATION OF NET ASSET VALUE
The net asset value of shares of each Fund is normally calculated as of the
close of trading on the Exchange on every day the Exchange is open for trading,
except (1) on days where the degree of trading in the Fund's portfolio
securities would not materially affect the net asset value of the Fund's shares
and (2) on days during which no shares of the Fund were tendered for redemption
and no purchase orders were received. The Exchange is open Monday through
Friday except on the following national holidays: New Year's Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day.
The assets of each Fund are valued as follows:
With respect to the Money Market Fund, all money market instruments held by the
Fund are valued on an amortized cost basis. In addition, with respect to the
Short-Term Bond Fund, all money market instruments with a remaining maturity of
60 days or less are also valued on an amortized cost basis. Amortized cost
valuation involves initially valuing a security at its cost, and thereafter,
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which value, as determined by amortized cost, is higher or
lower than the price the Fund would receive if it sold the security. During
periods of declining interest rates, the quoted yield on shares of the Money
Market Fund may be higher than a like computation made by a fund with identical
investments utilizing a method of valuation based upon market prices and
estimates of market prices for all of its portfolio securities. Thus, if the use
of the amortized cost method of valuation by the Money Market Fund results in a
lower aggregate
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portfolio value on a particular day, (1) a prospective investor in the Money
Market Fund would be able to obtain a somewhat higher yield if he purchased
shares of the Money Market Fund on that day than would result from investment in
a fund utilizing solely market values, and (2) existing investors in the Money
Market Fund would receive less investment income. The converse would apply in a
period of rising interest rates.
Short-term debt instruments with a remaining maturity of more than 60 days,
intermediate and long-term bonds, convertible bonds, and other debt securities
are generally valued at prices obtained from an independent pricing service.
Where such prices are not available, valuations will be obtained from brokers
who are market makers for such securities. However, in circumstances where the
Sub-Adviser deems it appropriate to do so, the mean of the bid and asked prices
for over-the-counter securities or the last available sale price for exchange-
traded debt securities may be used. Where no last sale price for exchange
traded debt securities is available, the mean of the bid and asked prices may be
used.
Other securities and assets for which market quotations are not readily
available or for which valuation cannot be provided, as described above, are
valued in good faith by the Board using its best judgment.
TAXES
Each Fund intends to continue to qualify as a "regulated investment company"
("RIC") under Subchapter M of the Code. As such, each Fund must meet the
requirements of Subchapter M of the Code, including the requirements regarding
the character of investments in each Fund, investment diversification, and
distribution.
In general, to qualify as a RIC, at least 90% of the gross income of each Fund
for the taxable year must be derived from dividends, interest, and gains from
the sale or other disposition of securities, and less than 30% of its gross
income for the taxable year can be attributable to gains (without deductions for
losses) from the sale or other disposition of securities held for less than
three months.
A RIC must distribute to its shareholders 90% of its ordinary income and net
short-term capital gains. Moreover, undistributed net income may be subject to
tax at the RIC level.
In addition, each Fund must declare and distribute dividends equal to at least
98% of its ordinary income (as of the twelve months ended December 31) and
distributions of at least 98% of its capital gains net income (as of the twelve
months ended October 31), in order to avoid a federal excise tax. Each Fund
intends to make the required distributions, but they cannot guarantee that they
will do so. Dividends attributable to a Fund's ordinary income are taxable as
such to shareholders in the year in which they are received.
A corporate shareholder may be entitled to take a deduction for income dividends
received by it that are attributable to dividends received from a domestic
corporation, provided that both the corporate shareholder retains its shares in
the applicable Fund for more than 45 days and the Fund retains its shares in the
issuer from whom it received the income dividends for more than 45 days. A
distribution of capital gains net income reflects a Fund's excess of net long-
term gains over its net short-term losses. Each Fund must designate income
dividends and distributions of capital gains net income and must notify
shareholders of these designations within sixty days after the close of the
AAHSA Trust's taxable year. A corporate shareholder of a Fund cannot use a
dividends-received deduction for distributions of capital gains net income.
If, in any taxable year, a Fund should not qualify as a RIC under the Code: (1)
that Fund would be taxed at normal corporate rates on the entire amount of its
taxable income without deduction for dividends or other distributions to its
shareholders, and (2) that Fund's distributions to the extent made out of that
Fund's current or accumulated earnings and profits would be taxable to its
shareholders (other than shareholders in tax deferred accounts) as ordinary
dividends (regardless of whether they would otherwise have been considered
capital gains dividends), and may qualify for the deduction for dividends
received by corporations.
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ORGANIZATION OF THE TRUST
As a Delaware business trust entity, the AAHSA Trust need not hold regular
annual shareholder meetings and, in the normal course, does not expect to hold
such meetings. The AAHSA Trust, however, must hold shareholder meetings for
such purposes as, for example: (1) electing the initial Board of Trustees; (2)
approving certain agreements as required by the 1940 Act; (3) changing
fundamental investment objectives, policies, and restrictions of the Funds; and
(4) filling vacancies on the Board of Trustees in the event that less than a
majority of the Trustees were elected by shareholders. The AAHSA Trust expects
that there will be no meetings of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of the Trustees
holding office have been elected by shareholders. At such time, the Trustees
then in office will call a shareholders meeting for the election of Trustees.
In addition, holders of record of not less than two-thirds of the outstanding
shares of the AAHSA Trust may remove a Trustee from office by a vote cast in
person or by proxy at a shareholder meeting called for that purpose at the
request of holders of 10% or more of the outstanding shares of the AAHSA Trust.
The Funds have the obligation to assist in such shareholder communications.
Except as set forth above, Trustees will continue in office and may appoint
successor Trustees.
PERFORMANCE INFORMATION ABOUT THE FUNDS
MONEY MARKET FUND YIELD CALCULATION
The Money Market Fund calculates a seven-day "current yield" based on a
hypothetical account containing one share at the beginning of the seven-day
period. Current yield is calculated for the seven-day period by determining the
net change in the hypothetical account's value for the period (excluding
realized gains and losses from the sale of securities and unrealized
appreciation and depreciation, and including all dividends accrued and dividends
reinvested in additional shares), and dividing the net change in the account
value by the value of the account at the beginning of the period in order to
obtain the base period return. This base period return is then multiplied by
365/7 to annualize the yield figure, which is carried to the nearest one-
hundredth of one percent. Realized capital gains or losses and unrealized
appreciation or depreciation of the assets of the Money Market Fund are included
in the hypothetical account for only the beginning of the period. Account
values also reflect all accrued expenses.
The Money Market Fund's compound effective yield for the period is computed by
compounding the unannualized base period return by adding one to the base period
return, raising the sum to a power equal to 365/7, and subtracting one from the
result. Current and compound yields will fluctuate daily. Accordingly, yields
for any given seven-day period do not necessarily represent future results.
TOTAL RETURN CALCULATIONS
Each Fund may provide average annual total return information calculated
according to a formula prescribed by the SEC. According to that formula,
average annual total return figures represent the average annual compounded rate
of return for the stated period. Average annual total return quotations reflect
the percentage change between the beginning value of a static account in the
Fund and the ending value of that account measured by then current net asset
value of that Fund assuming that all dividends and capital gains distributions
during the stated period were reinvested in shares
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of the Fund when paid. Total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment that would equate the
initial amount invested to the ending redeemable value of such investment,
according to the following formula:
T = (ERV/P)1/n - 1
where T equals average annual total return; where ERV, the ending redeemable
value, is the value at the end of the applicable period of a hypothetical $1,000
payment made at the beginning of the applicable period; where P equals a
hypothetical initial payment of $1,000; and where n equals the number of years.
Each Fund, from time to time, also may advertise its cumulative total return
figures. Cumulative total return is the compound rate of return on a
hypothetical initial investment of $1,000 for a specified period. Cumulative
total return quotations reflect changes in the price of a Fund's shares and
assume that all dividends and capital gains distributions during the period were
reinvested in shares of that Fund. Cumulative total return is calculated by
finding the compound rates of a hypothetical investment over such period,
according to the following formula (cumulative total return is then expressed as
a percentage):
C = (ERV/P) - 1
Where:
C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value; ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at
the beginning of the applicable period.
SHORT-TERM BOND FUND YIELD CALCULATION.
In addition to providing cumulative total return information, the Short-Term
Bond Fund may also illustrate its performance by providing information
concerning its yield.
The Short-Term Bond Fund's yield is based on a specified 30-day (or one month)
period and is computed by dividing the net investment income per share earned
during the specified period by the maximum offering price (I.E., net asset
value) per share on the last day of the specified period, and annualizing the
net results according to the following formula:
YIELD = 2[(a-b + 1)6 - 1]
--- cd
Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
Yield fluctuations may reflect changes in the Short-Term Bond Fund's net income,
and portfolio changes resulting from net purchases or net redemptions of the
Fund's shares may affect its yield. Accordingly, the Short-Term Bond Fund's
yield may vary from day to day, and the yield stated for a particular past
period is not necessarily representative of the Fund's future yield. The Short-
Term Bond Fund's yield is not guaranteed, and its principal is not insured.
B-17-
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From time to time, in reports and promotional literature, each Fund's
performance may be compared to: (1) other groups of mutual funds tracked by: (A)
Lipper Analytical Services, a widely-used independent research firm which ranks
mutual funds by overall performance, investment objectives, and asset size; (B)
Forbes Magazine's Annual Mutual Funds Survey and Mutual Fund Honor Roll; or (C)
other financial or business publications, such as Business Week, Money Magazine,
and Barron's, which provide similar information; (2) the Consumer Price Index
(measure for inflation), which may be used to assess the real rate of return
from an investment in each Fund; (3) other Government statistics such as GNP,
and net import and export figures derived from Governmental publications, E.G.,
The Survey of Current Business, which may be used to illustrate investment
attributes of each Fund or the general economic, business, investment, or
financial environment in which each Fund operates; (4) Alexander Steele's Mutual
Fund Expert, a tracking service which ranks various mutual funds according to
their performance; and (5) Morningstar, Inc. which ranks mutual funds on the
basis of historical risk and total return. Morningstar's rankings are
calculated using the mutual fund's average annual returns for a certain period
and a risk factor that reflects the mutual fund's performance relative to three-
month Treasury bill monthly returns. Morningstar's rankings range from five
star (highest) to one star (lowest) and represent Morningstar's assessment of
the historical risk level and total return of a mutual fund as a weighted
average for 3, 5, and 10-year periods. In each category, Morningstar limits its
five star rankings to 10% of the funds it follows and its four star rankings to
22.5% of the funds it follows. Rankings are not absolute or necessarily
predictive of future performance.
In addition, the performance of the Money Market Fund may be compared to indices
of broad groups of similar but unmanaged securities or other benchmarks
considered to be representative of the Money Market Fund's holdings such as: (1)
Advertising News Service, Inc.'s "Bank Rate Monitor - The Weekly Financial Rate
Reporter," a weekly publication which lists the yield on various money market
instruments offered to the public by 100 leading banks and thrift institutions
in the United States, including loan rates offered by these banks; (2) Donoghue
Organization, Inc., "Donoghue's Money Fund Reports," a weekly publication which
tracks net assets, yield, maturity and portfolio holdings of approximately 380
money market mutual funds offered in the United States; and (3) indices prepared
by the research departments of such financial organizations as Merrill Lynch,
Pierce, Fenner and Smith, Inc. and Lipper Analytical Services, Inc.
The performance of the Short-Term Bond Fund may be compared to indices of broad
groups of similar but unmanaged securities or other benchmarks considered to be
representative of the Short-Term Bond Fund's holdings, including those listed
above for the Money Market Fund. Such benchmarks may also include: (1) bank
certificates of deposit ("CDs") which differ from an investment in a mutual fund
in several ways: (a) the interest rate established by the sponsoring bank is
fixed for the term of the CD, (b) there are penalties for early withdrawal from
CDs, and (c) the principal on a CD is insured by the FDIC; (2) Merrill Lynch,
Pierce, Fenner & Smith, Inc., "Taxable Bond Indices," including in particular
the 1-2.99 Years Treasury Note Index; (3) Salomon Brothers, Inc., "Bond Market
Round-Up," a weekly publication that tracks yields and yield prices in a large
group of money market instruments, public corporate debt obligations and U.S.
Government securities; and (4) other indices prepared by the research department
of such financial institutions as Merrill Lynch, Pierce, Fenner & Smith, Inc.
The performance of the indices that may be used as benchmarks for each Fund's
performance, unlike the returns of the Funds, do not include the effect of
paying brokerage costs (for equity securities) and other transaction costs that
investors normally incur when investing directly in the securities in those
indices.
The AAHSA Trust may also illustrate a particular Fund's investment returns or
returns in general by graphs and charts, that compare, at various points in
time, the return from an investment in the particular Fund (or returns in
general) on a tax-deferred basis (assuming reinvestment of capital gains and
dividends and assuming one or more tax rates) with the same return on a taxable
basis.
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<PAGE>
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP whose address is 4200 Norwest Center, 90 South Seventh
Street, Minneapolis, Minnesota 55402 has been selected as the Independent
Auditors for the AAHSA Trust for the fiscal year ending September 30, 1996.
LEGAL MATTERS
Legal advice regarding certain matters relating to the AAHSA Trust and the
offer and sale of its shares has been provided by Katten Muchin & Zavis, 1025
Thomas Jefferson Street, N.W., Washington, DC 20007, which serves as Special
Counsel to the AAHSA Trust.
B-19-
<PAGE>
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements incorporated by reference into the
Prospectus:
None
Financial Statements incorporated by reference into the Statement
of Additional Information:
None
(b) Exhibits:
1. Declaration of Trust of the AAHSA Trust.*
2. By-Laws of the AAHSA Trust.*
3. Not applicable.
4. Not applicable.
5(a). Form of Investment Management Agreement by and between the
AAHSA Trust on behalf of the Money Market Fund and CRSA
Investment Advisors, Inc.
5(b). Form of Sub-Advisory Agreement among the AAHSA Trust, on
behalf of the Money Market Fund, CRSA Investment Advisors,
Inc. and Wainwright Asset Management.
5(c). Form of Investment Management Agreement by and between
AAHSA Trust on behalf of the Short-Term Bond Fund and CRSA
Investment Advisors, Inc.
5(d). Form of Sub-Advisory Agreement among the AAHSA Trust, on
behalf of the Short-Term Bond Fund, CRSA Investment
Advisors, Inc. and Wainwright Asset Management.
6(a). Form of Distribution Agreement between the AAHSA Trust and
H.C. Wainwright & Co., Inc.
6(b). Form of Selected Dealers Agreement.
7. Not applicable.
8. Form of Custodian Contract by and between the AAHSA Trust
and State Street Bank and Trust Company.
9(a). Form of Transfer Agency and Service Agent Agreement by and
between the AAHSA Trust and State Street Bank and Trust
Company.
9(b). Form of Sub-Administrative Services Agreement by and
between the AAHSA Trust and the American Association of
Homes and Services for the Aging.
9(c) Form of Administration Agreement by and between the AAHSA
Trust and State Street Bank and Trust Company.
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<PAGE>
9(d) Form of Expense Limitation Agreement by and between the
AAHSA Trust, on behalf of the Money Market Fund, and
CRSA Investment Advisors, Inc.
9(e) Form of Expense Limitation Agreement by and between the
AAHSA Trust, on behalf of the Money Market Fund, and
Wainwright Asset Management.
9(f) Form of Expense Limitation Agreement by and between the
AAHSA Trust, on behalf of the Money Market Fund, and
the American Association of Homes and Services for the
Aging.
9(g) Form of Expense Limitation Agreement by and between the
AAHSA Trust, on behalf of the Short-Term Bond Fund, and
CRSA Investment Advisors, Inc.
9(h) Form of Expense Limitation Agreement by and between the
AAHSA Trust, on behalf of the Short-Term Bond Fund, and
Wainwright Asset Management.
9(i) Form of Expense Limitation Agreement by and between the
AAHSA Trust, on behalf of the Short-Term Bond Fund, and
the American Association of Homes and Services for the
Aging.
10. Opinion and Consent of Katten Muchin & Zavis regarding the
legality of the securities being registered.*
11. Not applicable.
12. Not applicable.
13. Share Subscription Agreement by and between the American
Association of Homes and Services for the Aging and the
AAHSA Trust on behalf of the Money Market Fund and the
Short-Term Bond Fund.*
14. Not applicable.
15(a). Form of Service Plan Pursuant to Rule 12b-1 under the
Investment Company Act of 1940 of the AAHSA Trust.**
15(b). Form of Agreement Pursuant to the Rule 12b-1 Service Plan
Agreement.
16. Not applicable.
17. Not applicable.
18. Not applicable.
19. Specimen Price Make-Up Sheet.** Incorporated by reference
to Exhibit No. 17 in Pre-Effective Amendment No. 1.
20. Powers of Attorney.* Incorporated by reference to
Exhibit No. 18 in Registration Statement.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Pursuant to a Share Subscription Agreement by and between the
American Association of Homes and Services for the Aging (the
"Association") and the AAHSA Trust, on behalf of the Money Market
Fund and the Short-Term Bond Fund, the Association has agreed to
provide the initial capitalization for the AAHSA Trust and will
initially own 100% of the shares of beneficial interest of the
Money Market Fund and the Short-Term Bond Fund. Shares of the
Money Market Fund and the Short-Term Bond Fund, registered
pursuant to this Registration Statement, will be offered and sold
to members of the Association. The Association represents not-
for-profit organizations dedicated to providing high-quality
health care, housing and services to the nation's elderly. The
Association is the national association of not-for-profit
organizations dedicated to providing high-quality health care,
housing and community services primarily to the elderly.
- --------------------------
* Incorporated herein by reference to initial filing, August 1, 1994, of
Registrant's Form N-1A Registration Statement (File No. 33-82256 and 811-8680).
** Incorporated herein by reference to filing, October 13, 1994, of Pre-
Effective Amendment No. 1 to Registrant's Registration Statement.
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<PAGE>
Item 26. NUMBER OF HOLDERS OF SECURITIES, AS OF THE EFFECTIVE DATE OF THIS
AMENDMENT.
Title of Class Number of Record Holders
-------------- ------------------------
Money Market Fund 1
Short-Term Bond Fund 1
Item 27. INDEMNIFICATION
Reference is made to the Registrant's By-Laws (Article VI) filed
herein as Exhibit 2 to this Registration Statement. The AAHSA
Trust's By-Laws provide that the Registrant will indemnify its
Trustees and officers to the extent permitted or required by
Delaware law. A resolution of the Board of Trustees specifically
approving payment or advancement of expenses to an officer is
required by the AAHSA Trust's By-Laws. Indemnification may not
be made if the Trustee or officer has incurred liability by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of duties in the conduct of his office
("Disabling Conduct"). The means of determining whether
indemnification shall be made are (1) a final decision by a court
or other body before whom the proceeding is brought that the
Trustee or officer was not liable by reason of Disabling Conduct,
or (2) in the absence of such a decision, a reasonable
determination, based on a review of the facts, that the Trustee
or officer was not liable by reason of Disabling Conduct. Such
latter determination may be made either by (a) vote of a majority
of Trustees who are neither interested persons (as defined in the
Investment Company Act of 1940) nor parties to the proceeding or
(b) independent legal counsel in a written opinion. The
advancement of legal expenses may not occur unless the Trustee or
officer agrees to repay the advance (if it is determined that he
is not entitled to the indemnification) and one of three other
conditions is satisfied: (1) he provides security for his
agreement to repay; (2) the Registrant is insured against loss by
reason of lawful advances; or (3) the Trustees who are not
interested persons and are not parties to the proceedings, or
independent counsel in a written opinion, determine that there is
reason to believe that the Trustee or officer will be found
entitled to indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 (the "1933 Act") may be permitted to
Trustees, officers, controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer or
controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such Trustee,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT MANAGER AND THE SUB-
ADVISER.
(a) Certain information pertaining to business and other
connections of the Registrant's Investment Manager, CRSA
Investment Advisors, Inc., ("CRSA Advisors") is hereby
incorporated herein by reference to the section of the Prospectus
captioned "How the AAHSA Trust is Managed" and to the section of
the Statement of Additional Information captioned "Investment
Management
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<PAGE>
and Other Services." Set forth below is a list of each director
and officer of CRSA Advisors indicating each business,
profession, vocation, or employment of a substantial nature in
which each such person has been, at any time during the past two
fiscal years, engaged for his own account or in the capacity of
director, officer, partner, or Trustee. The principal business
address of each individual listed in the table below is 6075
Poplar Avenue, Suite 600, Memphis, Tennessee 38119.
Position with
Name CRSA Investment Advisors, Inc.
---- ------------------------------
Edward P. Crouch President and Director, CRSA Investment
Advisors, Inc.; Senior Vice President,
CRSA Inc. (management, marketing and
financial consulting firm), 1995 -
present; Executive Vice President, A.
Webster Dougherty & Co. (investment
banking firm), 1994 ; Alex. Brown &
Sons, Inc. (investment banking firm),
1990-1994.
Martin R. Satava Director, CRSA Investment Advisors,
Inc.; Executive Vice President, CRSA
Inc. (management, marketing and
financial consulting firm),
1989-present.
Michael E. Wade Director, CRSA Investment Advisors,
Inc.; President and Chief Executive
Officer, CRSA Inc. (management,
marketing and financial consulting
firm), 1989-present; Partner, Ernst &
Young (public accounting firm),
1975-1989.
(b) Certain information pertaining to business and other
connections of the Registrant's Sub-Adviser, Wainwright Asset
Management, is hereby incorporated herein by reference to the
section of the Prospectus captioned "How the AAHSA Trust is
Managed" and to the section of the Statement of Additional
Information captioned "Investment Management and Other Services."
Set forth below is a list of each general partner and officer of
Wainwright Asset Management indicating each business, profession,
vocation, or employment of a substantial nature in which each
such person has been, at any time during the past two fiscal
years, engaged for his own account or in the capacity of
director, officer, partner, or trustee. The principal business
address of each individual listed in the table below, unless
otherwise indicated, is 966 Hungerford Drive, #26B, Rockville,
Maryland 20850.
Position with
Name Wainwright Asset Management
---- ---------------------------
Roger W. Marshall President, Wainwright Asset Management,
1995 - present; President, R.W. Marshall
& Associates, Inc. (holding company),
1995-present; Senior Vice President,
A. Webster Dougherty & Co., Inc.
(investment banking firm), 1994;
President and Managing Director, Riggs
Investment Management Corp., 1988 -
1994.
Kevin G. Quinn Vice President, Wainwright Asset
Management, 1995-present; Vice
President, H.C. Wainwright & Co., Inc.,
1994-present; President, Quinn
Associates Corporation (holding
company), 1995-present; President, A.
Webster Dougherty & Co., Inc.
(investment banking firm), 1994;
Managing Director, Alex. Brown &
Sons, Inc. (investment banking firm),
1982-1994.
Saro J. Picciotto Principal, Wainwright Asset Management,
1995-present; Chief Financial Officer,
Chief Operating Officer and Director,
H.C. Wainwright & Co., Inc.,
1982-present.
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<PAGE>
Item 29. PRINCIPAL UNDERWRITERS.
(a) H.C. Wainwright and Co., Inc. acts as principal underwriter
of the Registrant's shares on a best-efforts basis and receives
no sales load or commission for its underwriting and distribution
services. Nevertheless, it receives compensation for certain
expenditures pursuant to a Service Plan adopted under Rule
12b-1 of the 1940 Act on an annual basis of up to [ ]% of the
Money Market Fund's net assets and [ ]% of the Short-Term Bond
Fund's net assets.
(b) Set forth below is information concerning each director,
officer, or partner of H.C. Wainwright, as of the date of this
filing.
Name and Principal Positions and Offices Offices with
Business Address* with Underwriter Registrant
---------------- ---------------- ----------
Stephen Barrett Chief Executive Officer None
and Co-Chairman of the
Board
Hugh Caperton Managing Director None
Robert Clark Co-Chairman of the Board None
and President
Russell Clark Director None
Elena Dasaro Chief Compliance Officer None
and Director
Lloyd Glazer Managing Director - None
Sales Manager
Saro Picciotto Chief Financial Officer, None
Chief Operating Officer,
and Director
Kevin Quinn Director None
Patrick Curran Senior Vice President None
Jonathan Hodson-Walker Senior Vice President None
Sam Ketterman Senior Vice President None
John (Chris) McCormick Senior Vice President None
Donald Ross Senior Vice President None
Richard Trull Senior Vice President None
Thomas Valeo Senior Vice President None
Atef Aziz Vice President None
Daphne Caperton Vice President None
Paul Cuomo Vice President None
Gary Ford Vice President None
L. Clarke Hill Vice President None
John Kuhn Vice President None
David Nankin Vice President None
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Name and Principal Positions and Offices Offices with
Business Address* with Underwriter Registrant
---------------- ---------------- ----------
Peter Patterson Vice President None
Gregory Peterson Vice President None
James Queeney Vice President None
Edward Sanford Vice President None
David Schechter Vice President None
Rick Silver Vice President None
Marc Silk Vice President None
Joseph Sweeney Vice President None
Sidney Towle Vice President None
Frank Turgeon Vice President None
Christopher White Vice President None
Eric Bertonazzi Vice President None
Ken Flaherty Vice President None
Theodore O'Neill Vice President None
LeeAnne Smith Vice President None
Richard Zaccaro Vice President None
*The principal business address of each person listed in the
table is One Boston Place, Boston, Massachusetts 02108.
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
The following entities prepare, maintain and preserve the records
required by Section 31(a) of the 1940 Act for the Registrant.
These services are provided to the Registrant through written
agreements between the parties to the effect that such
services will be provided to the Registrant for such periods
prescribed by the rules and regulations of the Securities and
Exchange Commission under the 1940 Act and such records are
the property of the entity required to maintain and preserve
such records and will be surrendered promptly on request.
State Street Bank and Trust Company ("State Street") provides
custodian and accounting services pursuant to a Custodian
Contract between State Street and the AAHSA Trust and provides
transfer agent and dividend disbursing services pursuant to a
Transfer Agency and Service Agreement between State Street and
the AAHSA Trust. In such capacities, State Street provides
pricing for each Fund's portfolio securities, keeps records
regarding securities and other assets in custody and in transfer,
bank statements, canceled checks, financial books and records,
and keeps records of each shareholder's account and all
disbursements made to shareholders. CRSA Advisors, pursuant to
its Investment Management Agreements with respect to each Fund,
maintains all
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records required pursuant to such agreements. Wainwright Asset
Management, pursuant to its Sub-Advisory Agreements with CRSA
Advisors and the AAHSA Trust with regard to each Fund, maintains
all records required pursuant to such agreements. State
Street, pursuant to its Administration Agreement with the
AAHSA Trust, maintains all records required pursuant to such
agreement. H.C. Wainwright & Co., Inc., as principal
underwriter for the AAHSA Trust, maintains all records
required to be kept pursuant to the Distribution Agreement
with the AAHSA Trust, and such other records as must be
maintained pursuant to the AAHSA Trust's Distribution Plan and
Rule 12b-1 Agreement adopted pursuant to Rule 12b-1 under the
1940 Act.
Item 31. MANAGEMENT SERVICES.
State Street pursuant to its Administration Agreement with the
AAHSA Trust, will perform certain administrative services for the
AAHSA Trust. The American Association of Homes and Services for
the Aging, pursuant to its Sub-Administrative Services
Agreement with the AAHSA Trust, will perform certain
administrative services for the AAHSA Trust.
Item 32. UNDERTAKINGS.
Registrant undertakes to file a post-effective amendment, using
financial statements which need not by certified, within four to
six months after the commencement of operations of each Fund.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Post-
Effective Amendment No. 1 to its Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized in Washington, D.C. on the
30th day of August 1996.
AAHSA TRUST
By:
-----------------------------
Sheldon Goldberg
Trustee
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 1 to its Registration Statement has been signed below by
the following persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
Carol A. Berster * Trustee, Vice President August 30, 1996
- ------------------------
Carol A. Berster
James E. Dewhirst * Trustee, Vice President August 30, 1996
- ------------------------
James E. Dewhirst
Sheldon L. Goldberg * Trustee, Treasurer August 30, 1996
- ------------------------
Sheldon L. Goldberg
James I. Melhorn * Trustee, President August 30, 1996
- ------------------------
James I. Melhorn
*By: /s/ Sheldon Goldberg
--------------------
Sheldon Goldberg
(Attorney-in-fact)
<PAGE>
EXHIBIT LIST
Exhibit
Number Description
------ -----------
5(a). Form of Investment Management Agreement
by and between the AAHSA Trust on behalf
of the Money Market Fund and CRSA
Investment Advisors, Inc.
5(b). Form of Sub-Advisory Agreement among the
AAHSA Trust, on behalf of the Money
Market Fund, CRSA Investment Advisors,
Inc., and Wainwright Asset Management.
5(c). Form of Investment Management Agreement
by and between the AAHSA Trust on behalf
of the Short-Term Bond Fund and CRSA
Investment Advisors, Inc.
5(d). Form of Sub-Advisory Agreement among the
AAHSA Trust, on behalf of the Short-Term
Bond Fund, CRSA Investment Advisors,
Inc., and Wainwright Asset Management.
6(a). Form of Distribution Agreement between
the AAHSA Trust and H.C. Wainwright &
Co., Inc.
6(b). Form of Selected Dealers Agreement.
8. Form of Custodian Contract by and between
the AAHSA Trust and State Street Bank and
Trust Company.
9(a). Form of Transfer Agency and Service
Agreement by and between the AAHSA Trust
and State Street Bank and Trust Company.
9(b). Form of Sub-Administrative Services Agreement
by and between the AAHSA Trust and the
American Association of Homes and
Services for the Aging.
9(c). Form of Administration Agreement by and
between the AAHSA Trust and State Street
Bank and Trust Company.
9(d). Form of Expense Limitation Agreement by
and between the AAHSA Trust, on behalf of
the Money Market Fund, and CRSA Investment
Advisors, Inc.
9(e). Form of Expense Limitation Agreement by and
between the AAHSA Trust, on behalf of the Money
Market Fund, and Wainwright Asset Management.
9(f). Form of Expense Limitation Agreement by and
between the AAHSA Trust, on behalf of the
Money Market Fund, and the American Association
of Homes and Services for the Aging.
9(g). Form of Expense Limitation Agreement by and
between the AAHSA Trust, on behalf of the
Short-Term Bond Fund, and CRSA Investment
Advisors, Inc.
9(h). Form of Expense Limitation Agreement by and
between the AAHSA Trust, on behalf of the
Short-Term Bond Fund, and Wainwright Asset
Management.
9(i). Form of Expense Limitation Agreement by and
between the AAHSA Trust, on behalf of the
Short-Term Bond Fund, and the American Association
of Homes and Services for the Aging.
15(a). Form of Service Plan Pursuant to Rule
12b-1 under the Investment Company Act of
1940 of the AAHSA Trust.
15(b). Form of Agreement Pursuant to the Rule
12b-1 Service Plan.
<PAGE>
EXHIBIT 5(a)
Form of Investment Management Agreement by
and between the AAHSA Trust on behalf of
the Money Market Fund and CRSA Investment Advisors, Inc.
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT ("Agreement") made as of the ____ day of
________ 1996, by and between the AAHSA TRUST, a Delaware business trust, on
behalf of the Money Market Fund (the "Fund"), and CRSA INVESTMENT ADVISORS,
INC., a Delaware corporation (the "Investment Manager").
