As Filed with the Securities and Exchange Commission FILE NO. 811-8816
on November 30, 1998 FILE NO. 33-85196
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
Post-Effective Amendment No. 4 /x/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 5 / /
____________________
MILLENNIUM INCOME TRUST
(Exact Name of Registrant as Specified in Charter)
c/o TRIAS CAPITAL MANAGEMENT, INC.
140 S. Wacker Drive Suite 1620
Chicago, Illinois 60603
(Address of Principal Executive Offices, Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (815) 338-3442
Copies to:
JAMES A. CASSELBERRY, JR. JANIS S. ENGLAND
c/o TRIAS CAPITAL MANAGEMENT, INC. MILLENNIUM FINANCIAL LLC
140 S. Dearborn, Suite 1620 10814 Bull Valley Road
Chicago, Illinois 60603 Woodstock, Illinois 60098
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
/x/ immediately upon filing pursuant to paragraph (b); or
/ / on (date) pursuant to paragraph (b); or
/ / 60 days after filing pursuant to paragraph (a)(1); or
/ / on (date) pursuant to paragraph (a)(1); or
/ / 75 days after filing pursuant to paragraph (a)(2); or
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
<PAGE>
Prospectus November 30, 1998
TREASURERS' GOVERNMENT MONEY MARKET FUND
A Portfolio of Millennium Income Trust
DESIGNED FOR STATES AND MUNICIPALITIES -The Treasurers' Government Money
Market Fund (the "Fund") is designed for states, municipalities, school
districts and other governmental and institutional investors seeking high
current income consistent with protection of capital.
INVESTMENTS -The Fund invests in obligations issued or guaranteed as to
principal and interest by the United States Government, its agencies or
instrumentalities with original or remaining maturities of one year or less.
The Fund is neither insured nor guaranteed by the U. S. Government, the
Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other entity, and is not a deposit or obligation of, or guaranteed or
endorsed by, any bank. The Fund seeks to maintain, but does not guarantee,
a constant net asset value of $1.00 per share.
This prospectus sets forth concisely information about the Fund that you
should know before investing. Please keep it for future reference. A
Statement of Additional Information dated November 30, 1998 has been filed
with the Securities and Exchange Commission and is hereby incorporated by
reference. A copy may be obtained without charge by writing to the Fund at
140 S. Dearborn, Suite 1620, Chicago, Illinois 60603.
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 on the
accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
<PAGE>
<PAGE>
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
Expense Information 2 Redemption of Shares 9
Financial Highlights 3 Sub-Accounting Services 10
Designed for States and Municipalities 3 Operation of the Fund 11
Investment Objective and Policies 3 Description of Shares 13
Net Asset Value 6 Taxes 13
Dividends 7 Performance Information 14
Purchase of Shares 7 Quick Reference Guide 15
EXPENSE INFORMATION
- -------------------------------------------------------------------------------
Investor transaction expenses NONE
Annual fund operating expenses after reimbursement
(as a percentage of average net assets)
Management Fees .20%
Administrative Services Fee 05%
12b-1 Fees None
Other Expenses (after fee absorption) .00%
Total Fund Operating Expenses 25%
Example: You would pay the following expenses
on a hypothetical $1,000 investment, assuming 1 Year 3 Years 5 Years 10 Years
1) a 5% annual return and 2) redemption at $ 3 $ 8 $ 14 $ 32
the end of each time period:
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. As discussed more fully under "Operation of the Fund" Trias
Capital Management, Inc., the Fund's investment adviser has voluntarily
agreed to temporarily reimburse the Fund's operating expenses to the extent
that such expenses, as defined, exceed .25% of the average daily net assets
of the Fund. Without the expense reimbursements the Fund's other annualized
expenses for the year ended 9/30/98 would have been .58% and total operating
expenses would have been 0.80%. The Example is hypothetical and included
solely for illustrative purposes. It should not be considered a
representation of past or future performance; actual expenses may be greater
or less than those shown. Please note $1,000 is less than the Fund's minimum
investment requirement.
2
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
The figures below were audited by Arthur Andersen LLP the Fund's independent
public accountants. The audited financial statements, notes thereto and
report of independent public accountants are contained in the Fund's annual
report dated September 30, 1998, a copy of which may be obtained from the
Fund upon request and without charge. The Fund had no operations prior to the
public offering of shares except for the initial issuance of shares;
accordingly no financial statement information is presented for the period
prior to fiscal 1996.
<TABLE>
<CAPTION>
Year Ended September 30
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
PER SHARE DATA FOR A SHARE OUTSTANDING
Net asset value at beginning of period $ 1.000 $ 1.000 $ 1.000
------ ------ ------
Net investment income 0.053 0.051 0.052
Distributions from net investment income (0.053) (0.051) (0.052)
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000
===== ===== =====
Total Return 5.33% 5.06% 5.27%
===== ===== =====
NET ASSETS AT END OF PERIOD (000'S) $ 33,708 $ 111 $ 132
RATIOS NET OF EXPENSES WAIVED OR ABSORBED BY ADVISER
Ratio of net expenses to average net assets 0.22% 0.00% 0.00%
Ratio of net investment income to 5.33% 5.06% 5.25%
average net assets
RATIOS ASSUMING NO FEE WAIVER OR EXPENSE ABSORPTION
Ratio of expenses to average net assets 0.80% 30.19% 14.42%
Ratio of net investment income to 4.74% (25.13%) ( 9.17%)
average net assets
</TABLE>
DESIGNED FOR STATES AND MUNICIPALITIES
- -------------------------------------------------------------------------------
Treasurers' Government Money Market Fund is designed for states,
municipalities, school districts and other governmental and institutional
investors seeking an economical and convenient means for the investment of
short-term funds. The Fund offers sub-accounting and custom reporting
services to assist these institutions in meeting their unique requirements.
INVESTMENT OBJECTIVE AND POLICIES
- -------------------------------------------------------------------------------
The investment objective of the Fund is to seek high current income, consistent
with protection of capital. The Fund pursues its objective by investing
exclusively in
3
<PAGE>
<PAGE>
obligations issued or guaranteed as to principal and interest by the United
States Government, its agencies or instrumentalities ("U.S. Government
Obligations"), and repurchase agreements collateralized by such U.S. Government
Obligations. All securities purchased mature within 12 months or less, and
the Fund maintains a weighted average portfolio maturity of 90 days or less.
Except where otherwise indicated, all investment policies, practices and
limitations of the Fund are non-fundamental which means they may be changed by
the Board of Trustees (the "Trustees") without shareholder approval. There can
be no assurance that the investment objective of the Fund will be achieved.
US GOVERNMENTS AND AGENCIES
U.S. Government Obligations include securities that are issued or guaranteed
by the United States Treasury, by various agencies of the United States
Government, and by various instrumentalities that have been established or
sponsored by the United States Government. U.S. Treasury obligations are
backed by the full faith and credit of the United States Government. Other
U.S. Government Obligations may not be backed by the full faith and credit of
the United States. In the case of securities not backed by the full faith
and credit of the United States, the investor must look principally to the
agency issuing or guaranteeing the obligation for ultimate repayment and may
not be able to assert a claim against the United States in the event the
agency or instrumentality does not meet its commitments.
United States Treasury obligations ("U.S. Treasuries") include Treasury
bills, Treasury notes, and Treasury bonds. U.S. Treasuries also include the
separate principal and interest components of U.S. Treasuries that are traded
under the Separate Trading of Registered Interest and Principal of Securities
("STRIPS") program. Government agencies that issue or guarantee securities
backed by the full faith and credit of the United States include the
Government National Mortgage Association, the Student Loan Marketing
Association and the Small Business Administration. Government agencies and
instrumentalities that issue or guarantee securities not backed by the full
faith and credit of the United States include the Federal Farm Credit Banks,
the Federal Home Loan Banks, the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, the Federal Land Bank, the Bank for
Cooperatives, the Federal Intermediate Credit Bank, the Federal Financing
Bank, the Resolution Funding Corporation, the Financing Corporation of
America and the Tennessee Valley Authority.
The Fund may invest in securities issued or guaranteed by any of the entities
listed above or by any other agency or instrumentality established or
sponsored by the United States Government, provided that the securities are
otherwise permissible investments of the Fund. Certain U.S. Government
Obligations that have a variable rate of interest readjusted no less
frequently than annually will be deemed to have a maturity equal to the
period remaining until the next readjustment of the interest rate.
The Fund, notwithstanding any other investment policy or limitation, may
invest all of its
4
<PAGE>
<PAGE>
assets in the securities or shares of beneficial interests of a single pooled
investment entity having substantially the same objectives, policies and
limitations as the Fund.
The Fund's yield will fluctuate due to changes in interest rates, economic
conditions, quality ratings and other factors. The prepayment experience of
the mortgages underlying mortgage-related securities, such as obligations
issued by the Government National Mortgage Association, may affect the value
of, and return on, an investment in such securities.
Additional Policy. The Fund will not invest in certain derivative securities
as a matter of policy. The Fund will not invest in the types of derivative
securities that are prohibited for investment by money market funds subject
to Rule 2a-7 under the Investment Company Act of 1940 (the "1940 Act"), such
as inverse floaters, leveraged floaters, CMT floaters, range floaters, capped
floaters, COFI floaters and dual index floaters. Additionally, the Fund will
not invest in securities that the Fund's investment adviser believes involve
risks inappropriate for the Fund, including collateralized mortgage
obligations ("CMOs"), Interest Only securities ("IOs"), and Principal Only
securities ("POs"), except the Fund may invest in STRIPS.
OTHER INVESTMENT TECHNIQUES
The Fund may also engage in the following investment techniques, each of
which may involve certain risks:
Repurchase Agreements. Repurchase agreements are transactions by which the
Fund purchases a security and simultaneously commits to resell that security
to the seller at an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or other
default by the seller of a repurchase agreement, the Fund could experience
both delays in liquidating the underlying security and losses. To minimize
these possibilities, the Fund intends to enter into repurchase agreements
only with its Custodian, banks having assets in excess of $10 billion and
primary U.S. Government securities dealers. The Fund may only enter into
repurchase agreements fully collateralized by U.S. Government Obligations.
Collateral for repurchase agreements is held in safekeeping in the customer-
only account of the Fund's Custodian at the Federal Reserve Bank. At the time
the Fund enters into a repurchase agreement, the value of the collateral,
including accrued interest, will equal or exceed the value of the repurchase
agreement and, in the case of a repurchase agreement exceeding one day, the
seller agrees to maintain sufficient collateral so that the value of the
underlying collateral, including accrued interest, will at all times equal or
exceed the value of the repurchase agreement. Although the securities subject
to the repurchase agreement might bear maturities exceeding one year,
settlement for the repurchase would never be more than one year after the
Fund's acquisition of the securities and normally would be within a
shorter period of time. The Fund will not enter into a repurchase agreement
not terminable within seven business days if, as a result thereof, more than
10% of the value of the net assets of the Fund would be invested in
5
<PAGE>
<PAGE>
such securities and other illiquid securities.
Delayed Settlement Transactions. The Fund may trade securities on a "when-
issued" or "to-be-announced" basis. Obligations issued on a when-issued
basis are settled by delivery and payment after the date of the transaction,
usually within 15 to 45 days. In a to-be-announced transaction, the Fund
commits to purchasing or selling securities for which all specific
information is not yet known at the time of the trade, particularly the face
amount in transactions involving mortgage-related securities. The Fund will
only make commitments to purchase obligations on a when-issued or to-be-
announced basis with the intention of actually acquiring the obligations, but
the Fund may sell these securities before the settlement date if it is
deemed advisable as a matter of investment strategy or in order to meet its
obligations, although it would not normally expect to do so. The Fund
intends to invest less than 5% of its net assets in securities purchased on
this basis, and the Fund will not enter into a delayed settlement transaction
which settles in more than 120 days.
Lending Portfolio Securities. The Fund may make short-term loans of its
portfolio securities to banks, brokers and dealers. Lending portfolio
securities exposes the Fund to the risk that the borrower may fail to return
the loaned securities, may not be able to provide additional collateral or
that the Fund may experience delays in recovery of the loaned securities or
loss of rights in the collateral if the borrower fails financially. To
minimize these risks, the borrower must agree to maintain collateral marked
to market daily, in the form of cash or U.S. Government Obligations with the
Fund's Custodian in an amount at least equal to the market value of the
loaned securities. The Fund will limit the amount of its loans of portfolio
securities to no more than 25% of its net assets. This lending policy is
fundamental and may not be changed without the affirmative vote of a
majority of the Fund's outstanding securities, as defined in the 1940 Act.
Borrowing and Pledging. The Fund may borrow money from banks (provided there
is 300% asset coverage) or other persons (in an amount not exceeding 5% of
its total assets) for temporary purposes. The Fund may pledge assets in
connection with borrowings, but the Fund will not pledge more than one-third
of its assets. The Fund will not make any additional purchases of portfolio
securities if outstanding borrowings exceed 5% of the value of its total
assets. The Fund's policies on borrowing and pledging are fundamental
policies that may not be changed without the affirmative vote of a majority
of its outstanding securities. Additional information about the investment
policies of the Fund appears in the Statement of Additional Information under
"Investment Policies" and "Investment Limitations."
NET ASSET VALUE
- -------------------------------------------------------------------------------
The net asset value ("NAV"), the price of the Fund's shares, is determined as
of 11:30 a.m. Chicago time on each Business Day. A Business Day means any
day on which the New York Stock Exchange is open, except for days on which
Cincinnati or New York
6
<PAGE>
<PAGE>
banks are closed for local holidays. The NAV per share of the Fund is
calculated by dividing the sum of the value of the securities held by the Fund
plus cash or other assets minus all liabilities (including estimated accrued
expenses) by the total number of shares outstanding of the Fund, rounded to
the nearest cent. The Fund's securities are valued on an amortized cost
basis. In connection with the use of the amortized cost method of valuation,
the Fund maintains a dollar-weighted average portfolio maturity of 90 days or
less, purchases only United States dollar-denominated securities that have
remaining maturities of one year or less and invests only in securities
determined by the Trustees to meet the Fund's quality standards and to
present minimal credit risks. Other assets of the Fund are valued at their
fair value as determined in good faith in accordance with consistently
applied procedures established by and under the general supervision of the
Trustees. It is anticipated, but there is no assurance, that the Fund's use
of the amortized cost method of valuation will enable it to maintain a stable
NAV per share of $1.