W I T N E S S T H:
WHEREAS, the AAHSA Trust intends to engage in business as an open-end
management investment company and register as such under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund is a separately designated series of shares of beneficial
interest of the AAHSA Trust; and
WHEREAS, the Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the AAHSA Trust desires to retain the Investment Manager to render
investment supervisory and administrative services to the Fund in the manner and
on the terms and conditions hereinafter set forth; and
WHEREAS, the AAHSA Trust and the Investment Manager propose to engage a
sub-adviser ("Sub-Adviser") to provide certain investment advisory and other
services to the Fund, subject to the approval of the Board of Trustees of the
AAHSA Trust and, to the extent required by law, subject to the approval of the
shareholders of the Fund;
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereto, intending to be
legally bound, do hereby agree as follows:
1. DUTIES AND RESPONSIBILITIES OF THE INVESTMENT MANAGER.
1.1 INVESTMENT SUPERVISORY SERVICES. The Investment Manager shall, subject
to the supervision of the Board of Trustees of the AAHSA Trust, act as
investment manager of the AAHSA Trust with respect to the Fund and, as such,
shall:
<PAGE>
1.1.1 INVESTMENT OF THE FUND'S ASSETS. Supervise and direct, or cause
the Sub-Adviser to supervise and direct, the investment of the Fund's
assets in accordance with applicable law, and the investment objectives,
investment program, policies, and restrictions set forth in the
then-current prospectus ("Prospectus") and the then current Statement of
Additional Information ("SAI") relating to the Fund contained in the AAHSA
Trust's Registration Statement under the 1940 Act and the Securities Act of
1933, as amended ("1933 Act"), and subject to such further limitations as
the Board of Trustees of the AAHSA Trust may, from time to time impose by
written notice to the Investment Manager.
1.1.2 INVESTMENT PROGRAM. The Investment Manager shall cause the
Sub-Adviser to formulate a continuing program for the management of the
Fund's assets and resources, and the Investment Manager shall supervise
such investment program formulated by the Sub-Adviser and monitor the
Sub-Adviser's implementation of such investment program.
In furtherance of these duties and responsibilities, the Investment
Manager is authorized, in its discretion and without prior consultation
with the AAHSA Trust to, or cause or permit the Sub-Adviser to: (i) buy,
sell, exchange, convert, lend, and otherwise trade in any stocks; bonds,
and other securities or assets for the Fund; and (ii) place orders and
negotiate the commissions (if any) for the execution of transactions in
securities with or through such brokers, dealers, underwriters, or issuers
as the Investment Manager or Sub-Adviser may select for the Fund.
1.2 ADMINISTRATIVE SERVICES. In addition to investment supervisory
services set forth above in subparagraph 1.1, the Investment Manager shall
oversee the administration of all aspects of the AAHSA Trust's business and
affairs with respect to the Fund and shall provide certain services required for
effective administration of the AAHSA Trust with respect to the Fund. In
connection therewith, the Investment Manager shall:
1.2.1 OFFICE AND OTHER FACILITIES. Furnish, without cost to the
AAHSA Trust, or provide and pay the cost of, such office facilities,
furnishings, and office equipment as are necessary for the performance of
its duties to the AAHSA Trust under this Agreement.
1.2.2 PERSONNEL. Provide, without additional remuneration from or
other cost to the AAHSA Trust, the services of individuals competent to
perform all of the AAHSA Trust's executive, administrative, compliance, and
clerical functions that are not performed by or through other persons or
agents engaged by the AAHSA Trust (including, E.G., the depository agent,
accounting pricing agent, transfer agent and dividend disbursing agent).
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<PAGE>
1.2.3 AGENTS. Assist the company in selecting, coordinating the
activities of, supervising and acting as liaison with any other persons and
agents engaged by the AAHSA Trust, including the AAHSA Trust's depository
agent or custodian, accounting pricing agent, transfer agent, dividend
disbursing agent, sub-administrator, independent accountants and
independent legal counsel. The Investment Manager shall also monitor the
functions of such persons and agents, including, in particular, the
accounting pricing agent in its valuation of the Fund's portfolio
securities.
1.2.4 TRUSTEES AND OFFICERS. Authorize and permit the Investment
Manager's directors, officers and employees who may be elected or appointed
as Trustees or officers of the AAHSA Trust to serve in such capacities,
without remuneration from or additional cost to the AAHSA Trust.
1.2.5 BOOKS AND RECORDS. Ensure that all financial, accounting,
corporate, and other records required to be maintained and preserved by the
AAHSA Trust or on its behalf will be maintained in accordance with
applicable laws and regulations and that the AAHSA Trust's corporate
existence will be maintained.
1.2.6 REPORTS TO THE AAHSA TRUST. Furnish to or place at the
disposal of the AAHSA Trust such information, reports, evaluations,
analyses and opinions relating to its administrative functions as the AAHSA
Trust may, at any time or from time to time, reasonably request or as the
Investment Manager may deem helpful to the AAHSA Trust.
1.2.7 REPORTS AND FILINGS. Assist in the development and preparation
of all reports and communications by the AAHSA Trust to the Fund's
shareholders and all reports and filings necessary to maintain the
registrations and qualifications of the AAHSA Trust's shares under federal
and state law. The Investment Manager will also prepare or assist in the
preparation of all required tax returns, proxy statements and reports or
filings with any governmental agency.
1.2.8 SHAREHOLDER INQUIRIES. Respond to all inquiries from
shareholders or otherwise answer communications from shareholders if such
inquiries or communications are directed to the Investment Manager. If any
such inquiry or communication would be more properly answered by one of the
agents listed in subparagraph 1.2.3 above, the Investment Manager will
oversee their response.
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<PAGE>
2. ALLOCATION OF EXPENSES.
2.1 EXPENSES PAID BY THE INVESTMENT MANAGER.
2.1.1 SALARIES AND FEES OF TRUSTEES AND OFFICERS. As between the
AAHSA Trust, with respect to the Fund, and the Investment Manager, the
Investment Manager shall pay all salaries, expenses, and fees, if any, of
the directors, officers, and employees of the Investment Manager who are
Trustees, officers, or employees of the AAHSA Trust.
2.1.2 WAIVER OR ASSUMPTION AND REIMBURSEMENT OF AAHSA TRUST EXPENSES
BY THE INVESTMENT MANAGER. The waiver or assumption and reimbursement by
the Investment Manager of any expense of the AAHSA Trust that the
Investment Manager is not required by this Agreement to waive, or assume or
reimburse, shall not obligate the Investment Manager to waive, or assume or
reimburse, the same or any similar expense of the AAHSA Trust on any
subsequent occasion, unless so required pursuant to a separate agreement
between the AAHSA Trust and the Investment Manager.
2.2 EXPENSES PAID BY THE AAHSA TRUST. The AAHSA Trust, with respect to
the Fund, shall bear all expenses of its organization, operation, and business
not specifically waived, assumed, or agreed to be paid by the Investment Manager
as provided in this Agreement or any other agreement between the AAHSA Trust and
the Investment Manager. In particular, the expenses that the AAHSA Trust, with
respect to the Fund, shall bear include, but are not limited to:
2.2.1 CUSTODY AND ACCOUNTING SERVICES. All fees and expenses of
depositories, custodians, accounting service agents and other agents for
the transfer, receipt, safekeeping, servicing of and accounting for the
Fund's cash, securities, and other property, including, among other things,
fees and expenses for the calculation of standardized effective and
compound yield quotations for the Fund, maintenance of ledgers, position
and income reports and settlement of Fund purchases and sales.
2.2.2 DISTRIBUTION EXPENSES. Distribution expenses of the Fund paid
pursuant to any plan of distribution adopted in accordance with the
provisions of Rule 12b-1 under the 1940 Act.
2.2.3 TRANSFER AGENCY AND DIVIDEND DISBURSEMENT. All costs of
establishing, maintaining and servicing accounts of shareholders of the
Fund, including the Fund's proportionate share of all fees and expenses of
the Trust's transfer agent, sub-administrator, dividend disbursing agent
and any other agents engaged by the AAHSA Trust to service such Fund
accounts. In addition, the AAHSA Trust shall reimburse the Investment
Manager and charge to the Fund the Fund's proportionate share of all
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<PAGE>
expenses incurred by the Investment Manager in responding to telephonic and
written inquiries from, and in mailing information to Fund shareholders and
others requesting information on behalf of Fund shareholders, regarding
matters such as shareholder account or transaction status, net asset value
of Fund shares, Fund performance and general information about the Fund.
2.2.4 SHAREHOLDER REPORTS AND OTHER COMMUNICATIONS. All costs of
preparing, setting in type, printing and distributing reports and other
communications to shareholders of the Fund.
2.2.5 PROSPECTUSES. All costs of preparing, setting in type,
printing and mailing to shareholders of the Fund annual or more frequent
revisions of the AAHSA Trust's Prospectus and SAI and any supplements
thereto.
2.2.6 SHAREHOLDER MEETINGS. All costs incidental to holding meetings
of shareholders of the Fund, including the printing of notices and proxy
materials, and proxy solicitations therefor.
2.2.7 PRICING AND PORTFOLIO VALUATION. All costs of daily valuation
of the individual portfolio securities of the Fund and daily computation of
the net asset value per share of the Fund, including a proportionate share
of the cost of any equipment obtained by the AAHSA Trust, the Investment
Manager, or agents of the AAHSA Trust, or a proportionate share of the cost
of any equipment currently owned by the Investment Manager, that will be
used to price the Fund's shares or value the Fund's assets or the cost of
the services of any agents engaged by the AAHSA Trust for the purpose of
pricing Fund shares or valuing the assets of the Fund.
2.2.8 COMMUNICATIONS. All charges for equipment or services used for
communications with respect to the Fund between the Investment Manager or
the AAHSA Trust and the depository agent or custodian, accounting pricing
agent, transfer agent, dividend disbursing agent, sub-administrator or any
other agent engaged by the AAHSA Trust to provide services to the Fund.
2.2.9 INDEPENDENT LEGAL AND ACCOUNTING FEES. The Fund's
proportionate share of all charges for services and expenses of the AAHSA
Trust's independent legal counsel and independent accountants.
2.2.10 TRUSTEES' FEES AND EXPENSES. The Fund's proportionate share
of all compensation of Trustees (other than those Trustees affiliated with
the Investment Manager or the American Association of Homes and Services
for the Aging), all expenses incurred in connection with their services as
Trustees, and all expenses of
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<PAGE>
meetings of the Board of Trustees of the AAHSA Trust and committees of the
Board of Trustees.
2.2.11 FEDERAL REGISTRATION FEES. The Fund's proportionate share of
all fees and expenses of maintaining the registration of the AAHSA Trust
under the 1940 Act and maintaining the registration of the Fund's shares or
registering additional shares of the Fund under the 1933 Act, including all
fees and expenses incurred in connection with the preparation, setting in
type, printing and filing of any post-effective amendments or supplements
to the Registration Statement, Prospectus and SAI for the AAHSA Trust under
the 1933 Act or the 1940 Act that may be prepared from time to time.
2.2.12 STATE REGISTRATION FEES. The Fund's proportionate share of
all fees and expenses (i) of maintaining the registration and qualification
of the AAHSA Trust or the Fund, as appropriate, and of the Fund's shares
for sale under the securities laws of various states and jurisdictions,
(ii) of registering and qualifying additional shares of the Fund, and (iii)
of maintaining the registration and qualification of the AAHSA Trust or the
Fund, as appropriate, under all other laws applicable to the AAHSA Trust or
the Fund, as appropriate, or its business activities.
2.2.13 ISSUE, REDEMPTION AND TRANSFER OF THE FUND'S SHARES. All
expenses incurred in connection with the issue, redemption and transfer of
the Fund's shares, including the expenses of confirming all share
transactions and of transmitting any share certificates for the Fund.
2.2.14 BONDING AND INSURANCE. All expenses of bond, liability and
other insurance coverage required by law or regulation or deemed advisable
by the Board of Trustees of the AAHSA Trust, including, without limitation,
such bond, liability and other insurance expense that may from time to time
be allocated to the Fund in a manner approved by the Board of Trustees of
the AAHSA Trust.
2.2.15 BROKERAGE COMMISSIONS. All brokers' commissions, if any, and
other charges incident to the purchase, sale, or lending of the Fund's
portfolio securities.
2.2.16 TAXES. The Fund's proportionate share of all taxes or
governmental fees payable to federal, state, or other governmental
agencies, domestic or foreign, including issue, stamp, or transfer taxes.
2.2.17 TRADE ASSOCIATION FEES. The Fund's proportionate share of all
fees, dues, costs of attendance at meetings and conferences and other
expenses incurred in connection with the AAHSA Trust's membership in any
trade association or other investment organization.
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<PAGE>
2.2.18 PERFORMANCE INFORMATION. Industry performance reporting
services fees reasonably necessary for Board of Trustees of the AAHSA Trust
to keep current regarding industry and regulatory requirements.
2.2.19 NONRECURRING AND EXTRAORDINARY EXPENSES. The Fund's
proportionate share of such nonrecurring and extraordinary expenses as may
arise, including the costs of actions, suits, or proceedings to which the
AAHSA Trust is a party and the expenses the AAHSA Trust may incur as a
result of its legal obligation to provide indemnification to its Trustees,
officers, employees, and agents.
3. MANAGEMENT FEES.
3.1 COMPENSATION RATE. The AAHSA Trust, with respect to the Fund, shall
pay the Investment Manager, as compensation for all services rendered,
facilities provided, and expenses waived or assumed and reimbursed by the
Investment Manager, investment management fees at the annual rate of [ ]% of
the first $[ ] million of average daily net assets of the Fund; [ ]% of
average daily net assets of the Fund up to the next $[ ] million; [ ]% of
average daily net assets of the Fund up to the next $[ ] million; and [ ]% of
average daily net assets of the Fund in excess of $[ ]million.
3.2 METHOD OF COMPUTATION. The investment management fee shall accrue on
each calendar day and the sum of the daily fee accruals for the Fund shall be
paid monthly to the Investment Manager on the first business day of the next
calendar month. The daily fee accruals shall be computed by multiplying the
fraction of one over the number of calendar days in the year by the applicable
annual rates for the Fund, described in subparagraph 3.1. above, and multiplying
the product by the net assets of the Fund as determined in accordance with the
current Prospectus of the AAHSA Trust as of the close of business on the last
preceding business day on which the AAHSA Trust was open for business.
3.3 PRORATION OF FEE. If this Agreement becomes effective or terminates
before the end of any month, the fee for the period from the effective date to
the end of such month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the proportion
which such period bears to the full month in which such effectiveness or
termination occurs.
3.4 LIMITATION OF FEE. In the event the expenses of the Fund (including
the fees of the Investment Manager and amortization of organization expenses but
excluding interest, taxes, brokerage commissions, extraordinary expenses and
sales charges and distribution fees) for any fiscal year exceed the limits set
by applicable regulations of state securities commissions, the Investment
Manager will reduce its fee by the amount of such excess. Any such reductions
are subject to readjustment during the year. The payment of the investment
management fee at the
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<PAGE>
end of any month will be reduced or postponed or, if necessary, a refund will be
made to the Fund so that at no time will there be any accrued but unpaid
liability under this expense limitation.
4. BROKERAGE.
Subject to seeking best execution, and subject to any policies or
procedures as then approved by the Board of Trustees of the AAHSA Trust, the
Investment Manager, in carrying out its duties under subparagraph 1.1, may
cause, or permit the Sub-Adviser to cause, the AAHSA Trust, on behalf of the
Fund, to pay a broker-dealer that furnishes brokerage or research services (as
such services are defined under Section 28(e) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) a higher commission than that which might be
charged by another broker-dealer that does not furnish brokerage or research
services or that furnishes brokerage or research services deemed to be of lesser
value, if the Investment Manager or Sub-Adviser determines in good faith that
the amount of such commission is reasonable in relation to the value of the
brokerage and research services provided by the broker-dealer viewed in terms of
either that particular transaction or the overall responsibilities of the
Investment Manager or Sub-Adviser with respect to the other accounts, if any, as
to which it exercises investment discretion (as such term is defined under
Section 3(a)(35) of the 1934 Act). To demonstrate that such determinations were
in good faith, and to show the overall reasonableness of commissions paid, the
Investment Manager and/or Sub-Adviser shall be prepared to show that commissions
paid: (i) were for purposes contemplated by this Agreement; (ii) provide lawful
and appropriate assistance to the Investment Manager and/or Sub-Adviser in the
performance of its decision-making responsibilities; and (iii) were within a
reasonable range as compared to the rates charged by qualified brokers to other
institutional investors as such rates may become known from available
information. The AAHSA Trust recognizes that, on any particular transaction, a
higher than usual commission may be paid due to the difficulty of the
transaction in question. The Investment Manager and/or Sub-Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
to execute brokerage and principal transactions, subject to the requirements of
"best execution."
5. INVESTMENT MANAGER'S USE OF THE SERVICES OF OTHERS.
The Investment Manager may at its own cost (except as contemplated by
Paragraph 4 of this Agreement) employ, retain, or otherwise avail itself of the
services or facilities of other persons or organizations for the purpose of
providing the Investment Manager, the AAHSA Trust, or the Fund with: (i) such
statistical and other factual information; (ii) such advice regarding economic
factors and trends; (iii) such advice as to occasional transactions in specific
securities; or (iv) such other information, advice, or assistance as the
Investment Manager may deem necessary, appropriate, or convenient for the
discharge of its obligations hereunder or
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otherwise helpful to the Investment Manager, the AAHSA Trust, or the Fund, or in
the discharge of the Investment Manager's overall responsibilities with respect
to the other accounts which it serves as an investment manager.
6. OWNERSHIP AND CONFIDENTIALITY OF RECORDS.
All records required to be maintained and preserved by the AAHSA Trust,
with respect to the Fund, pursuant to the provisions of rules or regulations of
the Securities and Exchange Commission under Section 31(a) of the 1940 Act and
maintained and preserved by the Investment Manager on behalf of the AAHSA Trust,
with respect to the Fund, are the property of the AAHSA Trust and shall be
surrendered by the Investment Manager promptly on request by the AAHSA Trust.
The Investment Manager shall not disclose or use any records or information
obtained pursuant to this Agreement in any manner whatsoever except as expressly
authorized by this Agreement and applicable law. The Investment Manager shall
keep confidential any information obtained in connection with their duties
hereunder and shall disclose such information only if the AAHSA Trust, on behalf
of the Fund, has authorized such disclosure or if such disclosure is expressly
required by applicable law or federal or state regulatory authorities.
7. REPORTS TO THE INVESTMENT MANAGER.
The AAHSA Trust shall furnish or otherwise make available to the Investment
Manager such Prospectuses, SAIs, financial statements, proxy statements,
reports, and other information relating to the business and affairs of the AAHSA
Trust, with respect to the Fund, as the Investment Manager may, at any time or
from time to time, reasonably require in order to discharge its obligations
under this Agreement.
8. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the Investment Manager
or any affiliated person of the Investment Manager to render investment
supervisory and corporate administrative services to other investment companies
(including but not limited to one or more series of the AAHSA Trust), to act as
investment adviser or investment counselor to other persons, firms, or
corporations, or to engage in other business activities; however, so long as
this Agreement or any extension, renewal, or amendment hereof shall remain in
effect or until the Investment Manager shall otherwise consent, the Investment
Manager shall be the only investment manager to the AAHSA Trust.
9
<PAGE>
9. LIMITATION OF LIABILITY OF THE INVESTMENT MANAGER.
Neither the Investment Manager nor any of its directors, officers,
employees or agents performing services for the AAHSA Trust, with respect to the
Fund, at the direction or request of the Investment Manager in connection with
the Investment Manager's discharge of its obligations undertaken or reasonably
assumed with respect to this Agreement, shall be liable for any act or omission
in the course of or in connection with the Investment Manager's services
hereunder, including any error of judgment or mistake of law or for any loss
suffered by the AAHSA Trust, with respect to the Fund, in connection with the
matters to which this Agreement relates; PROVIDED, that nothing herein contained
shall be construed to protect the Investment Manager or any such persons against
any liability to the AAHSA Trust or its shareholders to which the Investment
Manager or such persons would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its or their
duties on behalf of the AAHSA Trust or for failure by the Investment Manager or
any such persons to exercise due care in rendering other services to the AAHSA
Trust.
10. RETENTION OF SUB-ADVISER.
Subject to the Fund's obtaining any required approvals under Section 15 of
the 1940 Act, the Investment Manager may retain a Sub-Adviser to perform
investment advisory and other services to the Fund. The retention of a Sub-
Adviser shall be at the risk, cost and expense of the Investment Manager. The
retention of a Sub-Adviser shall in no way reduce the responsibilities or
obligations of the Investment Manager under this Agreement and the Investment
Manager shall be responsible to the AAHSA Trust for all acts or omissions of the
Sub-Adviser in connection with the performance of the Investment Manager's
duties hereunder. The Investment Manager shall pay and shall be solely
responsible for the payment of the fees of the Sub-Adviser for the performance
of its services for the Fund.
11. TERM OF AGREEMENT.
The term of this Agreement shall begin on the day and year first above
written, and unless sooner terminated as hereinafter provided, shall continue in
effect through , 1996. Thereafter, this Agreement shall continue
in effect from year to year, subject to the termination provisions and all other
terms and conditions hereof; PROVIDED, that such continuance is specifically
approved at least annually by the Board of Trustees of the AAHSA Trust or by
vote of a majority of the outstanding voting securities of the Fund in
accordance with the requirements of the 1940 Act; and PROVIDED FURTHER, that in
either event such continuance also is approved annually by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of a
majority of the Board of Trustees of the AAHSA Trust who are not parties to
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this Agreement or "interested persons" (as defined in the 1940 Act and rules
thereunder) of any such party (hereinafter "non-interested Trustees").
Any approval of this Agreement by the holders of a majority of the
outstanding voting securities (as defined in the 1940 Act and rules thereunder)
of the Fund shall be effective to continue this Agreement, notwithstanding (i)
that a comparable agreement has not been approved by the holders of a majority
of the outstanding shares of any other series of the AAHSA Trust and (ii) that
this Agreement has not been approved by the vote of a majority of the
outstanding shares of the AAHSA Trust, unless such approval shall be required by
any other applicable law or otherwise. The Investment Manager shall furnish to
the AAHSA Trust, promptly upon its request, such information as may be
reasonably necessary to evaluate the terms of this Agreement or any extension,
renewal or amendment thereof.
12. AMENDMENT AND ASSIGNMENT OF AGREEMENT.
Any amendment to this Agreement shall be in writing and signed by the
parties hereto; PROVIDED, that no material amendment shall be effective unless
authorized on behalf of the AAHSA Trust (i) by resolution of the Board of
Trustees of the AAHSA Trust, including a majority of the non-interested Trustees
and (ii) if required by law, by vote of a majority of the outstanding voting
securities of the Fund. This Agreement shall automatically and immediately
terminate in the event of its assignment.
13. TERMINATION OF AGREEMENT.
This Agreement may be terminated by either party hereto, without the
payment of any penalty, upon sixty (60) days' prior written notice to the other
party; PROVIDED, that in the case of termination by the AAHSA Trust such action
shall have been authorized (i) by resolution of the Board of Trustees of the
AAHSA Trust, including a majority of the non-interested Trustees, or (ii) by
vote of a majority of the outstanding voting securities of the Fund; PROVIDED
FURTHER, that in the case of termination by the Investment Manager, such
termination shall not be effective until the AAHSA Trust shall have contracted
with one or more persons to serve as successor investment manager for the Fund
and such person(s) shall have assumed such position.
14. MISCELLANEOUS.
14.1 NOTICES. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, (i) if to the Investment Manager,
to CRSA Investment Advisors, Inc., 6075 Poplar Avenue, Ste 600, Memphis,
Tennessee 38119, and (ii) if to the AAHSA Trust,
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to the AAHSA Trust, 901 E Street, N.W., Suite 500, Washington, D.C. 20004-2037,
Attention: Sheldon Goldberg.
14.2 CAPTIONS. The captions contained in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
14.3 INTERPRETATION. Nothing herein contained shall be deemed to require
the AAHSA Trust to take any action contrary to its Declaration of Trust or
By-Laws, or any applicable statutory or regulatory requirement to which it is
subject or by which it is bound, or to relieve or deprive the Board of Trustees
of its responsibility for and control of the conduct of the affairs of the AAHSA
Trust.
14.4 DEFINITIONS. Any question of interpretation of any term or provision
of this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court
by rules, regulations, or orders of the Securities and Exchange Commission
validly issued pursuant to the 1940 Act. Specifically, the terms "vote of a
majority of the outstanding voting securities," "interested person,"
"assignment" and "affiliated person" shall have the meanings assigned to them by
Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of
the 1940 Act reflected in any provision of this Agreement is relaxed by a rule,
regulation, or order of the Securities and Exchange Commission, whether of
special or of general application, such provision shall be deemed to incorporate
the effect of such rule, regulation, or order.
14.5 SEVERABILITY. 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.
14.5 GOVERNING LAW. Except insofar as the 1940 Act or other federal laws
and regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the District of Columbia.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: AAHSA TRUST, on behalf of the
Money Market Fund
By:
- ---------------------------- ----------------------------------------
' Title:
ATTEST: CRSA INVESTMENT ADVISORS, INC.
By:
- ---------------------------- ----------------------------------------
Title:
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EXHIBIT 5(b)
Form of Sub-Advisory Agreement among the AAHSA
Trust, on behalf of the Money Market Fund, CRSA Investment
Advisors, Inc., and Wainwright Asset Management
<PAGE>
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT ("Agreement") made as of the __________day
of___________ , 1996, by and among the AAHSA TRUST, a Delaware business
trust, on behalf of the Money Market Fund, CRSA INVESTMENT ADVISORS, INC., a
Delaware corporation ("CRSA"), and WAINWRIGHT ASSET MANAGEMENT, a
_____________________.
W I T N E S S E T H:
WHEREAS, the AAHSA Trust intends to engage in business as an open-end
management investment company and register as such under the Investment Company
Act of 1940, as amended (the " 1940 Act"); and
WHEREAS, the AAHSA Trust is a series type investment company currently
consisting of two series, the Money Market Fund and the Short-Term Bond Fund
each with its own investment objectives, investment program, policies, and
restrictions; and
WHEREAS, CRSA is engaged in the business of rendering investment management
services and is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended ("Advisers Act"); and
WHEREAS, Wainwright Asset Management is engaged principally in the business
of rendering investment advisory services and is registered as an investment
adviser under the Advisers Act: and
WHEREAS, CRSA and the AAHSA Trust on behalf of its separately designated
series, the Money Market Fund (the "Fund"), have entered into an Advisory
Agreement dated as of _______________, 1996 (the "Investment Management
Agreement") pursuant to which CRSA provides investment supervisory and
administrative services to the Fund; and
WHEREAS, CRSA proposes to engage the services of Wainwright Asset
Management as sub-adviser ("Sub-Adviser") to the Fund as permitted by the
Investment Management Agreement; and
WHEREAS, Sub-Adviser is willing to perform sub-advisory services for the
Fund upon the terms and conditions and for the compensation hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree to the following:
-1-
<PAGE>
1. IN GENERAL.
CRSA hereby employs Wainwright Asset Management to serve as Sub-Adviser
with respect to the assets of the Fund under management of CRSA and to perform
the services hereinafter set forth. Wainwright Asset Management hereby accepts
such employment and agrees for the compensation herein provided to assume all
obligations herein set forth and to bear all expenses of its performance of such
obligations (but no other expenses).
2. DUTIES AND RESPONSIBILITIES OF THE SUB-ADVISER.
2.1 INVESTMENT ADVISORY SERVICES. Subject to the supervision and control
of the AAHSA Trust's Board of Trustees and of CRSA, Sub-Adviser shall manage the
investment and reinvestment of the Fund's assets in accordance with applicable
law, including Sub-Chapter M of the Internal Revenue Code of 1986, as amended,
and the investment objectives, investment program, policies, and restrictions
set forth in the then-current Prospectus and then-current Statement of
Additional Information ("SAI") relating to the Fund contained in the AAHSA
Trust's Registration Statement under the 1940 Act, and the Securities Act of
1933, as amended from time to time, and subject to such further limitations as
the AAHSA Trust may from time to time impose by written notice to CRSA. CRSA
shall promptly inform Sub-Adviser of such further limitations imposed by the
AAHSA Trust. Such limitations will include all procedures adopted by the AAHSA
Trust's Board of Trustees respecting portfolio transactions (I.E., Rule 17a-7,
Rule 10f-3 and affiliated bank transactions). Sub-Adviser shall formulate and
implement a continuing investment program for the management of the Fund's
assets, and shall amend and update such investment program from time to time as
financial and other economic conditions warrant. Subject to the supervision and
control of the AAHSA Trust's Board of Trustees and CRSA, Sub-Adviser shall make
all determinations with respect to the investment and reinvestment of the assets
of the Fund and the purchase or sale of portfolio securities, and shall take
such steps as may be necessary to implement the same. Such determinations and
services shall include advising CRSA and the AAHSA Trust's Board of Trustees of
the manner in which voting rights, rights to consent to corporate action and any
other non-investment decisions pertaining to the Fund's portfolio securities
should be exercised.
2.2 REPORTS. Sub-Adviser shall regularly furnish reports to the AAHSA
Trust's Board of Trustees and to CRSA concerning: (i) Sub-Adviser's economic
outlook and investment research and strategy; (ii) a discussion of the Fund's
portfolio activity, including (a) a schedule of the Fund's investments and other
assets, (b) a statement of all purchases and sales for the Fund during the
period since the last preceding report and (c) the Fund's performance since the
last report and for such other relevant periods as shall be mutually agreed
upon; and (iii) any other information about material developments affecting the
Fund
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that may be reasonably requested in connection with Sub-Adviser's duties under
this Agreement. Copies of all such reports shall be furnished to CRSA for
examination and review within a reasonable time prior to the presentation of
such reports to the AAHSA Trust's Board of Trustees.
2.3 OTHER RESPONSIBILITIES OF SUB-ADVISER.
2.3.1 OFFICES AND OTHER FACILITIES. Furnish the AAHSA Trust, for
the Fund, without charge, such reasonable administrative and management
supervision and office facilities, which may be their own offices, as shall
be appropriate and necessary to carry out Sub-Adviser's responsibilities
under this Agreement, subject to the requirements of any regulatory
authority to which CRSA or Sub-Adviser may be subject.
2.3.2 PERSONNEL. Provide, without charge, persons to render such
reasonable clerical, administrative, and other services to the Fund as are
necessary to carry out Sub-Adviser's responsibilities under this Agreement
or as the AAHSA Trust's Board of Trustees may from time to time reasonably
request.
2.3.3 REPORTS AND FILINGS. Provide information to the AAHSA Trust
or CRSA as necessary to prepare reports to shareholders, tax returns, and
reports to and filings with the Securities and Exchange Commission and any
other regulatory and administrative bodies that have jurisdiction over the
operations of the Fund and submit to all such regulatory and administrative
bodies such information, reports, or other material as necessary to comply
with applicable laws or regulations.
2.3.4 BOOKS AND RECORDS. Maintain records relating to the services
provided under this Agreement, which records shall be the property of, and
under control of, the AAHSA Trust, except when otherwise required by law or
a court or regulatory body of competent jurisdiction.
2.3.5 EXPERTISE AND INFORMATION. Cooperate with and make available
to CRSA, the AAHSA Trust, and any agents engaged by the AAHSA Trust, its
expertise relating to matters affecting the Fund which involve markets,
securities or individual companies.
Sub-Adviser may (at its own cost) employ, retain, or otherwise avail itself
of the services and facilities of persons and entities within its own
organization or any other organization for the purpose of providing Sub-Adviser,
CRSA, the AAHSA Trust or the Fund with such information, advice or assistance,
including but not limited to advice regarding economic factors and trends and
advice as to transactions in specific securities, as Sub-Adviser may deem
necessary, appropriate, or convenient for the discharge of its obligations
hereunder.
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3. BROKERAGE.
3.1 SELECTION OF BROKERS OR DEALERS. Sub-Adviser shall select the brokers
or dealers that will execute the purchases and sales of portfolio securities for
the Fund and place, in the name of the Fund or its nominee, all such orders.
Such brokers or dealers may include brokers or dealers affiliated with CRSA.
When placing such orders, Sub-Adviser shall use its best efforts to obtain the
best available price and most favorable execution for the Fund. Sub-Adviser
shall use its best efforts to recapture all available tender and exchange offer
solicitation fees and similar payments in connection with tenders or exchanges
of the securities of the Fund. Sub-Adviser shall advise the AAHSA Trust's Board
of Trustees of any fees or payments of whatever type that it may be possible for
Sub-Adviser or any affiliate of Sub-Adviser to receive in connection with the
purchase or sale of investment securities for the Fund.
3.2 SECTION 28(e). Subject to prior authorization by CRSA and to the
appropriate policies, procedures, and/or guidelines established by the AAHSA
Trust's Board of Trustees, Sub-Adviser may cause the Fund to pay a broker-dealer
that furnishes brokerage or research services (as such services are defined
under Section 28(e) of the Securities Exchange Act of 1934) commission rates in
excess of the commission rates charged by a broker-dealer that does not furnish
brokerage or research services or that furnishes services of lesser value, if
Sub-Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage or research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or Sub-Adviser's overall responsibilities with respect to the Fund
or Sub-Adviser's other advisory clients. The execution of such transactions
shall not be deemed to represent an unlawful act or breach of any duty created
by this Agreement or otherwise. To demonstrate that such determinations were in
good faith, and to show the overall reasonableness of commissions paid,
Sub-Adviser shall be prepared to show that commissions paid: (i) were for
purposes contemplated by this Agreement; (ii) provide lawful and appropriate
assistance to Sub-Adviser in the performance of its decision-making
responsibilities; and (iii) were within a reasonable range as compared to the
rates charged by qualified brokers to other institutional investors as such
rates may become known from available information. The AAHSA Trust recognizes
that, on any particular transaction, a higher than usual commission may be paid
due to the difficulty of the transaction in question. Sub-Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
to execute brokerage and principal transactions, subject to the requirements of
"best execution."
3.3 COMMUNICATIONS. Sub-Adviser shall promptly communicate to CRSA and
the AAHSA Trust's Board of Trustees such information relating to portfolio
transactions as CRSA or the Board of Trustees may reasonably request.
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3.4 RESPONSIBILITY FOR COSTS AND EXPENSES. The parties understand that
the Fund shall bear all brokerage commissions in connection with purchases and
sales of portfolio securities for the Fund and all ordinary and reasonable
transaction costs in connection with purchases of such securities in private
placements and subsequent sales thereof.
4. COMPENSATION.
4.1 RATE. As compensation for all services rendered by Sub-Adviser under
this Agreement, CRSA shall have the sole responsibility to pay to Sub-Adviser a
fee calculated at the annual rate of [ ]% on the first $[ ]million of the
average daily net asset value of the Fund, [ ]% on the next $[ ]million, and
[ ]% in excess of $[ ]million of average daily net asset value.
4.2 METHOD OF COMPUTATION. The sub-advisory fee shall accrue on each
calendar day, and the sum of the daily fee accruals shall be paid monthly to
Sub-Adviser on the first business day of the next succeeding calendar month. The
daily fee accruals shall be computed by multiplying the fraction of one over the
number of calendar days in the year by the applicable annual sub-advisory fee
rate described above, and multiplying this product by the net assets of the Fund
as determined in accordance with the Fund's then-current Prospectus as of the
close of business on the previous business day on which the Fund's net asset
value was determined.
4.2.1 ADJUSTMENTS. Sub-Adviser shall promptly reduce its
sub-advisory fee by the amount of any commissions, tender and exchange
offer solicitation fees, other fees, or similar payments received by
Sub-Adviser, or any affiliated person of Sub-Adviser, in connection with
the Fund's portfolio transactions, less the amount of any direct expenses
incurred by Sub-Adviser, or any affiliated persons of Sub-Adviser, in
obtaining such commissions, fees, or payments. Such "commissions" or "other
fees" shall exclude those charged by brokers or dealers affiliated with
CRSA as referred to in subparagraph 3.1. Such "tender and exchange offer
solicitation fees" shall exclude those received by Sub-Adviser acting in
the capacity of manager for any such offer.
4.3 RESPONSIBILITY FOR PAYMENT. Sub-Adviser shall not be entitled to
receive any payment for the performance of its services hereunder from the Fund
and shall look solely and exclusively to CRSA for payment of all fees for such
services.
4.4 EXPENSES. Sub-Adviser shall bear all expenses in connection with the
performance of its services under this Agreement, except as otherwise provided
herein. Expenses incurred in connection with the investment operations of the
Fund, including brokers' commissions, transfer and capital gains or other income
taxes, and fees relating to purchases, sales, or loans of investments, shall be
paid out of the assets of the Fund. Other expenses incurred in the operation of
the Fund shall also be paid by the Fund, as described in
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the then-current Prospectus and Statement of Additional Information and as
provided in the Investment Management Agreement between the AAHSA Trust, on
behalf of the Fund, and CRSA.
5. LIMITATION OF LIABILITY OF SUB-ADVISER.
Neither Sub-Adviser nor any of its directors, officers, employees or agents
performing services for the AAHSA Trust, with respect to the Fund, at the
direction or request of Sub-Adviser in connection with Sub-Adviser's discharge
of its obligations undertaken or reasonably assumed with respect to this
Agreement, shall be liable for any act or omission in the course of or in
connection with Sub-Adviser's services hereunder, including any error of
judgment or mistake of law or for any loss suffered by the AAHSA Trust, with
respect to the Fund, in connection with the matters to which this Agreement
relates; PROVIDED, that nothing herein contained shall be construed to protect
Sub-Adviser or any such persons against any liability to the AAHSA Trust or its
shareholders to which Sub-Adviser or such persons would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of its or their duties on behalf of the AAHSA Trust or for failure by
Sub-Adviser or any such persons to exercise due care in rendering other services
to the AAHSA Trust.
6. MISCELLANEOUS.
6.1 TERM OF AGREEMENT. This Agreement shall become effective on the day and
year first above written and unless sooner terminated as hereinafter provided,
shall continue in effect through _____________________, 1996. Thereafter, this
Agreement shall continue in effect from year to year, so long as its continuance
is approved in the manner required by the 1940 Act.
6.2 TERMINATION. This Agreement may be terminated at any time without the
payment of any penalty upon sixty (60) days' written notice, (a) by the AAHSA
Trust's Board of Trustees, including the vote or written consent of a majority
of the Trustees of the AAHSA Trust who are not parties to this Agreement or the
Investment Management Agreement or interested persons of any such party, (b) by
the vote of a majority of the outstanding voting securities of the Fund, or (c)
by Sub-Adviser, provided, that if Sub-Adviser terminates this Agreement for any
reason other than the AAHSA Trust's decision to make a change in fundamental
investment policies or restrictions applicable to the Fund over Sub-Adviser's
written objection to such change, the termination by Sub-Adviser will not be
effective until CRSA shall have contracted with one or more persons to serve as
a successor sub-adviser for the Fund and such person or persons shall have
assumed such position but in no event will the termination be delayed more than
an additional sixty (60) days after the end of the notice period. This Agreement
shall terminate automatically in the event of its assignment, or upon
termination of the Investment Management Agreement between the AAHSA Trust and
CRSA.
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6.3 DEFINITIONS. As used in this Agreement, the terms "assignment,"
"interested person" and "vote of a majority of the outstanding voting
securities" of the Fund shall have the meanings set forth for such terms in the
1940 Act.
6.4 RECORDS. In the event of termination of this Agreement, Sub-Adviser
shall promptly return to the AAHSA Trust all records maintained by Sub-Adviser
with respect to the Fund and Sub-Adviser shall be free from any claim or
retention of rights therein. Sub-Adviser and CRSA shall not disclose or use any
non-public records or information obtained pursuant to this Agreement in any
manner whatsoever except as expressly authorized by this Agreement and
applicable law. Sub-Adviser and CRSA shall keep confidential any information
obtained in connection with their duties hereunder and shall disclose such
information only if the AAHSA Trust, on behalf of the Fund, has authorized such
disclosure or if such disclosure is expressly required by applicable law or
federal or state regulatory authorities.
6.5 NOTICE. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid (a) if to Sub-Adviser, to Wainwright
Asset Management, 966 Hungerford Drive, #26B, Rockville, Maryland 20850,
Attention:______________; (b) if to CRSA, to CRSA Investment Advisors, Inc.,
6075 Popular Avenue, STE 600, Memphis, Tennessee 38119,
Attention:_______________; and (c) if to the AAHSA Trust, to AAHSA, 901 E
Street, N.W., Suite 500, Washington, D.C. 20004-2037, Attention: Sheldon
Goldberg.
6.6 OTHER BUSINESS. Nothing in this Agreement shall limit or restrict the
right of any director, trustee, officer, or employee of Sub-Adviser to engage in
any other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar nature
or a dissimilar nature, nor to limit or restrict the right of Sub-Adviser to
engage in any other business or to render services of any kind to any other
corporation, firm, individual, or association.
6.7 SEVERABILITY. 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.
6.8 GOVERNING LAW. Except insofar as the 1940 Act or other federal laws
and regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the District of Columbia.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
ATTEST: CRSA INVESTMENT ADVISORS, INC.
__________________ By: ___________________________________________________
Title:
ATTEST: WAINWRIGHT ASSET MANAGEMENT
__________________ By: ___________________________________________________
Title:
ATTEST: AAHSA TRUST, on behalf of the Money Market Fund
__________________ By: ___________________________________________________
Title:
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<PAGE>
EXHIBIT 5(c)
Form of Investment Management Agreement by
and between the AAHSA Trust on behalf of
the Short-Term Bond Fund and CRSA Investment Advisors, Inc.
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT ("Agreement") made as of the ___ day of
_____ 1996, by and between the AAHSA TRUST, a Delaware business trust, on
behalf of the Short-Term Bond (the "Fund"), and CRSA INVESTMENT ADVISORS,
INC., a Delaware corporation (the "Investment Manager").
W I T N E S S T H:
WHEREAS, the AAHSA Trust intends to engage in business as an open-end
management investment company and register as such under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund is a separately designated series of shares of beneficial
interest of the AAHSA Trust; and
WHEREAS, the Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the AAHSA Trust desires to retain the Investment Manager to render
investment supervisory and administrative services to the Fund in the manner
and on the terms and conditions hereinafter set forth; and
WHEREAS, the AAHSA Trust and the Investment Manager propose to engage a
sub-adviser ("Sub-Adviser") to provide certain investment advisory and other
services to the Fund, subject to the approval of the Board of Trustees of the
AAHSA Trust and, to the extent required by law, subject to the approval of the
shareholders of the Fund;
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereto, intending to be
legally bound, do hereby agree as follows:
1. DUTIES AND RESPONSIBILITIES OF THE INVESTMENT MANAGER.
1.1 INVESTMENT SUPERVISORY SERVICES. The Investment Manager shall, subject
to the supervision of the Board of Trustees of the AAHSA Trust, act as
investment manager of the AAHSA Trust with respect to the Fund and, as such,
shall:
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1.1.1 INVESTMENT OF THE FUND'S ASSETS. Supervise and direct, or
cause the Sub-Adviser to supervise and direct, the investment of the Fund's
assets in accordance with applicable law, and the investment objectives,
investment program, policies, and restrictions set forth in the then-
current prospectus ("Prospectus") and the then current Statement of
Additional Information ("SAI") relating to the Fund contained in the AAHSA
Trust's Registration Statement under the 1940 Act and the Securities Act of
1933, as amended ("1933 Act"), and subject to such further limitations as
the Board of Trustees of the AAHSA Trust may, from time to time impose by
written notice to the Investment Manager.
1.1.2 INVESTMENT PROGRAM. The Investment Manager shall cause the
Sub-Adviser to formulate a continuing program for the management of the
Fund's assets and resources, and the Investment Manager shall supervise
such investment program formulated by the Sub-Adviser and monitor the Sub-
Adviser's implementation of such investment program.
In furtherance of these duties and responsibilities, the Investment Manager
is authorized, in its discretion and without prior consultation with the AAHSA
Trust to, or cause or permit the Sub-Adviser to: (i) buy, sell, exchange,
convert, lend, and otherwise trade in any stocks; bonds, and other securities
or assets for the Fund; and (ii) place orders and negotiate the commissions
(if any) for the execution of transactions in securities with or through such
brokers, dealers, underwriters, or issuers as the Investment Manager or
Sub-Adviser may select for the Fund.
1.2 ADMINISTRATIVE SERVICES. In addition to investment supervisory
services set forth above in subparagraph 1.1, the Investment Manager shall
oversee the administration of all aspects of the AAHSA Trust's business and
affairs with respect to the Fund and shall provide certain services required for
effective administration of the AAHSA Trust with respect to the Fund. In
connection therewith, the Investment Manager shall:
1.2.1 OFFICE AND OTHER FACILITIES. Furnish, without cost to the
AAHSA Trust, or provide and pay the cost of, such office facilities,
furnishings, and office equipment as are necessary for the performance of
its duties to the AAHSA Trust under this Agreement.
1.2.2 PERSONNEL. Provide, without additional remuneration from or
other cost to the AAHSA Trust, the services of individuals competent to
perform all of the AAHSA Trust's executive, administrative, compliance, and
clerical functions that are not performed by or through other persons or
agents engaged by the AAHSA Trust (including, E.G., the depository agent,
accounting pricing agent, transfer agent and dividend disbursing agent).
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1.2.3 AGENTS. Assist the company in selecting, coordinating the
activities of, supervising and acting as liaison with any other persons and
agents engaged by the AAHSA Trust, including the AAHSA Trust's depository
agent or custodian, accounting pricing agent, transfer agent, dividend
disbursing agent, sub-administrator, independent accountants and
independent legal counsel. The Investment Manager shall also monitor the
functions of such persons and agents, including, in particular, the
accounting pricing agent in its valuation of the Fund's portfolio
securities.
1.2.4 TRUSTEES AND OFFICERS. Authorize and permit the Investment
Manager's directors, officers and employees who may be elected or appointed
as Trustees or officers of the AAHSA Trust to serve in such capacities,
without remuneration from or additional cost to the AAHSA Trust.
1.2.5 BOOKS AND RECORDS. Ensure that all financial, accounting,
corporate, and other records required to be maintained and preserved by the
AAHSA Trust or on its behalf will be maintained in accordance with
applicable laws and regulations and that the AAHSA Trust's corporate
existence will be maintained.
1.2.6 REPORTS TO THE AAHSA TRUST. Furnish to or place at the
disposal of the AAHSA Trust such information, reports, evaluations,
analyses and opinions relating to its administrative functions as the AAHSA
Trust may, at any time or from time to time, reasonably request or as the
Investment Manager may deem helpful to the AAHSA Trust.
1.2.7 REPORTS AND FILINGS. Assist in the development and
preparation of all reports and communications by the AAHSA Trust to the
Fund's shareholders and all reports and filings necessary to maintain the
registrations and qualifications of the AAHSA Trust's shares under federal
and state law. The Investment Manager will also prepare or assist in the
preparation of all required tax returns, proxy statements and reports or
filings with any governmental agency.
1.2.8 SHAREHOLDER INQUIRIES. Respond to all inquiries from
shareholders or otherwise answer communications from shareholders if such
inquiries or communications are directed to the Investment Manager. If any
such inquiry or communication would be more properly answered by one of the
agents listed in subparagraph 1.2.3 above, the Investment Manager will
oversee their response.
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2. ALLOCATION OF EXPENSES.
2.1 EXPENSES PAID BY THE INVESTMENT MANAGER.
2.1.1 SALARIES AND FEES OF TRUSTEES AND OFFICERS. As between the
AAHSA Trust, with respect to the Fund, and the Investment Manager, the
Investment Manager shall pay all salaries, expenses, and fees, if any, of
the directors, officers, and employees of the Investment Manager who are
Trustees, officers, or employees of the AAHSA Trust.
2.1.2 WAIVER OR ASSUMPTION AND REIMBURSEMENT OF AAHSA TRUST
EXPENSES BY THE INVESTMENT MANAGER. The waiver or assumption and
reimbursement by the Investment Manager of any expense of the AAHSA Trust
that the Investment Manager is not required by this Agreement to waive, or
assume or reimburse, shall not obligate the Investment Manager to waive, or
assume or reimburse, the same or any similar expense of the AAHSA Trust on
any subsequent occasion, unless so required pursuant to a separate
agreement between the AAHSA Trust and the Investment Manager.
2.2 EXPENSES PAID BY THE AAHSA TRUST. The AAHSA Trust, with respect to
the Fund, shall bear all expenses of its organization, operation, and business
not specifically waived, assumed, or agreed to be paid by the Investment Manager
as provided in this Agreement or any other agreement between the AAHSA Trust and
the Investment Manager. In particular, the expenses that the AAHSA Trust, with
respect to the Fund, shall bear include, but are not limited to:
2.2.1 CUSTODY AND ACCOUNTING SERVICES. All fees and expenses of
depositories, custodians, accounting service agents and other agents for
the transfer, receipt, safekeeping, servicing of and accounting for the
Fund's cash, securities, and other property, including, among other things,
fees and expenses for the calculation of standardized effective and
compound yield quotations for the Fund, maintenance of ledgers, position
and income reports and settlement of Fund purchases and sales.
2.2.2 DISTRIBUTION EXPENSES. Distribution expenses of the Fund
paid pursuant to any plan of distribution adopted in accordance with the
provisions of Rule 12b-1 under the 1940 Act.
2.2.3 TRANSFER AGENCY AND DIVIDEND DISBURSEMENT. All costs of
establishing, maintaining and servicing accounts of shareholders of the
Fund, including the Fund's proportionate share of all fees and expenses of
the Trust's transfer agent, sub-administrator, dividend disbursing agent
and any other agents engaged by the AAHSA Trust to service such Fund
accounts. In addition, the AAHSA Trust shall reimburse the Investment
Manager and charge to the Fund the Fund's proportionate share of all
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expenses incurred by the Investment Manager in responding to telephonic and
written inquiries from, and in mailing information to Fund shareholders and
others requesting information on behalf of Fund shareholders, regarding
matters such as shareholder account or transaction status, net asset value
of Fund shares, Fund performance and general information about the Fund.
2.2.4 SHAREHOLDER REPORTS AND OTHER COMMUNICATIONS. All costs of
preparing, setting in type, printing and distributing reports and other
communications to shareholders of the Fund.
2.2.5 PROSPECTUSES. All costs of preparing, setting in type,
printing and mailing to shareholders of the Fund annual or more frequent
revisions of the AAHSA Trust's Prospectus and SAI and any supplements
thereto.
2.2.6 SHAREHOLDER MEETINGS. All costs incidental to holding
meetings of shareholders of the Fund, including the printing of notices and
proxy materials, and proxy solicitations therefor.
2.2.7 PRICING AND PORTFOLIO VALUATION. All costs of daily
valuation of the individual portfolio securities of the Fund and daily
computation of the net asset value per share of the Fund, including a
proportionate share of the cost of any equipment obtained by the AAHSA
Trust, the Investment Manager, or agents of the AAHSA Trust, or a
proportionate share of the cost of any equipment currently owned by the
Investment Manager, that will be used to price the Fund's shares or value
the Fund's assets or the cost of the services of any agents engaged by the
AAHSA Trust for the purpose of pricing Fund shares or valuing the assets of
the Fund.
2.2.8 COMMUNICATIONS. All charges for equipment or services used
for communications with respect to the Fund between the Investment Manager
or the AAHSA Trust and the depository agent or custodian, accounting
pricing agent, transfer agent, dividend disbursing agent, sub-administrator
or any other agent engaged by the AAHSA Trust to provide services to the
Fund.
2.2.9 INDEPENDENT LEGAL AND ACCOUNTING FEES. The Fund's
proportionate share of all charges for services and expenses of the AAHSA
Trust's independent legal counsel and independent accountants.
2.2.10 TRUSTEES' FEES AND EXPENSES. The Fund's proportionate share
of all compensation of Trustees (other than those Trustees affiliated with
the Investment Manager or the American Association of Homes and Services
for the Aging), all expenses incurred in connection with their services as
Trustees, and all expenses of
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meetings of the Board of Trustees of the AAHSA Trust and committees of the
Board of Trustees.
2.2.11 FEDERAL REGISTRATION FEES. The Fund's proportionate share
of all fees and expenses of maintaining the registration of the AAHSA Trust
under the 1940 Act and maintaining the registration of the Fund's shares or
registering additional shares of the Fund under the 1933 Act, including all
fees and expenses incurred in connection with the preparation, setting in
type, printing and filing of any post-effective amendments or supplements
to the Registration Statement, Prospectus and SAI for the AAHSA Trust under
the 1933 Act or the 1940 Act that may be prepared from time to time.
2.2.12 STATE REGISTRATION FEES. The Fund's proportionate share of
all fees and expenses (i) of maintaining the registration and qualification
of the AAHSA Trust or the Fund, as appropriate, and of the Fund's shares
for sale under the securities laws of various states and jurisdictions,
(ii) of registering and qualifying additional shares of the Fund, and (iii)
of maintaining the registration and qualification of the AAHSA Trust or the
Fund, as appropriate, under all other laws applicable to the AAHSA Trust or
the Fund, as appropriate, or its business activities.
2.2.13 ISSUE, REDEMPTION AND TRANSFER OF THE FUND'S SHARES. All
expenses incurred in connection with the issue, redemption and transfer of
the Fund's shares, including the expenses of confirming all share
transactions and of transmitting any share certificates for the Fund.
2.2.14 BONDING AND INSURANCE. All expenses of bond, liability and
other insurance coverage required by law or regulation or deemed advisable
by the Board of Trustees of the AAHSA Trust, including, without limitation,
such bond, liability and other insurance expense that may from time to time
be allocated to the Fund in a manner approved by the Board of Trustees of
the AAHSA Trust.
2.2.15 BROKERAGE COMMISSIONS. All brokers' commissions, if any,
and other charges incident to the purchase, sale, or lending of the Fund's
portfolio securities.
2.2.16 TAXES. The Fund's proportionate share of all taxes or
governmental fees payable to federal, state, or other governmental
agencies, domestic or foreign, including issue, stamp, or transfer taxes.
2.2.17 TRADE ASSOCIATION FEES. The Fund's proportionate
share of all fees, dues, costs of attendance at meetings and conferences
and other expenses incurred in connection with the AAHSA Trust's
membership in any trade association or other investment organization.
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2.2.18 PERFORMANCE INFORMATION. Industry performance reporting
services fees reasonably necessary for Board of Trustees of the AAHSA Trust
to keep current regarding industry and regulatory requirements.
2.2.19 NONRECURRING AND EXTRAORDINARY EXPENSES. The Fund's
proportionate share of such nonrecurring and extraordinary expenses as may
arise, including the costs of actions, suits, or proceedings to which the
AAHSA Trust is a party and the expenses the AAHSA Trust may incur as a
result of its legal obligation to provide indemnification to its Trustees,
officers, employees, and agents.
3. MANAGEMENT FEES.
3.1 COMPENSATION RATE. The AAHSA Trust, with respect to the Fund, shall
pay the Investment Manager, as compensation for all services rendered,
facilities provided, and expenses waived or assumed and reimbursed by the
Investment Manager, investment management fees at the annual rate of [ ]% of
the first $[ ]million of average daily net assets of the Fund; [ ]% of
average daily net assets of the Fund up to the next $[ ]million; [ ]% of
average daily net assets of the Fund up to the next $[ ] million; and [ ]% of
average daily net assets of the Fund in excess of $[ ]million.
3.2 METHOD OF COMPUTATION. The investment management fee shall accrue on
each calendar day and the sum of the daily fee accruals for the Fund shall be
paid monthly to the Investment Manager on the first business day of the next
calendar month. The daily fee accruals shall be computed by multiplying the
fraction of one over the number of calendar days in the year by the applicable
annual rates for the Fund, described in subparagraph 3.1. above, and multiplying
the product by the net assets of the Fund as determined in accordance with the
current Prospectus of the AAHSA Trust as of the close of business on the last
preceding business day on which the AAHSA Trust was open for business.
3.3 PRORATION OF FEE. If this Agreement becomes effective or terminates
before the end of any month, the fee for the period from the effective date to
the end of such month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the proportion
which such period bears to the full month in which such effectiveness or
termination occurs.
3.4 LIMITATION OF FEE. In the event the expenses of the Fund (including
the fees of the Investment Manager and amortization of organization expenses but
excluding interest, taxes, brokerage commissions, extraordinary expenses and
sales charges and distribution fees) for any fiscal year exceed the limits set
by applicable regulations of state securities commissions, the Investment
Manager will reduce its fee by the amount of such excess. Any such reductions
are subject to readjustment during the year. The payment of the investment
management fee at the
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<PAGE>
end of any month will be reduced or postponed or, if necessary, a refund will be
made to the Fund so that at no time will there be any accrued but unpaid
liability under this expense limitation.
4. BROKERAGE.
Subject to seeking best execution, and subject to any policies or
procedures as then approved by the Board of Trustees of the AAHSA Trust, the
Investment Manager, in carrying out its duties under subparagraph 1.1, may
cause, or permit the Sub-Adviser to cause, the AAHSA Trust, on behalf of the
Fund, to pay a broker-dealer that furnishes brokerage or research services (as
such services are defined under Section 28(e) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) a higher commission than that which might be
charged by another broker-dealer that does not furnish brokerage or research
services or that furnishes brokerage or research services deemed to be of lesser
value, if the Investment Manager or Sub-Adviser determines in good faith that
the amount of such commission is reasonable in relation to the value of the
brokerage and research services provided by the broker-dealer viewed in terms of
either that particular transaction or the overall responsibilities of the
Investment Manager or Sub-Adviser with respect to the other accounts, if any, as
to which it exercises investment discretion (as such term is defined under
Section 3(a)(35) of the 1934 Act). To demonstrate that such determinations were
in good faith, and to show the overall reasonableness of commissions paid, the
Investment Manager and/or Sub-Adviser shall be prepared to show that commissions
paid: (i) were for purposes contemplated by this Agreement; (ii) provide lawful
and appropriate assistance to the Investment Manager and/or Sub-Adviser in the
performance of its decision-making responsibilities; and (iii) were within a
reasonable range as compared to the rates charged by qualified brokers to other
institutional investors as such rates may become known from available
information. The AAHSA Trust recognizes that, on any particular transaction, a
higher than usual commission may be paid due to the difficulty of the
transaction in question. The Investment Manager and/or Sub-Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
to execute brokerage and principal transactions, subject to the requirements of
"best execution."
5. INVESTMENT MANAGER'S USE OF THE SERVICES OF OTHERS.
The Investment Manager may at its own cost (except as contemplated by
Paragraph 4 of this Agreement) employ, retain, or otherwise avail itself of the
services or facilities of other persons or organizations for the purpose of
providing the Investment Manager, the AAHSA Trust, or the Fund with: (i) such
statistical and other factual information; (ii) such advice regarding economic
factors and trends; (iii) such advice as to occasional transactions in specific
securities; or (iv) such other information, advice, or assistance as the
Investment Manager may deem necessary, appropriate, or convenient for the
discharge of its obligations hereunder or
8
<PAGE>
otherwise helpful to the Investment Manager, the AAHSA Trust, or the Fund, or in
the discharge of the Investment Manager's overall responsibilities with respect
to the other accounts which it serves as an investment manager.
6. OWNERSHIP AND CONFIDENTIALITY OF RECORDS.
All records required to be maintained and preserved by the AAHSA Trust,
with respect to the Fund, pursuant to the provisions of rules or regulations of
the Securities and Exchange Commission under Section 31(a) of the 1940 Act and
maintained and preserved by the Investment Manager on behalf of the AAHSA Trust,
with respect to the Fund, are the property of the AAHSA Trust and shall be
surrendered by the Investment Manager promptly on request by the AAHSA Trust.
The Investment Manager shall not disclose or use any records or information
obtained pursuant to this Agreement in any manner whatsoever except as expressly
authorized by this Agreement and applicable law. The Investment Manager shall
keep confidential any information obtained in connection with their duties
hereunder and shall disclose such information only if the AAHSA Trust, on behalf
of the Fund, has authorized such disclosure or if such disclosure is expressly
required by applicable law or federal or state regulatory authorities.
7. REPORTS TO THE INVESTMENT MANAGER.
The AAHSA Trust shall furnish or otherwise make available to the Investment
Manager such Prospectuses, SAIs, financial statements, proxy statements,
reports, and other information relating to the business and affairs of the AAHSA
Trust, with respect to the Fund, as the Investment Manager may, at any time or
from time to time, reasonably require in order to discharge its obligations
under this Agreement.
8. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the Investment Manager
or any affiliated person of the Investment Manager to render investment
supervisory and corporate administrative services to other investment companies
(including but not limited to one or more series of the AAHSA Trust), to act as
investment adviser or investment counselor to other persons, firms, or
corporations, or to engage in other business activities; however, so long as
this Agreement or any extension, renewal, or amendment hereof shall remain in
effect or until the Investment Manager shall otherwise consent, the Investment
Manager shall be the only investment manager to the AAHSA Trust.
9
<PAGE>
9. LIMITATION OF LIABILITY OF THE INVESTMENT MANAGER.
Neither the Investment Manager nor any of its directors, officers,
employees or agents performing services for the AAHSA Trust, with respect to the
Fund, at the direction or request of the Investment Manager in connection with
the Investment Manager's discharge of its obligations undertaken or reasonably
assumed with respect to this Agreement, shall be liable for any act or omission
in the course of or in connection with the Investment Manager's services
hereunder, including any error of judgment or mistake of law or for any loss
suffered by the AAHSA Trust, with respect to the Fund, in connection with the
matters to which this Agreement relates; PROVIDED, that nothing herein contained
shall be construed to protect the Investment Manager or any such persons against
any liability to the AAHSA Trust or its shareholders to which the Investment
Manager or such persons would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its or their
duties on behalf of the AAHSA Trust or for failure by the Investment Manager or
any such persons to exercise due care in rendering other services to the AAHSA
Trust.
10. RETENTION OF SUB-ADVISER.
Subject to the Fund's obtaining any required approvals under Section 15 of
the 1940 Act, the Investment Manager may retain a Sub-Adviser to perform
investment advisory and other services to the Fund. The retention of a
Sub-Adviser shall be at the risk, cost and expense of the Investment Manager.