DIVIDENDS
- -------------------------------------------------------------------------------
Substantially all of the Fund's net investment income will be declared daily
(as of 3 p.m. Chicago time) as a dividend and distributed to shareholders
monthly. Distributions will be automatically reinvested in additional shares
of the Fund unless the shareholder elects to receive them in cash. The
election to reinvest dividends and distributions or receive them in cash can
be changed at any time upon written notice to the Fund's transfer agent.
Dividends will be reinvested, and cash distributions will be paid, on or
about the first Business Day of each month. The Fund will distribute at
least annually substantially all of the short-term and long-term capital
gains in excess of available capital losses, if any, that it realizes on the
disposition of securities. Although realized gains and losses on the assets
of the Fund are reflected in the net asset value of the Fund, they are not
expected to be of an amount that would affect the Fund's net asset value of
$1.00 per share.
The Fund's net investment income consists of the excess of accrued interest
or discount (including both original issue and market discount) on all
portfolio securities and any income of the Fund from sources other than
capital gains over the amortization of market premium on all portfolio
securities and the estimated expenses of the Fund, including a proportionate
share of the general expenses of the Trust, if any.
PURCHASE OF SHARES
- -------------------------------------------------------------------------------
Fund shares are purchased at NAV without the imposition of a sales charge.
The Fund seeks to be fully invested at all times in order to achieve maximum
income. Since it will be investing in instruments that normally require
immediate payment in Federal Funds, the Fund has adopted procedures for the
convenience of its shareholders and to ensure
7
<PAGE>
<PAGE>
that it receives investable funds. All phone numbers and addresses are
included in the "Quick Reference Guide" at the end of this prospectus.
Shares of the Fund may be purchased on any Business Day at the NAV next
determined after receipt of a purchase request. A purchase request is
considered an effective purchase order only when the transfer agent is
notified that Federal Funds have been credited to the Fund on the same day.
Purchase requests for which Federal Funds are not received will be
rejected. Fund shares are deemed to have been purchased, and are entitled to
dividends on Fund shares purchased, if the purchase request is received by
the transfer agent by 11:30 a.m. Chicago time and Federal Funds are credited
to the Fund's custodial account on the same day.
The minimum initial investment in the Fund is $250,000. The Fund and the
transfer agent each reserves the right to waive or change the minimum initial
and subsequent investment requirements at any time for any reason. The Fund
will not issue certificates representing Fund shares. The transfer agent
will maintain a complete record of transactions and Fund shares held in each
shareholder's account.
Initial Investment. When you are ready to make your initial investment, call
the transfer agent and a representative will ask you the name, address, and
tax identification number of the entity in whose name you want the account to
be registered. You will be given an account number and any detailed
instructions you may need. The Fund Representative will also ask for the
amount of the investment and the name and address of the fin/wiring the
investment to the Fund. Then have your financial institution wire Federal
Funds to the Fund's Custodian. You will then need to complete, sign, and
return the Account Information Form immediately to the transfer agent. Of
course, you may send your Account Information Form in advance. If you do not
have a form, one can be sent to you via facsimile. No redemption will be
permitted until the signed Account Information Form is on file with the
transfer agent as described under "Redemption of Shares."
Additional Investments by Wire. The investor is responsible for providing
prior telephonic or facsimile notice of the purchase request to the transfer
agent. A purchase request for wire investment is considered effective only
when the transfer agent is notified that the bank wire has been credited to
the Fund on the same day. To purchase additional shares of the Fund, call or
fax the account name, account number and the amount of the investment to
the transfer agent. Then have your financial institution wire Federal Funds
to the Fund's Custodian.
Additional Investments by Mail. Investing by mail is not recommended since
delays in delivery may delay your investment, and you will not be certain of
the actual date the Fund will receive it. Purchase requests by mail are
effected at the net asset value next determined after receipt of the purchase
request and the conversion to Federal Funds.
Purchases of Fund shares may be made by delivering to the Fund's Custodian a
Federal Reserve draft or check payable to the Fund and drawn on a U.S. bank.
Be sure to
8
<PAGE>
<PAGE>
include the name in which the account is registered and the
shareholder account number. It is expected that Federal Reserve drafts will
ordinarily be converted to Federal Funds on the day of receipt; however,
checks must be converted to Federal Funds, which normally takes up to two
Business Days after receipt. Fund shares purchased by check may not be
redeemed until the check has cleared as described under "Redemption of
Shares."
Purchase by ACH Transfer. Purchase of shares may also be made through an
Automated Clearing House ("ACH") transfer to Treasurers' Government Money
Market Fund in care of the Fund's Custodian. Purchase orders are effected at
the net asset value next determined after receipt of the purchase request and
the conversion to Federal Funds. It is expected that ACH transfers will
ordinarily be converted to Federal Funds on the Business Day following
receipt of the ACH transfer.
The Fund, the transfer agent and the distributor each reserves the right to
reject any purchase request for any reason.
REDEMPTION OF SHARES
- -------------------------------------------------------------------------------
You can access all or part of your account by selling (redeeming) shares
without charge upon request on any Business Day at the NAV next determined
after receipt of the redemption request. If the redemption request is
received by 11:30 a.m. Chicago time the proceeds will ordinarily be wired the
same Business Day. Dividends are not earned on the day of the request.
Redemption requests received after 11:30 a.m. will be effective the next
Business Day.
To redeem shares, follow one of the methods described below.
Redemptions by Phone. Redemption requests may be made by telephone or
facsimile to the transfer agent. The request should include the account
name, account number and the amount of the redemption. The transfer agent
may establish further identification procedures. Proceeds of such
redemptions by phone will be sent only to the account at the financial
institution pre-designated on the Account Information Form. No redemptions
will be processed without an Account Information Form on file with the
transfer agent, and redemption proceeds will be wired to the bank
account designated on the shareholder's Account Information Form, unless
payment by check has been requested.
Redemptions by Mail. Redeeming by mail is not recommended since delays in
delivery may delay your request, and you will not be certain of the actual
date that the Fund will receive it. However, if the proceeds are to be paid
to someone other than the shareholder of record or to a different address or
financial institution than that on the Account Information Form, the
redemption request must be in writing. See "Other Redemption Information"
below.
Redemption requests made by written request should be addressed to the
transfer
9
<PAGE>
<PAGE>
agent. The letter of instruction must specify the number of shares to be
redeemed, the account number, payment instructions and the exact registration
of the account. Redemptions by mail are effected at the NAV next determined
after receipt of the redemption request.
Other Redemption Information. Additional documentation may be required by
the transfer agent for any redemption request in order to establish that a
redemption request has been properly authorized. A redemption request will
not be considered to have been received in proper form until such additional
documentation has been submitted to the transfer agent.
Any request to: a) change the name of the registered holder or; b) the
address of the account or c) the financial institution designated to receive
proceeds of redemptions must be in writing and signed by the authorized
person(s) as designated on the Account Information Form. These signature(s)
must be guaranteed. The transfer agent may also require additional
documentation in connection with such request. Any such written request may
also be confirmed by telephone with the requesting party and/or the
designated bank account to verify instructions. Other procedures may be
implemented from time to time in an effort to prevent unauthorized or
fraudulent redemption requests.
After a wire has been initiated by the transfer agent, neither the transfer
agent nor the Fund assumes any further responsibility for the performance of
intermediaries or the shareholder's bank in the transfer process. If a
problem with such performances arises, the shareholder should deal directly
with such intermediaries or bank.
To keep Fund expenses low, the Fund reserves the right to redeem any single
shareholder account that falls below $50,000 because of redemptions. The
Fund will notify you in writing at least 60 days before your account is
redeemed to allow you to make additional share purchases to bring your
account value up to the minimum level.
SUB-ACCOUNTING SERVICES
- -------------------------------------------------------------------------------
The Fund has designed special procedures for its institutional investors
desiring to establish multiple accounts (master accounts and their sub-
accounts). For example, public funds' investors may find that arbitrage
rebate record keeping requirements can be facilitated by the use of sub-
accounts. Sub-accounts may be established with registration by name and or
number. Institutions will not be charged for this service unless otherwise
agreed. Upon request, master accounts will be provided with a monthly
summary report that sets forth for each sub-account by account number or name
the share balance at month end and the monthly income. Such summary reports
also include the total share balance and monthly income for the master
account. To minimize your time and costs, custom report formats are also
available for coordination with full service arbitrage calculation and other
service providers.
10
<PAGE>
<PAGE>
OPERATION OF THE FUND
- -------------------------------------------------------------------------------
Like other investment companies, the Trust retains various organizations to
provide specialized services for the Fund.
The Fund retains Trias Capital Management, Inc. (the "Adviser") to manage the
Fund's investments. Subject to the supervision and direction of the Trustees,
the Adviser has complete discretion to purchase, manage and sell portfolio
securities for the Fund within the Fund's investment objectives, restrictions
and policies.
The Adviser is located at 140 S. Dearborn, Suite 1620, Chicago, Illinois and
is controlled by Mr. James A. Casselberry, Jr. The principals of the Adviser
have been engaged in the management of investment funds for approximately 40
years, collectively. In addition to serving as the Adviser to the Fund, the
Adviser provides investment advice and manages investment portfolios for
endowments, foundations, corporate cash, pension, profit sharing and
individual accounts. The Adviser does not have previous experience managing
a registered investment company; however, as noted below, Mr. James A.
Casselberry, Jr., the Adviser's Chief Executive Officer, has previous
experience managing registered money market funds.
Mr. James A. Casselberry, Jr. is the Fund's portfolio manager. Mr.
Casselberry has more than 10 years of experience as a fixed income
strategist. Prior to founding Trias Capital Management, Mr. Casselberry was
the Chief Operating Officer at Wedgewood Capital Management in Washington,
D.C. His primary responsibility was to oversee the firm's marketing, client
services and operations divisions. Before joining Wedgewood Capital
Management, Mr. Casselberry was a Partner in the MacArthur Investment Group
and was the Director of Fixed Income Investments for the John D. and
Catherine T. MacArthur Foundation. Preceding his four years at the
MacArthur Foundation, Mr. Casselberry served as Portfolio Manager and
Credit Analyst for First National Bank of Chicago. Mr. Casselberry managed
two tax-exempt money market funds, First Prairie Tax-Exempt Money Market Fund
($400 Million) and the Personal Investments Tax-Exempt Fund ($500 Million).
Mr. Casselberry graduated from the University of Illinois at Chicago with a
Bachelor of Science degree in Economics. Mr. Casselberry is an associate
member of the Financial Analysts Federation, a member of the Chicago
Quantitative Alliance, a member of the Urban Bankers' Forum, and the
Treasurer of the National Association of Security Professionals.
The Fund pays the Adviser an annual fee not to exceed .20% of the Fund's
assets. Under the Advisory Agreement, the Adviser may from time to time
voluntarily waive some or all of its advisory fee charged to the Fund and may
terminate any such voluntary waiver at any time in its sole discretion. The
Adviser has agreed to temporarily reimburse the Fund's total operating
expenses to the extent that they exceed .25% of average daily net assets
on an annual basis. For this purpose "operating expenses" do not
include taxes, interest, extraordinary expenses, brokerage commissions
or transaction costs. Upon notice to the Fund, the Adviser may
terminate this expense absorption at any time.
11
<PAGE>
<PAGE>
costs. Upon notice to the Fund, the Adviser may terminate this expense
absorption at any time.
Pursuant to an Administration Agreement, the Fund retains Millennium
Financial LLC, ("MFL") to manage the Fund's business affairs. MFL is located
at 10814 Bull Valley Road, Woodstock, IL, and is an Illinois limited
liability company organized on January 1, 1994. MFL is controlled by Janis S.
England who has over 25 years of mutual fund experience.
In connection with its responsibilities under the Administration Agreement,
MFL supplies executive, administrative and regulatory services, supervises
the preparation of tax returns and coordinates the preparation of reports to
shareholders and reports to and filings with the Securities and Exchange
Commission and state securities authorities. MFL also performs such
administrative and managerial oversight of the activities of the Fund's
Custodian as the Trustees may from time to time direct and maintains such
books and records as are necessary to enable it to perform its duties. The
Fund pays MFL a fee, payable monthly, equal to the annual rate of .05% of its
average daily net assets. MFL may waive a portion of its administration fee
from time to time. The level of this voluntary fee waiver shall be in MFL's
discretion.
Pursuant to a Transfer Agency Agreement, the Fund retains Countrywide Fund
Services, Inc. ("Countrywide") to act as transfer, dividend-disbursing and
shareholder services agent for the Fund. Countrywide is located at 312
Walnut Street, P.O. Box 5354, Cincinnati, Ohio 45201-5354.
Millennium Capital LLC, 10814 Bull Valley Road, Woodstock, Illinois (the
"Distributor") is the principal underwriter for the Fund acting as agent of
the Fund in the sale of its shares. Millennium Capital LLC is an Illinois
limited liability company organized on March 9, 1994. The Distributor is
controlled by Janis S. England. The Fund is available on a no-load basis
(i.e., there are no sales commissions or 12b-1 fees).
The Trust shall assume and pay the charges and expenses of its operations,
including but not limited to expenses for services rendered by a custodian
for the safekeeping of the Fund's securities or other property, compensation
of the trustees (other than those affiliated with the investment adviser or
administrator), charges and expenses of independent auditors, of legal counsel,
of any transfer or dividend disbursing agent, any registrar of the Fund, costs
of acquiring and disposing of portfolio securities, interest, if any, on
obligations incurred by the Fund, costs of pricing services to obtain
valuations of portfolio securities, costs of reports, insurance premiums,
membership dues in the Investment Company Institute or any similar
organization, reports and notices to shareholders, stationery, printing,
postage, other like miscellaneous expenses and all taxes and fees payable to
federal, state or other government agencies on account of the registration of
securities issued by the Trust, filing of corporate documents or otherwise.
12
<PAGE>
<PAGE>
DESCRIPTION OF SHARES
- -------------------------------------------------------------------------------
Millennium Income Trust is a diversified, open-end management investment
company organized as a Massachusetts business trust on August 19, 1994. The
Trust is governed by a board of trustees, which is responsible for protecting
the interests of the shareholders of the Fund. The trustees are experienced
professionals who meet at regular intervals to oversee the activities of the
Trust and the Fund. A majority of the trustees are not otherwise affiliated
with the Trust or the Adviser.