The retention of a Sub-Adviser shall in no way reduce the responsibilities or
obligations of the Investment Manager under this Agreement and the Investment
Manager shall be responsible to the AAHSA Trust for all acts or omissions of the
Sub-Adviser in connection with the performance of the Investment Manager's
duties hereunder. The Investment Manager shall pay and shall be solely
responsible for the payment of the fees of the Sub-Adviser for the performance
of its services for the Fund.
11. TERM OF AGREEMENT.
The term of this Agreement shall begin on the day and year first above
written, and unless sooner terminated as hereinafter provided, shall continue in
effect through ______________________, 1996. Thereafter, this Agreement shall
continue in effect from year to year, subject to the termination provisions and
all other terms and conditions hereof; PROVIDED, that such continuance is
specifically approved at least annually by the Board of Trustees of the AAHSA
Trust or by vote of a majority of the outstanding voting securities of the Fund
in accordance with the requirements of the 1940 Act; and PROVIDED FURTHER, that
in either event such continuance also is approved annually by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of a
majority of the Board of Trustees of the AAHSA Trust who are not parties to
10
<PAGE>
this Agreement or "interested persons" (as defined in the 1940 Act and rules
thereunder) of any such party (hereinafter "non-interested Trustees").
Any approval of this Agreement by the holders of a majority of the
outstanding voting securities (as defined in the 1940 Act and rules thereunder)
of the Fund shall be effective to continue this Agreement, notwithstanding (i)
that a comparable agreement has not been approved by the holders of a majority
of the outstanding shares of any other series of the AAHSA Trust and (ii) that
this Agreement has not been approved by the vote of a majority of the
outstanding shares of the AAHSA Trust, unless such approval shall be required by
any other applicable law or otherwise. The Investment Manager shall furnish to
the AAHSA Trust, promptly upon its request, such information as may be
reasonably necessary to evaluate the terms of this Agreement or any extension,
renewal or amendment thereof.
12. AMENDMENT AND ASSIGNMENT OF AGREEMENT.
Any amendment to this Agreement shall be in writing and signed by the
parties hereto; PROVIDED, that no material amendment shall be effective unless
authorized on behalf of the AAHSA Trust (i) by resolution of the Board of
Trustees of the AAHSA Trust, including a majority of the non-interested Trustees
and (ii) if required by law, by vote of a majority of the outstanding voting
securities of the Fund. This Agreement shall automatically and immediately
terminate in the event of its assignment.
13. TERMINATION OF AGREEMENT.
This Agreement may be terminated by either party hereto, without the
payment of any penalty, upon sixty (60) days' prior written notice to the other
party; PROVIDED, that in the case of termination by the AAHSA Trust such action
shall have been authorized (i) by resolution of the Board of Trustees of the
AAHSA Trust, including a majority of the non-interested Trustees, or (ii) by
vote of a majority of the outstanding voting securities of the Fund; PROVIDED
FURTHER, that in the case of termination by the Investment Manager, such
termination shall not be effective until the AAHSA Trust shall have contracted
with one or more persons to serve as successor investment manager for the Fund
and such person(s) shall have assumed such position.
14. MISCELLANEOUS.
14.1 NOTICES. Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postpaid, (i) if to the Investment
Manager, to CRSA Investment Advisors, Inc., 6075 Poplar Avenue, Ste 600,
Memphis, Tennessee 38119, and (ii) if to the AAHSA Trust,
11
<PAGE>
to the AAHSA Trust, 901 E Street, N.W., Suite 500, Washington, D.C. 20004-2037,
Attention: Sheldon Goldberg.
14.2 CAPTIONS. The captions contained in this Agreement are included
for convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
14.3 INTERPRETATION. Nothing herein contained shall be deemed to
require the AAHSA Trust to take any action contrary to its Declaration of Trust
or By-Laws, or any applicable statutory or regulatory requirement to which it is
subject or by which it is bound, or to relieve or deprive the Board of Trustees
of its responsibility for and control of the conduct of the affairs of the AAHSA
Trust.
14.4 DEFINITIONS. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court
by rules, regulations, or orders of the Securities and Exchange Commission
validly issued pursuant to the 1940 Act. Specifically, the terms "vote of a
majority of the outstanding voting securities," "interested person,"
"assignment" and "affiliated person" shall have the meanings assigned to them by
Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of
the 1940 Act reflected in any provision of this Agreement is relaxed by a rule,
regulation, or order of the Securities and Exchange Commission, whether of
special or of general application, such provision shall be deemed to incorporate
the effect of such rule, regulation, or order.
14.5 SEVERABILITY. 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.
14.5 GOVERNING LAW. Except insofar as the 1940 Act or other federal
laws and regulations may be controlling, this Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the District of
Columbia.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: AAHSA TRUST, on behalf of the
Short-Term Bond Fund
_____________________________ By: _________________________
Title:
ATTEST: CRSA INVESTMENT ADVISORS, INC.
_____________________________ By: _________________________
Title:
<PAGE>
EXHIBIT 5(d)
Form of Sub-Advisory Agreement among the AAHSA
Trust, on behalf of the Short-Term Bond Fund, CRSA Investment
Advisors, Inc., and Wainwright Asset Management
<PAGE>
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT ("Agreement") made as of the __________day
of___________ , 1996, by and among the AAHSA TRUST, a Delaware business
trust, on behalf of the Short-Term Bond Fund, CRSA INVESTMENT ADVISORS, INC.,
a Delaware corporation ("CRSA"), and WAINWRIGHT ASSET MANAGEMENT, a
_______________.
W I T N E S S E T H:
WHEREAS, the AAHSA Trust intends to engage in business as an open-end
management investment company and register as such under the Investment Company
Act of 1940, as amended (the " 1940 Act"); and
WHEREAS, the AAHSA Trust is a series type investment company currently
consisting of two series, the Money Market Fund and the Short-Term Bond Fund
each with its own investment objectives, investment program, policies, and
restrictions; and
WHEREAS, CRSA is engaged in the business of rendering investment management
services and is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended ("Advisers Act"); and
WHEREAS, Wainwright Asset Management is engaged principally in the business
of rendering investment advisory services and is registered as an investment
adviser under the Advisers Act: and
WHEREAS, CRSA and the AAHSA Trust on behalf of its separately designated
series, the Short-Term Bond Fund (the "Fund"), have entered into an Advisory
Agreement dated as of _______________, 1996 (the "Investment Management
Agreement") pursuant to which CRSA provides investment supervisory and
administrative services to the Fund; and
WHEREAS, CRSA proposes to engage the services of Wainwright Asset
Management as sub-adviser ("Sub-Adviser") to the Fund as permitted by the
Investment Management Agreement; and
WHEREAS, Sub-Adviser is willing to perform sub-advisory services for the
Fund upon the terms and conditions and for the compensation hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree to the following:
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<PAGE>
1. IN GENERAL.
CRSA hereby employs Wainwright Asset Management to serve as Sub-Adviser
with respect to the assets of the Fund under management of CRSA and to perform
the services hereinafter set forth. Wainwright Asset Management hereby accepts
such employment and agrees for the compensation herein provided to assume all
obligations herein set forth and to bear all expenses of its performance of such
obligations (but no other expenses).
2. DUTIES AND RESPONSIBILITIES OF THE SUB-ADVISER.
2.1 INVESTMENT ADVISORY SERVICES. Subject to the supervision and control
of the AAHSA Trust's Board of Trustees and of CRSA, Sub-Adviser shall manage the
investment and reinvestment of the Fund's assets in accordance with applicable
law, including Sub-Chapter M of the Internal Revenue Code of 1986, as amended,
and the investment objectives, investment program, policies, and restrictions
set forth in the then-current Prospectus and then-current Statement of
Additional Information ("SAI") relating to the Fund contained in the AAHSA
Trust's Registration Statement under the 1940 Act, and the Securities Act of
1933, as amended from time to time, and subject to such further limitations as
the AAHSA Trust may from time to time impose by written notice to CRSA. CRSA
shall promptly inform Sub-Adviser of such further limitations imposed by the
AAHSA Trust. Such limitations will include all procedures adopted by the AAHSA
Trust's Board of Trustees respecting portfolio transactions (I.E., Rule 17a-7,
Rule 10f-3 and affiliated bank transactions). Sub-Adviser shall formulate and
implement a continuing investment program for the management of the Fund's
assets, and shall amend and update such investment program from time to time as
financial and other economic conditions warrant. Subject to the supervision and
control of the AAHSA Trust's Board of Trustees and CRSA, Sub-Adviser shall make
all determinations with respect to the investment and reinvestment of the assets
of the Fund and the purchase or sale of portfolio securities, and shall take
such steps as may be necessary to implement the same. Such determinations and
services shall include advising CRSA and the AAHSA Trust's Board of Trustees of
the manner in which voting rights, rights to consent to corporate action and any
other non-investment decisions pertaining to the Fund's portfolio securities
should be exercised.
2.2 REPORTS. Sub-Adviser shall regularly furnish reports to the AAHSA
Trust's Board of Trustees and to CRSA concerning: (i) Sub-Adviser's economic
outlook and investment research and strategy; (ii) a discussion of the Fund's
portfolio activity, including (a) a schedule of the Fund's investments and other
assets, (b) a statement of all purchases and sales for the Fund during the
period since the last preceding report and (c) the Fund's performance since the
last report and for such other relevant periods as shall be mutually agreed
upon; and (iii) any other information about material developments affecting the
Fund
-2-
<PAGE>
that may be reasonably requested in connection with Sub-Adviser's duties under
this Agreement. Copies of all such reports shall be furnished to CRSA for
examination and review within a reasonable time prior to the presentation of
such reports to the AAHSA Trust's Board of Trustees.
2.3 OTHER RESPONSIBILITIES OF SUB-ADVISER.
2.3.1 OFFICES AND OTHER FACILITIES. Furnish the AAHSA Trust, for
the Fund, without charge, such reasonable administrative and management
supervision and office facilities, which may be their own offices, as shall
be appropriate and necessary to carry out Sub-Adviser's responsibilities
under this Agreement, subject to the requirements of any regulatory
authority to which CRSA or Sub-Adviser may be subject.
2.3.2 PERSONNEL. Provide, without charge, persons to render such
reasonable clerical, administrative, and other services to the Fund as are
necessary to carry out Sub-Adviser's responsibilities under this Agreement
or as the AAHSA Trust's Board of Trustees may from time to time reasonably
request.
2.3.3 REPORTS AND FILINGS. Provide information to the AAHSA Trust
or CRSA as necessary to prepare reports to shareholders, tax returns, and
reports to and filings with the Securities and Exchange Commission and any
other regulatory and administrative bodies that have jurisdiction over the
operations of the Fund and submit to all such regulatory and administrative
bodies such information, reports, or other material as necessary to comply
with applicable laws or regulations.
2.3.4 BOOKS AND RECORDS. Maintain records relating to the services
provided under this Agreement, which records shall be the property of, and
under control of, the AAHSA Trust, except when otherwise required by law or
a court or regulatory body of competent jurisdiction.
2.3.5 EXPERTISE AND INFORMATION. Cooperate with and make available
to CRSA, the AAHSA Trust, and any agents engaged by the AAHSA Trust, its
expertise relating to matters affecting the Fund which involve markets,
securities or individual companies.
Sub-Adviser may (at its own cost) employ, retain, or otherwise avail itself
of the services and facilities of persons and entities within its own
organization or any other organization for the purpose of providing Sub-Adviser,
CRSA, the AAHSA Trust or the Fund with such information, advice or assistance,
including but not limited to advice regarding economic factors and trends and
advice as to transactions in specific securities, as Sub-Adviser may deem
necessary, appropriate, or convenient for the discharge of its obligations
hereunder.
-3-
<PAGE>
3. BROKERAGE.
3.1 SELECTION OF BROKERS OR DEALERS. Sub-Adviser shall select the brokers
or dealers that will execute the purchases and sales of portfolio securities for
the Fund and place, in the name of the Fund or its nominee, all such orders.
Such brokers or dealers may include brokers or dealers affiliated with CRSA.
When placing such orders, Sub-Adviser shall use its best efforts to obtain the
best available price and most favorable execution for the Fund. Sub-Adviser
shall use its best efforts to recapture all available tender and exchange offer
solicitation fees and similar payments in connection with tenders or exchanges
of the securities of the Fund. Sub-Adviser shall advise the AAHSA Trust's Board
of Trustees of any fees or payments of whatever type that it may be possible for
Sub-Adviser or any affiliate of Sub-Adviser to receive in connection with the
purchase or sale of investment securities for the Fund.
3.2 SECTION 28(e). Subject to prior authorization by CRSA and to the
appropriate policies, procedures, and/or guidelines established by the AAHSA
Trust's Board of Trustees, Sub-Adviser may cause the Fund to pay a broker-dealer
that furnishes brokerage or research services (as such services are defined
under Section 28(e) of the Securities Exchange Act of 1934) commission rates in
excess of the commission rates charged by a broker-dealer that does not furnish
brokerage or research services or that furnishes services of lesser value, if
Sub-Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage or research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or Sub-Adviser's overall responsibilities with respect to the Fund
or Sub-Adviser's other advisory clients. The execution of such transactions
shall not be deemed to represent an unlawful act or breach of any duty created
by this Agreement or otherwise. To demonstrate that such determinations were in
good faith, and to show the overall reasonableness of commissions paid,
Sub-Adviser shall be prepared to show that commissions paid: (i) were for
purposes contemplated by this Agreement; (ii) provide lawful and appropriate
assistance to Sub-Adviser in the performance of its decision-making
responsibilities; and (iii) were within a reasonable range as compared to the
rates charged by qualified brokers to other institutional investors as such
rates may become known from available information. The AAHSA Trust recognizes
that, on any particular transaction, a higher than usual commission may be paid
due to the difficulty of the transaction in question. Sub-Adviser is also
authorized to consider sales of shares as a factor in the selection of brokers
to execute brokerage and principal transactions, subject to the requirements of
"best execution."
3.3 COMMUNICATIONS. Sub-Adviser shall promptly communicate to CRSA and
the AAHSA Trust's Board of Trustees such information relating to portfolio
transactions as CRSA or the Board of Trustees may reasonably request.
-4-
<PAGE>
3.4 RESPONSIBILITY FOR COSTS AND EXPENSES. The parties understand that
the Fund shall bear all brokerage commissions in connection with purchases and
sales of portfolio securities for the Fund and all ordinary and reasonable
transaction costs in connection with purchases of such securities in private
placements and subsequent sales thereof.
4. COMPENSATION.
4.1 RATE. As compensation for all services rendered by Sub-Adviser under
this Agreement, CRSA shall have the sole responsibility to pay to Sub-Adviser a
fee calculated at the annual rate of [ ]% on the first $[ ]million of the
average daily net asset value of the Fund, [ ]% on the next $[ ]million, and
[ ]% in excess of $[ ]million of average daily net asset value.
4.2 METHOD OF COMPUTATION. The sub-advisory fee shall accrue on each
calendar day, and the sum of the daily fee accruals shall be paid monthly to
Sub-Adviser on the first business day of the next succeeding calendar month. The
daily fee accruals shall be computed by multiplying the fraction of one over the
number of calendar days in the year by the applicable annual sub-advisory fee
rate described above, and multiplying this product by the net assets of the Fund
as determined in accordance with the Fund's then-current Prospectus as of the
close of business on the previous business day on which the Fund's net asset
value was determined.
4.2.1 ADJUSTMENTS. Sub-Adviser shall promptly reduce its
sub-advisory fee by the amount of any commissions, tender and exchange
offer solicitation fees, other fees, or similar payments received by
Sub-Adviser, or any affiliated person of Sub-Adviser, in connection with
the Fund's portfolio transactions, less the amount of any direct expenses
incurred by Sub-Adviser, or any affiliated persons of Sub-Adviser, in
obtaining such commissions, fees, or payments. Such "commissions" or "other
fees" shall exclude those charged by brokers or dealers affiliated with
CRSA as referred to in subparagraph 3.1. Such "tender and exchange offer
solicitation fees" shall exclude those received by Sub-Adviser acting in
the capacity of manager for any such offer.
4.3 RESPONSIBILITY FOR PAYMENT. Sub-Adviser shall not be entitled to
receive any payment for the performance of its services hereunder from the Fund
and shall look solely and exclusively to CRSA for payment of all fees for such
services.
4.4 EXPENSES. Sub-Adviser shall bear all expenses in connection with the
performance of its services under this Agreement, except as otherwise provided
herein. Expenses incurred in connection with the investment operations of the
Fund, including brokers' commissions, transfer and capital gains or other income
taxes, and fees relating to purchases, sales, or loans of investments, shall be
paid out of the assets of the Fund. Other expenses incurred in the operation of
the Fund shall also be paid by the Fund, as described in
-5-
<PAGE>
the then-current Prospectus and Statement of Additional Information and as
provided in the Investment Management Agreement between the AAHSA Trust, on
behalf of the Fund, and CRSA.
5. LIMITATION OF LIABILITY OF SUB-ADVISER.
Neither Sub-Adviser nor any of its directors, officers, employees or agents
performing services for the AAHSA Trust, with respect to the Fund, at the
direction or request of Sub-Adviser in connection with Sub-Adviser's discharge
of its obligations undertaken or reasonably assumed with respect to this
Agreement, shall be liable for any act or omission in the course of or in
connection with Sub-Adviser's services hereunder, including any error of
judgment or mistake of law or for any loss suffered by the AAHSA Trust, with
respect to the Fund, in connection with the matters to which this Agreement
relates; PROVIDED, that nothing herein contained shall be construed to protect
Sub-Adviser or any such persons against any liability to the AAHSA Trust or its
shareholders to which Sub-Adviser or such persons would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of its or their duties on behalf of the AAHSA Trust or for failure by
Sub-Adviser or any such persons to exercise due care in rendering other services
to the AAHSA Trust.
6. MISCELLANEOUS.
6.1 TERM OF AGREEMENT. This Agreement shall become effective on the day and
year first above written and unless sooner terminated as hereinafter provided,
shall continue in effect through ______________________, 1996. Thereafter, this
Agreement shall continue in effect from year to year, so long as its continuance
is approved in the manner required by the 1940 Act.
6.2 TERMINATION. This Agreement may be terminated at any time without the
payment of any penalty upon sixty (60) days' written notice, (a) by the AAHSA
Trust's Board of Trustees, including the vote or written consent of a majority
of the Trustees of the AAHSA Trust who are not parties to this Agreement or the
Investment Management Agreement or interested persons of any such party, (b) by
the vote of a majority of the outstanding voting securities of the Fund, or (c)
by Sub-Adviser, provided, that if Sub-Adviser terminates this Agreement for any
reason other than the AAHSA Trust's decision to make a change in fundamental
investment policies or restrictions applicable to the Fund over Sub-Adviser's
written objection to such change, the termination by Sub-Adviser will not be
effective until CRSA shall have contracted with one or more persons to serve as
a successor sub-adviser for the Fund and such person or persons shall have
assumed such position but in no event will the termination be delayed more than
an additional sixty (60) days after the end of the notice period. This Agreement
shall terminate automatically in the event of its assignment, or upon
termination of the Investment Management Agreement between the AAHSA Trust and
CRSA.
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<PAGE>
6.3 DEFINITIONS. As used in this Agreement, the terms "assignment,"
"interested person" and "vote of a majority of the outstanding voting
securities" of the Fund shall have the meanings set forth for such terms in the
1940 Act.
6.4 RECORDS. In the event of termination of this Agreement, Sub-Adviser
shall promptly return to the AAHSA Trust all records maintained by Sub-Adviser
with respect to the Fund and Sub-Adviser shall be free from any claim or
retention of rights therein. Sub-Adviser and CRSA shall not disclose or use any
non-public records or information obtained pursuant to this Agreement in any
manner whatsoever except as expressly authorized by this Agreement and
applicable law. Sub-Adviser and CRSA shall keep confidential any information
obtained in connection with their duties hereunder and shall disclose such
information only if the AAHSA Trust, on behalf of the Fund, has authorized such
disclosure or if such disclosure is expressly required by applicable law or
federal or state regulatory authorities.
6.5 NOTICE. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid (a) if to Sub-Adviser, to Wainwright
Asset Management, 966 Hungerford Drive, #26B, Rockville, Maryland 20850,
Attention:______________; (b) if to CRSA, to CRSA Investment Advisors, Inc.,
6075 Popular Avenue, STE 600, Memphis, Tennessee 38119,
Attention:_______________; and (c) if to the AAHSA Trust, to AAHSA, 901 E
Street, N.W., Suite 500, Washington, D.C. 20004-2037, Attention: Sheldon
Goldberg.
6.6 OTHER BUSINESS. Nothing in this Agreement shall limit or restrict the
right of any director, trustee, officer, or employee of Sub-Adviser to engage in
any other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar nature
or a dissimilar nature, nor to limit or restrict the right of Sub-Adviser to
engage in any other business or to render services of any kind to any other
corporation, firm, individual, or association.
6.7 SEVERABILITY. 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.
6.8 GOVERNING LAW. Except insofar as the 1940 Act or other federal laws
and regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the District of Columbia.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
ATTEST: CRSA INVESTMENT ADVISORS, INC.
__________________ By: ___________________________________________________
Title:
ATTEST: WAINWRIGHT ASSET MANAGEMENT
__________________ By: ___________________________________________________
Title:
ATTEST: AAHSA TRUST, on behalf of the Short-Term Bond Fund
__________________ By: ___________________________________________________
Title:
-8-
<PAGE>
EXHIBIT 6(a)
Form of Distribution Agreement between
the AAHSA Trust and H.C. Wainwright & Co., Inc.
<PAGE>
FORM OF
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT ("Agreement") made this ____ day of ___________,
1996, by and between THE AAHSA TRUST, a Delaware Business Trust (the "Trust"),
and H.C. WAINWRIGHT & CO., INC., a ___________ corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Trust intends to engage in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
(the "Shares"), in separately designated series ("Funds") each with its own
investment objectives, investment program, policies, and restrictions; and
WHEREAS, the Trust has registered the Shares of the Funds under the
Securities Act of 1933, as amended (the "1933 Act"), pursuant to a registration
statement on Form N-1A (the "Registration Statement"), including a prospectus
("Prospectus") and a statement of additional information ("Statement of
Additional Information"); and
WHEREAS, the Trust has adopted a Distribution Plan Pursuant to Rule 12b-1
under the 1940 Act (the "Distribution Plan") and may enter into related
agreements providing for the distribution of the Shares of the Funds; and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"); and
WHEREAS, the Trust wishes to engage the services of the Distributor as
distributor of the Shares of the Funds and the Distributor is willing to serve
in that capacity;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. APPOINTMENT OF DISTRIBUTOR. (a) The Trust hereby appoints the
Distributor as principal underwriter and distributor of the Trust to sell the
Shares of the Funds in jurisdictions wherein the Shares may be legally offered
for sale. The Distributor shall be the exclusive agent
<PAGE>
for the distribution of Shares of the Funds; PROVIDED, HOWEVER, that the Trust
in its absolute discretion may issue Shares of the Funds otherwise than through
the Distributor in connection with (i) the payment or reinvestment of dividends
or distributions, (ii) any merger or consolidation of the Trust or a Fund with
any other investment company or trust or any personal holding company, or the
acquisition of the assets of any such entity or another series of the Trust,
(iii) any offer of exchange authorized by the Board of Trustees of the Trust,
(iv) any sales of Shares to Trustees and officers of the Trust, the American
Association of Homes and Services for the Aging (the "AAHSA") or the Distributor
or such other persons identified in the current Prospectus and Statement of
Additional Information of the Trust, or (v) the issuance of such Shares to a
unit investment trust if such unit investment trust has elected to use Shares as
an underlying investment. Notwithstanding any other provision hereof, the Trust
may terminate, suspend, or withdraw the offering of the Shares of a Fund
whenever, in its sole discretion, it deems such action to be desirable.
(b) The Distributor hereby accepts such appointment as principal
underwriter and distributor of the Trust and agrees that it will use its best
efforts to promote the Funds and to solicit orders for the purchase of Shares.
The Distributor shall sell Shares of the Funds as agent for the Corporation at
prices determined as hereinafter provided and on the terms set forth herein, all
according to applicable federal and state laws and regulations and the
Declaration of Trust and By-Laws of the Trust. The Distributor may sell Shares
of the Funds to or through qualified brokers, dealers or others and shall
require each such person to conform to the provisions hereof, the Registration
Statement, the current Prospectus and Statement of Additional Information, and
applicable law. Neither the Distributor nor any such person shall withhold the
placing of purchase orders for Shares so as to make a profit thereby.
(c) The Distributor shall order Shares of the Funds from the Trust only to
the extent that it shall have received purchase orders therefor. The
Distributor will not make, or authorize any brokers, dealers, or others to make,
(i) any short sales of Shares or (ii) any sales of Shares to any Trustee or
officer of the Trust, the Distributor, or any corporation or association
furnishing investment advisory, managerial, or supervisory services to the
Trust, or to any such corporation or association, unless such sales are made in
accordance with the then current Prospectus and Statement of Additional
Information.
(d) The Distributor is not authorized by the Trust to give any information
or to make any representation other than those contained in the current
Prospectus, Statement of Additional Information, and shareholder reports, or in
supplementary sales materials specifically approved by the Trust.
2. OFFERING PRICE OF SHARES. All Shares of each Fund sold under this
Agreement shall be sold at the public offering price per Share in effect at the
time of the sale as described in the then current Prospectus and Statement of
Additional Information; PROVIDED, HOWEVER, that
2
<PAGE>
any public offering price for the Shares shall be the net asset value per Share,
as determined in the manner described in the Trust's current Prospectus and/or
Statement of Additional Information. At no time shall the Trust receive less
than the full net asset value of the Shares, determined in the manner set forth
in the then current Prospectus and Statement of Additional Information.
3. DISTRIBUTION PLAN PAYMENTS. (a) The Distributor shall be entitled to
reimbursement of its expenses incurred in promoting the sale of Shares of each
Fund, including payments made to qualified brokers, dealers, and others in
respect of Shares of each Fund sold by such persons. Such payments to the
Distributor shall be made by the Funds pursuant to the Distribution Plan at such
times and in such amount as the Board of Trustees of the Trust may from time to
time determine.
(b) The Distributor shall prepare and deliver reports to the Board of
Trustees of the Trust on a regular basis, at least quarterly, showing the
payments made by the Distributor to qualified brokers, dealers, and others and
the payments made by the Funds to the Distributor pursuant to the Distribution
Plan, and other amounts expended by the Distributor in connection with its
activities hereunder and the purposes for which such expenditures were made, as
well as any supplemental reports as the Board of Trustees of the Trust may from
time to time reasonably request.
4. PAYMENT OF EXPENSES. (a) Except as otherwise provided herein, the
Distributor shall pay, or arrange for others to pay, all its expenses, including
the following: (i) payments to sales representatives of the Distributor and to
qualified brokers, dealers and others in respect of the sale of Shares of the
Funds; (ii) compensation and expenses of employees of the Distributor who engage
in or support distribution of Shares of the Funds or render shareholder support
services not otherwise provided by the Corporation's transfer and shareholder
servicing agent; (iii) formulation and implementation of marketing and
promotional activities; (iv) preparation, printing, and distribution of
supplementary sales materials and the printing and distribution of Prospectuses,
Statements of Additional Information, and shareholder reports for recipients
other than existing shareholders of the Funds; (v) qualification of the Trust as
a broker or dealer under state law as well as qualification of the Trust as an
entity authorized to do business in certain states; and (vi) obtaining such
information, analyses, and reports with respect to marketing and promotional
activities as the Trust may from time to time reasonably request.
(b) The Trust shall pay or arrange for others to pay the following
expenses: (i) preparation, printing, and distribution to shareholders of
Prospectuses and Statements of Additional Information; (ii) preparation,
printing, and distribution of shareholder reports and other communications to
shareholders; (iii) registration of the Shares of the Funds under the federal
securities laws; (iv) qualification of the Shares of the Funds for sale in such
states as the
3
<PAGE>
Distributor and the Trust may approve; (v) maintaining facilities for the issue
and transfer of Shares; (vi) supplying information, prices, and other data to be
furnished by the Corporation under this Agreement; and (vii) taxes applicable to
the sale or delivery of the Shares of the Funds or certificates therefor.
5. FURNISHING OF INFORMATION. The Trust shall furnish to the Distributor
for use in connection with the sale of Shares of the Funds such information,
financial statements, and other documents as the Distributor may reasonably
request. The Trust shall also make available such number of copies of the
current Prospectus, Statement of Additional Information, and shareholder reports
as the Distributor shall reasonably request.
6. REPURCHASE OF SHARES. The Distributor as agent and for the account of
the Trust may repurchase Shares of the Funds offered for resale to it and redeem
such Shares at their net asset value determined as set forth in the Prospectus
and Statement of Additional Information.
7. INDEMNIFICATION. (a) The Trust agrees to indemnify and hold harmless
the Distributor and each person, if any, who controls the Distributor within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any
losses, claims, damages, or liabilities to which the Distributor or such
controlling person may become subject under the 1933 Act or otherwise, insofar
as such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment thereto or
the Prospectus (other than an omitting prospectus prepared pursuant to Rule
482 under the 1933 Act unless such omitting prospectus has been
specifically approved by the Trust) or the Statement of Additional
Information or any amendment or supplement thereto or an annual or interim
report to shareholders; or
(ii) the omission or alleged omission to state in the Registration
Statement or any amendment thereto or the Prospectus (other than an
omitting prospectus prepared pursuant to Rule 482 under the 1933 Act unless
such omitting prospectus has been specifically approved by the Trust) or
the Statement of Additional Information or any amendment or supplement
thereto or an annual or interim report to shareholders, a material fact
required to be stated therein or necessary to make the statements therein
not misleading;
and shall reimburse, as incurred, the Distributor and each such controlling
person for any legal or other expenses reasonably incurred by the Distributor or
such controlling person in connection
4
<PAGE>
with investigating, defending against, or appearing as a third-party witness in
connection with any such loss, claim, damage, liability, or action; PROVIDED,
HOWEVER, that the Trust shall not be liable in any such case to the extent that
any such loss, claim, damage, or liability arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement or any amendment thereto, or the Prospectus
or Statement of Additional Information or any amendment or supplement thereto,
or in an annual or interim report to shareholders, in reliance upon and in
conformity with written information furnished to the Trust by the Distributor
specifically for use therein; and PROVIDED, FURTHER, that this indemnity
agreement shall not protect the Distributor or any such controlling person
against any liability to which it would otherwise be subject by reason of
willful misfeasance, bad faith, or negligence in the performance of its duties,
or by reason of its failure to exercise due care in rendering services
hereunder. This indemnity agreement shall be in addition to any liability which
the Trust may otherwise have.