The Trust Agreement permits the Trust to offer one or more separate series of
units of beneficial interest, referred to in this prospectus as "shares,"
representing interests in separate portfolios ("Funds"). The shares in any
one Fund may be offered in two or more separate classes. At the date of this
prospectus, the Trustees of the Trust have established only one Fund, the
Treasurers' Government Money Market Fund.
Shareholders are entitled to one vote for each share and to the appropriate
fractional vote for each fractional share. The shares of the Trust are fully
paid and non-assessable; have no preference as to conversion, exchange,
dividends, retirement or other features and have no preemptive rights. Such
shares have noncumulative voting rights, meaning that the holders of more
than 50% of the shares voting for the election of Trustees can elect 100% of
the Trustees if they so choose.
Annual meetings of shareholders will not be held except as required by the
1940 Act, the Trust Agreement or other applicable law. The Trust will call a
meeting of shareholders for the purpose of voting upon the question of
removal of a Trustee if such a meeting is requested in writing by the holders
of not less than 10% of the outstanding shares of the Trust.
For further organization information, including certain shareholder rights
and responsibilities, see "The Trust" in the Statement of Additional
Information.
TAXES
- -------------------------------------------------------------------------------
The Fund intends to continue to qualify for the special tax treatment
afforded a "regulated investment company" under Subchapter M of the Internal
Revenue Code so that it does not pay federal taxes on income and capital
gains distributed to the shareholders. The Fund intends to distribute
substantially all of its net investment income and any realized capital gains
to its shareholders. Unless otherwise exempt, shareholders are subject to
federal income tax on dividends and capital gains received. Since the Fund's
investment income is derived from interest rather than dividends, no portion
of such distributions is expected to be eligible for the dividends received
deduction available to corporations.
The Fund will mail to each of its shareholders a statement indicating the
amount and federal income tax status of all distributions made during the
year. In addition to federal
13
<PAGE>
<PAGE>
taxes, shareholders of the Fund may be subject to state and local taxes on
distributions. The tax consequences described in this section apply whether
distributions are taken in shares or cash.
PERFORMANCE INFORMATION
- -------------------------------------------------------------------------------
From time to time, the Fund may advertise several types of performance
information for a Fund. These are "yield" and "effective yield." Each of
these figures is based upon historical earnings and is not necessarily
representative of the future performance of the Fund. The yield of a Fund
refers to the net investment income generated by a hypothetical investment in
the Fund over a specific seven-day period. This net investment income is
then annualized, which means that the net investment income generated during
the seven-day period is assumed to be generated each week over an annual
period and is shown as a percentage of the investment. The effective yield
is calculated similarly, but the net investment income earned by the
investment is assumed to be compounded weekly when annualized. The effective
yield will be slightly higher than the yield due to this compounding effect.
- -------------------------------------------------------------------------------
No person has been authorized to give any information or to make any
representations, other than those contained in this prospectus, in connection
with the offering contained in this prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This prospectus does not constitute an offer by the Fund to sell
shares in any state to any person to whom it is unlawful for the Fund to make
such an offer in such state.
14
<PAGE>
<PAGE>
Millennium Income Trust
[LOGO] Treasurers' Government Quick Reference Guide
Money Market Fund
TO OPEN AN ACCOUNT To open without an immediate purchase skip to # 3
1 Call the Fund at 888-534-2001 to tell a representative of the Fund:
The name of the account, and
The tax id number and
The dollar amount of the purchase
We will give you the new account number.
2 Instruct your bank to immediately wire Fed Funds (see other side for
instructions).
3 Complete the Account Information Form then:
a. Fax the completed form to: b. Mail the signed original immediately to:
Millennium Capital LLC Countrywide Fund Services, Inc.
800-514-2004 P. O. Box 5354
Cincinnati, OH 45201
____________________________________________________________
NO REDEMPTIONS CAN BE PROCESSED BEFORE THE FUND RECEIVES THE SIGNED ACCOUNT
FORM
FOR QUESTIONS Countrywide Fund Services, Inc
ABOUT YOUR ACCOUNT 888-534-2001
fax 513-629-2901
FOR MORE PROSPECTUSES, Millennium Capital LLC
NEW ACCOUNT FORMS, 800-514-2001
and QUESTIONS ABOUT THE FUND fax 800-514-2004
Trias Capital Management, Inc * Investment Adviser
<PAGE>
<PAGE>
Millennium Income Trust
[LOGO] Treasurers' Government Quick Reference Guide
Money Market Fund
TO BUY Purchase requests received by 11:30 am Central Time will
SHARES start to earn interest that day provided that the Fund's
custody account is credited with Fed Funds by close of
business that day.
1 Call 888-534-2001 before 11:30 am to tell the representative of the Fund:
The account name and number; and
The dollar amount of the purchase.
If you do not have a fund account number, see other side "TO OPEN AN
ACCOUNT"
2 Instruct your bank to immediately wire Fed Funds to:
Fifth Third Bank
ABA # 042 000 314
Attn: TGMMF
Acct # 728-76052
For further credit to: insert the account name and number
THE INVESTOR IS RESPONSIBLE FOR NOTIFYING THE FUND OF ALL PURCHASE ORDERS
BEFORE SENDING ANY MONEY
TO SELL If a redemption request is received by 11:30 am Central
SHARES Time, Fed Funds will be wired to the investor that day.
Call 888-534-2001 before 11:30 am to tell a representative of the Fund:
The account name and number; and
The dollar amount of the redemption.
PROCEEDS OF REDEMPTIONS MAY ONLY BE SENT TO THE PREAUTHORIZED BANK
ACCOUNT OF THE INVESTOR
<PAGE>
<PAGE>
TREASURERS' GOVERNMENT MONEY MARKET FUND
A Portfolio of MILLENNIUM INCOME TRUST
STATEMENT OF ADDITIONAL INFORMATION
November 30, 1998
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus of the Treasurers' Government Money
Market Fund dated November 30, 1998. A copy of the Prospectus can be
obtained by writing the Fund at 140 S. Dearborn, Suite 1620, Chicago,
Illinois 60603.
This Statement of Additional Information shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of any such State.
<PAGE>
<PAGE>
TABLE OF CONTENTS
THE TRUST 2
INVESTMENT POLICIES 2
INVESTMENT LIMITATIONS 6
TRUSTEES AND OFFICERS 7
INVESTMENT MANAGEMENT AND ADMINISTRATION 9
SECURITIES TRANSACTIONS 11
NET ASSET VALUE 12
TAXES 13
REDEMPTION IN KIND 14
HISTORICAL PERFORMANCE INFORMATION 14
TRANSFER AND SHAREHOLDER SERVICE AGENT 15
DISTRIBUTOR 15
CUSTODIAN 16
INDEPENDENT PUBLIC ACCOUNTANTS 16
LEGAL COUNSEL 16
FINANCIAL STATEMENTS 17
<PAGE>
<PAGE>
THE TRUST
Millennium Income Trust (the "Trust") was organized as a Massachusetts
business trust on August 19, 1994. The Trust currently offers one series of
shares to investors, the Treasurers' Government Money Market Fund (the
"Fund"). This Statement of Additional Information provides information
relating to the Fund.
Each share of the Fund represents an equal proportionate interest in the
assets and liabilities belonging to the Fund with each other share of the
Fund and is entitled to such dividends and distributions out of the income
belonging to the Fund as are declared by the Board of Trustees (the
"Trustees"). The shares do not have cumulative voting rights or any
preemptive or conversion rights, and the Trustees have the authority from
time to time to divide or combine the shares of any Fund into a greater or
lesser number of shares of that Fund so long as the proportionate beneficial
interest in the assets belonging to the Fund and the rights of shares of any
other Fund are in no way affected. In case of any liquidation of the Fund,
the holders of shares will be entitled to receive as a class a distribution
out of the assets, net of the liabilities belonging to the Fund. No
shareholder is liable to further calls or to assessment by the Trust without
its express consent.
Under Massachusetts law, in certain circumstances, shareholders of a
Massachusetts business trust could be deemed to have the same type of
personal liability for the obligations of the Trust as a partner of a
partnership. However, numerous investment companies registered under the
Investment Company Act of 1940 (the "1940 Act") have been formed as
Massachusetts business trusts, and the Trust is not aware of an instance
where such result has occurred. In addition, the Trust Agreement of
Millennium Income Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given
in each agreement, obligation or instrument entered into or executed by the
Trust or the Trustees. The Trust Agreement also provides for indemnification
out of the Trust property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Moreover, the Trust
Agreement provides that the Trust will, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of the Trust
and satisfy any judgment thereon. As a result, and particularly because the
Trust's assets are readily marketable and ordinarily substantially exceed
liabilities, the risk of shareholder liability is slight and limited to
circumstances in which both inadequate insurance existed and the Trust was
unable to meet its obligations. In view of the above, the risk of
shareholder liability is remote.
INVESTMENT POLICIES
A more detailed discussion of the terms used in the Prospectus (see
"Investment Objective and Policies") appears below:
2
<PAGE>
<PAGE>
When-Issued Securities Purchased on a To-Be-Announced Basis. The Fund will
make commitments to purchase securities on a When-Issued ("WI") or To-Be-
Announced ("TBA") basis with the intention of actually acquiring the
securities. In addition, the Fund may purchase securities on a WI or TBA
basis only if delivery and payment for the securities takes place within 120
days after the date of the transaction. In connection with these
investments, the Fund will direct the Custodian to place liquid securities in
a segregated account in an amount sufficient to make payment for the
securities to be purchased. When a segregated account is maintained because
the Fund purchases securities on a WI or TBA basis, the assets deposited in
the segregated account will be valued daily at market for the purpose of
determining the adequacy of the securities in the account. If the market
value of such securities declines, additional cash or securities will be
placed in the account on a daily basis so that the market value of the
account will equal the amount of the Fund's commitments to purchase
securities on a WI or TBA basis. To the extent funds are in a segregated
account, they will not be available for new investment or to meet
redemptions. Securities in the Fund's portfolio are subject to changes in
market value based upon changes in the level of interest rates (which will
generally result in all of those securities changing in value in the same
way, i.e., all those securities experiencing appreciation when interest rates
decline and depreciation when interest rates rise). Therefore, if in order
to achieve higher returns, the Fund remains substantially fully invested at
the same time that it has purchased securities on a WI or TBA basis, there
will be a possibility that the market value of the Fund's assets will have
greater fluctuation. The purchase of securities on a WI or TBA basis may
involve a risk of loss if the broker-dealer selling the securities fails to
deliver after the value of the securities has risen.
When the time comes for the Fund to make payment for securities purchased on
a WI or TBA basis, the Fund will do so by using then available cash flow, by
sale of the securities held in the segregated account, by sale of other
securities or, although it would not normally expect to do so, by directing
the sale of the securities purchased on a WI or TBA basis themselves (which
may have a market value greater or less than the Fund's payment obligation).
Although the Fund will only make commitments to purchase securities on a WI
or TBA basis with the intention of actually acquiring the securities, the
Fund may sell these securities before the settlement date if it is deemed
advisable by the Adviser as a matter of investment strategy.
STRIPS. STRIPS are U.S. Treasury bills, notes and bonds that have been
issued without interest coupon or stripped of their unmatured interest
coupons, interest coupons that have been stripped from such U.S. Treasury
securities, and receipts or certificates representing interests in such
stripped U.S. Treasury securities and coupons. A STRIPS security pays no
interest in cash to its holder during its life although interest is accrued
for federal income tax purposes. Its value to an investor consists of the
difference between its face value at the time of maturity and the price for
which it was acquired, which is generally an amount significantly less than
its face value. Investing in STRIPS
3
<PAGE>
<PAGE>
may help to preserve capital during periods of declining interest rates. For
example, if interest rates decline, Government National Mortgage Association
Certificates purchased at greater than par are more likely to be prepaid,
which would cause a loss of principal. In anticipation of this, the Fund
might purchase STRIPS, the value of which would be expected to increase when
interest rates decline.
STRIPS do not entitle the holder to periodic payments of interest prior to
maturity. Accordingly, such securities usually trade at a deep discount from
their face or par value and will be subject to greater fluctuations of market
value in response to changing interest rates than debt obligations of
comparable maturities that make periodic distributions of interest. On the
other hand, because there are no periodic interest payments to be reinvested
prior to maturity, STRIPS eliminate the reinvestment risk and lock in a rate
of return to maturity. Current federal tax law requires that a holder of a
STRIPS security accrue a portion of the discount at which the security was
purchased as income each year even though the Fund received no interest
payment in cash on the security during the year.
Repurchase Agreements. When the Fund purchases securities, it may enter into
a repurchase agreement with the seller wherein the seller agrees at the time
of sale to repurchase the security at a mutually agreed upon time and price.
The Fund may enter into repurchase agreements with the Custodian, with banks
having assets in excess of $10 billion and with broker-dealers who are
recognized as primary dealers in U.S. Government obligations by the Federal
Reserve Bank of New York. Although the securities subject to the repurchase
agreement might bear maturities exceeding one year, settlement for the
repurchase would never be more than one year after the Fund's acquisition of
the securities and normally would be within a shorter period of time. The
resale price will be in excess of the purchase price, reflecting an agreed
upon market rate effective for the period of time the Fund's money will be
invested in the securities and will not be related to the coupon rate of the
purchased security. At the time the Fund enters into a repurchase agreement,
the value of the underlying security, including accrued interest, will equal
or exceed 102% of the value of the repurchase agreement, and in the case of
a repurchase agreement exceeding one day, the seller will agree that the
value of the underlying security, including accrued interest, will at all
times equal or exceed 102% of the value of the repurchase agreement. The
collateral securing the seller's obligation will be held by the Custodian or
in the Fund's account in the Federal Reserve Book Entry System.
For purposes of the 1940 Act, a repurchase agreement is deemed to be a loan
from a Fund to the seller subject to the repurchase agreement and is
therefore subject to the Fund's investment restriction applicable to loans.
It is not clear whether a court would consider the securities purchased by
the Fund subject to a repurchase agreement as being owned by the Fund or as
being collateral for a loan by the Fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to
4
<PAGE>
<PAGE>
the seller of the securities before repurchase of the security under a
repurchase agreement, the Fund may encounter delay and incur costs before
being able to sell the security. Delays may involve loss of interest or
decline in price of the security. If the court characterized the transaction
as a loan and the Fund has not perfected a security interest in the security,
the Fund may be required to return the security to the seller's estate and be
treated as an unsecured creditor of the seller. As an unsecured creditor,
the Fund would be at the risk of losing some or all of the principal and
income involved in the transaction. As with any unsecured debt obligation
purchased for the Fund, the Fund's investment adviser seeks to minimize the
risk of loss through repurchase agreements by analyzing the creditworthiness
of the obligor, in this case the seller. Apart from the risk of bankruptcy
or insolvency proceedings, there is also the risk that the seller may fail to
repurchase the security, in which case the Fund may incur a loss if the
proceeds to the Fund of the sale to a third party are less than the
repurchase price. However, if the market value of the securities subject to
the repurchase agreement becomes less than the repurchase price (including
interest), the Fund will direct the seller of the security to deliver
additional securities so that the market value of all securities subject to
the repurchase agreement will equal or exceed 102% of the repurchase price.
It is possible that the Fund will be unsuccessful in seeking to enforce the
seller's contractual obligation to deliver additional securities.
Loans of Portfolio Securities. The Fund may lend portfolio securities
subject to the restrictions stated in the Fund's Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, at least equal the value of the loaned
securities. To be acceptable as collateral, letters of credit must obligate
a bank to pay amounts demanded by the Fund if the demand meets the terms of
the letter. Such terms and the issuing bank must be satisfactory to the
Fund. The Fund receives amounts equal to the interest on loaned securities
and also receives one or more of (a) negotiated loan fees, (b) interest on
securities used as collateral or (c) interest on short-term debt securities
purchased with such collateral; either type of interest may be shared with
the borrower. The Fund may also pay fees to placing brokers as well as
custodian and administrative fees in connection with loans. Fees may only be
paid to a placing broker provided that the Trustees determine that the fee
paid to the placing broker is reasonable and based solely upon services
rendered, that the Trustees separately consider the propriety of any fee
shared by the placing broker with the borrower and that the fees are not used
to compensate the Fund's investment adviser or any affiliated person of the
Trust or an affiliated person of the Fund's investment adviser. The terms of
the Fund's loans must meet applicable tests under the Internal Revenue Code
and permit the Fund to reacquire the loaned securities on five days' written
notice or in time to vote on any important matter.
Majority. As used in the Prospectus and this Statement of Additional
Information, the term "majority of the outstanding securities" of the Trust
(or of the Fund) means the lesser of (1) 67% or more of the outstanding
shares of the Trust (or the Fund) present at
5
<PAGE>
<PAGE>
a meeting, if the holders of more than 50% of the outstanding shares of the
Trust (or the Fund) are present or represented at such meeting or (2) more
than 50% of the outstanding shares of the Trust (or the Fund).
INVESTMENT LIMITATIONS
The Trust has adopted certain fundamental investment limitations designed to
reduce the risk of an investment in the Fund. These limitations may not be
changed without the affirmative vote of a majority of the outstanding
securities of the Fund.
The limitations applicable to the Fund are:
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other entity
for temporary purposes only, provided than when made, such temporary
borrowings are in an amount not exceeding 5% of the Fund's total assets. The
Fund also will not make any borrowing which would cause its outstanding
borrowings to exceed one-third of the value of its total assets.
2. Pledging. The Fund will not mortgage, pledge, or hypothecate or in any
manner transfer, as security for indebtedness, any security owned or held by
the Fund except as may be necessary in connection with borrowings described
in limitation (1) above. The Fund will not mortgage, pledge, or hypothecate
more than one-third of its assets in connection with borrowings.
3. Underwriting. The Fund will not act as underwriter of securities issued
by other persons. This limitation is not applicable to the extent that, in
connection with the disposition of its portfolio securities (including
restricted securities), the Fund may be deemed an underwriter under certain
federal securities laws.
4. Illiquid Investments. The Fund will not invest more than 10% of its net
assets in securities for which there are legal or contractual restrictions on
resale and other illiquid securities.
5. Real Estate. The Fund will not purchase, hold or deal in real estate.
6. Commodities. The Fund will not purchase, hold or deal in commodities or
commodities future contracts or invest in oil, gas or other mineral
exploration or development programs. This limitation is not applicable to
the extent that the U.S. Government obligations in which the Fund may
otherwise invest would be considered to be such commodities, contracts or
investments.
7. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, or (b) by engaging in repurchase agreements.
For purposes of this limitation, the term "loans" shall not include the
purchase of a portion of an issue of U.S. Government obligations.
8. Margin Purchases. The Fund will not purchase securities or evidences of
interest
6
<PAGE>
<PAGE>
thereon on "margin." This limitation is not applicable to short-term credit
obtained by the Fund for the clearance of purchase and sales or redemptions
of securities.
9. Short Sales and Options. The Fund will not sell any securities short or
sell put and call options. This limitation is not applicable to the extent
that sales by the Fund of securities in which the Fund may otherwise invest
would be considered to be sales of options.
10. Other Investment Companies. The Fund will not invest in the securities
of any investment company except as permitted by the Investment Company Act
of 1940.
11. Concentration. The Fund will not invest more than 25% of its total
assets in the securities of issuers in a particular industry; this limitation
is not applicable to investments in obligations issued or guaranteed by the
United States Government, its agencies and instrumentalities or repurchase
agreements with respect thereto.
12. Mineral Leases. The Fund will not purchase oil, gas or other mineral
leases or exploration or development programs.
13. Senior Securities. The Fund will not issue senior securities as defined
in the Investment Company Act of 1940.
Notwithstanding any other investment policy the Fund may invest all, but not
less than all, of its investable assets in the securities of beneficial
interests of a single pooled investment entity having substantially the same
objective, policies and limitations as the Fund.
With respect to the percentages adopted by the Trust as maximum limitations
on the Fund's investment policies and restrictions, an excess above the fixed
percentage (except for the percentage limitations relative to the borrowing
of money) will not be a violation of the policy or restriction unless the
excess results immediately and directly from the acquisition of any security
or the action taken.
The Trust does not presently intend to pledge, mortgage or hypothecate the
assets of the Fund. The Trust does not presently intend to acquire
securities issued by any other investment companies. The Trust does not
presently intend to invest all its assets in securities issued by any other
single pooled investment entity. The statements of intention in this
paragraph reflect nonfundamental policies that may be changed by the Board of
Trustees without shareholder approval.
TRUSTEES AND OFFICERS
The officers and trustees of the Fund, their principal occupations and
affiliations, if any, with the Adviser and Underwriter and their ages, are
listed below.
James A. Casselberry, Jr., Trustee, Chairman of the Board and President*, 140
S. Dearborn, Chicago, Illinois; Chairman and Chief Executive Officer of
Trias Capital Management, Inc. (the investment adviser of the Trust)
beginning in 1996. From 1995
7
<PAGE>
<PAGE>
through 1996, Chief Operating Officer of Wedgewood Capital Management, an
investment adviser. From 1991 to 1995 Investment Manager at the MacArthur
Investment Group and Director of Fixed Income Investments for the John D. and
Catherine T. MacArthur Foundation, a 501(c)(3) foundation. From 1987 to 1991,
portfolio manager of First National Bank of Chicago, managing the First
Prairie money market funds. (39).
Janis S. England, Trustee, Secretary and Treasurer*, 10814 Bull Valley Road,
Woodstock, Illinois; Chairman of Millennium Financial LLC (administrator of
the Trust) LLC and Millennium Capital LLC (the principal underwriter of the
Trust). From 1986 through 1993 she was associated with Kemper Financial
Services, Inc. (a registered broker-dealer and investment adviser) most
recently as Senior Vice President with responsibility for, among other
things, wholesale money market funds. (52).
Marjorie H. O'Laughlin , Trustee+, 3838 N. Rural Street, Indianapolis, IN;
Treasurer, Health & Hospital Corporation of Marion County, a municipal
corporation created by the Indiana General Assembly. From 1987 through
February 1995 Treasurer of the State of Indiana. (69).
Courtney C. Shea, Trustee*, 311 S. Wacker Drive, Chicago, IL; Managing
Director of Artemis Capital Group, Inc., a registered broker-dealer, since
1992. From 1990 until 1992 Vice President Kemper Securities, Inc., a
registered broker-dealer. (38).
Sally M. Tassani, Trustee+, 6003 Guion , Indianapolis, IN; Director and
Executive Vice President of Paul Harris Stores, Inc., a specialty retailer of
moderately price women's apparel and accessories since July 1998. From
January 1998 to June 1998 Managing Director of Tassani Partners LLC,
marketing communication consultants. From October 1995 through 1997, Senior
Vice-President of Leo Burnett Company, an advertising agency. From August
through September 1995 Executive Vice-President of Bender Browning Dolby &
Sanderson an advertising agency. Formerly Chief Executive Officer of Tassani
& Paglia Inc., an advertising agency. (49).
Barbara E. Wallace , Trustee+ 875 N. Michigan Avenue, Chicago, IL; Executive
Vice President of SMG Marketing Group, Inc., a firm providing information and
consulting to the health care industry. (49).
* These are "interested persons" of the Trust within the meaning of Section
2(a)(19) of the of 1940 Act. Mr. Casselberry is an affiliated person of
Trias Capital Management, the Trust's investment adviser. Ms England is an
affiliated person of Millennium Capital LLC, the Trust's principal
underwriter, and Millennium Financial LLC, the Trust's administrator. Ms.
Shea, is an affiliated person of Artemis Capital Group, Inc. a registered
broker-dealer.
+ Member of the Audit Committee
The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of
8
<PAGE>
<PAGE>
judgment or mistakes of fact or law. However, they are not protected against
any liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.
The Fund pays Trustees who are not interested persons of the investment
adviser a fee of $1,000 for each Board meeting attended plus $250 for each
committee meeting attended. The table below shows the amounts estimated to
be paid to Trustees during the Trust's 1998 fiscal year.
Aggregate Pension or Retirement Total
Compensation Benefits Accrued as Compensation
Name of Trustee from Trust Part of Trust Expenses from Trust
- ---------------------- ---------- -------------------- ----------
Marjorie H. O'Laughlin $3,000 $0 $3,000
Courtney C. Shea $2,000 $0 $2,000
Sally M. Tassani $3,000 $0 $3,000
Barbara E. Wallace $3,000 $0 $3,000
During a typical fiscal year, the Fund would anticipate quarterly board
meetings, with compensation in the amount of $4,000 to each Trustee.
On October 31, 1998, the trustees and officers as a group owned less than 1%
of the outstanding shares of the Fund. Those record owners which also owned
beneficially 5% or more of the outstanding shares of the Fund are: City of
Detroit - Water Bond 97 Fund for 83, 2 Woodward Ave, Detroit, MI 48226,
28.42%; Chicago Housing Authority/Operating, 626 W. Jackson, Chicago, IL,
60661, 36.34%; Chicago Housing Authority/Section 8, 626 W. Jackson, Chicago,
IL, 60661, 11.18%; Chicago Park District, 425 E. McFedtridge Dr, Chicago, IL
60605, 5.95%; Treasurer State of Illinois, 300 W. Jefferson, Springfield, IL
62702 5.59%. Hoosier Lottery, PO Box 771072, Detroit, MI 48277, benefically
owned 8.57% of the outstanding shares of the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION
The Trust's investment adviser is Trias Capital Management, Inc. ("Trias").
Under the terms of an investment advisory agreement (the "Advisory
Agreement") with the Fund, Trias provides the investment advice to the Fund
subject to the supervison of the board of trustees. Trias has complete
discretion to purchase and sell portfolio securities for the Fund within the
Fund's investment objective, restrictions and policies. In addition to
serving as the investment adviser to the Fund, Trias provides investment
advice and manages investment portfolios for endowments, foundations,
corporate cash, pension, profit sharing and individual accounts. Trias is
controlled by Mr. James A. Casselberry, Jr.
9
<PAGE>
<PAGE>
For performing its responsibilities, the Fund pays Trias an annual fee,
payable monthly, of .20% of the Fund's average daily net assets. Trias has
agreed to temporarily reimburse the Fund's total operating expenses to the
extent that they exceed .25% of the average daily net assets of the Fund on
an annual basis. For this purpose "operating expenses" do not include taxes,
interest, extraordianary expenses, brokerage commissions or transaction
costs. Upon notice to the Fund, Trias may terminate this expense absorption
at any time.
By its terms, the Trust's Advisory Agreement will remain in force until June
27, 1999 and from year to year thereafter, subject to annual approval by (a)
the Board of Trustees or (b) a vote of the majority of the Fund's outstanding
voting securities; provided that in either event continuance is also approved
by a majority of the Trustees who are not interested persons of the Trust, by
a vote cast in person at a meeting called for the purpose of voting such
approval. The Advisory Agreement may be terminated at any time, on sixty
days' written notice, without the payment of any penalty, by the Board of
Trustees, by a vote of the majority of the Fund's outstanding voting
securities, or by Trias. The Advisory Agreement automatically terminates in
the event of its assignment, as defined by the 1940 Act and the rules
thereunder. For the fiscal year ended September 30, 1998, and September 30,
1997 the Fund incurred $25,202 and $301, respectively, for the investment and
management services.
The Trust's Administrator is Millennium Financial LLC ("MFL"). Under the
terms of an administration agreement (the "Administration Agreement") with
the Fund, it is MFL's responsibility to provide executive and administrative
services to the Trust.
MFL supervises the preparation of the Trust's tax returns, reports to
shareholders of the Trust; reports to and filings with the Securities and
Exchange Commission and state securities commissions and materials for the
meetings of the Board of Trustees. The controlling member of MFL is Janis S.
England. For performing its responsibilities, the Fund pays MFL an annual
fee, payable monthly, of .05% of the Fund's daily net assets.
By its terms, the Trust's Administration Agreement will remain in force until
June 30, 1999 and from year to year thereafter, subject to annual approval by
(a) the Board of Trustees or (b) a vote of the majority of the Fund's
outstanding voting securities; provided that in either event continuance is
also approved by a majority of the Trustees who are not interested persons of
the Trust, by a vote cast in person at a meeting called for the purpose of
voting such approval. The Administration Agreement may be terminated at any
time, on sixty days' written notice, without the payment of any penalty, by
the Board of Trustees, by a vote of the majority of the Fund's outstanding
voting securities, or by MFL. The Administration Agreement automatically
terminates in the event of its assignment, as defined by the 1940 Act and the
rules thereunder.
Trias and MFL shall not be liable for any losses that may be sustained in the
purchase, holding or sale of any security or for anything done or omitted by
it except acts or
10
<PAGE>
<PAGE>
omissions involving willful misfeasance of the duties imposed upon it by its
contract with the Trust.