(b) The Distributor agrees to indemnify and hold harmless the AAHSA, the
Trust, each of the Trust's Trustees, each of the Trust's officers who signed the
Registration Statement, and each person, if any, who controls the Trust within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any losses, claims, damages or liabilities to which the Trust or any such
Trustee, officer, or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment thereto or
the Prospectus or Statement of Additional Information, or any amendment or
supplement thereto, or the omission or alleged omission to state in the
Registration Statement or any amendment thereto, or the Prospectus or
Statement of Additional Information or any amendment or supplement thereto,
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Trust by the Distributor specifically for use
therein; or
(ii) any untrue statement or alleged untrue statement of a material
fact contained in any unauthorized supplementary sales materials or
omitting prospectus prepared pursuant to Rule 482 under the 1933 Act, or
the omission or alleged omission to state in any such materials or
prospectus, a material fact required to be stated therein or necessary to
make the statements therein not misleading; or
(iii) any act or deed of the Distributor, its employees, or its sales
representatives which has not been authorized by the Trust in any
Prospectus or Statement of Additional Information or by this Agreement;
5
<PAGE>
and shall reimburse, as incurred, any legal or other expenses reasonably
incurred by the Trust or any such Trustee , officer, or controlling person in
connection with investigating, defending against, or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that this indemnity agreement shall not protect any Trustee
or officer of the Trust against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office. This
indemnity agreement shall be in addition to any liability which the Distributor
may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 7. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may wish, to assume the defense thereof, with counsel satisfactory to
such indemnified party; PROVIDED, HOWEVER, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of such action
on behalf of such indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend such
action, the indemnifying party shall not be liable to such indemnified party
under this Section 7 for any legal or other expense, other than reasonable costs
of investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
or (ii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
shall not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the consent of the indemnifying
party, unless such indemnifying party waived its rights under this Section 7 in
which case the indemnified party may effect such a settlement without such
consent.
8. TERM AND TERMINATION. (a) This Agreement shall become effective as of
the date hereof. Unless sooner terminated as herein provided, this Agreement
shall remain in full force and effect until ________, 1996, and thereafter may
be continued for successive periods of
6
<PAGE>
one year, but only so long as each such continuance is specifically approved at
least annually (i) by the Board of Trustees of the Trust, and (ii) by vote of a
majority of the Trustees of the Trust who are not interested persons of the
Trust and who have no direct or indirect financial interest in the operation of
the Distribution Plan or in this Agreement or any other agreement related to the
Distribution Plan (the "Rule 12b-1 Trustees"), cast in person at a meeting
called for the purpose of voting on such approval.
(b) This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Trustees of the Trust or a majority of the Rule
12b-1 Trustees, by vote of a majority of the outstanding voting securities of
the Trust, or by the Distributor, on not more than 60 days' nor less than 30
days' written notice to the other party or upon such shorter notice as may be
mutually agreed upon.
(c) This Agreement shall automatically terminate in the event of its
assignment.
(d) The reimbursement and indemnification provisions contained in Section
7 of this Agreement shall remain in full force and effect regardless of any
termination of this Agreement.
9. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement the terms
"assignment," "interested person," "majority of the outstanding voting
securities," and "principal underwriter" shall have their respective meanings
defined in the 1940 Act and the rules and regulations thereunder, subject,
however, to such exemptions as may be granted to either the Distributor or the
Trust by the Securities and Exchange Commission, or such interpretative
positions as may be taken by the Commission or its staff under the 1940 Act.
10. NOTICE. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid (a) if to the Distributor, to H.C.
Wainwright & Co., Inc., One Boston Place, Boston, Massachusetts 02108,
Attention: ; and (b) if to the Trust, to AAHSA, 901 E Street,
N.W., Suite 500, Washington, D.C. 20004-2037, Attention: Sheldon Goldberg.
11. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no other way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12. INTERPRETATION. Nothing herein contained shall be deemed to require
the Trust to take any action contrary to its Declaration of Trust or By-Laws, or
any applicable statutory or
7
<PAGE>
regulatory requirement to which it is subject or by which it is bound, or to
relieve or deprive the Board of Trustees of its responsibility for and control
of the conduct of the affairs of the Trust.
13. GOVERNING LAW. Except insofar as the 1940 Act or other federal laws
and regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with the laws of the District of Columbia.
8
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: AAHSA TRUST
_________________________ By: ________________________________________
ATTEST: H.C. WAINWRIGHT & CO., INC.
_________________________ By: ________________________________________
9
<PAGE>
EXHIBIT 6(b)
Form of Selected Dealers Agreement
<PAGE>
FORM OF
H.C. WAINWRIGHT & CO., INC.
One Boston Place / Boston, Massachusetts 02108 / ( ) -
SELECTED DEALERS AGREEMENT
Re: Continuous Offering of the AAHSA Trust
Gentlemen:
H.C. Wainwright & Co., Inc. ("H.C. Wainwright") as the Distributor of the
shares of each series (each "Fund") of the AAHSA Trust, understands that you are
a member in good standing of the National Association of Securities Dealers,
Inc. (your signature below shall constitute a representation of such membership
in good standing) and, on the basis of such understanding, invites you to become
a Selected Dealer to distribute any or all shares of each Fund of the AAHSA
Trust on the following terms:
1. You and ourselves agree to abide by the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. ("NASD") and all other federal
and state rules and regulations that are now or may become applicable to
transactions hereunder. Your expulsion or suspension from the NASD will
automatically terminate this Agreement without notice. H.C. Wainwright may
terminate this Agreement at any time upon notice.
2. Orders for shares received from you and accepted by us will be at the
public offering price applicable to each order, as established by the then
effective prospectus of the AAHSA Trust (the "Prospectus"). The procedure
relating to the handling of orders shall be subject to instructions which we
will forward from time to time to all Selected Dealers. All orders are subject
to acceptance by us at 215 North Main Street, West Bend, Wisconsin 53095,
Attention: Mutual Fund Department, and we reserve the right in our sole
discretion to reject any order. We also reserve the right to establish minimum
orders for individual purchasers as set forth in the Prospectus as well as for
Selected Dealers.
3. Compensation for the sale of shares of the Funds of the AAHSA Trust
will be as set forth in Appendix A. You agree that you will cooperate with H.C.
Wainwright in connection with any reporting requirements applicable to net
assets held by you and your customers.
4. You agree that your transactions in shares of the AAHSA Trust will be
limited to the purchase of shares from us for resale to your customers at the
public offering price then in effect or for your bona fide investment and to
repurchases which are made in accordance with the procedures set forth in the
Prospectus.
5. Except for sales pursuant to plans established by the AAHSA Trust with
an agent bank and providing for the periodic investment of new monies, orders
will not be accepted for less than the number of shares or dollar amount set
forth in the Prospectus.
<PAGE>
6. You agree that you will not withhold placing customers' orders so as
to profit yourself as a result of such withholding.
7. You agree to sell shares only to your customers at the applicable
public offering price or to the AAHSA Trust or us as Distributor for the AAHSA
Trust at net asset value, in each case determined as set forth in the
Prospectus.
8. You shall provide such other customer services as contemplated by the
Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of
1940 adopted by the AAHSA Trust and described in the Prospectus.
9. Settlement shall be made within five business days after our
acceptance of the order or such other period as may be required by applicable
law. If payment is not so received or made, we reserve the right forthwith to
cancel the sale, or, at our option, to sell the shares at the then prevailing
net asset value in which latter case you agree to be responsible for any loss
resulting to any Fund of the AAHSA Trust or to us from your failure to make
payments as aforesaid.
10. If any shares are repurchased from you by the AAHSA Trust, or by us
for the account of the AAHSA Trust, such shares shall be tendered in good order
within ten business days. If shares are not tendered within such time period
the right is reserved to cancel, at any subsequent time, the repurchase order,
or, at our option, to reacquire such number of shares at the net asset value
next computed, in which latter case you will agree to be responsible for any
loss resulting from your failure to deliver such shares.
11. All sales will be subject to receipt of shares by us from the AAHSA
Trust. We reserve the right in our discretion without notice to you to suspend
sales or withdraw any offering of shares entirely or to change the offering
prices as provided in the Prospectus or, upon notice, to amend or cancel this
Agreement, which shall be construed in accordance with the laws of the State of
Wisconsin. You agree that any order to purchase shares of any Fund of the AAHSA
Trust placed by you after notice of any such amendment has been sent to you
shall constitute your agreement to any such amendment.
12. No person is authorized to make any representation concerning the
AAHSA Trust or the shares of any Fund except those contained in the Prospectus
and any such information as may be officially designated as information
supplemental to the Prospectus. In purchasing shares from us you shall rely
solely on the representations contained in the Prospectus and supplemental
information above mentioned.
13. We will supply to Selected Dealers additional copies of the Prospectus
in reasonable quantities upon request. All expenses incurred in connection with
your activities under this Agreement shall be borne by you.
14. In no transaction shall you have any authority whatever to act as
agent of the AAHSA Trust or of us or of any other Selected Dealer and nothing in
this Agreement shall constitute either of us the agent of the other or shall
constitute you or the AAHSA Trust the agent of the other. This Agreement shall
not be assignable by you.
-2-
<PAGE>
15. Any notice to you shall be duly given if mailed or telegraphed to you
at your address as registered from time to time with the NASD. Any notice to
H.C. Wainwright shall be sent to 215 North Main Street, West Bend, Wisconsin
53095, Attention: Mutual Fund Department.
16. This Agreement constitutes the entire agreement between H.C.
Wainwright and the undersigned Selected Dealer and supersedes all prior oral or
written agreements between the parties hereto. This Agreement may be amended by
Addendum thereto which need not be executed by the Selected Dealer. Such
Addendum may be used, for example, to add additional Funds to the AAHSA Trust,
and shall be effective as to each Selected Dealer upon our provision of Notice
and upon making a trade in the shares of any Fund of the AAHSA Trust following
such Notice.
Sincerely,
H.C. WAINWRIGHT AND COMPANY
BY __________________________________________
The undersigned accepts your invitation to become a Selected Dealer and
agrees to abide by the foregoing terms and conditions.
Signed ___________________________, 19__.
_____________________________________________
(Selected Dealer)
By __________________________________________
(Authorized Signature)
-3-
<PAGE>
APPENDIX A
For the Money Market Fund:
___% of the Fund's net assets held by the Selected Dealers and its
customers which have been held for the minimum holding period established
by the Board of Trustees of the AAHSA Trust.*
For the Short-Term Bond Fund:
___% of the Fund's net assets held by the Selected Dealers and its
customers which have been held for the minimum holding period established
by the Board of Trustees of the AAHSA Trust.*
*All compensation herein to be paid to a Selected Dealer shall be subject to the
applicable provisions of the Distribution Plan Pursuant to Rule 12b-1 under the
Investment Company Act of 1940 adopted by the AAHSA Trust. Average net assets
per quarter of the Selected Dealers and its customers must exceed the minimum
amount established by the Board of Trustees of the AAHSA Trust, without respect
to the minimum holding period established by the Board of Trustees of the AAHSA
Trust.
-4-
<PAGE>
EXHIBIT 8
Form of Custodian Agreement by and between
the AAHSA Trust and State Street Bank and Trust Company
<PAGE>
CUSTODIAN CONTRACT
Between
AAHSA TRUST
and
STATE STREET BANK AND TRUST COMPANY
Global/Series/Trust
21E593
<PAGE>
TABLE OF CONTENTS
Page
----
1. Employment of Custodian and Property to be Held By
It . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States. . . 2
2.1 Holding Securities. . . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities. . . . . . . . . . . . . . . 2
2.3 Registration of Securities. . . . . . . . . . . . . 4
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . 4
2.5 Availability of Federal Funds . . . . . . . . . . . 5
2.6 Collection of Income. . . . . . . . . . . . . . . . 5
2.7 Payment of Fund Monies. . . . . . . . . . . . . . . 5
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased. . . . . . . . . . . . . . . . 6
2.9 Appointment of Agents . . . . . . . . . . . . . . . 7
2.10 Deposit of Fund Assets in U.S. Securities System. . 7
2.11 Fund Assets Held in the Custodian's Direct
Paper System. . . . . . . . . . . . . . . . . . . . 8
2.12 Segregated Account. . . . . . . . . . . . . . . . . 9
2.13 Ownership Certificates for Tax Purposes . . . . . . 9
2.14 Proxies . . . . . . . . . . . . . . . . . . . . . . 10
2.15 Communications Relating to Portfolio
Securities. . . . . . . . . . . . . . . . . . . . . 10
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States. . . . . . . . . 10
3.1 Appointment of Foreign Sub-Custodians . . . . . . . 10
3.2 Assets to be Held . . . . . . . . . . . . . . . . . 10
3.3 Foreign Securities Systems. . . . . . . . . . . . . 11
3.4 Holding Securities. . . . . . . . . . . . . . . . . 11
3.5 Agreements with Foreign Banking Institutions. . . . 11
3.6 Access of Independent Accountants of the Fund . . . 11
3.7 Reports by Custodian. . . . . . . . . . . . . . . . 11
3.8 Transactions in Foreign Custody Account . . . . . . 12
3.9 Liability of Foreign Sub-Custodians . . . . . . . . 12
3.10 Liability of Custodian. . . . . . . . . . . . . . . 12
3.11 Reimbursement for Advances. . . . . . . . . . . . . 13
3.12 Monitoring Responsibilities . . . . . . . . . . . . 13
3.13 Branches of U.S. Banks. . . . . . . . . . . . . . . 13
<PAGE>
3.14 Tax Law . . . . . . . . . . . . . . . . . . . . . . 14
4. Payments for Sales or Repurchases or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . 14
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . 14
6. Actions Permitted Without Express Authority . . . . . . . . 15
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . 15
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income . . . . . 15
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10. Opinion of Fund's Independent Accountants . . . . . . . . . 16
11. Reports to Fund by Independent Public Accountants . . . . . 16
12. Compensation of Custodian . . . . . . . . . . . . . . . . . 16
13. Responsibility of Custodian . . . . . . . . . . . . . . . . 17
14. Effective Period, Termination and Amendment . . . . . . . . 18
15. Successor Custodian . . . . . . . . . . . . . . . . . . . . 19
16. Interpretive and Additional Provisions. . . . . . . . . . . 19
17. Additional Funds. . . . . . . . . . . . . . . . . . . . . . 20
18. Massachusetts Law to Apply. . . . . . . . . . . . . . . . . 20
19. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . 20
20. Shareholder Communications Election . . . . . . . . . . . . 20
<PAGE>
CUSTODIAN CONTRACT
This Contract between AAHSA Trust, a business trust organized and existing
under the laws of Delaware, having its principal place of business at 901 E.
Street, N.W., Suite 500, Washington, D.C. 20004 hereinafter called the "Fund",
and State Street Bank and Trust Company, a Massachusetts trust company, having
its principal place of business at 225 Franklin Street, Boston, Massachusetts,
02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in two series, the
Money Market Fund and Short-Term Bond Fund (such series together with all other
series subsequently established by the Fund and made subject to this Contract in
accordance with paragraph 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Declaration of
Trust. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios, ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
<PAGE>
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY THE
CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, to be held by it in
the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury
and certain federal agencies (each, a "U.S. Securities System") and (b)
commercial paper of an issuer for which State Street Bank and Trust Company
acts as issuing and paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian (the "Direct Paper
System") pursuant to Section 2.11.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a U.S.
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the
Portfolio or into the name of any nominee or nominees of the Custodian
or into the name or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
2
<PAGE>
aggregate face amount or number of units; PROVIDED that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, BUT ONLY against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of the
Portfolio, which may be in the form of cash or obligations issued by
the United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the Custodian will
not be held liable or responsible for the delivery of securities owned
by the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the Fund
on behalf of the Portfolio requiring a pledge of assets by the Fund on
behalf of the Portfolio, BUT ONLY against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio of the Fund;
3
<PAGE>
13) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board of
Trustees or of the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person
or persons to whom delivery of such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, UNLESS the Fund has authorized in
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed pursuant
to Section 2.9 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the Custodian
on behalf of the Portfolio under the terms of this Contract shall be in
"street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
the Fund, subject only to draft or order by the Custodian acting pursuant
to the terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for the
account of the Portfolio, other than cash maintained by the Portfolio in a
bank account
4
<PAGE>
established and used in accordance with Rule 17f-3 under the Investment
Company Act of 1940. Funds held by the Custodian for a Portfolio may be
deposited by it to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; PROVIDED, however, that every such
bank or trust company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or trust company and
the funds to be deposited with each such bank or trust company shall on
behalf of each applicable Portfolio be approved by vote of a majority of
the Board of Trustees of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian shall,
upon the receipt of Proper Instructions from the Fund on behalf of a
Portfolio, make federal funds available to such Portfolio as of specified
times agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of such Portfolio which are
deposited into the Portfolio's account.
2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to bearer domestic securities if, on the date
of payment by the issuer, such securities are held by the Custodian or its
agent thereof and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due
and shall collect interest when due on securities held hereunder. Income
due each Portfolio on securities loaned pursuant to the provisions of
Section 2.2 (10) shall be the responsibility of the Fund. The Custodian
will have no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian of
the income to which the Portfolio is properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing instructions
when deemed appropriate by the parties, the Custodian shall pay out monies
of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of title
to such options, futures contracts or options on futures contracts to
the Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a custodian and
has been designated by the Custodian as its agent for this purpose)
registered in the name of
5
<PAGE>
the Portfolio or in the name of a nominee of the Custodian referred to
in Section 2.3 hereof or in proper form for transfer; (b) in the case
of a purchase effected through a U.S. Securities System, in accordance
with the conditions set forth in Section 2.10 hereof; (c) in the case
of a purchase involving the Direct Paper System, in accordance with
the conditions set forth in Section 2.11; (d) in the case of
repurchase agreements entered into between the Fund on behalf of the
Portfolio and the Custodian, or another bank, or a broker-dealer which
is a member of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Portfolio of
securities owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from the
Portfolio or (e) for transfer to a time deposit account of the Fund in
any bank, whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the applicable
bank pursuant to Proper Instructions from the Fund as defined in
Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio as
set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the Portfolio,
including but not limited to the following payments for the account of
the Portfolio: interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the Fund whether or
not such expenses are to be in whole or part capitalized or treated as
deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in addition to
Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Trustees or of the
Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of
6
<PAGE>
domestic securities for the account of a Portfolio is made by the Custodian
in advance of receipt of the securities purchased in the absence of
specific written instructions from the Fund on behalf of such Portfolio
to so pay in advance, the Custodian shall be absolutely liable to the
Fund for such securities to the same extent as if the securities had been
received by the Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, to act as a custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from time to time direct;
PROVIDED, however, that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
2.10 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S. Department
of the Treasury and certain federal agencies, collectively referred to
herein as "U.S. Securities System" in accordance with applicable Federal
Reserve Board and Securities and Exchange Commission rules and regulations,
if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in an
account ("Account") of the Custodian in the U.S. Securities System
which shall not include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the Portfolio. The
Custodian shall transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S. Securities System
that payment for such securities has been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Portfolio.
Copies of all advices from the U.S. Securities System of transfers of
securities for the account of the Portfolio shall identify the
Portfolio, be maintained for the Portfolio by the Custodian and be
provided to the Fund at its request. Upon request, the Custodian
shall furnish the Fund on behalf of the Portfolio confirmation of each
7
<PAGE>
transfer to or from the account of the Portfolio in the form of a
written advice or notice and shall furnish to the Fund on behalf of
the Portfolio copies of daily transaction sheets reflecting each day's
transactions in the U.S. Securities System for the account of the
Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with any report
obtained by the Custodian on the U.S. Securities System's accounting
system, internal accounting control and procedures for safeguarding
securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the Portfolio
for any loss or damage to the Portfolio resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be entitled
to be subrogated to the rights of the Custodian with respect to any
claim against the U.S. Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage if and
to the extent that the Portfolio has not been made whole for any such
loss or damage.
2.11 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The Custodian may
deposit and/or maintain securities owned by a Portfolio in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from the Fund on
behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall
8
<PAGE>
transfer securities sold for the account of the Portfolio upon the
making of an entry on the records of the Custodian to reflect such
transfer and receipt of payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio,
in the form of a written advice or notice, of Direct Paper on the next
business day following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets reflecting
each day's transaction in the U.S. Securities System for the account
of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio with
any report on its system of internal accounting control as the Fund
may reasonably request from time to time.
2.12 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio establish
and maintain a segregated account or accounts for and on behalf of each
such Portfolio, into which account or accounts may be transferred cash
and/or securities, including securities maintained in an account by the
Custodian pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by
the Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, BUT ONLY, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the Board of Trustees or of
the Executive Committee signed by an officer of the Fund and certified by
the Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper corporate purposes.
2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
9
<PAGE>
2.14 PROXIES. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without limitation, pendency
of calls and maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian
from issuers of the securities being held for the Portfolio. With respect
to tender or exchange offers, the Custodian shall transmit promptly to the
Portfolio all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Portfolio desires
to take action with respect to any tender offer, exchange offer or any
other similar transaction, the Portfolio shall notify the Custodian at
least three business days prior to the date on which the Custodian is to
take such action.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD OUTSIDE
OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated
on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together with a
certified resolution of the Fund's Board of Trustees, the Custodian and the
Fund may agree to amend Schedule A hereto from time to time to designate
additional foreign banking institutions and foreign securities depositories
to act as sub-custodian. Upon receipt of Proper Instructions, the Fund may
instruct the Custodian to cease the employment of any one or more such
sub-custodians for maintaining custody of the Portfolio's assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Portfolio's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund, the foreign
securities of the Fund held by each foreign sub-custodian.
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3.3 FOREIGN SECURITIES SYSTEMS. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall be
maintained in a clearing agency which acts as a securities depository or in
a book-entry system for the central handling of securities located outside
the United States (each a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign Securities Systems and
U.S. Securities Systems are collectively referred to herein as the
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.5
hereof.
3.4 HOLDING SECURITIES. The Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, PROVIDED HOWEVER, that (i) the
records of the Custodian with respect to securities and other non-cash
property of the Fund which are maintained in such account shall identify by
book-entry those securities and other non-cash property belonging to the
Fund and (ii) the Custodian shall require that securities and other non-
cash property so held by the foreign sub-custodian be held separately from
any assets of the foreign sub-custodian or of others.
3.5 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest, lien
or claim of any kind in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the assets of each Portfolio
will be freely transferable without the payment of money or value other
than for custody or administration; (c) adequate records will be maintained
identifying the assets as belonging to each applicable Portfolio; (d)
officers of or auditors employed by, or other representatives of the
Custodian, including to the extent permitted under applicable law the
independent public accountants for the Fund, will be given access to the
books and records of the foreign banking institution relating to its
actions under its agreement with the Custodian; and (e) assets of the
Portfolios held by the foreign sub-custodian will be subject only to the
instructions of the Custodian or its agents.
3.6 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
3.7 REPORTS BY CUSTODIAN. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of the Portfolio(s) held by foreign sub-custodians, including
but not limited to an identification of entities having possession of the
Portfolio(s) securities and other assets and advices or
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<PAGE>
notifications of any transfers of securities to or from each custodial
account maintained by a foreign banking institution for the Custodian on
behalf of each applicable Portfolio indicating, as to securities acquired
for a Portfolio, the identity of the entity having physical possession of
such securities.
3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and 2.7
of this Contract shall apply, MUTATIS MUTANDIS to the foreign securities of
the Fund held outside the United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of each
applicable Portfolio and delivery of securities maintained for the account
of each applicable Portfolio may be effected in accordance with the
customary established securities trading or securities processing practices
and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser
or dealer) against a receipt with the expectation of receiving later
payment for such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set
forth in Section 2.3 of this Contract, and the Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such
securities.
3.9 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and the Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.13 hereof, the Custodian shall not be liable
for any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this
paragraph 3.10, in delegating custody duties to State Street London Ltd.,
the Custodian shall not be relieved of any responsibility to the Fund for
any loss due to such delegation,
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except such loss as may result from (a) political risk (including, but not
limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or (b)
other losses (excluding a bankruptcy or insolvency of State Street London
Ltd. not caused by political risk) due to Acts of God, nuclear incident or
other losses under circumstances where the Custodian and State Street
London Ltd. have exercised reasonable care.
3.11 REIMBURSEMENT FOR ADVANCES. If the Fund requires the Custodian to advance
cash or securities for any purpose for the benefit of a Portfolio including
the purchase or sale of foreign exchange or of contracts for foreign
exchange, or in the event that the Custodian or its nominee shall incur or
be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent action, negligent
failure to act or willful misconduct, any property at any time held for the
account of the applicable Portfolio shall be security therefor and should
the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's
assets to the extent necessary to obtain reimbursement.
3.12 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection with
the initial approval of this Contract. In addition, the Custodian will
promptly inform the Fund in the event that the Custodian learns of a
material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the case
of any foreign sub-custodian not the subject of an exemptive order from the
Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below
$200 million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.13 BRANCHES OF U.S. BANKS. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract.
(b) Cash held for each Portfolio of the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with the
Custodian's London branch, which account shall be subject to the direction
of the Custodian, State Street London Ltd. or both.
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<PAGE>
3.14 TAX LAW. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or any
state or political subdivision thereof. It shall be the responsibility of
the Fund to notify the Custodian of the obligations imposed on the Fund or
the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole responsibility of the
Custodian with regard to such tax law shall be to use reasonable efforts to
assist the Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such information.
4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian shall honor checks
drawn on the Custodian by a holder of Shares, which checks have been furnished
by the Fund to the holder of Shares, when presented to the Custodian in
accordance with such procedures and controls as are mutually agreed upon from
time to time between the Fund and the Custodian.
5. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Contract means a writing signed
or initialled by one or more person or persons as the Board of Trustees shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices
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<PAGE>
provided that the Board of Trustees and the Custodian are satisfied that such
procedures afford adequate safeguards for the Portfolios' assets. For purposes
of this Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three - party agreement which requires a segregated
asset account in accordance with Section 2.12.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
otherwise directed by the Board of Trustees of the Fund.
7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Trustees of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Trustees pursuant to the Declaration of Trust as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION OF
NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund to keep the
books of account of each Portfolio and/or compute the net asset value per share
of the outstanding shares of each Portfolio or, if directed in writing to do so
by the Fund on behalf of the Portfolio, shall itself keep such books of account
and/or compute such net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of the Portfolio as described in the
Fund's currently effective prospectus related to such Portfolio and shall advise
the Fund and the Transfer Agent daily of the
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<PAGE>
total amounts of such net income and, if instructed in writing by an officer of
the Fund to do so, shall advise the Transfer Agent periodically of the division
of such net income among its various components. The calculations of the net
asset value per share and the daily income of each Portfolio shall be made at
the time or times described from time to time in the Fund's currently effective
prospectus related to such Portfolio.
9. RECORDS
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Portfolio and held by the Custodian and shall, when requested to
do so by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
12. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.
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13. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled
to rely on and may act upon advice of counsel (who may be counsel for the Fund)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts; (ii) errors by the Fund or the Investment Advisor
in their instructions to the Custodian provided such instructions have been in
accordance with this Contract; (iii) the insolvency of or acts or omissions by a
Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to the Custodian's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of the Custodian, the Fund,
the Custodian's sub-custodians, nominees or agents or any consequential losses
arising out of such delay or failure to transfer such securities including
non-receipt of bonus, dividends and rights and other accretions or benefits;
(vi) delays or inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities System; and
(vii) any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to sub-
custodians generally in this Contract.
If the Fund on behalf of the Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of
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the Custodian, result in the Custodian or its nominee assigned to the Fund or
the Portfolio being liable for the payment of money or incurring liability of
some other form, the Fund on behalf of the Portfolio, as a prerequisite to
requiring the Custodian to take such action, shall provide indemnity to the
Custodian in an amount and form satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to a Portfolio act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees of the Fund has approved the
initial use of a particular Securities System by such Portfolio, as required by
Rule 17f-4 under the Investment Company Act of 1940, as amended and that the
Custodian shall not with respect to a Portfolio act under Section 2.11 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees has approved the initial use of
the Direct Paper System by such Portfolio ; PROVIDED FURTHER, however, that the
Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Declaration of
Trust, and further provided, that the Fund on behalf of one or more of the
Portfolios may at any time by action of its Board of Trustees (i) substitute
another bank or trust company for the Custodian by giving notice as described
above to the Custodian, or (ii) immediately terminate this Contract in the event
of the appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
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15. SUCCESSOR CUSTODIAN
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of Trustees
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, PROVIDED that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of Trust of the Fund. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
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17. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to Money Market Fund and Short-Term Bond Fund with respect to which it
desires to have the Custodian render services as custodian under the terms
hereof, it shall so notify the Custodian in writing, and if the Custodian agrees
in writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
18. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
20. SHAREHOLDER COMMUNICATIONS ELECTION
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any purpose
other than corporate communications. Please indicate below whether the Fund
consents or objects by checking one of the alternatives below.
YES [ ] Custodian is authorized to release the Fund's name, address, and
share positions.
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
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IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the day of , 1996.
ATTEST AAHSA TRUST
By
- ------------------------------- -------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
By
- ------------------------------- -------------------------------
Executive Vice President
<PAGE>
SCHEDULE A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of AAHSA Trust for use
as sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
____________________________
Fund's Authorized Officer
Date: ________________________
<PAGE>
EXHIBIT 9(a)
Form of Transfer Agent and Services Agreement
by and between the AAHSA Trust and
State Street Bank and Trust Company
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
between
AAHSA TRUST
and
STATE STREET BANK AND TRUST COMPANY
1C-Domestic Trust/Series
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TABLE OF CONTENTS
Page
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1. Terms of Appointment; Duties of the Bank . . . . . . . 1
2. Fees and Expenses. . . . . . . . . . . . . . . . . . . 3
3. Representations and Warranties of the Bank . . . . . . 4
4. Representations and Warranties of the Fund . . . . . . 4
5. Data Access and Proprietary Information. . . . . . . . 5
6. Indemnification. . . . . . . . . . . . . . . . . . . . 6
7. Standard of Care . . . . . . . . . . . . . . . . . . . 8
8. Covenants of the Fund and the Bank . . . . . . . . . . 8
9. Termination of Agreement . . . . . . . . . . . . . . . 9
10. Additional Funds . . . . . . . . . . . . . . . . . . . 9
11. Assignment . . . . . . . . . . . . . . . . . . . . . . 9
12. Amendment. . . . . . . . . . . . . . . . . . . . . . . 10
13. Massachusetts Law to Apply . . . . . . . . . . . . . . 10
14. Force Majeure. . . . . . . . . . . . . . . . . . . . . 10
15. Consequential Damages. . . . . . . . . . . . . . . . . 10
16. Merger of Agreement. . . . . . . . . . . . . . . . . . 10
17. Limitations of Liability of the Trustees
or Shareholders. . . . . . . . . . . . . . . . . . . . 10
18. Counterparts . . . . . . . . . . . . . . . . . . . . . 10
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TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the day of , 1996, by and between AAHSA
TRUST, a Delaware business trust, having its principal office and place of
business at 901 E Street N.W., Suite 500, Washington, D.C. 20004 (the "Fund"),
and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having
its principal office and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in two series, Money Market
Fund and Short- Term Bond Fund (each such series, together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with Article 10, being herein referred to as a "Portfolio", and
collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as its
transfer agent, dividend disbursing agent, custodian of certain retirement plans
and agent in connection with certain other activities, and the Bank desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
L. TERMS OF APPOINTMENT; DUTIES OF THE BANK
1.1 Subject to the terms and conditions set forth in this Agreement, the Fund,
on behalf of the Portfolios, hereby employs and appoints the Bank to act
as, and the Bank agrees to act as its transfer agent for the Fund's
authorized and issued shares of its common stock, $ par value,
("Shares"), dividend disbursing agent, custodian of certain retirement
plans and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of each of the respective
Portfolios of the Fund ("Shareholders") and set out in the currently
effective prospectus and statement of additional information ("prospectus")
of the Fund on behalf of the applicable Portfolio, including without
limitation any periodic investment plan or periodic withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund on behalf of each of the Portfolios, as
applicable and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the Custodian of
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the Fund authorized pursuant to the Declaration of Trust of
the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with
broker-dealers authorized by the Fund who shall thereby be
deemed to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay
over or cause to be paid over in the appropriate manner such
monies as instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and
distributions declared by the Fund on behalf of the
applicable Portfolio;
(viii) Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon receipt
by the Bank of indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and the Bank at its
option, may issue replacement certificates in place of
mutilated stock certificates upon presentation thereof and
without such indemnity;
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. The
Bank shall also provide the Fund on a regular basis with the
total number of shares which are authorized and issued and
outstanding and shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such shares
or to take cognizance of any laws relating to the issue or
sale of such Shares, which functions shall be the sole
responsibility of the Fund.