The Fund is responsible for the payment of all expenses incurred in
connection with the organization, registration of shares and operations of
the Fund, including such extraordinary or non-recurring expenses as may
arise, such as litigation to which the Trust may be a party.
The Fund may have an obligation to indemnify the Trust's Officers and
Trustees with respect to such litigation except in instances of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office. As the Fund's distributor, MFL
bears promotional expenses in connection with the distribution of the Fund's
shares. The Fund will not be responsible for the compensation and expenses
of any officer, Trustee or employee of the Trust who is either (i) an
officer, member or employee of MFL or (ii) an officer, partner or employee of
Trias.
MFL has licensed the use of the name "Millennium," "Millennium Income" or any
derivation thereof in connection with any registered investment company or
other business enterprise with which the Trust is or may become associated.
In the event MFL ceases to be the Administrator of the Fund, the Fund will be
required to cease using the name.
SECURITIES TRANSACTIONS
Decisions to buy and sell securities for the Fund and the placing of the
Fund's securities transactions and negotiation of commission rates where
applicable are made by Trias and are subject to review by the Trustees. In
the purchase and sale of portfolio securities, Trias seeks best execution for
the Fund, taking into account such factors as price (including the applicable
brokerage commission or dealer spread), the execution capability, financial
responsibility and responsiveness of the broker or dealer and the brokerage
and research services provided by the broker or dealer. Trias generally
seeks favorable prices and commission rates that are reasonable in relation
to the benefits received.
Generally, the Fund attempts to deal directly with the dealers who make a
market in the securities involved unless better prices and execution are
available elsewhere. Such dealers usually act as principals for their own
account. On occasion, portfolio securities may be purchased directly from
the United States Treasury. Because the portfolio securities of the Fund are
generally traded on a net basis and transactions in such securities do not
normally involve brokerage commissions, the cost of portfolio securities
transactions of the Fund will consist primarily of dealer and underwriting
spreads.
Trias is specifically authorized to select brokers who also provide brokerage
and research to the Fund and/or other accounts over which Trias exercises
investment
11
<PAGE>
<PAGE>
discretion and to pay such brokers a commission in excess of the commission
another broker would charge if Trias determines in good faith that the
commission is reasonable in relation to the value of the brokerage and
research services provided. The determination may be viewed in terms of a
particular transaction or Trias's overall responsibilities with respect to
the Fund and to accounts over which it exercises investment discretion.
Research services include securities and economic analyses, reports on
issuers' financial conditions and future business prospects, newsletters and
opinions relating to interest trends, general advice on the relative merits
of possible investment securities for the Fund and statistical services and
information with respect to the availability of securities or purchasers or
sellers of securities. Although this information is useful to the Fund and
Trias, it is not possible to place a dollar value on it. Research services
furnished by brokers through whom the Fund effects securities transactions
may be used by Trias in servicing all of its accounts and not all such
services may be used by Trias in connection with the Fund.
NET ASSET VALUE
The NAV of the shares of the Fund is determined as of 11:30 p.m. Central
time, on each Business Day. Business Day means any day on which the New York
Stock Exchange is open except on days on which Cincinnati or New York banks
are closed for holidays. For a description of the method used to determine
the NAV see "Net Asset Value" in the Prospectus.
Pursuant to Rule 2a-7 promulgated under the 1940 Act, the Fund values its
portfolio securities on an amortized cost basis. The use of the amortized
cost method of valuation involves valuing an instrument at is cost and,
thereafter, assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. Under the amortized cost method of valuation,
neither the amount of daily income nor the NAV of the Fund is affected by any
unrealized appreciation or depreciation of the portfolio. The Board of
Trustees has determined in good faith that utilization of amortized cost is
appropriate and represents the fair value of the portfolio securities of the
Fund. Pursuant to Rule 2a-7, the Fund maintains a dollar weighed average
portfolio maturity of 90 days or less, purchases only securities having
remaining maturities of one year or less and invests only in United States
dollar- denominated securities determined by the Board of Trustees to be of
high quality and to present minimal credit risks. If a security ceases to be
an eligible security, or if the Board of Trustees believes such security no
longer presents minimal credit risks, the Trustees will cause the Fund to
dispose of the security as soon as practicable. The maturity of U.S.
Government obligations which have a variable rate of interest readjusted no
less frequently then annually will be deemed to be the period of time
remaining until the next readjustment of the interest rate.
The Board of Trustees has established procedures designed to stabilize, to
the extent
12
<PAGE>
<PAGE>
reasonably possible, the price per share of the Fund as computed for the
purpose of sales and redemptions at $1 per share. The procedures include
review of the Fund's portfolio holdings by the Board of Trustees to determine
whether the Fund's NAV, calculated by using available market quotations,
deviates more than one-half of one percent from $1 per share and, if so,
whether such deviation may result in material dilution or is otherwise unfair
to existing shareholders. In the event the Board of Trustees determines that
such a deviation exists, it will take corrective action as it regards
necessary and appropriate, including the sale of portfolio securities prior
to maturity to realize capital gains or losses or to shorten average
portfolio maturities, the withholding of dividends, the redemption of shares
in kind, or the establishment of a NAV per share by using available market
quotations. The Board of Trustees has also established procedures designed
to ensure that the Fund complies with the quality requirements of Rule 2a-7.
While the amortized cost method provides certainty in valuation, it may
result in periods during which the value of an instrument, as determined by
amortized cost, is higher or lower than the price the Fund would receive if
it sold the instrument. During periods of declining interest rates, the
daily yield on shares of the Fund may tend to be higher than a like
computation made by a fund with identical investments utilizing a method of
valuation based upon market prices and estimates of market prices for all of
its portfolio securities. Thus, if the use of amortized cost by the Fund
resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in the Fund would be able to obtain a somewhat higher
yield than would result from investment in a fund utilizing solely market
values, and existing investors would receive less investment income. The
converse would apply in a period of rising interest rates.
TAXES
The Prospectus describes generally the tax treatment of distributions by the
Fund. This section of the Statement of Additional Information includes
additional information concerning federal taxes.
A Fund's net realized capital gains from securities transactions will be
distributed only after reducing such gains by the amount of any available
capital loss carry forwards. Capital losses may be carried forward to offset
any capital gains for eight years, after which any undeducted capital loss
remaining is lost as a deduction.
A federal excise tax at the rate of 4% will be imposed on the excess, if any,
of the Fund's "required distribution" over actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its net capital gains
recognized during the one year period ending on October 31 of the calendar
year plus undistributed amounts from prior years. The Fund intends to make
distributions sufficient to avoid imposition of the excise tax. The Trust is
required to withhold and remit to the U.S. Treasury a portion (31%) of
dividend income on any
13
<PAGE>
<PAGE>
account unless the shareholder provides a taxpayer identification number and
certifies that such number is correct and that the shareholder is not subject
to backup withholding.
REDEMPTION IN KIND
Although the Trust intends to redeem Fund shares in cash, it reserves the
right under circumstances when the Board of Trustees deems it in the best
interests of the Fund's shareholders, to pay the redemption price in whole or
in part in securities of the Fund taken at current value. If any such
redemption in kind is to be made, the Fund intends to make an election
pursuant to Rule 18f-1 under the 1940 Act. This election will require the
Fund to redeem shares solely in cash up to the lesser of $250,000 or 1% of
the net asset value of the Fund during any 90 day period for any one
shareholder. Should payment be made in securities, the redeeming shareholder
will generally incur brokerage costs in converting such securities to cash.
Portfolio securities which are issued in an "in-kind" redemption will, to the
extent available, be readily marketable.
HISTORICAL PERFORMANCE INFORMATION
Yield quotations on investments in the Fund are provided on both a current
and an effective (compounded) basis. The current yield for the 7 day period
ended 9/30/98 was 5.26%. Current yield is calculated by determining the net
change in the value of a hypothetical account for a seven calendar day period
(base period) with a beginning balance of one share, dividing by the value of
the account at the beginning of the base period to obtain the base period
return, multiplying the result by (365/7) and carrying the resulting yield
figure to the nearest hundredth of one percent. The effective yield for the
7 day period ended 9/30/98 was 5.40%. Effective yield reflects daily
compounding and is calculated as follows: Effective yield = (base period
return + 1)(365/7)-1. For purposes of these calculations, no effect is given
to realized or unrealized gains or losses (the Fund does not normally
recognize unrealized gains and losses under the amortized cost valuation
method).
To help investors better evaluate how an investment in the Fund might satisfy
their investment objective, advertisements regarding the Fund may discuss
various measures of Fund performance, including current performance ratings
and/or rankings appearing in financial magazines, newspapers and publications
that track mutual fund performance. Advertisements may also compare
performance (using the calculation methods set forth in the Prospectus) to
performance as reported by other investments, indices and averages. The
performance of the Fund may be compared to that of other money market mutual
funds tracked by mutual fund rating services, various indices of investment
performance or direct investments in United States government obligations or
bank certificates of deposit, or other investments for which reliable
performance data is available. The Fund performance may also be compared
with other well known
14
<PAGE>
<PAGE>
market rates, including the Federal Funds rate, or investments for which its
institutional clients request comparative data. The Fund may use the
following publications or indices to discuss or compare Fund performance:
Donoghue's Money Fund Report provides a comparative analysis of
performance for various categories of money market funds. The Fund may
compare performance with any other individual money market fund or any
of the taxable fund categories.
Federal Reserve Publication H.15 and G.13 Selected Interest Rates
provides weekly and monthly averages of various direct investments
including U.S. Treasury Bills and the Federal Funds rate.
Lipper Fixed Income Fund Performance Analysis measures total return and
average current yield for the mutual fund industry and ranks individual
mutual fund performance over specified time periods assuming
reinvestment of all distributions, exclusive of sales loads. The Fund
may provide comparative performance information appearing in the Short
Term U.S. Government Funds or the Institutional Government Money Market
Funds category.
In assessing such comparisons of performance with indices, averages, other
funds, direct investments or market rates, an investor should keep in mind
that the composition of the investments in the reported funds, indices and
averages is not identical to the Fund's portfolio, that the averages are
generally unmanaged and that the items included in the calculations of such
averages may not be identical to the formula used by the Fund to calculate
its performance. Additionally, some direct investments may be insured by, or
direct obligations of, the U.S. Government, while the Fund is not. In
addition, there can be no assurance that the Fund will continue its
comparative performance record.
TRANSFER AND SHAREHOLDER SERVICE AGENT
As described in the Prospectus, Countrywide Fund Services, Inc.
("Countrywide") is the Trust's transfer and dividend disbursing, shareholder
servicing and plan agent. Countrywide maintains the records of each
shareholder account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions.
DISTRIBUTOR
Millennium Capital LLC (the "Distributor"), as principal underwriter of the
Trust, is the exclusive agent for distribution of shares of the Fund. Shares
of the Fund are offered on a continuous basis.
15
<PAGE>
<PAGE>
CUSTODIAN
Fifth Third Bank has been retained to act as Custodian for the Fund's
investments. Fifth Third Bank acts as the Fund's depository, safekeeps its
portfolio securities, collects all income and other payments with respect
thereto, disburses funds as instructed and maintains records in connection
with its duties.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP has been selected as independent public
accountants for the Trust for the fiscal year ending September 30, 1999.
Arthur Andersen LLP, 425 Walnut Street, Cincinnati, Ohio, performs an annual
audit of the Trust's financial statements.
LEGAL COUNSEL
Legal counsel is provided by Bell, Boyd & Lloyd.
16
<PAGE>
<PAGE>
MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
Annual Report
September 30, 1998
<PAGE>
<PAGE>
MILLENNIUM INCOME TRUST
Dear Shareholder,
We are pleased to provide you with the annual report of the
Millennium Income Trust for the year ended September 30, 1998.
During the period the Treasurers' Government Money Market Fund (the
"Fund") portfolio registered solid performance and achieved its
objective of providing maximum current income from high quality
money market securities while maintaining stability of principal.
Although past performance is no guarantee of future results, the
table below presents the Fund's 7 day average yields at the end of
the year.
Treasurers' Government Money Market Fund
7 Day Average Yields (9/30/98)
Current Compound
5.26% 5.40%
Thank you for choosing the Treasurers' Government Money Market
Fund. We look forward to the continued opportunity to meet your
investment needs.
James A. Casselberry, Jr.
President
November 25, 1998
<PAGE>
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1998
ASSETS:
Investment securities, at cost and value (Note 2) $ 33,770,291
Receivables
Accrued income 1,749
Receivable from related party 49,188
Prepaid organizational expenses, net (Note 3) 5,984
---------
Total assets 33,827,212
---------
LIABILITES:
Income distribution payable 74,156
Payable to related party (Note 3) 13,845
Accrued Expenses 31,405
---------
Total liabilities 119,406
---------
Net assets $ 33,707,806
=========
Net assets consisting of capital shares $ 33,707,806
=========
Shares of beneficial interest outstanding
(Unlimited number of shares authorized, no par value) 33,707,806
Net asset value, redemption price and offering $ 1.00
price per share (Note 2) ====
See accompanying Notes to Financial Statements.
2
<PAGE>
<PAGE>
STATEMENT OF OPERATIONS
September 30, 1998
INVESTMENT INCOME:
Interest income
U.S. government securities $ 455,634
Repurchase agreements 245,381
-------
Total Income 701,015
EXPENSES: (Note 3)
Management fees 25,202
Administration fees 6,300
Service fees 29,081
Professional fees 12,769
Insurance expense 2,200
Trustees fees & expenses 11,232
Registration fees 10,145
Amortization of organization expenses 4,700
-------
Total Expenses 101,629
Less fees waived and expenses reimbursed
by the Manager and Administrator (Note 3) 74,040
-------
Net Expenses 27,589
-------
NET INVESTMENT INCOME AND INCREASE
IN NET ASSETS FROM OPERATIONS $ 673,426
=======
See accompanying Notes to Financial Statements.
3
<PAGE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30
1998 1997
------- -------
From operations:
Net investment income $ 673,426 $ 6,315
From dividends:
Dividends to shareholders from investment income (673,426) (6,315)
From capital share transactions:
Proceeds from shares sold 33,475,179 0
Shares issued in reinvestment of dividends 321,417 6,315
Less payments for shares redeemed (200,000) (26,606)
------- -------
Net increase (decrease) in net assets 33,596,596 (20,291)
Net assets:
Beginning of period (Note 1) 111,210 131,501
------- -------
End of period $ 33,707,806 $ 111,210
========== =======
See accompanying Notes to Financial Statements.
4
<PAGE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Year Ended September 30
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Per share data for a share outstanding:
Net asset value at beginning of period $ 1.000 $ 1.000 $ 1.000
----- ----- -----
Net investment income 0.053 0.051 0.052
Distributions from net investment income (0.053) (0.051) (0.052)
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000
==== ==== ====
Total Return* 5.33% 5.06% 5.27%
==== ==== ====
Net assets at end of period (000's) $ 33,708 $ 111 $ 132
Ratios net of expenses waived or absorbed by adviser (Note 3)
Ratio of net expenses to average net assets 0.22% 0.00% 0.00%
Ratio of net investment income to average net assets 5.33% 5.06% 5.25%
Ratios assuming no fee waiver or expense absorption (Note 3)
Ratio of expenses to average net assets 0.80% 30.19% 14.42%
Ratio of net investment income to average net assets 4.74% (25.13%) (9.17%)
</TABLE>
* Past performance cannot be used to predict future returns. An investment in a
money market fund is neither insured nor guaranteed by the U. S. government and
there is no assurance that the Fund will be able to maintain a stable net asset
value of $1 per share.
See accompanying Notes to Financial Statements.
5
<PAGE>
<PAGE>
SCHEDULE OF INVESTMENTS
September 30, 1998
AGENCY DISCOUNT NOTES - 65.5 %
Par Value
------------ ------------
Federal Home Loan Mortgage Corp
5.41% discount rate, due 10/7/98 $ 3,000,000 $ 2,997,295
5.44% discount rate, due 10/9/98 3,000,000 2,996,373
5.32% discount rate, due 11/5/98 2,500,000 2,487,070
5.36% discount rate, due 11/16/98 3,024,000 3,003,289
Federal National Mortgage Association
5.45% discount rate, due 10/13/98 1,973,000 1,969,422
5.42% discount rate, due 10/16/98 8,675,000 8,655,409
------------
TOTAL AGENCY DISCOUNT NOTES
(Amortized Cost $ 22,108,858) $ 22,108,858
REPURCHASE AGREEMENT (1) - 35.4 %
Proceeds Value
------------ ------------
Lehman Brothers
5.40% Issue date 9/30/98 due 10/1/98 $ 11,663,182 $ 11,661,433
------------ ------------
TOTAL REPURCHASE AGREEMENT 11,663,182 11,661,433
------------ ------------
TOTAL INVESTMENTS $ 33,770,291
(Amortized Cost $ 33,770,291) ------------
(1) Repurchase agreements are fully collateralized by U.S. Government
agency securities.
See accompanying Notes to Financial Statements.
6
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30 1998
(1) Organization
The Millennium Income Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as an open-end diversified
management investment company. The Trust was established as a
Massachusetts business trust under a Declaration of Trust dated August 19,
1994. The Trust has established one fund series, the Treasurers'
Government Money Market Fund (the "Fund"). The Trust was capitalized on
January 17, 1995, when 100,000 shares of the Fund were issued at $1.00 per
share to Janis S. England, chairman and controlling member of Millennium
Financial LLC, ("MFL") the Fund's administrator, and Millennium Capital
LLC, ("MCL") the Fund's principal underwriter. The Fund had no operations
prior to the public offering (which occurred on October 2, 1995) of shares
except for the initial issuance of shares; accordingly, no financial
statement information is presented for the period prior to fiscal 1996.
The Fund's investment objective is to seek high current income, consistent
with protection of capital.
(2) Significant Accounting Policies
The following is a summary of the Fund's significant accounting policies:
Security valuation - Securities are valued on an amortized cost basis,
which approximates market value. This involves initially valuing a
security at its original cost and thereafter assuming a constant
amortization to maturity of any discount or premium. This method of
valuation is designed to enable the Fund to maintain a stable net asset
value per share.
Repurchase agreements - Repurchase agreements are collateralized by U.S.
Government securities and are valued at cost which, together with accrued
interest, approximates market. Collateral for repurchase agreements is
held in safekeeping in the Fund's custodian customer-only account at the
Federal Reserve Bank of Cleveland. At the time the Fund enters into a
repurchase agreement, the seller agrees that the value of the underlying
securities, including accrued interest, will be equal to or exceed the face
amount of the repurchase agreement. In the event of a bankruptcy or other
default of the seller of a repurchase agreement, the Fund could experience
both delays in liquidating the underlying security and losses. These
losses would equal the face amount of the repurchase agreement(s) and
accrued interest, net of any proceeds received in liquidation of the
underlying securities. To minimize the possibility of loss, the Fund
enters into repurchase agreements only with institutions deemed to be
creditworthy by the invesment manager.
Security transactions - Investment transactions are accounted for on the
trade date. Securities sold are valued on a specific identification
basis.
Fund share valuation, investment income and distributions to shareholders -
The net asset value per share of the Fund is calculated twice a day by
dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. Interest income is accrued as earned.
Distributions from net investment income are declared daily and paid on or
about the first business day of each month.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statements and the reported amount
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
7
<PAGE>
<PAGE>
Federal income tax - It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so
qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of Federal income tax on the
income distributed. Accordingly, no provision for income taxes has been
made. In order to avoid imposition of the excise tax applicable to
regulated investment companies, it is also the Fund's intention to declare
as dividends in each calendar year at least 98% of its net investment
income (earned during the calendar year) and 98% of its net realized
capital gains (earned during the twelve months ended October 31) plus
undistributed amounts from prior years.
(3) Transactions with Affiliates
The President of the Trust is the chairman and controlling shareholder of
Trias Capital Management, Inc. ("Trias"), the Trust's investment manager.
The Secretary/Treasurer of the Trust is the chairman and controlling member
of MFL, the Trust's administrator, and MCL, the Trust's principal
underwriter.
Investment Management Agreement - The Fund's investments are managed by
Trias pursuant to the terms of a management agreement. Under the terms of
the management agreement, the Fund pays Trias a fee, which is computed and
accrued daily and paid monthly at the annual rate of 0.20% of its average
daily net assets. Trias voluntarily waived its advisory fees and absorbed
all Fund expenses through March 31, 1998. Since April 1, 1998 Trias has
voluntarily agreed to maintain the Funds expenses at 0.25% of its average
daily net assets.
Administration Agreement - The Fund's business affairs are managed by MFL
pursuant to the terms of an administration agreement. Under the terms of
the administration agreement, the Fund pays MFL a fee, which is computed
and accrued daily and paid monthly at the annual rate of 0.05% of its
average daily net assets. In order to reduce the operating expenses of the
Fund, MFL voluntarily waived its administration fee through March 31, 1998.
Transfer Agent and Shareholder Service Agreement - Under the terms of a
Transfer, Dividend Disbursing, Shareholder Service and Plan Agency
Agreement between the Trust and Countrywide Fund Services, Inc. ("CFS"),
CFS maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend distribution and
disbursing agent and performs other shareholder service functions. For
these services CFS receives a monthly fee at an annual rate of $20 per
shareholder account, subject to a minimum monthly fee not to exceed $1,500.
In addition the Fund pays CFS' out-of-pocket expenses including, but not
limited to, postage and supplies.
Accounting Services Agreement - Under the terms of the Accounting Services
Agreement between the Trust and CFS, CFS calculates the daily net asset
value per share and maintains the books and records of the Fund. For these
services CFS receives a monthly fee, based on current assets levels, of
$2,000 per month.
Prepaid Organizational Expenses - Expenses incurred in connection with the
organization of the Trust and the initial offering of shares were paid by
MFL. Such organizational expenses were capitalized and amortized on a
straight-line basis over five years. As of January 17, 1995, all
outstanding shares of the Fund were held by the chairman and controlling
member of MFL, who purchased these initial shares in order to provide the
Trust with its required capital. In the event any of the initial shares of
the Fund are redeemed by the chairman and controlling member of MFL or by
any subsequent owner at any time prior to the complete amortization of
organizational expenses, the redemption proceeds payable with respect to
such shares will be reduced by the pro rata share of the unamortized
deferred organizational expenses as of the date of such redemption.
8
<PAGE>
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Board of Trustees of the
Treasurers' Government Money Market Fund of Millennium Income Trust:
We have audited the accompanying statement of assets and liabilities of the
Treasurers' Government Money Market Fund of Millennium Income Trust (a
Massachusetts business trust), including the portfolio of investments as of
September 30, 1998, and the related statement of operations, the statements
of changes in net assets, and the financial highlights for the periods
indicated thereon. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
investments owned as of September 30, 1998, by correspondence with the
custodian and broker. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the Treasurers' Government Money Market Fund of the Millennium Income
Trust as of September 30, 1998, the results of its operations, the changes
in its net assets, and the financial highlights for the periods indicated
thereon, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Cincinnati, Ohio,
November 6, 1998
<PAGE>
<PAGE>
PART C: OTHER INFORMATION
- ----------------------------
Item 24. Financial Statements and Exhibits:
- -------------------------------------------
(a) Financial Statements
--------------------
Part A:
Financial Highlights
Part B:
Statement of Assets and Liabilities at September 30, 1998
Statement of Operations for the Year Ended September 30, 1998
Statements of Changes in Net Assets for the Years Ended
September 30, 1998 and 1997
Financial Highlights
Portfolio of Investments at September 30, 1998
Notes to Financial Statements -- September 30, 1998
Report of Independent Public Accountants
(b) Additional Exhibits
-------------------
(1) Agreement and Declaration of Trust(1)
(2) By-Laws(2)
(3) Not applicable
(4) Not applicable
(5) Form of Advisory Agreement(3)
(6) Form of Underwriting Agreement(3)
(7) Not applicable
(8) Form of Custodian Agreement(2)
(9)(a) Form of Transfer Agency Agreement(1)
(9)(b) Form of Administration Agreement(3)
(9)(c) Form of Accounting Services Agreement(3)
(10) Not applicable
(11) Consent of Independent Public Accountants
(12) Not applicable
(13) Form of Subscription Agreement(2)
(14) Not applicable
C-1
<PAGE>
<PAGE>
(15) Not applicable
(16) Schedule for Performance Quotations
(18) Not applicable
(19) Powers of Attorney
(27) Financial Data Schedule
(1) Incorporated by reference from the initial Registration
Statement filed on Form N-1A on or about October 12, 1994.
(2) Incorporated by reference from Pre-Effective Amendment No. 1
filed on Form N-1A on or about February 21, 1995.
(3) Incorporated by reference from Post-Effective Amendment No. 3
filed on Form N-1A on or about January 29, 1998.
Item 25. Persons Controlled by or Under Common Control With Registrant.
- -----------------------------------------------------------------------
The Registrant retains Millennium Financial LLC ("MFL") to act as the
Registrant's Administrator. MFL is an Illinois limited liability company
organized on January 1, 1994. MFL is controlled by Janis S. England.
Millennium Capital LLC ("MCL") is the principal underwriter for the
Registrant. MCL is an Illinois limited liability company organized on
March 9, 1994. MCL is controlled by Janis S. England.
Item 26. Number of Holders of Securities:
- -----------------------------------------
As of November 1, 1998:
Number of
Title of Class Record Holders
-------------- --------------
Treasurers' Government Money Market Portfolio 9
Item 27. Indemnification:
- --------------------------
Article VIII of the Agreement of Declaration of Trust filed as Exhibit 1 to
the Registration Statement is incorporated by reference. Insofar as
indemnification for liabilities arising under the Securities Act of 1933
may be permitted to trustees, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or
otherwise, the Registrant is aware that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and, therefore, is unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
C-2
<PAGE>
<PAGE>
by the Registrant of expenses incurred or paid by trustees, directors,
officers or controlling persons of the Registrant in connection with the
successful defense of any act, suit or proceeding) is asserted by such
trustees, directors, officers or controlling persons in connection with the
shares 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 Act and will be governed
by the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Adviser:
- --------------------------------------------------------------
Trias Capital Management, Inc. is a registered investment adviser providing
investment advice to the Registrant.
Position with Other Business, Profession,
Name Adviser Vocation or Employment
---- ------------- ---------------------------
James A. Casselberry, Jr. Chairman None
Michael L. Lucas President None
Nora J. Bustamante COO None
Item 29. Principal Underwriters:
- -------------------------------
(a) None.
(b) MCL acts as principal underwriter of the Registrant. Information
about the officers and members of MCL is as follows:
Name and Positions and Offices Positions and Offices
Principal Business Address With Underwriter With Registrant
- -------------------------- --------------------- ---------------------
Janis S. England Chairman and Trustee and Treasurer
10814 Bull Valley Road Managing Member
Woodstock, IL 60098
John A. Lancaster Vice President and None
10814 Bull Valley Road Member
Woodstock, IL 60098
(c) Not applicable.
C-3
<PAGE>
<PAGE>
Item 30. Location of Accounts and Records:
- ------------------------------------------
All such accounts, books and other documents are maintained (i) at the
offices of Registrant's investment adviser, Trias Capital Management, Inc,
140 S. Dearborn, Chicago, IL 60603.;(ii) at the offices of Registrant's
distributor, Millennium Capital LLC or at the offices of the Registrant's
Administrator. Millennium Financial LLC, 10814 Bull Valley Road, Woodstock,
Illinois 60098; (iii) at the offices of Registrant's custodian, The Fifth
Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263; or (iv) at
the offices of the Registrant's accountant and transfer agent, Countrywide
Fund Services, Inc., 321 Walnut Street, 21st Floor, Cincinnati, Ohio 45202.
Item 31. Management Services.
- ----------------------------
Not applicable.
Item 32. Undertakings:
- ---------------------
(a) Not applicable.
(b) Not applicable.
(c) Registrant hereby undertakes, if requested to do so by holders of at
least 10% of the registrant's outstanding shares, to call a meeting
of shareholders for the purpose of voting upon the question of
removal of a trustee or trustees and to assist in communications with
other shareholders as required by Section 16(c) of the Act.
C-4
<PAGE>
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereto duly authorized in the City of Chicago, and State of Illinois on
the 25th day of November 1998.
MILLENNIUM INCOME TRUST
By:/s/ JAMES A. CASSELBERRY, JR.
--------------------------------------
James A. Casselberry, Jr.,President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in
the capacities and on the date indicated.
/s/ JAMES A. CASSELBERRY, JR. Chairman of the Board, Trustee and
- --------------------------------- President (Chief Executive Officer)
James A. Casselberry, Jr.