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(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i)
perform the customary services of a transfer agent, dividend
disbursing agent, custodian of certain retirement plans and, as
relevant, agent in connection with accumulation, open-account or
similar plans (including without limitation any periodic investment
plan or periodic withdrawal program), including but not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, mailing Shareholder reports and prospectuses
to current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with
respect to dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements
of account to Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder accounts, preparing
and mailing activity statements for Shareholders, and providing
Shareholder account information and (ii) provide a system which will
enable the Fund to monitor the total number of Shares sold in each
State.
(c) In addition, the Fund shall (i) identify to the Bank in writing those
transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of
transactions for each State on the system prior to activation and
thereafter monitor the daily activity for each State. The
responsibility of the Bank for the Fund's blue sky State registration
status is solely limited to the initial establishment of transactions
subject to blue sky compliance by the Fund and the reporting of such
transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services in
Section 1 may be established from time to time by agreement between
the Fund on behalf of each Portfolio and the Bank per the attached
service responsibility schedule. The Bank may at times perform only a
portion of these services and the Fund or its agent may perform these
services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the Fund
(i.e., escheatment services) which may be agreed upon in writing
between the Fund and the Bank.
2. FEES AND EXPENSES
2.1 For the performance by the Bank pursuant to this Agreement, the Fund agrees
on behalf of each of the Portfolios to pay the Bank an annual maintenance
fee for each Shareholder account as set out in the initial fee schedule
attached hereto. Such fees and out-of-pocket expenses and advances
identified under Section 2.2 below may be changed from time to time subject
to mutual written agreement between the Fund and the Bank.
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2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees on
behalf of each of the Portfolios to reimburse the Bank for out-of-pocket
expenses, including but not limited to confirmation production, postage,
forms, telephone, microfilm, microfiche, tabulating proxies, records
storage, or advances incurred by the Bank for the items set out in the fee
schedule attached hereto. In addition, any other expenses incurred by the
Bank at the request or with the consent of the Fund, will be reimbursed by
the Fund on behalf of the applicable Portfolio.
2.3 The Fund agrees on behalf of each of the Portfolios to pay all fees and
reimbursable expenses within five days following the receipt of the
respective billing notice. Postage for mailing of dividends, proxies, Fund
reports and other mailings to all shareholder accounts shall be advanced to
the Bank by the Fund at least seven (7) days prior to the mailing date of
such materials.
3. REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Fund that:
3.1 It is a trust company duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Bank that:
4.1 It is a business trust duly organized and existing and in good standing
under the laws of the State of Delaware.
4.2 It is empowered under applicable laws and by its Declaration of Trust and
By-Laws to enter into and perform this Agreement.
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4.3 All corporate proceedings required by said Declaration of Trust and By-Laws
have been taken to authorize it to enter into and perform this Agreement.
4.4 It is an open-end and diversified management investment company registered
under the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as amended on
behalf of each of the Portfolios is currently effective and will remain
effective, and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of the Fund being
offered for sale.
5. DATA ACCESS AND PROPRIETARY INFORMATION
5.1 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank
on data bases under the control and ownership of the Bank or other third
party ("Data Access Services") constitute copyrighted, trade secret, or
other proprietary information (collectively, "Proprietary Information") of
substantial value to the Bank or other third party. In no event shall
Proprietary Information be deemed Customer Data. The Fund agrees to treat
all Proprietary Information as proprietary to the Bank and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without limiting the
foregoing, the Fund agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as may be designated in
writing by the Bank and solely in accordance with the Bank's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing the data acquired hereunder from
being retransmitted to any other computer facility or other location,
except with the prior written consent of the Bank;
(e) that the Fund shall have access only to those authorized transactions
agreed upon by the parties;
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(f) to honor all reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law, under federal copyright law and under other
federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section shall
survive any earlier termination of this Agreement.
5.2 If the Fund notifies the Bank that any of the Data Access Services do not
operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely manner
to correct such failure. Organizations from which the Bank may obtain
certain data included in the Data Access Services are solely responsible
for the contents of such data and the Fund agrees to make no claim against
the Bank arising out of the contents of such third-party data, including,
but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL
COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH
ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS
ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
5.3 If the transactions available to the Fund include the ability to originate
electronic instructions to the Bank in order to (i) effect the transfer or
movement of cash or Shares or (ii) transmit Shareholder information or
other information, then in such event the Bank shall be entitled to rely
on the validity and authenticity of such instruction without undertaking
any further inquiry as long as such instruction is undertaken in conformity
with security procedures established by the Bank from time to time.
6. INDEMNIFICATION
6.1 The Bank shall not be responsible for, and the Fund shall on behalf of the
applicable Portfolio indemnify and hold the Bank harmless from and against,
any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken
in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation or warranty of the Fund
hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors of
information, records, documents or services which (i) are received by
the Bank or its agents or
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subcontractors and (ii) have been prepared, maintained or performed
by the Fund or any other person or firm on behalf of the Fund
including but not limited to any previous transfer agent or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund on behalf
of the applicable Portfolio.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of
such Shares in such state.
(f) The negotiation and processing by the Bank of checks not made payable
to the order of the Bank, the Fund, the Fund's management company,
transfer agent or distributor or the retirement account custodian or
trustee for a plan account investing in Shares, which checks are
tendered to the Bank for the purchase of Shares (i.e., checks made
payable to prospective or existing Shareholders, such checks are
commonly known as "third party checks").
6.2 At any time the Bank may apply to any officer of the Fund for instructions,
and may consult with legal counsel with respect to any matter arising in
connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be
liable and shall be indemnified by the Fund on behalf of the applicable
Portfolio for any action taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel. The Bank, its agents and
subcontractors shall be protected and indemnified in acting upon any paper
or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon
any instruction, information, data, records or documents provided the Bank
or its agents or subcontractors by machine readable input, telex, CRT data
entry or other similar means authorized by the Fund, and shall not be held
to have notice of any change of authority of any person, until receipt of
written notice thereof from the Fund. The Bank, its agents and
subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual or
facsimile signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or former registrar, or of a
co-transfer agent or co-registrar.
6.3 In order that the indemnification provisions contained in this Section 6
shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Bank, the Bank shall promptly notify the Fund of
such assertion, and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with the Bank in the defense of such claim or to defend against
said claim in its own name or in the name of the Bank. The Bank shall in
no case confess any claim or
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make any compromise in any case in which the Fund may be required to
indemnify the Bank except with the Fund's prior written consent.
7. STANDARD OF CARE
The Bank shall at all times act in good faith and agrees to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall not
be liable for loss or damage due to errors unless said errors are caused by
its negligence, bad faith, or willful misconduct or that of its employees.
8. COVENANTS OF THE FUND AND THE BANK
8.1 The Fund shall on behalf of each of the Portfolios promptly furnish to the
Bank the following:
(a) A certified copy of the resolution of the Board of Trustees of the
Fund authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund and all
amendments thereto.
8.2 The Bank hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates,
check forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms
and devices.
8.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained
and made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
8.4 The Bank and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement
shall remain confidential, and shall not be voluntarily disclosed to any
other person, except as may be required by law.
8.5 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, the Bank will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right,
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however, to exhibit the Shareholder records to any person whenever it is
advised by its counsel that it may be held liable for the failure to
exhibit the Shareholder records to such person.
9. TERMINATION OF AGREEMENT
9.1 This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other.
9.2 Should the Fund exercise its right to terminate, all out-of-pocket expenses
associated with the movement of records and material will be borne by the
Fund on behalf of the applicable Portfolio(s). Additionally, the Bank
reserves the right to charge for any other reasonable expenses associated
with such termination and/or a charge equivalent to the average of three
(3) months' fees.
10. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to Money Market Fund and Short-Term Bond Fund with respect to
which it desires to have the Bank render services as transfer agent under
the terms hereof, it shall so notify the Bank in writing, and if the Bank
agrees in writing to provide such services, such series of Shares shall
become a Portfolio hereunder.
11. ASSIGNMENT
11.1 Except as provided in Section 11.3 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
11.3 The Bank may, without further consent on the part of the Fund, subcontract
for the performance hereof with (i) Boston Financial Data Services, Inc., a
Massachusetts corporation ("BFDS") which is duly registered as a transfer
agent pursuant to Section 17A(c)(2) of the Securities Exchange Act of 1934,
as amended ("Section 17A(c)(2)"), (ii) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(2) or (iii) a BFDS
affiliate; provided, however, that the Bank shall be as fully responsible
to the Fund for the acts and omissions of any subcontractor as it is for
its own acts and omissions.
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12. AMENDMENT
This Agreement may be amended or modified by a written agreement executed
by both parties and authorized or approved by a resolution of the Board of
Trustees of the Fund.
13. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
14. FORCE MAJEURE
In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform
or otherwise from such causes.
15. CONSEQUENTIAL DAMAGES
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
16. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
17. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees and not individually and that the obligations of this instrument
are not binding upon any of the Trustees or Shareholders individually but
are binding only upon the assets and property of the Fund.
18. COUNTERPARTS
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
AAHSA TRUST
BY:_____________________________________
ATTEST:
_____________________________________
STATE STREET BANK AND TRUST
COMPANY
BY:_____________________________________
Executive Vice President
ATTEST:
_____________________________________
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STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
1. Receives orders for the purchase
of Shares.
2. Issue Shares and hold Shares in
Shareholders accounts.
3. Receive redemption requests.
4. Effect transactions 1-3 above
directly with broker-dealers.
5. Pay over monies to redeeming
Shareholders.
6. Effect transfers of Shares.
7. Prepare and transmit dividends
and distributions.
8. Issue Replacement Certificates.
9. Reporting of abandoned property.
10. Maintain records of account.
11. Maintain and keep a current and
accurate control book for each
issue of securities.
12. Mail proxies.
13. Mail Shareholder reports.
14. Mail prospectuses to current
Shareholders.
15. Withhold taxes on U.S. resident
and non-resident alien accounts.
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Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
16. Prepare and file U.S. Treasury
Department forms.
17. Prepare and mail account and
confirmation statements for
Shareholders.
18. Provide Shareholder account
information.
19. Blue sky reporting.
* Such services are more fully described in Section 1.2 (a), (b) and (c) of
the Agreement.
AAHSA TRUST
BY:_____________________________________
ATTEST:
______________________________________
STATE STREET BANK AND TRUST COMPANY
BY:_____________________________________
Executive Vice President
ATTEST:
______________________________________
<PAGE>
EXHIBIT 9(b)
Form of Sub-Administrative Services Agreement
by and among the AAHSA Trust
and the American Association of Homes and Services for the Aging
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SUB-ADMINISTRATIVE SERVICES AGREEMENT
SUB-ADMINISTRATIVE SERVICES AGREEMENT ("Agreement"), dated as of
_____________, 1996, by and among the AAHSA TRUST, a Delaware Business Trust,
and the AMERICAN ASSOCIATION OF HOMES AND SERVICES FOR THE AGING (the "Sub-
Administrator" or the "Association").
W I T N E S S E T H:
WHEREAS, the AAHSA Trust intends to engage in business as an open-end
investment company and is registered as such under the Investment Company Act of
1940, as amended (collectively with the rules and regulations promulgated
thereunder, the "1940 Act");
WHEREAS, the authorized shares of beneficial interest of the AAHSA Trust
(the "Shares") are divided into separate series, the Money Market Fund and the
Short-Term Bond Fund (each the "Fund," collectively the "Funds"); and
WHEREAS, the AAHSA Trust wishes to engage the Sub-Administrator to provide
certain administrative services, and the Sub-Administrator agrees to provide
such administrative services to the AAHSA Trust and the Funds on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. GENERAL DUTIES OF THE SUB-ADMINISTRATOR. Subject to the general
direction and control of the Board of Trustees of the AAHSA Trust, the Sub-
Administrator shall perform such administrative services as may from time to
time be reasonably requested by the AAHSA Trust with respect to the Funds,
including those services set forth in Section 3 of this Agreement.
2. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Administrator hereby agrees that all records which
it maintains for the AAHSA Trust are the property of the AAHSA Trust and further
agrees to surrender promptly to the AAHSA Trust any such records upon the AAHSA
Trust's request. The Sub-Administrator shall keep confidential any information
obtained in connection with its duties hereunder not otherwise known by the Sub-
Administrator and shall disclose such information only if the AAHSA Trust, on
behalf of the Funds, has authorized such disclosure or if such disclosure is
expressly required by applicable law or federal or state regulatory authorities.
The AAHSA Trust hereby acknowledges that the Association currently has extensive
information about the members of the Association that may be shareholders or
prospective investors in the Funds.
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3. SUB-ADMINISTRATIVE AND LIAISON SERVICES. The Sub-Administrator shall
keep and maintain such records as are required from time to time by the AAHSA
Trust or by applicable securities laws, and shall provide such other ministerial
and clerical duties as are necessary to assist the AAHSA Trust's investment
manager, transfer agent and administrator in performing their administrative
duties and services for the AAHSA Trust on behalf of each Fund. In addition,
the Sub-Administrator shall act as a liaison among the AAHSA Trust and members
of the Association who may wish to obtain information or materials regarding the
AAHSA Trust. As necessary, the Sub-Administrator shall act as a liaison with
the AAHSA Trust's independent public accountants and shall provide, upon
request, account analyses, fiscal year summaries and other audit-related
schedules. The Sub-Administrator shall take all reasonable action in the
performance of its obligations under this Agreement to assure that the necessary
information is made available to such persons for the performance of their
services for the AAHSA Trust, as such may be required by the AAHSA Trust from
time to time.
4. ALLOCATION OF CHARGES AND EXPENSES. The Sub-Administrator shall pay
the entire salaries and wages of all of the AAHSA Trust's Trustees, officers and
agents who are officers or employees of the Association and who devote part or
all of their time to the affairs of the Sub-Administrator or its affiliates, and
the wages and salaries of such persons shall not be deemed to be expenses
incurred by the AAHSA Trust for purposes of this Section 4. Except as provided
in the foregoing sentence, the Association in its capacity as Sub-Administrator
shall not pay other expenses relating to the AAHSA Trust including, without
limitation: compensation of Trustees not affiliated with the Sub-Administrator;
governmental fees; interest charges; taxes; membership dues in the Investment
Company Institute allocable to the AAHSA Trust; fees and expenses of the AAHSA
Trust's independent auditors, of legal counsel and of any transfer agent,
distributor, shareholder servicing agent, registrar or dividend disbursing agent
of the AAHSA Trust; expenses of distributing and redeeming shares of the AAHSA
Trust and servicing shareholder accounts; expenses of preparing, printing and
mailing prospectuses and statements of additional information, reports, notices,
proxy statements and reports to shareholders and governmental officers and
commissions; expenses of preparing and mailing agendas and supporting documents
for meetings of the Board of Trustees and committees thereof; expenses connected
with the execution, recording and settlement of portfolio security transactions;
insurance premiums; fees and expenses of the AAHSA Trust's custodian for all
services to the AAHSA Trust, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of shares of the AAHSA Trust; expenses of shareholder meetings; and
expenses relating to the issuance, registration and qualification of shares of
the AAHSA Trust.
5. COMPENSATION OF SUB-ADMINISTRATOR. For the services to be rendered
and the facilities to be provided by the Sub-Administrator hereunder, the AAHSA
Trust shall pay to the Sub-Administrator an administrative fee calculated at the
annual rate of 0.07% of the net assets of the Money Market Fund and at the
annual rate of 0.07% of the net assets of the Short-Term Bond Fund.
2
<PAGE>
6. LIMITATION OF LIABILITY OF THE SUB-ADMINISTRATOR. The Sub-
Administrator and its directors, officers, employees and agents shall not be
liable for any error of judgment or mistake of law or for any act or omission in
the administration or management of the AAHSA Trust or the performance of its or
their duties hereunder or for any loss suffered by the AAHSA Trust, with respect
to the Funds, in connection with the matters to which this Agreement relates,
except for willful misfeasance, bad faith or gross negligence in the performance
of its or their duties, or by reason of the reckless disregard of its or their
obligations and duties hereunder.
7. ACTIVITIES OF THE SUB-ADMINISTRATOR. The services of the Sub-
Administrator or the AAHSA Trust are not to be deemed to be exclusive, the Sub-
Administrator being free to render other services to other parties.
8. TERMINATION. This Agreement may be terminated at any time, without
the payment of any penalty, by a party, upon sixty (60) days' written notice to
the other parties.
9. SUBCONTRACTING BY THE SUB-ADMINISTRATOR. The Sub-Administrator may
subcontract for the performance of its obligations hereunder with any one or
more persons; PROVIDED, HOWEVER, that the Sub-Administrator shall not enter into
any such subcontract unless the Board of Trustees of the AAHSA Trust shall have
approved such subcontract and found the subcontracting party to be qualified to
perform the obligations sought to be subcontracted and PROVIDED, FURTHER, that,
unless the AAHSA Trust otherwise expressly agrees in writing, the Sub-
Administrator shall be as fully responsible to the AAHSA Trust for the acts and
omissions of any subcontractor as it would be for its own acts or omissions.
10. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
11. AMENDMENTS. 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 and no material amendment of this Agreement shall be
effective until approved by vote of the holders of a majority of the outstanding
voting securities of the AAHSA Trust or the Funds, as the case may be.
12. GOVERNING LAW. This Agreement shall be construed and governed by the
laws of the District of Columbia.
13. NOTICE. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid: (a) if to Sub-Administrator, to
AAHSA, 901 E Street, N.W., Suite 500, Washington, D.C. 20004-2037, Attention:
Sheldon Goldberg; and (b) if to the AAHSA Trust, to the AAHSA Trust, 901 E
Street, N.W., Suite 500, Washington, D.C. 20004-2037, Attention: Sheldon
Goldberg.
3
<PAGE>
14. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. 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. Should any part of this Agreement 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 and shall inure to the
benefit of the parties hereto and their respective successors, to the extent
permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
AAHSA TRUST
By:
---------------------------------
Sheldon L. Goldberg, Trustee
AMERICAN ASSOCIATION OF HOMES
AND SERVICES FOR THE AGING
By:
---------------------------------
Sheldon L. Goldberg, President
4
<PAGE>
EXHIBIT 9(c)
Form of Administration Agreement
by and between AAHSA Trust and
State Street Bank and Trust Company
<PAGE>
ADMINISTRATION AGREEMENT
Agreement dated as of ______________, 1996 by and between State Street
Bank and Trust Company, a Massachusetts trust company (the "Administrator"), and
AAHSA Trust (the "Fund").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund desires to retain the Administrator to furnish
certain administrative services to the Fund, and the Administrator is willing to
furnish such services, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
The Fund hereby appoints the Administrator to act as administrator
with respect to the Fund for purposes of providing certain administrative
services for the period and on the terms set forth in this Agreement. The
Administrator accepts such appointment and agrees to render the services stated
herein.
The Fund will initially consist of the portfolio(s) and/or class(es)
of shares (each an "Investment Fund") listed in Schedule A to this Agreement.
In the event that the Fund establishes one or more additional Investment Funds
with respect to which it wishes to retain the Administrator to act as
administrator hereunder, the Fund shall notify the Administrator in writing.
Upon written acceptance by the Administrator, such Investment Fund shall become
subject to the provisions of this Agreement to the same extent as the existing
Investment Funds, except to the extent that such provisions (including those
relating to the compensation and expenses payable by the Fund and its Investment
Funds) may be modified with respect to each additional Investment Fund in
writing by the Fund and the Administrator at the time of the addition of the
Investment Fund.
2. DELIVERY OF DOCUMENTS
The Fund will promptly deliver to the Administrator copies of each of
the following documents and all future amendments and supplements, if any:
a. The Fund's charter document and by-laws;
b. The Fund's currently effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and the 1940
Act and the Fund's Prospectus(es) and Statement(s) of Additional
Information relating to all Investment Funds and all amendments
and supplements thereto as in effect from time to time;
<PAGE>
c. Certified copies of the resolutions of the Board of Trustees of
the Fund (the "Board") authorizing (1) the Fund to enter into
this Agreement and (2) certain individuals on behalf of the Fund
to (a) give instructions to the Administrator pursuant to this
Agreement and (b) sign checks and pay expenses;
d. A copy of the investment advisory agreement between the Fund and
its investment adviser; and
e. Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem necessary
or appropriate in the proper performance of its duties.
3. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to the Fund that:
a. It is a Massachusetts trust company, duly organized, existing and
in good standing under the laws of The Commonwealth of
Massachusetts;
b. It has the corporate power and authority to carry on its business
in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or
threatened which would impair the Administrator's ability to
perform its duties and obligations under this Agreement; and
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Administrator or any law or regulation
applicable to it.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Administrator that:
a. It is a business trust, duly organized and existing and in good
standing under the laws of the State of Delaware;
b. It has the corporate power and authority under applicable laws
and by its charter and by-laws to enter into and perform this
Agreement;
c. All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
2
<PAGE>
d. It is an investment company properly registered under the 1940
Act;
e. A registration statement under the 1933 Act and the 1940 Act has
been filed and will be effective and remain effective during the
term of this Agreement. The Fund also warrants to the
Administrator that as of the effective date of this Agreement,
all necessary filings under the securities laws of the states in
which the Fund offers or sells its shares have been made;
f. No legal or administrative proceedings have been instituted or
threatened which would impair the Fund's ability to perform its
duties and obligations under this Agreement;
g. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Fund or any law or regulation applicable to it;
and
h. As of the close of business on the date of this Agreement, the
Fund is authorized to issue shares of [capital stock/beneficial
interest], and it will initially offer shares, in the authorized
amounts as set forth in Schedule A to this Agreement.
5. ADMINISTRATION SERVICES
The Administrator shall provide the following services, in each case,
subject to the control, supervision and direction of the Fund and the review and
comment by the Fund's auditors and legal counsel and in accordance with
procedures which may be established from time to time between the Fund and the
Administrator:
a. Oversee the determination and publication of the Fund's net asset
value in accordance with the Fund's policy as adopted from time
to time by the Board;
b. Oversee the maintenance by the Fund's custodian of certain books
and records of the Fund as required under Rule 31a-1(b) of the
1940 Act;
c. Prepare the Fund's federal, state and local income tax returns
for review by the Fund's independent accountants and filing by
the Fund's treasurer;
d. Review calculation, submit for approval by officers of the Fund
and arrange for payment of the Fund's expenses;
e. Prepare for review and approval by officers of the Fund financial
information for the Fund's semi-annual and annual reports, proxy
statements and other
3
<PAGE>
communications required or otherwise to be sent to Fund
shareholders, and arrange for the printing and dissemination of
such reports and communications to shareholders;
f. Prepare for review by an officer of and legal counsel for the
Fund the Fund's periodic financial reports required to be filed
with the Securities and Exchange Commission ("SEC") on Form N-SAR
and financial information required by Form [N-1A/N-2] and such
other reports, forms or filings as may be mutually agreed upon;
g. Prepare reports relating to the business and affairs of the Fund
as may be mutually agreed upon and not otherwise prepared by the
Fund's investment adviser, custodian, legal counsel or
independent accountants;
h. Make such reports and recommendations to the Board concerning the
performance of the independent accountants as the Board may
reasonably request;
i. Make such reports and recommendations to the Board concerning the
performance and fees of the Fund's custodian and transfer and
dividend disbursing agent ("Transfer Agent") as the Board may
reasonably request or deems appropriate;
j. Oversee and review calculations of fees paid to the Fund's
investment adviser, custodian and Transfer Agent;
k. Consult with the Fund's officers, independent accountants, legal
counsel, custodian and Transfer Agent in establishing the
accounting policies of the Fund;
l. Review implementation of any dividend reinvestment programs
authorized by the Board;
m. Respond to, or refer to the Fund's officers or Transfer Agent,
shareholder inquiries relating to the Fund;
n. Provide periodic testing of portfolios to assist the Fund's
investment adviser in complying with Internal Revenue Code
mandatory qualification requirements, the requirements of the
1940 Act and Fund prospectus limitations as may be mutually
agreed upon;
o. Review and provide assistance on shareholder communications;
p. Maintain general corporate calendar;
q. Maintain copies of the Fund's charter and by-laws;
4
<PAGE>
r. File annual and semi-annual shareholder reports with the
appropriate regulatory agencies; review text of "President's
letters" to shareholders and "Management's Discussion of Fund
Performance" (which shall also be subject to review by the Fund's
legal counsel);
s. Organize, attend and prepare minutes of shareholder meetings;
t. Provide consultation on regulatory matters relating to portfolio
management, Fund operations and any potential changes in the
Fund's investment policies, operations or structure; act as
liaison to legal counsel to the Fund and, where applicable, to
legal counsel to the Fund's independent Board members;
u. Maintain continuing awareness of significant emerging regulatory
and legislative developments which may affect the Fund, update
the Board and the investment adviser on those developments and
provide related planning assistance where requested or
appropriate;
v. Develop or assist in developing guidelines and procedures to
improve overall compliance by the Fund and its various agents;
w. Counsel and assist the Fund in the handling of routine regulatory
examinations and work closely with the Fund's legal counsel in
response to any non-routine regulatory matters;
Subject to review and comment by the Fund's legal counsel:
x. Prepare and file with the SEC amendments to the Fund's
registration statement, including updating the Prospectus and
Statement of Additional Information, where applicable;
y. Prepare and file with the SEC proxy statements; provide
consultation on proxy solicitation matters;
z. Prepare agenda and background materials for Board meetings, make
presentations where appropriate, prepare minutes and follow-up on
matters raised at Board meetings; and
aa. Prepare and file with the SEC Rule 24f-2 notices.
bb. Prepare and file state registrations of the Fund's securities
pursuant to the specific instructions of the Fund and as detailed
in Schedule C to this Agreement
The Administrator shall provide the office facilities and the personnel required
by it to perform the services contemplated herein.
5
<PAGE>
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from the Fund such compensation for
the Administrator's services provided pursuant to this Agreement as may be
agreed to from time to time in a written fee schedule approved by the parties
and initially set forth in Schedule B to this Agreement. The fees are accrued
daily and billed monthly and shall be due and payable upon receipt of the
invoice. Upon the termination of this Agreement before the end of any month,
the fee for the part of the month before such termination shall be prorated
according to the proportion which such part bears to the full monthly period and
shall be payable upon the date of termination of this Agreement. In addition,
the Fund shall reimburse the Administrator for its out-of-pocket costs incurred
in connection with this Agreement.
The Fund agrees promptly to reimburse the Administrator for any
equipment and supplies specially ordered by or for the Fund through the
Administrator and for any other expenses not contemplated by this Agreement that
the Administrator may incur on the Fund's behalf at the Fund's request or with
the Fund's consent.
The Fund will bear all expenses that are incurred in its operation and
not specifically assumed by the Administrator. Expenses to be borne by the
Fund, include, but are not limited to: organizational expenses; cost of
services of independent accountants and outside legal and tax counsel (including
such counsel's review of the Fund's registration statement, proxy materials,
federal and state tax qualification as a regulated investment company and other
reports and materials prepared by the Administrator under this Agreement); cost
of any services contracted for by the Fund directly from parties other than the
Administrator; cost of trading operations and brokerage fees, commissions and
transfer taxes in connection with the purchase and sale of securities for the
Fund; investment advisory fees; taxes, insurance premiums and other fees and
expenses applicable to its operation; costs incidental to any meetings of
shareholders including, but not limited to, legal and accounting fees, proxy
filing fees and the costs of preparation, printing and mailing of any proxy
materials; costs incidental to Board meetings, including fees and expenses of
Board members; the salary and expenses of any officer, director\trustee or
employee of the Fund; costs incidental to the preparation, printing and
distribution of the Fund's registration statements and any amendments thereto
and shareholder reports; cost of typesetting and printing of prospectuses; cost
of preparation and filing of the Fund's tax returns, Form N-1A or N-2 and Form
N-SAR, and all notices, registrations and amendments associated with applicable
federal and state tax and securities laws; all applicable registration fees and
filing fees required under federal and state securities laws; fidelity bond and
directors' and officers' liability insurance; and cost of independent pricing
services used in computing the Fund's net asset value.
The Administrator is authorized to and may employ or associate with such
person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided,however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to the Fund for the acts
and omissions of any such person or persons as it is for its own acts and
omissions.
6
<PAGE>
7. INSTRUCTIONS AND ADVICE
At any time, the Administrator may apply to any officer of the Fund
for instructions and may consult with its own legal counsel or outside counsel
for the Fund or the independent accountants for the Fund at the expense of the
Fund, with respect to any matter arising in connection with the services to be
performed by the Administrator under this Agreement. The Administrator shall
not be liable, and shall be indemnified by the Fund, for any action taken or
omitted by it in good faith in reliance upon any such instructions or advice or
upon any paper or document believed by it to be genuine and to have been signed
by the proper person or persons. The Administrator shall not be held to have
notice of any change of authority of any person until receipt of written notice
thereof from the Fund. Nothing in this paragraph shall be construed as imposing
upon the Administrator any obligation to seek such instructions or advice, or to
act in accordance with such advice when received.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall be responsible for the performance of only
such duties as are set forth in this Agreement and, except as otherwise provided
under Section 6, shall have no responsibility for the actions or activities of
any other party, including other service providers. The Administrator shall
have no liability for any error of judgement or mistake of law or for any loss
or damage resulting from the performance or nonperformance of its duties
hereunder unless solely caused by or resulting from the gross negligence or
willful misconduct of the Administrator, its officers or employees. The
Administrator shall not be liable for any special, indirect, incidental, or
consequential damages of any kind whatsoever (including, without limitation,
attorneys' fees) under any provision of this Agreement or for any such damages
arising out of any act or failure to act hereunder. In any event, the
Administrator's liability under this Agreement shall be limited to its total
annual compensation earned and fees paid hereunder during the preceding twelve
months for any liability or loss suffered by the Fund including, but not limited
to, any liability relating to qualification of the Fund as a regulated
investment company or any liability relating to the Fund's compliance with any
federal or state tax or securities statute, regulation or ruling.
The Administrator shall not be responsible or liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its control,
including without limitation, work stoppage, power or other mechanical failure,
computer virus, natural disaster, governmental action or communication
disruption, nor shall any such failure or delay give the Fund the right to
terminate this Agreement.
The Fund shall indemnify and hold the Administrator harmless from all
loss, cost, damage and expense, including reasonable fees and expenses for
counsel, incurred by the Administrator resulting from any claim, demand, action
or suit in connection with the Administrator's acceptance of this Agreement, any
action or omission by it in the performance of its duties hereunder, or as a
result of acting upon any instructions reasonably believed by it to have been
duly authorized by the Fund, provided that this indemnification shall not apply
to actions or omissions of the Administrator, its officers or employees in cases
of its or their own gross negligence or willful misconduct.
The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above. In the
event the Fund elects to assume the defense of any such suit and retain counsel,
7
<PAGE>
the Administrator or any of its affiliated persons, named as defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Fund shall have specifically
authorized the retaining of such counsel or (ii) the Administrator shall have
determined in good faith that the retention of such counsel is required as a
result of a conflict of interest.
The indemnification contained herein shall survive the termination of
this Agreement.
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by law or
in connection with any required disclosure to a banking or other regulatory
authority, it will keep confidential all records and information in its
possession relating to the Fund or its shareholders or shareholder accounts and
will not disclose the same to any person except at the request or with the
written consent of the Fund.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
The Fund assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations applicable to
it.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Administrator agrees that all records which it maintains for the Fund shall
at all times remain the property of the Fund, shall be readily accessible during
normal business hours, and shall be promptly surrendered upon the termination of
the Agreement or otherwise on written request. The Administrator further agrees
that all records which it maintains for the Fund pursuant to Rule 31a-1 under
the 1940 Act will be preserved for the periods prescribed by Rule 31a-2 under
the 1940 Act unless any such records are earlier surrendered as provided above.
Records shall be surrendered in usable machine-readable form.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to the Fund are not to be deemed
exclusive, and the Administrator shall be free to render similar services to
others. The Administrator shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Fund from
time to time, have no authority to act or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
12. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective on ____________________________.
The Agreement shall remain in effect for a period of _____________________ from
[the effective date\the date the Fund first accepts money for investment], and
shall automatically continue in effect thereafter with respect to the Fund
unless terminated in writing by either party at the end of such period or
thereafter on sixty (60) days' prior written notice given by either party to the
other party. Termination of this Agreement with respect to any given Investment
Fund shall in no way affect the continued validity of this Agreement with
respect to any other Investment Fund. Upon termination of this Agreement, the
Fund shall pay to the Administrator
8
<PAGE>
such compensation and any reimbursable expenses as may be due under the terms
hereof as of the date of such termination, including reasonable out-of-pocket
expenses associated with such termination. This Agreement may be modified or
amended from time to time by mutual written agreement of the parties hereto.
13. NOTICES
Any notice or other communication authorized or required by this
Agreement to be given to either party shall be in writing and deemed to have
been given when delivered in person or by confirmed facsimile, or posted by
certified mail, return receipt requested, to the following address (or such
other address as a party may specify by written notice to the other): if to the
Fund: ____________________, Attn: _________________, fax: __________________; if
to the Administrator: State Street Bank and Trust Company, 1776 Heritage Drive,
North Quincy, Massachusetts 02171, Attn: , fax: (617) 985-2497.
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by either party hereto without
the prior consent in writing of the other party, except that the Administrator
may assign this Agreement to a successor of all or a substantial portion of its
business, or to a party controlling, controlled by or under common control with
the Administrator.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of
the Fund and the Administrator and their respective successors and permitted
assigns.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
hereto with respect to the subject matter hereof and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing.
17. WAIVER
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist upon strict adherence to
that term or any term of this Agreement. Any waiver must be in writing signed
by the waiving party.
18. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
9
<PAGE>
19. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
AAHSA TRUST
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
STATE STREET BANK AND TRUST COMPANY
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
10
<PAGE>
ADMINISTRATION AGREEMENT
AAHSA TRUST
SCHEDULE A
LISTING OF INVESTMENT FUNDS AND AUTHORIZED SHARES
Investment Fund Authorized Shares
Money Market Fund
Short-Term Bond Fund
11
<PAGE>
ADMINISTRATION AGREEMENT
AAHSA TRUST
SCHEDULE B
FEES AND EXPENSES
12
<PAGE>
ADMINISTRATION AGREEMENT
AAHSA TRUST
SCHEDULE C
REGISTRATION OF FUND SHARES
WITH STATE SECURITIES ADMINISTRATORS
AT THE SPECIFIC DIRECTION OF THE FUND, THE ADMINISTRATOR WILL PREPARE REQUIRED
DOCUMENTATION AND REGISTER FUND SHARES IN ACCORDANCE WITH THE SECURITIES LAWS OF
EACH JURISDICTION IN WHICH FUND SHARES ARE TO BE OFFERED OR SOLD PURSUANT TO
INSTRUCTIONS GIVEN TO THE ADMINISTRATOR BY THE FUND.
THE FUND SHALL BE SOLELY RESPONSIBLE FOR THE DETERMINATION (i) OF THOSE
JURISDICTIONS IN WHICH FUND SHARES ARE TO BE REGISTERED AND (ii) THE NUMBER OF
FUND SHARES TO BE REGISTERED IN EACH SUCH JURISDICTION. IN THE EVENT THAT THE
ADMINISTRATOR BECOMES AWARE OF (a) THE SALE OF FUND SHARES IN A JURISDICTION IN
WHICH FUND SHARES ARE NOT REGISTERED FOR OFFER AND SALE OR (b) THE SALE OF FUND
SHARES IN EXCESS OF THE NUMBER OF FUND SHARES REGISTERED IN SUCH JURISDICTION,
THE ADMINISTRATOR SHALL REPORT SUCH INFORMATION TO THE FUND, AND IT SHALL BE THE
FUND'S RESPONSIBILITY TO DETERMINE APPROPRIATE CORRECTIVE ACTION AND INSTRUCT
THE ADMINISTRATOR WITH RESPECT THERETO.
The registration services shall consist of the following:
1. Filing of Fund's Application to Register Securities and amendments, if
directed by the Fund;
2. Filing of amendments to the Fund's registration statement;
3. Filing Fund sales reports and advertising literature where required;
4. Payment at the expense of the Fund of all Fund state registration and
filing fees;
5. Filing the Prospectuses and Statements of Additional Information and
any amendments or supplements thereto;
6. Filing of annual reports and proxy statements where required; and
7. The performance of such additional services as the Administrator and
the Fund may agree upon in writing.
Unless otherwise specified in writing by the Administrator, registration
services by the Administrator shall not include determining the availability of
exemptions under a jurisdiction's blue sky law. Any such determination shall be
made by the Fund or its legal counsel. In connection with the services
described herein, the Fund shall issue in favor of the Administrator a power of
attorney to register Fund shares on behalf of the Fund, which power of attorney
shall be substantially in the form of Exhibit I attached hereto.
13
<PAGE>
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of _________________________, 1996 that the
undersigned AAHSA Trust with principal offices at 901 E Street N.W., Suite 500,
Washington, D.C. 20004 (individually the "Fund") makes, constitutes, and
appoints STATE STREET BANK AND TRUST COMPANY (the "Administrator") with
principal offices at 225 Franklin Street, Boston, Massachusetts its lawful
attorney-in-fact for it to do as if it were itself acting, the following:
1. REGISTRATION OF FUND SHARES. The power to register shares of the Fund in
each jurisdiction in which Fund shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and file
any and all Fund applications, including without limitation, applications
to register shares, consents, including consents to service of process,
reports, including without limitation, all periodic reports, claims for
exemption, or other documents and instruments now or hereafter required or
appropriate in the judgement of the Administrator in connection with the
registration of Fund shares.
2. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney, individuals
holding the titles of Officer, Blue Sky Manager, or Senior Blue Sky
Administrator at the Administrator shall have authority to act on behalf
of the Fund with respect to item 1 above.
The execution of this limited power of attorney shall be deemed coupled with an
interest and shall be revocable only upon receipt by the Administrator of such
termination of authority. Nothing herein shall be construed to constitute the
appointment of the Administrator as or otherwise authorize the Administrator to
act as an officer, director or employee of the Fund.
IN WITNESS WHEREOF, the Fund has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
AAHSA TRUST
By:
---------------------------
Name:
-------------------------
Title:
------------------------
14
<PAGE>
EXHIBIT 9(d)
Form of Expense Limitation Agreement
by and between the AAHSA Trust on
behalf of the Money Market Fund, and
CRSA Investment Advisors, Inc.
<PAGE>
THE AAHSA TRUST:
MONEY MARKET FUND
FORM OF EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of ________________, 1996, by
and between CRSA Investment Advisors, Inc. (the "Manager") and The AAHSA Trust
(the "Trust"), on behalf of the Money Market Fund (the "Fund").
WHEREAS, the Trust is a Delaware business trust organized under a Trust
Instrument dated __________, 1994 (the "Trust Instrument"), and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end diversified management company of the series type, and the Fund is one
of the series of the Trust; and
WHEREAS, The Trust and the Manager have entered into an Investment
Management Agreement (the "Management Agreement"), pursuant to which the Manager
will render investment advisory services to the Fund for compensation based on
the value of the average daily net assets of the Fund; and
WHEREAS, The Trust and the Manager have determined that is appropriate and
in the best interests of the Fund and its shareholders to maintain the expenses
of the Fund at a level below the level to which the Fund would normally be
subject during its start-up period.
NOW THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION
1.1 APPLICABLE EXPENSE LIMIT. To the extent that the aggregate expenses
of every character incurred by the Fund in any fiscal year, including but not
limited to investment advisory fees of the Manager (but excluding interest,
taxes, brokerage commissions, and other expenditures which are capitalized in
accordance with generally accepted accounting principles, and other
extraordinary expenses not incurred in the ordinary course of the Fund's
business) ("Fund Operating Expenses"), exceed the Operating Expense Limit, as
defined in Section 1.2 below, such excess amount (the "Excess Amount") shall be
the liability of the Manager.
1.2 OPERATING EXPENSE LIMIT. The Operating Expense Limit in any year
shall be 0.65% of the average daily net assets of the Fund, or such other rate
as may be agreed to in writing by the parties.
1.3 METHOD OF COMPUTATION. To determine the Manager's liability with
respect to the Excess Amount, each month the Fund Operating Expenses for the
Fund shall be annualized as of the last day of the month. If the annualized
Fund Operating Expenses for any month exceed the Operating Expense Limit, the
Manager shall first waive or reduce its investment management fee for such month
by an amount sufficient to reduce the annualized Fund Operating Expenses to an
amount no higher than the Operating Expense Limit. If the amount of the waived
or reduced investment management fee for any such month is insufficient to pay
the Excess Amount, the Manager may also remit to the Fund an amount that,
together with the waived or reduced advisory fee, is sufficient to pay such
Excess Amount.
<PAGE>
1.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the advisory fees waived or
reduced and other payments remitted by the Manager to the Fund with respect to
the previous fiscal year shall equal the Excess Amount.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1 REIMBURSEMENT. If in any year during which total Fund assets are
greater than $__________ and in which the Management Agreement is still in
effect, the estimated aggregate Fund Operating Expenses for the fiscal year are
less than the Operating Expense Limit for that year, subject to quarterly
approval by the Trust's Board of Trustees as provided in Section 2.2 below, the
Manager shall be entitled to reim-bursement by the Fund in whole or in part as
provided below, of the management fees waived or reduced and other payments
remitted by the Manager to the Fund pursuant to Section 1 hereof. The total
amount of reimbursement to which the Manager may be entitled (the "Reimbursement
Amount") shall equal, at any time, the sum of all investment management fees
previously waived or reduced by the Manager and all other payments remitted by
the Manager to the Fund, pursuant to Section 1 hereof, during any of the
previous [two (2)] fiscal years, less any reimbursement previously paid by the
Fund to the Manager, pursuant to Sections 2.2 or 2.3 hereof, with respect to
such waivers, reductions, and payments. The Reimbursement Amount shall not
include any additional charges or fees whatsoever, including, e.g., interest
accruable on the Reimbursement Amount.
2.2 BOARD APPROVAL. No reimbursement shall be paid to the Manager
pursuant to this provision in any fiscal quarter, unless the Trust's Board of
Trustees has determined that the payment of such reimbursement is in the best
interests of the Fund and its shareholders. The Trust's Board of Trustee shall
determine quarterly in advance whether any reimbursement may be paid to the
Manager in such quarter.
2.3 METHOD COMPUTATION. To determine the Fund's payments, if any, to
reimburse the Manager for the Reimbursement Amount, each month the Fund
Operating Expenses shall be annualized as of the last day of the month. If the
annualized Operating Expenses for any month are less than the Operating Expense
Limit, the Fund shall pay to the Manager an amount sufficient to increase the
annualized Fund Operating Expenses to an amount no greater than the Operating
Expense Limit, provided that such amount paid to the Manager will in no event
exceed the total Reimbursement Amount.
2.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the actual Fund Operating Expenses for the prior
fiscal year (including any reimbursement payments hereunder with respect to such
fiscal year) do not exceed the Operating Expense Limit.
3. TERMINATION OF AGREEMENT.
This Agreement shall continue in effect for a period of one year from the
date of its execution and from year to year thereafter provided such continuance
is specifically approved by a majority of the Trustees of the AAHSA Trust who
(i) are not "interested persons" of the AAHSA Trust or any other party to this
Agreement, as defined in the Act, and (ii) have no direct or indirect financial
interest in the operation of this Agreement (Non-Interested Trustees).
Nevertheless, this Agreement may be terminated thereafter by either party
hereto, without
2
<PAGE>
payment of any penalty, upon 90 days' prior written notice to the other party at
its principal place of business; provided that, in the case of termination by
the Fund, such action shall be authorized by resolution of a majority of the
Non-Interested Trustees or of the AAHSA Trust by a vote of a majority of the
outstanding voting securities of the Fund.
4. MISCELLANEOUS.
4.1 CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
4.2 INTERPRETATION. Nothing herein contained shall be deemed to require
the Fund or the Trust to take any action contrary to the Fund's Articles of
Incorporation or By-Laws, or any applicable statutory or regulatory requirement
to which it is subject or by which it is bound, or to relieve or deprive the
Trust's Board of Trustees of its responsibility for and control of the conduct
of the affairs of the Trust or the Fund.
4.3 DEFINITIONS. Any question of interpretation of any term or provision
of this Agreement, including but not limited to the investment advisory fee, the
computations of net asset values, and the allocation expenses, having a
counterpart in or otherwise derived from the terms and provisions of the
Management Agreement or the Act, shall have the same meaning as and be resolved
by reference to such Contract or the Act.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: THE AAHSA TRUST ON BEHALF OF
THE MONEY MARKET FUND
By:
- ---------------------------- ----------------------------
Secretary
ATTEST: CRSA INVESTMENT ADVISORS, INC.
By:
- ---------------------------- ----------------------------
Secretary
4
<PAGE>
EXHIBIT 9(e)
Form of Expense Limitation Agreement
by and between the AAHSA Trust on
behalf of the Money Market Fund, and
Wainwright Asset Management
<PAGE>
THE AAHSA TRUST:
MONEY MARKET FUND
FORM OF EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of ________________, 1996, by
and between Wainwright Asset Management (the "Sub-Advisor") and The AAHSA Trust
(the "Trust"), on behalf of the Money Market Fund (the "Fund").
WHEREAS, the Trust is a Delaware business trust organized under a Trust
Instrument dated _____________, 1994 (the "Trust Instrument"), and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end diversified management company of the series type, and the Fund is one
of the series of the Trust; and
WHEREAS, The Trust and the Sub-Advisor have entered into a Sub-Advisory
Agreement (the "Sub-Advisory Agreement"), pursuant to which the Sub-Advisor will
render investment advisory services to the Fund for compensation based on the
value of the average daily net assets of the Fund; and
WHEREAS, The Trust and the Sub-Advisor have determined that is appropriate
and in the best interests of the Fund and its shareholders to maintain the
expenses of the Fund at a level below the level to which the Fund would normally
be subject during its start-up period.
NOW THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION
1.1 APPLICABLE EXPENSE LIMIT. To the extent that the aggregate expenses
of every character incurred by the Fund in any fiscal year, including but not
limited to sub-advisory fees of the Sub-Advisor (but excluding interest, taxes,
brokerage commissions, and other expenditures which are capitalized in
accordance with generally accepted accounting principles, and other
extraordinary expenses not incurred in the ordinary course of the Fund's
business) ("Fund Operating Expenses"), exceed the Operating Expense Limit, as
defined in Section 1.2 below, such excess amount (the "Excess Amount") shall be
the liability of the Sub-Advisor.
1.2 OPERATING EXPENSE LIMIT. The Operating Expense Limit in any year
shall be 0.65% of the average daily net assets of the Fund, or such other rate
as may be agreed to in writing by the parties.
1.3 METHOD OF COMPUTATION. To determine the Sub-Advisor's liability with
respect to the Excess Amount, each month the Fund Operating Expenses for the
Fund shall be annualized as of the last day of the month. If the annualized
Fund Operating Expenses for any month exceed the Operating Expense Limit, the
Sub-Advisor shall first waive or reduce its sub-advisory fee for such month by
an amount sufficient to reduce the annualized Fund Operating Expenses to an
amount no higher than the Operating Expense Limit. If the amount of the waived
or reduced sub-advisory fee for any such month is insufficient to pay the Excess
Amount, the Sub-Advisor may also remit to the Fund an amount that, together with
the waived or reduced sub-advisory fee, is sufficient to pay such Excess Amount.
<PAGE>
1.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the advisory fees waived or
reduced and other payments remitted by the Sub-Advisor to the Fund with respect
to the previous fiscal year shall equal the Excess Amount.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1 REIMBURSEMENT. If in any year during which total Fund assets are
greater than $____________ and in which the Sub-Advisory Agreement is still in
effect, the estimated aggregate Fund Operating Expenses for the fiscal year are
less than the Operating Expense Limit for that year, subject to quarterly
approval by the Trust's Board of Trustees as provided in Section 2.2 below, the
Sub-Advisor shall be entitled to reimbursement by the Fund in whole or in part
as provided below, of the management fees waived or reduced and other payments
remitted by the Sub-Advisor to the Fund pursuant to Section 1 hereof. The total
amount of reimbursement to which the Sub-Advisor may be entitled (the
"Reimbursement Amount") shall equal, at any time, the sum of all investment
management fees previously waived or reduced by the Sub-Advisor and all other
payments remitted by the Sub-Advisor to the Fund, pursuant to Section 1 hereof,
during any of the previous [two (2)] fiscal years, less any reimbursement
previously paid by the Fund to the Sub-Advisor, pursuant to Sections 2.2 or 2.3
hereof, with respect to such waivers, reductions, and payments. The
Reimbursement Amount shall not include any additional charges or fees
whatsoever, including, e.g., interest accruable on the Reimbursement Amount.
2.2 BOARD APPROVAL. No reimbursement shall be paid to the Sub-Advisor
pursuant to this provision in any fiscal quarter, unless the Trust's Board of
Trustees has determined that the payment of such reimbursement is in the best
interests of the Fund and its shareholders. The Trust's Board of Trustee shall
determine quarterly in advance whether any reimbursement may be paid to the Sub-
Advisor in such quarter.
2.3 METHOD COMPUTATION. To determine the Fund's payments, if any, to
reimburse the Sub-Advisor for the Reimbursement Amount, each month the Fund
Operating Expenses shall be annualized as of the last day of the month. If the
annualized Operating Expenses for any month are less than the Operating Expense
Limit, the Fund shall pay to the Sub-Advisor an amount sufficient to increase
the annualized Fund Operating Expenses to an amount no greater than the
Operating Expense Limit, provided that such amount paid to the Sub-Advisor will
in no event exceed the total Reimbursement Amount.
2.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the actual Fund Operating Expenses for the prior
fiscal year (including any reimbursement payments hereunder with respect to such
fiscal year) do not exceed the Operating Expense Limit.
3. TERMINATION OF AGREEMENT.
This Agreement shall continue in effect for a period of one year from the
date of its execution and from year to year thereafter provided such continuance
is specifically approved by a majority of the Trustees of the AAHSA Trust who
(i) are not "interested persons" of the AAHSA Trust or any other party to this
Agreement, as defined in the Act, and (ii) have no direct or indirect financial
interest in the operation of this Agreement (Non-Interested Trustees).
Nevertheless, this Agreement may be terminated thereafter by either party
hereto, without
3
<PAGE>
payment of any penalty, upon 90 days' prior written notice to the other party at
its principal place of business; provided that, in the case of termination by
the Fund, such action shall be authorized by resolution of a majority of the
Non-Interested Trustees or of the AAHSA Trust by a vote of a majority of the
outstanding voting securities of the Fund.
4. MISCELLANEOUS.
4.1 CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
4.2 INTERPRETATION. Nothing herein contained shall be deemed to require
the Fund or the Trust to take any action contrary to the Fund's Articles of
Incorporation or By-Laws, or any applicable statutory or regulatory requirement
to which it is subject or by which it is bound, or to relieve or deprive the
Trust's Board of Trustees of its responsibility for and control of the conduct
of the affairs of the Trust or the Fund.
4.3 DEFINITIONS. Any question of interpretation of any term or provision
of this Agreement, including but not limited to the sub-advisory fee, the
computations of net asset values, and the allocation expenses, having a
counterpart in or otherwise derived from the terms and provisions of the Sub-
Advisory Agreement or the Act, shall have the same meaning as and be resolved by
reference to such Contract or the Act.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: THE AAHSA TRUST ON BEHALF OF
THE MONEY MARKET FUND
By:
- ---------------------------- ---------------------------
Secretary
ATTEST: WAINWRIGHT ASSET MANAGEMENT
By:
- ---------------------------- ---------------------------
Secretary
4
<PAGE>
EXHIBIT 9(f)
Form of Expense Limitation Agreement
by and between the AAHSA Trust on
behalf of the Money Market Fund, and
the American Association of Homes and Services for the Aging
<PAGE>
THE AAHSA TRUST:
MONEY MARKET FUND
FORM OF EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of ________________, 1996, by
and between the American Association of Homes and Services for the Aging (the
"Sub-Administrator") and The AAHSA Trust (the "Trust"), on behalf of the Money
Market Fund (the "Fund").
WHEREAS, the Trust is a Delaware business trust organized under a Trust
Instrument dated _____________, 1994 (the "Trust Instrument"), and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end diversified management company of the series type, and the Fund is one
of the series of the Trust; and
WHEREAS, The Trust and the Sub-Administrator have entered into a Sub-
Administrative Agreement (the "Sub-Administrative Agreement"), pursuant to which
the Sub-Administrator will render investment advisory services to the Fund for
compensation based on the value of the average daily net assets of the Fund; and
WHEREAS, The Trust and the Sub-Administrator have determined that is
appropriate and in the best interests of the Fund and its shareholders to
maintain the expenses of the Fund at a level below the level to which the Fund
would normally be subject during its start-up period.
NOW THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION
1.1 APPLICABLE EXPENSE LIMIT. To the extent that the aggregate expenses
of every character incurred by the Fund in any fiscal year, including but not
limited to sub-administrative fees of the Sub-Administrator (but excluding
interest, taxes, brokerage commissions, and other expenditures which are
capitalized in accordance with generally accepted accounting principles, and
other extraordinary expenses not incurred in the ordinary course of the Fund's
business) ("Fund Operating Expenses"), exceed the Operating Expense Limit, as
defined in Section 1.2 below, such excess amount (the "Excess Amount") shall be
the liability of the Sub-Administrator.
1.2 OPERATING EXPENSE LIMIT. The Operating Expense Limit in any year
shall be 0.65% of the average daily net assets of the Fund, or such other rate
as may be agreed to in writing by the parties.
1.3 METHOD OF COMPUTATION. To determine the Sub-Administrator's liability
with respect to the Excess Amount, each month the Fund Operating Expenses for
the Fund shall be annualized as of the last day of the month. If the annualized
Fund Operating Expenses for any month exceed the Operating Expense Limit, the
Sub-Administrator shall first waive or reduce its sub-administrative fee for
such month by an amount sufficient to reduce the annualized Fund Operating
Expenses to an amount no higher than the Operating Expense Limit. If the amount
of the waived or reduced sub-administrative fee for any such month is
insufficient to pay the Excess Amount, the Sub-Administrator may also remit to
the Fund an amount that, together with the waived or reduced sub-administrative
fee, is sufficient to pay such Excess Amount.
<PAGE>
1.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the sub-administrative fees waived
or reduced and other payments remitted by the Sub-Administrator to the Fund with
respect to the previous fiscal year shall equal the Excess Amount.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1 REIMBURSEMENT. If in any year during which total Fund assets are
greater than $______________ and in which the Sub-Administratory Agreement is
still in effect, the estimated aggregate Fund Operating Expenses for the fiscal
year are less than the Operating Expense Limit for that year, subject to
quarterly approval by the Trust's Board of Trustees as provided in Section 2.2
below, the Sub-Administrator shall be entitled to reimbursement by the Fund in
whole or in part as provided below, of the management fees waived or reduced and
other payments remitted by the Sub-Administrator to the Fund pursuant to Section
1 hereof. The total amount of reimbursement to which the Sub-Administrator may
be entitled (the "Reimbursement Amount") shall equal, at any time, the sum of
all investment management fees previously waived or reduced by the Sub-
Administrator and all other payments remitted by the Sub-Administrator to the
Fund, pursuant to Section 1 hereof, during any of the previous [two (2)] fiscal
years, less any reimbursement previously paid by the Fund to the Sub-
Administrator, pursuant to Sections 2.2 or 2.3 hereof, with respect to such
waivers, reductions, and payments. The Reimbursement Amount shall not include
any additional charges or fees whatsoever, including, e.g., interest accruable
on the Reimbursement Amount.
2.2 BOARD APPROVAL. No reimbursement shall be paid to the Sub-
Administrator pursuant to this provision in any fiscal quarter, unless the
Trust's Board of Trustees has determined that the payment of such reimbursement
is in the best interests of the Fund and its shareholders. The Trust's Board of
Trustee shall determine quarterly in advance whether any reimbursement may be
paid to the Sub-Administrator in such quarter.
2.3 METHOD COMPUTATION. To determine the Fund's payments, if any, to
reimburse the Sub-Administrator for the Reimbursement Amount, each month the
Fund Operating Expenses shall be annualized as of the last day of the month. If
the annualized Operating Expenses for any month are less than the Operating
Expense Limit, the Fund shall pay to the Sub-Administrator an amount sufficient
to increase the annualized Fund Operating Expenses to an amount no greater than
the Operating Expense Limit, provided that such amount paid to the Sub-
Administrator will in no event exceed the total Reimbursement Amount.
2.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the actual Fund Operating Expenses for the prior
fiscal year (including any reimbursement payments hereunder with respect to such
fiscal year) do not exceed the Operating Expense Limit.
3. TERMINATION OF AGREEMENT.
This Agreement shall continue in effect for a period of one year from the
date of its execution and from year to year thereafter provided such continuance
is specifically approved by a majority of the Trustees of the AAHSA Trust who
(i) are not "interested persons" of the
2
<PAGE>
AAHSA Trust or any other party to this Agreement, as defined in the Act, and
(ii) have no direct or indirect financial interest in the operation of this
Agreement (Non-Interested Trustees). Nevertheless, this Agreement may be
terminated thereafter by either party hereto, without payment of any penalty,
upon 90 days' prior written notice to the other party at its principal place of
business; provided that, in the case of termination by the Fund, such action
shall be authorized by resolution of a majority of the Non-Interested Trustees
or of the AAHSA Trust by a vote of a majority of the outstanding voting
securities of the Fund.
4. MISCELLANEOUS.
4.1 CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
4.2 INTERPRETATION. Nothing herein contained shall be deemed to require
the Fund or the Trust to take any action contrary to the Fund's Articles of
Incorporation or By-Laws, or any applicable statutory or regulatory requirement
to which it is subject or by which it is bound, or to relieve or deprive the
Trust's Board of Trustees of its responsibility for and control of the conduct
of the affairs of the Trust or the Fund.
4.3 DEFINITIONS. Any question of interpretation of any term or provision
of this Agreement, including but not limited to the sub-administrative fee, the
computations of net asset values, and the allocation expenses, having a
counterpart in or otherwise derived from the terms and provisions of the Sub-
Administrative Agreement or the Act, shall have the same meaning as and be
resolved by reference to such Contract or the Act.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: THE AAHSA TRUST ON BEHALF OF
THE MONEY MARKET FUND
By:
- ---------------------------- ----------------------------
Secretary
ATTEST: AMERICAN ASSOCIATION OF HOMES
AND SERVICES FOR THE AGING
By:
- ---------------------------- ----------------------------
Secretary
4
<PAGE>
EXHIBIT 9(g)
Form of Expense Limitation Agreement
by and between the AAHSA Trust on
behalf of the Short-Term Bond Fund, and
CRSA Investment Advisors, Inc.
<PAGE>
THE AAHSA TRUST:
SHORT-TERM BOND FUND
FORM OF EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of ________________, 1996, by
and between CRSA Investment Advisors, Inc. (the "Manager") and The AAHSA Trust
(the "Trust"), on behalf of the Short-Term Bond Fund (the "Fund").
WHEREAS, the Trust is a Delaware business trust organized under a Trust
Instrument dated ______________, 1994 (the "Trust Instrument"), and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end diversified management company of the series type, and the
Fund is one of the series of the Trust; and
WHEREAS, The Trust and the Manager have entered into an Investment
Management Agreement (the "Management Agreement"), pursuant to which the Manager
will render investment advisory services to the Fund for compensation based on
the value of the average daily net assets of the Fund; and
WHEREAS, The Trust and the Manager have determined that is appropriate and
in the best interests of the Fund and its shareholders to maintain the expenses
of the Fund at a level below the level to which the Fund would normally be
subject during its start-up period.
NOW THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION
1.1 APPLICABLE EXPENSE LIMIT. To the extent that the aggregate expenses
of every character incurred by the Fund in any fiscal year, including but not
limited to investment advisory fees of the Manager (but excluding interest,
taxes, brokerage commissions, and other expenditures which are capitalized in
accordance with generally accepted accounting principles, and other
extraordinary expenses not incurred in the ordinary course of the Fund's
business) ("Fund Operating Expenses"), exceed the Operating Expense Limit, as
defined in Section 1.2 below, such excess amount (the "Excess Amount") shall be
the liability of the Manager.
1.2 OPERATING EXPENSE LIMIT. The Operating Expense Limit in any year
shall be 0.65% of the average daily net assets of the Fund, or such other rate
as may be agreed to in writing by the parties.
1.3 METHOD OF COMPUTATION. To determine the Manager's liability with
respect to the Excess Amount, each month the Fund Operating Expenses for the
Fund shall be annualized as of the last day of the month. If the annualized
Fund Operating Expenses for any month exceed the Operating Expense Limit, the
Manager shall first waive or reduce its investment management fee for such month
by an amount sufficient to reduce the annualized Fund Operating Expenses to an
amount no higher than the Operating Expense Limit. If the amount of the waived
or reduced investment management fee for any such month is insufficient to pay
the Excess Amount, the Manager may also remit to the Fund an amount that,
together with the waived or reduced advisory fee, is sufficient to pay such
Excess Amount.