/s/ JANIS S. ENGLAND Trustee, Treasurer and Secretary
- --------------------------------- (Chief Financial Officer and Chief
Janis S. England Accounting Officer)
/s/ MARJORIE H. O'LAUGHLIN Trustee
- ---------------------------------
Marjorie H. O'Laughlin
/s/ COURTNEY C. SHEA Trustee
- ---------------------------------
Courtney C. Shea
/s/ SALLY M. TASSANI Trustee
- ---------------------------------
Sally M. Tassani
/s/ BARBARA E. WALLACE Trustee
- ---------------------------------
Barbara E. Wallace
<PAGE>
<PAGE>
EXHIBIT INDEX
-------------
Page No.
--------
(1) Agreement and Declaration of Trust(1)
(2) By-Laws(2)
(3) Not applicable
(4) Not applicable
(5) Form of Advisory Agreement(3)
(6) Form of Underwriting Agreement(3)
(7) Not applicable
(8) Form of Custodian Agreement
(9)(a) Form of Transfer Agency Agreement(1)
(9)(b) Form of Administration Agreement(3)
(9)(c) Form of Accounting Services Agreement(3)
(10) Not applicable
(11) Consent of Independent Public Accountants
(12) Not applicable
(13) Form of Subscription Agreement(2)
(14) Not applicable
(15) Not applicable
(16) Schedule for Performance Quotations
(18) Not applicable
(19) Powers of Attorney
(27) Financial Data Schedule
(1) Incorporated by reference from the initial Registration
Statement filed on Form N-1A on or about October 12, 1994.
(2) Incorporated by reference from Pre-Effective Amendment No. 1
filed on Form N-1A on or about February 21, 1995.
(3) Incorporated by reference from Post-Effective Amendment No. 3
filed on Form N-1A on or about January 29, 1998.
<PAGE>
<PAGE>
CUSTODY AGREEMENT
THIS AGREEMENT, is made as of April 21, 1998, by and between MILLENNIUM
INCOME TRUST, a business trust organized under the laws of the State of
Massachusetts (the "Trust"), and THE FIFTH THIRD BANK, a banking company
organized under the laws of the State of Ohio (the "Custodian").
WITNESSETH:
WHEREAS, the Trust desires that the Securities and cash of each of the
investment portfolios identified in Exhibit A hereto (such investment
portfolios and individually referred to herein as a "Fund" and collectively
as the "Funds"), be held and administered by the Custodian pursuant to this
Agreement; and
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly
authorized by resolution of the Board of Trustees to give Oral Instructions
and Written Instructions on behalf of the Trust and named in Exhibit B
hereto or in such resolutions of the Board of Trustees, certified by an
Officer, as may be received by the Custodian from time to time.
1.2 "Board of Trustees" shall mean the Trustees from time to time
serving under the Trust's Agreement and Declaration of Trust, dated August
19, 1994, as from time to time amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as
provided in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart
B of 31 CFR Part 350, or in such book-entry regulations of federal agencies
as are substantially in the form of such Subpart O.
<PAGE>
1.4 "Business Day" shall mean any day recognized as a settlement day
by The New York Stock Exchange, Inc. and any other day for which the Fund
computes the net asset value of the Fund.
1.5 "NASD" shall mean The National Association of Securities Dealers,
Inc.
1.6 "Officer" shall mean the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer, or any Assistant
Treasurer of the Trust.
1.7 "Oral Instructions" shall mean instructions orally transmitted to
and accepted by the Custodian because such instructions are: (i)
reasonably believed by the Custodian to have been given by an Authorized
Person, (ii) recorded and kept among the records of the Custodian made in
the ordinary course of business and (iii) orally confirmed by the
Custodian. The Trust shall cause all Oral Instructions to be confirmed by
Written Instructions. If such Written Instructions confirming Oral
Instructions are not received by the Custodian prior to a transaction, it
shall in no way affect the validity of the transaction or the authorization
thereof by the Trust. If Oral Instructions vary from the Written
Instructions which purport to confirm them, the Custodian shall notify the
Trust of such variance but such Oral Instructions will govern unless the
Custodian has not yet acted.
1.8 "Custody Account" shall mean any account in the name of the
Trust, which is provided for in Section 3.2 below.
1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions
when deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Participants Trust Company
or The Depository Trust Company and (provided that Custodian shall have
received a copy of a resolution of the Board of Trustees, certified by an
Officer, specifically approving the use of such clearing agency as a
depository for the Trust) any other clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities and
Exchange Act of 1934 (the "1934 Act"), which acts as a system for the
central handling of Securities where all Securities of any particular class
or series of an issuer deposited within the system are treated as fungible
and may be transferred or pledged by bookkeeping entry without physical
delivery of the Securities.
1.11 "Securities" shall include, without limitation, common and
preferred stocks, bonds, call options, put options, debentures, notes, bank
<PAGE>
certificates of deposit, bankers' acceptances, mortgage-backed securities,
other money market instruments or other obligations, and any certificates,
receipts, warrants or other instruments or documents representing rights to
receive, purchase or subscribe for the same, or evidencing or representing
any other rights or interests therein, or any similar property or assets
that the Custodian has the facilities to clear and to service.
1.12 "Shares" shall mean the units of beneficial interest issued by
the Trust.
1.13 "Written Instructions" shall mean (i) written communications
actually received by the Custodian and signed by one or more persons as the
Board of Trustees shall have from time to time authorized, or (ii)
communications by telex or any other such system from a person or persons
reasonably believed by the Custodian to be Authorized, or (iii)
communications transmitted electronically through the Institutional
Delivery System (IDS), or any other similar electronic instruction system
acceptable to Custodian and approved by resolutions of the Board of
Trustees, a copy of which, certified by an Officer, shall have been
delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and appoints the
Custodian as custodian of all Securities and cash owned by or in the
possession of the Trust at any time during the period of this Agreement,
provided that such Securities or cash at all times shall be and remain the
property of the Trust.
2.2 Acceptance. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set forth
and in accordance with the 1940 Act as amended. Except as specifically set
forth herein, the Custodian shall have no liability and assumes no
responsibly for any non-compliance by the Trust or a Fund of any laws,
rules or regulations.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of the Fund, except Securities maintained in a
Securities Depository or Book-Entry System, shall be physically segregated
from other Securities and non-cash property in the possession of the
Custodian and shall be identified as subject to this Agreement.
3.2 Custody Account. The Custodian shall open and maintain in its
<PAGE>
trust department a custody account in the name of each Fund, subject only
to draft or order of the Custodian, in which the Custodian shall enter and
carry all Securities, cash and other assets of the Fund which are delivered
to it.
3.3 Appointment of Agents. In its discretion, the Custodian may
appoint, and at any time remove, any domestic bank or trust company, which
has been approved by the Board of Trustees and is qualified to act as a
custodian under the 1940 Act, as sub-custodian to hold Securities and cash
of the Funds and to carry out such other provisions of this Agreement as it
may determine, and may also open and maintain one or more banking accounts
with such a bank or trust company (any such accounts to be in the name of
the Custodian and subject only to its draft or order), provided, however,
that the appointment of any such agent shall not relieve the Custodian of
any of its obligations or liabilities under this Agreement.
3.4 Delivery of Assets to Custodian. The Fund shall deliver, or
cause to be delivered, to the Custodian all of the Fund's Securities, cash
and other assets, including (a) all payments of income, payments of
principal and capital distributions received by the Fund with respect to
such Securities, cash or other assets owned by the Fund at any time during
the period of this Agreement, and (b) all cash received by the Fund for the
issuance, at any time during such period, of Shares. The Custodian shall
not be responsible for such Securities, cash or other assets until actually
received by it.
3.5 Securities Depositories and Book-Entry Systems. The Custodian
may deposit and/or maintain Securities of the Funds in a Securities
Depository or in a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Fund shall deliver to the
Custodian a resolution of the Board of Trustees, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry
System all Securities eligible for deposit therein and to make
use of such Securities Depository or Book-Entry System to the
extent possible and practical in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of collateral consisting
of Securities. So long as such Securities Depository or Book-
Entry System shall continue to be employed for the deposit of
Securities of the Funds, the Trust shall annually re-adopt such
resolution and deliver a copy thereof, certified by an Officer,
to the Custodian.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of
the Custodian in such Book-Entry System or Securities Depository
which includes only assets held by the Custodian as a fiduciary,
custodian or otherwise for customers.
(c) The records of the Custodian and the Custodian's account on the
books of the Book-Entry System and Securities Depository as the
case may be, with respect to Securities of a Fund maintained in a
Book-Entry System or Securities Depository shall, by book-entry,
or otherwise identify such Securities as belonging to the Fund.
(d) If Securities purchases by the Fund are to be held in a Book-
Entry System or Securities Depository, the Custodian shall pay
for such Securities upon (i) receipt of advice from the Book-
Entry System or Securities Depository that such Securities have
been transferred to the Depository 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 Fund. If Securities
sold by the Fund are held in a Book-Entry System or Securities
Depository, the Custodian shall transfer such Securities upon (i)
receipt of advice from the Book-Entry System or Securities
depository that payment for such Securities has been transferred
to the Depository 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 Fund.
(e) Upon request, the Custodian shall provide the Fund with copies of
any report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of the Fund is kept) on
the internal accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or Securities
Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to
the Trust resulting (i) from the use of a Book-Entry System or
Securities Depository by reason of any negligence or willful
misconduct on the part of Custodian or any sub-custodian
appointed pursuant to Section 3.3 above or any of its or their
employees, or (ii) from failure of Custodian or any such sub-
custodian to enforce effectively such rights as it may have
against a Book-Entry System or Securities Depository. At its
election, the Trust shall be subrogated to the rights of the
Custodian with respect to any claim against a Book-Entry System
or Securities Depository or any other person for any loss or
damage to the Funds arising from the use of such Book-Entry
System or Securities Depository, if and to the extent that the
Trust has been made whole for any such loss or damage.
3.6 Disbursement of Moneys from Custody Accounts. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from a Fund
Custody Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon
compliance with Section 4.1 of this Agreement and only (i) in the
case of Securities (other than options on Securities, futures
contracts and options on futures contracts), against the delivery
to the Custodian (or any sub-custodian appointed pursuant to
Section 3.3 above) of such Securities registered as provided in
Section 3.9 below in proper form for transfer, or if the purchase
of such Securities is effected through a Book-Entry System or
Securities Depository, in accordance with the conditions set
forth in Section 3.5 above; (ii) in the case of options on
Securities, against delivery to the Custodian (or such sub-
custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of
futures contracts and options on futures contracts, against
delivery to the Custodian (or such sub-custodian) of evidence of
title thereto in favor of the Trust or any nominee referred to in
Section 3.9 below; and (iv) in the case of repurchase or reverse
repurchase agreements entered into between the Trust and a bank
which is a member of the Federal Reserve System or between the
Trust and a primary dealer in U.S. Government securities, against
delivery of the purchased Securities either in certificate form
or through an entry crediting the Custodian's account at a Book-
Entry System or Securities Depository for the account of the Fund
with such Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the
Trust, including but not limited to the following payments for
the account of a Fund: interest; taxes; administration,
investment management, investment advisory, accounting, auditing,
transfer agent, custodian, trustee and legal fees; and other
operating expenses of a Fund; in all cases, whether or not such
expenses are to be in whole or in part capitalized or treated as
deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to
compliance with 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 Trust;
(g) For transfer in accordance with the provisions of any agreement
among the Trust, 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 Trust;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including
the Custodian), which deposit or account has a term of one year
or less; and
(i) For any other proper purposes, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of
Trustees, certified by an Officer, specifying the amount and
purpose of such payment, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such
payment is to be made.
3.7 Delivery of Securities from Fund Custody Accounts. Upon receipt
of Proper Instructions, the Custodian shall release and deliver Securities
from a Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of a Fund but only
against receipt of payment therefor in cash, by certified or
cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an Offeror's depository agent in connection with tender or
other similar offers for Securities of a Fund; provided that, in
any such case, the cash or other consideration is to be delivered
to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Trust, the Custodian or any sub-custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees of
any of the foregoing, or (ii) for exchange for a different number
of certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such case,
the new Securities are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the issuer of such Securities, or pursuant to provisions for
conversion contained in such Securities, or pursuant to any
deposit agreement, including surrender or receipt of underlying
Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by a Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of a
Fund, but only against receipt of such collateral as the Trust
shall have specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Trust on behalf of a Fund requiring a pledge of assets by such
Fund, but only against receipt by the Custodian of the amounts
borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust or a Fund;
(l) For delivery in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the 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 Trust on
behalf of a Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Trust on behalf of a Fund, 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 Trust on behalf of a Fund; or
(n) For any other proper corporate purposes, but only upon receipt,
in addition to Proper Instructions, of a copy of a resolution of
the Board of Trustees, certified by an Officer, specifying the
Securities 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.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise
instructed by the Trust, the Custodian shall with respect to all Securities
held for a Fund;
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Trust is entitled either
by law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on
a timely basis the amount payable upon all Securities which may
mature or be called, redeemed, or retired, or otherwise become
payable;
(c) Endorse for collection, in the name of the Trust, checks, drafts
and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect, and prepare and submit reports to the Internal Revenue
Service ("IRS") and to the Trust at such time, in such manner and
containing such information as is prescribed by the IRS;
(f) Hold for a Fund, either directly or, with respect to Securities
held therein, through a Book-Entry System or Securities
Depository, all rights and similar securities issued with respect
to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with sale, exchange, substitution, purchase, transfer
and other dealings with Securities and assets of the Fund.
3.9 Registration and Transfer of Securities. All Securities held for
a Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in
a Book-Entry System for the account of the Trust on behalf of a Fund, if
eligible therefor. All other Securities held for a Fund may be registered
in the name of the Trust on behalf of such Fund, the Custodian, or any sub-
custodian appointed pursuant to Section 3.3 above, or in the name of any
nominee of any of them, or in the name of a Book-Entry System, Securities
Depository or any nominee of either thereof; provided, however, that such
Securities are held specifically for the account of the Trust on behalf of
a Fund. The Trust shall furnish to the Custodian appropriate instruments
to enable the Custodian to hold or deliver in proper form for transfer, or
to register in the name of any of the nominees hereinabove referred to or
in the name of a Book-Entry System or Securities Depository, any Securities
registered in the name of a Fund.