<PAGE>
1.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the advisory fees waived or
reduced and other payments remitted by the Manager to the Fund with respect to
the previous fiscal year shall equal the Excess Amount.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1 REIMBURSEMENT. If in any year during which total Fund assets are
greater than $____________ and in which the Management Agreement is still in
effect, the estimated aggregate Fund Operating Expenses for the fiscal year are
less than the Operating Expense Limit for that year, subject to quarterly
approval by the Trust's Board of Trustees as provided in Section 2.2 below, the
Manager shall be entitled to reimbursement by the Fund in whole or in part as
provided below, of the management fees waived or reduced and other payments
remitted by the Manager to the Fund pursuant to Section 1 hereof. The total
amount of reimbursement to which the Manager may be entitled (the "Reimbursement
Amount") shall equal, at any time, the sum of all investment management fees
previously waived or reduced by the Manager and all other payments remitted by
the Manager to the Fund, pursuant to Section 1 hereof, during any of the
previous [two (2)] fiscal years, less any reimbursement previously paid by the
Fund to the Manager, pursuant to Sections 2.2 or 2.3 hereof, with respect to
such waivers, reductions, and payments. The Reimbursement Amount shall not
include any additional charges or fees whatsoever, including, e.g., interest
accruable on the Reimbursement Amount.
2.2 BOARD APPROVAL. No reimbursement shall be paid to the Manager
pursuant to this provision in any fiscal quarter, unless the Trust's Board of
Trustees has determined that the payment of such reimbursement is in the best
interests of the Fund and its shareholders. The Trust's Board of Trustee shall
determine quarterly in advance whether any reimbursement may be paid to the
Manager in such quarter.
2.3 METHOD COMPUTATION. To determine the Fund's payments, if any, to
reimburse the Manager for the Reimbursement Amount, each month the Fund
Operating Expenses shall be annualized as of the last day of the month. If the
annualized Operating Expenses for any month are less than the Operating Expense
Limit, the Fund shall pay to the Manager an amount sufficient to increase the
annualized Fund Operating Expenses to an amount no greater than the Operating
Expense Limit, provided that such amount paid to the Manager will in no event
exceed the total Reimbursement Amount.
2.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the actual Fund Operating Expenses for the prior
fiscal year (including any reimbursement payments hereunder with respect to such
fiscal year) do not exceed the Operating Expense Limit.
3. TERMINATION OF AGREEMENT.
This Agreement shall continue in effect for a period of one year from the
date of its execution and from year to year thereafter provided such continuance
is specifically approved by a majority of the Trustees of the AAHSA Trust who
(i) are not "interested persons" of the AAHSA Trust or any other party to this
Agreement, as defined in the Act, and (ii) have no direct or indirect financial
interest in the operation of this Agreement (Non-Interested Trustees).
Nevertheless, this Agreement may be terminated thereafter by either party
hereto, without
2
<PAGE>
payment of any penalty, upon 90 days' prior written notice to the other party at
its principal place of business; provided that, in the case of termination by
the Fund, such action shall be authorized by resolution of a majority of the
Non-Interested Trustees or of the AAHSA Trust by a vote of a majority of the
outstanding voting securities of the Fund.
4. MISCELLANEOUS.
4.1 CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
4.2 INTERPRETATION. Nothing herein contained shall be deemed to require
the Fund or the Trust to take any action contrary to the Fund's Articles of
Incorporation or By-Laws, or any applicable statutory or regulatory requirement
to which it is subject or by which it is bound, or to relieve or deprive the
Trust's Board of Trustees of its responsibility for and control of the conduct
of the affairs of the Trust or the Fund.
4.3 DEFINITIONS. Any question of interpretation of any term or provision
of this Agreement, including but not limited to the investment advisory fee, the
computations of net asset values, and the allocation expenses, having a
counterpart in or otherwise derived from the terms and provisions of the
Management Agreement or the Act, shall have the same meaning as and be resolved
by reference to such Contract or the Act.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: THE AAHSA TRUST ON BEHALF OF
THE SHORT-TERM BOND FUND
By:
- ---------------------------- ----------------------------
Secretary
ATTEST: CRSA INVESTMENT ADVISORS, INC.
By:
- ---------------------------- ----------------------------
Secretary
4
<PAGE>
EXHIBIT 9(h)
Form of Expense Limitation Agreement
by and between the AAHSA Trust on
behalf of the Short-Term Bond Fund, and
Wainwright Asset Management
<PAGE>
THE AAHSA TRUST:
SHORT-TERM BOND FUND
FORM OF EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of ________________, 1996, by
and between Wainwright Asset Management (the "Sub-Advisor") and The AAHSA Trust
(the "Trust"), on behalf of the Short-Term Bond Fund (the "Fund").
WHEREAS, the Trust is a Delaware business trust organized under a Trust
Instrument dated ______________, 1994 (the "Trust Instrument"), and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end diversified management company of the series type, and the
Fund is one of the series of the Trust; and
WHEREAS, The Trust and the Sub-Advisor have entered into a Sub-Advisory
Agreement (the "Sub-Advisory Agreement"), pursuant to which the Sub-Advisor will
render investment advisory services to the Fund for compensation based on the
value of the average daily net assets of the Fund; and
WHEREAS, The Trust and the Sub-Advisor have determined that is appropriate
and in the best interests of the Fund and its shareholders to maintain the
expenses of the Fund at a level below the level to which the Fund would normally
be subject during its start-up period.
NOW THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION
1.1 APPLICABLE EXPENSE LIMIT. To the extent that the aggregate expenses
of every character incurred by the Fund in any fiscal year, including but not
limited to sub-advisory fees of the Sub-Advisor (but excluding interest, taxes,
brokerage commissions, and other expenditures which are capitalized in
accordance with generally accepted accounting principles, and other
extraordinary expenses not incurred in the ordinary course of the Fund's
business) ("Fund Operating Expenses"), exceed the Operating Expense Limit, as
defined in Section 1.2 below, such excess amount (the "Excess Amount") shall be
the liability of the Sub-Advisor.
1.2 OPERATING EXPENSE LIMIT. The Operating Expense Limit in any year
shall be 0.65% of the average daily net assets of the Fund, or such other rate
as may be agreed to in writing by the parties.
1.3 METHOD OF COMPUTATION. To determine the Sub-Advisor's liability with
respect to the Excess Amount, each month the Fund Operating Expenses for the
Fund shall be annualized as of the last day of the month. If the annualized
Fund Operating Expenses for any month exceed the Operating Expense Limit, the
Sub-Advisor shall first waive or reduce its sub-advisory fee for such month by
an amount sufficient to reduce the annualized Fund Operating Expenses to an
amount no higher than the Operating Expense Limit. If the amount of the waived
or reduced sub-advisory fee for any such month is insufficient to pay the Excess
Amount, the Sub-Advisor may also remit to the Fund an amount that, together with
the waived or reduced sub-advisory fee, is sufficient to pay such Excess Amount.
<PAGE>
1.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the advisory fees waived or
reduced and other payments remitted by the Sub-Advisor to the Fund with respect
to the previous fiscal year shall equal the Excess Amount.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1 REIMBURSEMENT. If in any year during which total Fund assets are
greater than $____________ and in which the Sub-Advisory Agreement is still in
effect, the estimated aggregate Fund Operating Expenses for the fiscal year are
less than the Operating Expense Limit for that year, subject to quarterly
approval by the Trust's Board of Trustees as provided in Section 2.2 below, the
Sub-Advisor shall be entitled to reimbursement by the Fund in whole or in part
as provided below, of the management fees waived or reduced and other payments
remitted by the Sub-Advisor to the Fund pursuant to Section 1 hereof. The total
amount of reimbursement to which the Sub-Advisor may be entitled (the
"Reimbursement Amount") shall equal, at any time, the sum of all investment
management fees previously waived or reduced by the Sub-Advisor and all other
payments remitted by the Sub-Advisor to the Fund, pursuant to Section 1 hereof,
during any of the previous [two (2)] fiscal years, less any reimbursement
previously paid by the Fund to the Sub-Advisor, pursuant to Sections 2.2 or 2.3
hereof, with respect to such waivers, reductions, and payments. The
Reimbursement Amount shall not include any additional charges or fees
whatsoever, including, e.g., interest accruable on the Reimbursement Amount.
2.2 BOARD APPROVAL. No reimbursement shall be paid to the Sub-Advisor
pursuant to this provision in any fiscal quarter, unless the Trust's Board of
Trustees has determined that the payment of such reimbursement is in the best
interests of the Fund and its shareholders. The Trust's Board of Trustee shall
determine quarterly in advance whether any reimbursement may be paid to the Sub-
Advisor in such quarter.
2.3 METHOD COMPUTATION. To determine the Fund's payments, if any, to
reimburse the Sub-Advisor for the Reimbursement Amount, each month the Fund
Operating Expenses shall be annualized as of the last day of the month. If the
annualized Operating Expenses for any month are less than the Operating Expense
Limit, the Fund shall pay to the Sub-Advisor an amount sufficient to increase
the annualized Fund Operating Expenses to an amount no greater than the
Operating Expense Limit, provided that such amount paid to the Sub-Advisor will
in no event exceed the total Reimbursement Amount.
2.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the actual Fund Operating Expenses for the prior
fiscal year (including any reimbursement payments hereunder with respect to such
fiscal year) do not exceed the Operating Expense Limit.
3. TERMINATION OF AGREEMENT.
This Agreement shall continue in effect for a period of one year from the
date of its execution and from year to year thereafter provided such continuance
is specifically approved by a majority of the Trustees of the AAHSA Trust who
(i) are not "interested persons" of the AAHSA Trust or any other party to this
Agreement, as defined in the Act, and (ii) have no direct or indirect financial
interest in the operation of this Agreement (Non-Interested Trustees).
Nevertheless, this Agreement may be terminated thereafter by either party
hereto, without
2
<PAGE>
payment of any penalty, upon 90 days' prior written notice to the other party at
its principal place of business; provided that, in the case of termination by
the Fund, such action shall be authorized by resolution of a majority of the
Non-Interested Trustees or of the AAHSA Trust by a vote of a majority of the
outstanding voting securities of the Fund.
4. MISCELLANEOUS.
4.1 CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
4.2 INTERPRETATION. Nothing herein contained shall be deemed to require
the Fund or the Trust to take any action contrary to the Fund's Articles of
Incorporation or By-Laws, or any applicable statutory or regulatory requirement
to which it is subject or by which it is bound, or to relieve or deprive the
Trust's Board of Trustees of its responsibility for and control of the conduct
of the affairs of the Trust or the Fund.
4.3 DEFINITIONS. Any question of interpretation of any term or provision
of this Agreement, including but not limited to the sub-advisory fee, the
computations of net asset values, and the allocation expenses, having a
counterpart in or otherwise derived from the terms and provisions of the Sub-
Advisory Agreement or the Act, shall have the same meaning as and be resolved by
reference to such Contract or the Act.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: THE AAHSA TRUST ON BEHALF OF
THE SHORT-TERM BOND FUND
By:
- ---------------------------- ----------------------------
Secretary
ATTEST: WAINWRIGHT ASSET MANAGEMENT
By:
- ---------------------------- ----------------------------
Secretary
4
<PAGE>
EXHIBTI 9(i)
Form of Expense Limitation Agreement
by and between the AAHSA Trust on
behalf of the Short-Term Bond Fund, and
the American Association of Homes and Services for the Aging
<PAGE>
THE AAHSA TRUST:
SHORT-TERM BOND FUND
FORM OF EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of ________________, 1996, by
and between the American Association of Homes and Services for the Aging (the
"Sub-Administrator") and The AAHSA Trust (the "Trust"), on behalf of the Short-
Term Bond Fund (the "Fund").
WHEREAS, the Trust is a Delaware business trust organized under a Trust
Instrument dated ______________, 1994 (the "Trust Instrument"), and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end diversified management company of the series type, and the
Fund is one of the series of the Trust; and
WHEREAS, The Trust and the Sub-Administrator have entered into a Sub-
Administrative Agreement (the "Sub-Administrative Agreement"), pursuant to which
the Sub-Administrator will render investment advisory services to the Fund for
compensation based on the value of the average daily net assets of the Fund; and
WHEREAS, The Trust and the Sub-Administrator have determined that is
appropriate and in the best interests of the Fund and its shareholders to
maintain the expenses of the Fund at a level below the level to which the Fund
would normally be subject during its start-up period.
NOW THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION
1.1 APPLICABLE EXPENSE LIMIT. To the extent that the aggregate expenses
of every character incurred by the Fund in any fiscal year, including but not
limited to sub-administrative fees of the Sub-Administrator (but excluding
interest, taxes, brokerage commissions, and other expenditures which are
capitalized in accordance with generally accepted accounting principles, and
other extraordinary expenses not incurred in the ordinary course of the Fund's
business) ("Fund Operating Expenses"), exceed the Operating Expense Limit, as
defined in Section 1.2 below, such excess amount (the "Excess Amount") shall be
the liability of the Sub-Administrator.
1.2 OPERATING EXPENSE LIMIT. The Operating Expense Limit in any year
shall be 0.65% of the average daily net assets of the Fund, or such other rate
as may be agreed to in writing by the parties.
1.3 METHOD OF COMPUTATION. To determine the Sub-Administrator's liability
with respect to the Excess Amount, each month the Fund Operating Expenses for
the Fund shall be annualized as of the last day of the month. If the annualized
Fund Operating Expenses for any month exceed the Operating Expense Limit, the
Sub-Administrator shall first waive or reduce its sub-administrative fee for
such month by an amount sufficient to reduce the annualized Fund Operating
Expenses to an amount no higher than the Operating Expense Limit. If the amount
of the waived or reduced sub-administrative fee for any such month is
insufficient to pay the Excess Amount, the Sub-Administrator may also remit to
the Fund an amount that, together with the waived or reduced sub-administrative
fee, is sufficient to pay such Excess Amount.
<PAGE>
1.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the sub-administrative fees waived
or reduced and other payments remitted by the Sub-Administrator to the Fund with
respect to the previous fiscal year shall equal the Excess Amount.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1 REIMBURSEMENT. If in any year during which total Fund assets are
greater than $__________ and in which the Sub-Administratory Agreement is still
in effect, the estimated aggregate Fund Operating Expenses for the fiscal year
are less than the Operating Expense Limit for that year, subject to quarterly
approval by the Trust's Board of Trustees as provided in Section 2.2 below, the
Sub-Administrator shall be entitled to reimbursement by the Fund in whole or in
part as provided below, of the management fees waived or reduced and other
payments remitted by the Sub-Administrator to the Fund pursuant to Section 1
hereof. The total amount of reimbursement to which the Sub-Administrator may be
entitled (the "Reimbursement Amount") shall equal, at any time, the sum of all
investment management fees previously waived or reduced by the Sub-Administrator
and all other payments remitted by the Sub-Administrator to the Fund, pursuant
to Section 1 hereof, during any of the previous [two (2)] fiscal years, less any
reimbursement previously paid by the Fund to the Sub-Administrator, pursuant to
Sections 2.2 or 2.3 hereof, with respect to such waivers, reductions, and
payments. The Reimbursement Amount shall not include any additional charges or
fees whatsoever, including, e.g., interest accruable on the Reimbursement
Amount.
2.2 BOARD APPROVAL. No reimbursement shall be paid to the Sub-
Administrator pursuant to this provision in any fiscal quarter, unless the
Trust's Board of Trustees has determined that the payment of such reimbursement
is in the best interests of the Fund and its shareholders. The Trust's Board of
Trustee shall determine quarterly in advance whether any reimbursement may be
paid to the Sub-Administrator in such quarter.
2.3 METHOD COMPUTATION. To determine the Fund's payments, if any, to
reimburse the Sub-Administrator for the Reimbursement Amount, each month the
Fund Operating Expenses shall be annualized as of the last day of the month. If
the annualized Operating Expenses for any month are less than the Operating
Expense Limit, the Fund shall pay to the Sub-Administrator an amount sufficient
to increase the annualized Fund Operating Expenses to an amount no greater than
the Operating Expense Limit, provided that such amount paid to the Sub-
Administrator will in no event exceed the total Reimbursement Amount.
2.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the actual Fund Operating Expenses for the prior
fiscal year (including any reimbursement payments hereunder with respect to such
fiscal year) do not exceed the Operating Expense Limit.
3. TERMINATION OF AGREEMENT.
This Agreement shall continue in effect for a period of one year from the
date of its execution and from year to year thereafter provided such continuance
is specifically approved by a majority of the Trustees of the AAHSA Trust who
(i) are not "interested persons" of the
2
<PAGE>
AAHSA Trust or any other party to this Agreement, as defined in the Act, and
(ii) have no direct or indirect financial interest in the operation of this
Agreement (Non-Interested Trustees). Nevertheless, this Agreement may be
terminated thereafter by either party hereto, without payment of any penalty,
upon 90 days' prior written notice to the other party at its principal place of
business; provided that, in the case of termination by the Fund, such action
shall be authorized by resolution of a majority of the Non-Interested Trustees
or of the AAHSA Trust by a vote of a majority of the outstanding voting
securities of the Fund.
4. MISCELLANEOUS.
4.1 CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
4.2 INTERPRETATION. Nothing herein contained shall be deemed to require
the Fund or the Trust to take any action contrary to the Fund's Articles of
Incorporation or By-Laws, or any applicable statutory or regulatory requirement
to which it is subject or by which it is bound, or to relieve or deprive the
Trust's Board of Trustees of its responsibility for and control of the conduct
of the affairs of the Trust or the Fund.
4.3 DEFINITIONS. Any question of interpretation of any term or provision
of this Agreement, including but not limited to the sub-administrative fee, the
computations of net asset values, and the allocation expenses, having a
counterpart in or otherwise derived from the terms and provisions of the Sub-
Administrative Agreement or the Act, shall have the same meaning as and be
resolved by reference to such Contract or the Act.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: THE AAHSA TRUST ON BEHALF OF
THE SHORT-TERM BOND FUND
By:
- ---------------------------- ----------------------------
Secretary
ATTEST: AMERICAN ASSOCIATION OF HOMES
AND SERVICES FOR THE AGING
By:
- ---------------------------- ----------------------------
Secretary
4
<PAGE>
EXHIBIT 15(a)
Form of Service Plan Pursuant to Rule 12b-1
under the Investment Company Act of 1940 of
the AAHSA Trust
<PAGE>
AAHSA TRUST
FORM OF SERVICE PLAN PURSUANT TO RULE 12B-1
WHEREAS, the AAHSA Trust, a Delaware business trust, intends to engage in
the business of being an open-end management investment company and has
registered as such under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, majority of the Board of Trustees of the AAHSA Trust, including a
majority of those Trustees who (I) are not "interested persons" of the AAHSA
Trust, as defined in the Act ("non-interested Trustees"), and (ii) have no
direct or indirect financial interest in the operation of the Service Plan
pursuant to Rule 12b-1 described herein (the "Plan") or in any agreements
related to the Plan (the "Rule 12b-1 Trustees"), have determined in the exercise
of their reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the Act that there is a
reasonable likelihood that adoption of the Plan will benefit each series
("Fund") of the AAHSA Trust and the shareholders of each Fund; and
WHEREAS, a majority of the Board of Trustees of the AAHSA Trust, including
a majority of the Rule 12b-1 Trustees, have approved the Plan by votes cast in
person at a meeting called for purposes of voting on the Plan;
WHEREAS, expenditures under this Plan by the AAHSA Trust are primarily
intended to result in the sale of shares of each Fund of the AAHSA Trust within
the meaning of paragraph (a)(2) of Rule 12b-1 promulgated under the Act.
NOW, THEREFORE, NOW, THEREFORE, the AAHSA Trust hereby adopts this Plan in
accordance with Rule 12b-1 under the Act, on the following terms and conditions:
1. DEFINITIONS.
1.1. "Recipient" shall mean any broker or dealer, administrator, or other
person that: (a) has rendered assistance (whether direct, administrative, or
both) in the distribution of shares of the AAHSA Trust or has provided
administrative support services in connection therewith; (b) has furnished or
will furnish the AAHSA Trust's principal underwriter and distributor
("Distributor") with such information as the Distributor has requested or may
request to answer such questions as may arise concerning the sale of shares of
the AAHSA Trust; or (c) has been selected by the Distributor to receive payments
under the Plan, including persons selected to receive compensation for
preparing, printing and distributing advertisements, sales materials,
prospectuses and annual and semi-annual reports for potential investors.
Notwithstanding the foregoing, a majority of the Rule 12b-1 Trustees may remove
any broker or dealer as a Recipient.
<PAGE>
1.2. "Qualified Holdings" shall mean, as to any Recipient, all shares of
the AAHSA Trust owned beneficially or of record by: (a) such Recipient; or (b)
those brokerage or other customers, investment advisory or other clients, and/or
accounts as to which such Recipient is a fiduciary or custodian or co-fiduciary
or co-custodian (collectively, the "Customers"), but in no event shall any such
shares of the AAHSA Trust be deemed owned by more than one Recipient.
2. COMPENSATION.
2.1. As compensation for the services provided pursuant to this Plan and
the costs and expenses incurred by the Distributor and others in promoting the
sale of the Fund shares, the Distributor will be paid a service fee at the
annual rate of ____________% of the average daily net assets each Fund in those
instances in which no Recipient, as defined herein, receives compensation
pursuant to this Plan, and at the annual rate of _______% of the average daily
net assets of each Fund in those instances in which Recipients receive
compensation pursuant to this Plan. Such fees shall be calculated and accrued
daily and paid quarterly in arrears or at such other intervals as the Board of
Trustees shall determine. Any and all payments to the Distributor and
Recipients in accordance with this Plan will be made pursuant to the
Distribution Agreement entered into by AAHSA Trust and the Distributor. Each
Fund may pay a service fee to the Distributor at a lesser rate than the rates
specified above if such lesser rate is approved by a majority of the Trustees
and a majority of the Rule 12b-1 Trustees by votes cast in person at a meeting
called for the purpose of voting on such matter.
2.2. As distributor of the shares of the AAHSA Trust, the Distributor may
spend such amounts as it deems appropriate or necessary in order to promote the
sale of the shares of the AAHSA Trust or to service and maintain shareholder
accounts.
2.3. The Distributor shall use the service fee payments received from each
Fund, in order to compensate itself and certain Recipients for activities in
promoting the sale of such Fund's shares, and to pay for other distribution
costs and expenses, including, but not limited to those for the following
purposes: (a) compensating Recipients for providing distribution assistance and
administrative support services with respect to assets invested in the Funds, as
described in Section 2.4 hereof; (b) costs of compensating persons, including
Recipients, for preparing, printing and distributing sales materials and
advertisements; (c) cost of compensating persons, including Recipients, for
printing and distributing prospectuses and annual and semi-annual reports (other
than those furnished to current shareholders); and (d) promotional and incentive
programs.
2.4. The distribution assistance and administrative support services to be
rendered by Recipients may include, but shall not be limited to, the following:
(a) answering routine inquiries concerning a Fund; (b) assisting in the
establishment and maintenance of accounts or sub-accounts in a Fund and in
processing purchase and redemption transactions; (c) making a Fund's investment
plans and dividend options available; and (d) providing such other information
and services in connection with the
2
<PAGE>
distribution of shares of each Fund as the Distributor or the AAHSA Trust, on
behalf of a Fund, may reasonably request. It may be presumed that a Recipient
has provided such distribution assistance or administrative support services if
it had sufficient Qualified Holdings of shares of the AAHSA Trust, as determined
by the Board, to entitle it to payments under the Plan. In the event that
either the Distributor or the Board of Trustees of the AAHSA Trust should have
reason to believe that, notwithstanding the level of Qualified Holdings, a
Recipient may not be rendering appropriate distribution assistance or
administrative support services in connection with the sale of shares of the
AAHSA Trust, the Distributor, at the request of the Board of Trustees, shall
require the Recipient to provide a written report or other information to verify
that said Recipient is providing appropriate services in this regard. However,
Recipients providing the services described in Section 2.3(c) above need not
have sufficient Qualified Holdings of shares of the AAHSA Trust in order to
receive compensation hereunder.
3. QUARTERLY REPORTS.
3.1. Any agreement adopted pursuant to this Plan shall require the
Distributor to provide the Board of Trustees of the AAHSA Trust, for their
review, at least quarterly, a written report specifying in reasonable detail the
amounts expended pursuant to this Plan and the purposes for which such
expenditures were made.
3.2. The Distributor shall periodically inform the Board of Trustees of the
AAHSA Trust of any compensation or account servicing fees paid by the
Distributor to (a) Recipients that have Selling Group Agreements with the
Distributor with respect to the AAHSA Trust and (b) persons, including
Recipients, selected to receive compensation for preparing, printing and
distributing sales materials and advertisements and printing and distributing
prospectuses and annual and semi-annual reports for potential investors.
4. EFFECTIVENESS, CONTINUATION.
4.1. This Plan for each Fund shall not take effect until it has been
approved by a vote of at least a majority of the outstanding voting securities
(as defined in the Act) of each Fund, which may for these purposes be the sole
initial shareholder of each Fund.
4.2. This Plan shall continue in effect until ____________, 1997 and from
year to year thereafter, provided such continuance is specifically approved at
least annually by a majority of the Board of Trustees of the AAHSA Trust and a
majority of the Rule 12b-1 Trustees by votes cast in person at a meeting called
for the purpose of voting on the Plan.
5. TERMINATION.
This Plan may be terminated at any time by vote of a majority of the Rule
12b-1 Trustees or by a vote of a majority of the outstanding voting securities
of the AAHSA
3
<PAGE>
Trust. The Plan shall terminate automatically in the event of its assignment
(as defined in the Act).
6. AMENDMENTS.
This Plan may not be amended with respect to any Fund to increase
materially the amount of the service fee to be paid by the AAHSA Trust, as
provided for in Section 2.1 herein, unless such amendment to the Plan shall be
approved by the vote of a majority of the outstanding voting securities of that
Fund (as defined in the Act). In addition, all material amendments shall be
approved by a majority of the Board of Trustees of the AAHSA Trust and a
majority of the Rule 12b-1 Trustees by votes cast in person at a meeting called
for the purpose of voting on the Plan.
7. NON-INTERESTED TRUSTEES.
While this Plan is in effect, the selection and nomination of the non-
interested Trustees of the AAHSA Trust shall be committed to the discretion of
such non-interested Trustees.
8. RECORDS.
The Distributor shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Section 2 hereof, for a period of
not less than six (6) years from the date of this Plan or such agreements or
reports, as the case may be, and for at least the first two (2) years in an
easily accessible place.
9. RELATED AGREEMENTS.
Any agreement related to this Plan with respect to either Fund shall be in
writing and shall provide that: (a) it may be terminated at any time upon sixty
(60) days' written notice, without the payment of any penalty, by vote of a
majority of the Rule 12b-1 Trustees, or by vote of a majority of the outstanding
voting securities of the that Fund; (b) it shall automatically terminate in the
event of its assignment; and (c) it shall continue in effect for a period of
more than one (1) year from the date of its execution or adoption only so long
as such continuance is specifically approved at least annually by a majority of
the Board of Trustees of the AAHSA Trust and a majority of the Rule 12b-1
Trustees by votes cast in person at a meeting called for the purpose of voting
on such agreement.
4
<PAGE>
IN WITNESS WHEREOF, THE AAHSA Trust has executed this Plan as of the day
and year set forth below.
Date:
Attest AAHSA TRUST
By:
- ------------------------------- -------------------------------
5
<PAGE>
EXHIBIT 15(b)
Form of Agreement Pursuant to Rule 12b-1 Service Plan
<PAGE>
FORM OF AGREEMENT PURSUANT TO THE
RULE 12b-1 SERVICE PLAN
THIS AGREEMENT ("Agreement") made this ____ day of October, 1996, by and
between THE AAHSA TRUST, a Delaware business AAHSA Trust, and H.C. WAINWRIGHT &
CO., INC., a ___________ corporation ("H.C. Wainwright").
W I T N E S S E T H:
WHEREAS, the AAHSA Trust intends to engage in business as an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act"); and
WHEREAS, H.C. Wainwright is a broker-dealer registered as such under the
Securities Exchange Act of 1934, as amended, and a member of the National
Association of Securities Dealers, Inc., and engages in the business of selling
shares of investment companies either directly to purchasers or through other
broker-dealers; and
WHEREAS, pursuant to a Distribution Agreement between the AAHSA Trust and
H.C. Wainwright dated October ____, 1996, H.C. Wainwright is the principal
underwriter and distributor of shares of each series of the AAHSA Trust, i.e.,
the Money Market Fund and the Short-Term Bond Fund (each a "Fund" or the
"Funds"), to the public; and
WHEREAS, this Agreement has been approved by a vote of the Board of
Trustees of the AAHSA Trust and certain non-interested Trustees of the AAHSA
Trust in conformity with paragraph (b)(2) of Rule 12b-1 under the Act; and
WHEREAS, this Agreement between the AAHSA Trust and H.C. Wainwright is an
agreement related to the Service Plan Pursuant to Rule 12b-1 ("Service Plan").
NOW, THEREFORE, the AAHSA Trust and H.C. Wainwright, intending to be
legally bound, hereby agree as follows:
1. COMPENSATION.
As compensation for providing services under this Agreement, H.C.
Wainwright shall receive from the Fund service fees at the rate and under the
terms and conditions of the Service Plan adopted by the AAHSA Trust with respect
to each Fund, as such Service Plan is in effect from time to time, and subject
to any further limitations or conditions on such service fees as the Board of
Trustees of the AAHSA Trust may impose from time to time.
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2. QUARTERLY REPORTS.
So long as the Service Plan any amendment thereof is in effect, H.C.
Wainwright shall provide to the Board of Trustees of the AAHSA Trust for its
review, at least quarterly, a written report specifying in reasonable detail the
amounts expended and the purposes for which such expenditures were made and in
this regard shall specifically inform the Board of Trustees of the AAHSA Trust
specifically with respect to the compensation and account servicing fees to be
paid by H.C. Wainwright to Recipients that have Selling Group Agreements with
H.C. Wainwright with respect to the AAHSA Trust.
3. EFFECTIVE DATE OF THIS AGREEMENT.
3.1. This Agreement shall not become effective until the Plan takes effect
according to its terms.
3.2. This Agreement, or any amendments thereto, shall not take effect until
it has been approved by votes of a majority of both (a) the Board of Trustees of
the AAHSA Trust and (b) those Trustees of the AAHSA Trust who (i) are not
"interested persons" of the AAHSA Trust and (ii) have no direct or indirect
financial interest in the operation of the Service Plan or any agreement related
to the Service Plan (the "Rule 12b-1 Trustees"), cast in person at a meeting
called for the purpose of voting on this Agreement.
3.3. This Agreement shall continue in effect for one (1) year from the date
of effectiveness and from year to year thereafter provided such continuance is
specifically approved at least annually in the manner provided in Section 3.2.
of this Agreement.
4. TERMINATION.
This Agreement may be terminated with respect to Either Fund upon sixty
(60) days' written notice, and without payment of any penalty, by either party
hereto or by a vote of a majority of the Rule 12b-1 Trustees, or by vote of a
majority of the outstanding voting securities of the applicable Fund This
Agreement shall automatically terminate in the event of its assignment.
5. DEFINITION OF CERTAIN TERMS.
The terms vote of a majority of the outstanding voting securities,
" assignment," and "interested person," when used in this Agreement, shall have
their respective meanings specified in the Act and the rules and regulations
thereunder.
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6. GOVERNING LAW.
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the District of Columbia as at the time in effect
and the applicable provisions of the Act as from time to time amended and any
rules or regulations promulgated thereunder. In the event that the applicable
law of the District of Columbia or any of the provisions herein conflict with
the applicable provisions of the Act, the latter shall control.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ATTEST: AAHSA TRUST
By:
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ATTEST: H.C. WAINWRIGHT & CO., INC.
By:
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