3.10 Records. (a) The Custodian shall maintain, by Fund,
complete and accurate records with respect to Securities, cash or other
property held for the Trust, including (i) journals or other records of
original entry containing an itemized daily record in detail of all
receipts and deliveries of Securities and all receipts and disbursements of
cash; (ii) ledgers (or other records) reflecting (A) Securities in
transfer, (B) Securities in physical possession, (C) monies and Securities
borrowed and monies and Securities loaned (together with a
record of the collateral therefor and substitutions of such collateral),
(D) dividends and interest received, and (E) dividends receivable and
interest accrued; and (iii) canceled checks and bank records related
thereto. The Custodian shall keep such other books and records of the
Trust as the Trust shall reasonably request, or as may be required by the
1940 Act, including, but not limited to Section 3.1 and Rule 31a-1 and Rule
31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i)
be maintained in a form acceptable to the Trust and in compliance with
rules and regulations of the Securities and Exchange Commission, (ii) be
the property of the Trust and at all times during the regular business
hours of the Custodian be made available upon request for inspection by
duly authorized officers, employees or agents of the Trust and employees or
agents of the Securities and Exchange Commission, and (iii) if required to
be maintained by Rule 31a-1 under the 1940 Act, be preserved for the
periods prescribed in Rule 31a-2 under the 1940 Act.
3.11 Fund Reports by Custodian. The Custodian shall furnish the
Trust with a daily activity statement by Fund and a summary of all
transfers to or from the Custody Account on the day following such
transfers. At least monthly and from time to time, the Custodian shall
furnish the Trust with a detailed statement, by Fund, of the Securities and
moneys held for the Trust under this Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide the
Trust with such reports, as the Trust may reasonably request from time to
time, on the internal accounting controls and procedures for safeguarding
Securities, which are employed by the Custodian or any sub-custodian
appointed pursuant to Section 3.3 above.
3.13 Proxies and Other Materials. The Custodian shall cause all
proxies if any, relating to Securities which are not registered in the name
of a Fund, to be promptly executed by the registered holder of such
Securities, without indication of the manner in which such proxies are to
be voted, and shall include all other proxy materials, if any, promptly
deliver to the Trust such proxies, all proxy soliciting materials, which
should include all other proxy materials, if any, and all notices to such
Securities.
3.14 Information on Corporate Actions. Custodian will promptly
notify the Trust of corporate actions, limited to those Securities
registered in nominee name and to those Securities held at a Depository or
sub-Custodian acting as agent for Custodian. Custodian will be responsible
only if the notice of such corporate actions is published by the Financial
Daily Card Service, J.J. Kenny Called Bond Service, DTC, or received by
first class mail from the agent. For market announcements not yet received
and distributed by Custodian's services, Trust will inform its custody
representative with appropriate instructions. Custodian will, upon receipt
of Trust's response within the required deadline, affect such action for
receipt or payment for the Trust. For those responses received after the
deadline, Custodian will affect such action for receipt or payment, subject
to the limitations of the agent(s) affecting such actions. Custodian will
promptly notify Trust for put options only if the notice is received by
first class mail from the agent. The Trust will provide or cause to be
provided to Custodian with all relevant information contained in the
prospectus for any security which has unique put/option provisions and
provide Custodian with specific tender instructions at least ten business
days prior to the beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each purchase of
Securities for the Trust, Written Instructions shall be delivered to the
Custodian, specifying (a) the name of the issuer or writer of such
Securities, and the title or other description thereof, (b) the number of
shares, principal amount (and accrued interest, if any) or other units
purchased, (c) the date of purchase and settlement, (d) the purchase price
per unit, (e) the total amount payable upon such purchase, and (f) the name
of the person to whom such amount is payable. The Custodian shall upon
receipt of such Securities purchased by a Fund pay out of the moneys held
for the account of such Fund the total amount specified in such Written
Instructions to the person named therein. The Custodian shall not be under
any obligation to pay out moneys to cover the cost of a purchase of
Securities for a Fund, if in the relevant Custody Account there is
insufficient cash available to the Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for the purchase of
Securities for a Fund is made by the Custodian in advance of receipt for
the account of the Fund of the Securities purchased but in the absence of
specific Written or Oral Instructions to so pay in advance, the Custodian
shall be liable to the Fund for such Securities to the same extent as if
the Securities had been received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by a
Fund, Written Instructions shall be delivered to the Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title or
other description thereof, (b) the number of shares, principal amount (and
accrued interest, if any), or other units sold, (c) the date of sale and
settlement (d) the sale price per unit, (e) the total amount payable upon
such sale, and (f) the person to whom such Securities are to be delivered.
Upon receipt of the total amount payable to the Trust as specified in such
Written Instructions, the Custodian shall deliver such Securities to the
person specified in such Written Instructions. Subject to the foregoing,
the Custodian may accept payment in such form as shall be satisfactory to
it, and may deliver Securities and arrange for payment in accordance with
the customs prevailing among dealers in Securities.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above
or any other provision of this Agreement, the Custodian, when instructed to
deliver Securities against payment, shall be entitled, if in accordance
with generally accepted market practice, to deliver such Securities prior
to actual receipt of final payment therefor. In any such case, the Trust
shall bear the risk that final payment for such Securities may not be made
or that such Securities may be returned or otherwise held or disposed of by
or through the person to whom they were delivered, and the Custodian shall
have no liability for any of the foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion and
from time to time, the Custodian may credit the relevant Custody Account,
prior to actual receipt of final payment thereof, with (i) proceeds from
the sale of Securities which it has been instructed to deliver against
payment, (ii) proceeds from the redemption of Securities or other assets of
the Trust, and (iii) income from cash, Securities or other assets of the
Trust. Any such credit shall be conditional upon actual receipt by
Custodian of final payment and may be reversed if final payment is not
actually received in full. The Custodian may, in its sole discretion and
from time to time, permit the Trust to use funds so credited to its Custody
Account in anticipation of actual receipt of final payment. Any such funds
shall be repayable immediately upon demand made by the Custodian at any
time prior to the actual receipt of all final payments in anticipation of
which funds were credited to the Custody Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its
sole discretion and from time to time, advance funds to the Trust to
facilitate the settlement of a Trust transactions on behalf of a Fund in
its Custody Account. Any such advance shall be repayable immediately upon
demand made by Custodian.
ARTICLE V
REDEMPTION OF TRUST SHARES
Transfer of Funds. From such funds as may be available for the
purpose in the relevant Custody Account, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares of a
Fund, the Custodian shall wire each amount specified in such Proper
Instructions to or through such bank as the Trust may designate with
respect to such amount in such Proper Instructions. Upon effecting payment
or distribution in accordance with proper Instruction, the Custodian shall
not be under any obligation or have any responsibility thereafter with
respect to any such paying bank.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of each Fund,
into which account or accounts may be transferred cash and/or Securities,
including Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Trust, the Custodian and a broker-dealer registered under the 1934 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 Trust,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by a Fund or in connection with
financial futures contracts (or options thereon) purchased or sold by a
Fund,
(c) which constitute collateral for loans of Securities made by a
Fund,
(d) for purposes of compliance by the Trust with requirements under
the 1940 Act for the maintenance of segregated accounts by registered
investment companies in connection with reverse repurchase agreements and
when-issued, delayed delivery and firm commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Board of Trustees, certified by an Officer, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper corporate purposes.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and
shall be without liability to the Trust for any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability or claim unless
such loss, damages, cost, expense, liability or claim arises from
negligence, bad faith or willful misconduct on its part or on the part of
any sub-custodian appointed pursuant to Section 3.3 above. The Custodian's
cumulative liability within a calendar year shall be limited with respect
to the Trust or any party claiming by, through or on behalf of the Trust
for the initial and all subsequent renewal terms of this Agreement, to the
lessor amount of (a) the actual damages sustained by the Trust, (actual
damages for uninvested funds shall be the overnight Feds fund rate), or (b)
to an amount not to exceed one-half of the net fees paid to the Custodian
within the prior three calendar months. The Custodian shall be entitled to
rely on and may act upon advice of counsel on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to
such advice. The Custodian shall promptly notify the Trust of any action
taken or omitted by the Custodian pursuant to advice of counsel. The
Custodian shall not be under any obligation at any time to ascertain
whether the Trust is in compliance with the 1940 Act, the regulations
thereunder, the provisions of the Trust's charter documents or by-laws, or
its investment objectives and policies as then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable
for, or considered to be the custodian of, any cash belonging to the Trust
or any money represented by a check, draft or other instrument for the
payment of money, until the Custodian or its agents actually receive such
cash or collect on such instrument.
7.3 No Responsibility for title, etc. 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 or delivered by it pursuant to this
Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be required
to enforce collection, by legal means or otherwise, of any money or
property due and payable with respect to Securities held for the Trust if
such Securities are in default or payment is not made after due demand or
presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in
writing received by it and reasonably believed by it to be genuine. The
Custodian shall be entitled to rely upon any Oral Instructions and/or any
Written Instructions actually received by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are
specifically set forth in this Agreement, and no covenant or obligation
shall be implied in this Agreement against the Custodian.
7.7 Cooperation. The Custodian shall cooperate with and supply
necessary information, by the Trust, to the entity or entities appointed by
the Trust to keep the books of account of the Trust and/or compute the
value of the assets of the Trust. The Custodian shall take all such
reasonable actions as the Trust may from time to time request to enable the
Trust to obtain, from year to year, favorable opinions from the Trust's
independent accountants with respect to the Custodian's activities
hereunder in connection with (a) the preparation of the Trust's report on
Form N-1A and Form N-SAR and any other reports required by the Securities
and Exchange Commission, and (b) the fulfillment by the Trust of any other
requirements of the Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. The Trust shall indemnify and hold harmless the
Custodian and any sub-custodian appointed pursuant to Section 3.3 above,
and any nominee of the Custodian or of such sub-custodian from and against
any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability (including, without limitation, liability
arising under the Securities Act of 1933, the 1934 Act, the 1940 Act, and
any state or foreign securities and/or banking laws) or claim arising
directly or indirectly (a) from the fact that Securities are registered in
the name of any such nominee, or (b) from any action or inaction by the
Custodian or such sub-custodian (i) at the request or direction of or in
reliance on the advice of the Trust, or (ii) upon Proper Instructions, or
(c) generally, from the performance of its obligations under this Agreement
or any sub-custody agreement with a sub-custodian appointed pursuant to
Section 3.3 above or, in the case of any such sub-custodian, from the
performance of its obligations under such custody agreement, provided that
neither the Custodian nor any such sub-custodian shall be indemnified and
held harmless from and against any such loss, damage, cost, expense,
liability or claim arising from the Custodian's or such sub-custodian's
negligence, bad faith or willful misconduct.
8.2 Indemnity to be Provided. If the Trust requests the Custodian to
take any action with respect to Securities, which may, in the opinion of
the custodian, result in the Custodian or its nominee becoming liable for
the payment of money or incurring liability of some other form, the
Custodian shall not be required to take such action until the Trust shall
have provided indemnity therefor to the Custodian in an amount and form
satisfactory to the Custodian.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Trust shall be 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 reasonable
control, including, without limitation, acts of God; earthquakes; fires;
floods; wars; civil or military disturbances; sabotage; strikes; epidemics;
riots; power failures; computer failure and any such circumstances beyond
its reasonable control as may cause interruption, loss or malfunction of
utility, transportation, computer (hardware or software) or telephone
communication service; accidents; labor disputes, acts of civil or military
authority; governmental actions; or inability to obtain labor, material,
equipment or transportation; provided, however, that the Custodian in the
event of a failure or delay shall use its best efforts to ameliorate the
effects of any such failure or delay. Notwithstanding the foregoing, the
Custodian shall maintain sufficient disaster recovery procedures to
minimize interruptions.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become effective as of
the date first set forth above and shall continue in full force and effect
until terminated as hereinafter provided.
10.2 Termination. Either party hereto may terminate this Agreement
by giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than ninety (90) days after the
date of the giving of such notice. If a successor custodian shall have
been appointed by the Board of Trustees, the Custodian shall, upon receipt
of a notice of acceptance by the successor custodian, on such specified
date of termination (a) deliver directly to the successor custodian all
Securities (other than Securities held in a Book-Entry System or Securities
Depository) and cash then owned by the Trust and held by the Custodian as
custodian, and (b) transfer any Securities held in a Book-Entry System or
Securities Depository to an account of or for the benefit of the Trust at
the successor custodian, provided that the Trust shall have paid to the
Custodian all fees, expenses and other amounts to the payment or
reimbursement of which it shall then be entitled. Upon such delivery and
transfer, the Custodian shall be relieved of all obligations under this
Agreement. The Trust may at any time immediately terminate this Agreement
in the event of the appointment of a conservator or receiver for the
Custodian by regulatory authorities in the State of Ohio or upon the
happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor
custodian is not designated by the Trust on or before the date of
termination specified pursuant to Section 10.1 above, then the Custodian
shall have the right to deliver to a bank or trust company of its own
selection, which is (a) a "Bank" as defined in the 1940 Act, (b) has
aggregate capital, surplus and undivided profits as shown on its then most
recent published report of not less than $25 million, and (c) is doing
business in New York, New York, all Securities, cash and other property
held by Custodian under this Agreement and to transfer to an account of or
for the Trust at such bank or trust company all Securities of the Trust
held in a Book-Entry System or Securities Depository. Upon such delivery
and transfer, such bank or trust company shall be the successor custodian
under this Agreement and the Custodian shall be relieved of all obligations
under this Agreement. If, after reasonable inquiry, Custodian cannot find
a successor custodian as contemplated in this Section 10.3, then Custodian
shall have the right to deliver to the Trust all Securities and cash then
owned by the Trust and to transfer any Securities held in a Book-Entry
System or Securities Depository to an account of or for the Trust.
Thereafter, the Trust shall be deemed to be its own custodian with respect
to the Trust and the Custodian shall be relieved of all obligations under
this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from
time to time by the Trust and the Custodian. The fees and other charges in
effect on the date hereof and applicable to the Funds are set forth in
Exhibit B attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
The Trust is a business trust organized under the laws of the State of
Illinois and under a Declaration of Trust, to which reference is hereby
made a copy of which is on file at the office of the Secretary of State of
Illinois as required by law, and to any and all amendments thereto so filed
or hereafter filed. The obligations of the Trust entered into in the name
of the Trust or on behalf thereof by any of the Trustees, officers,
employees or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, officers, employees, agents or
shareholders of the Trust or the Funds personally, but bind only the assets
of the Trust, and all persons dealing with any of the Funds of the Trust
must look solely to the assets of the Trust belonging to such Fund for the
enforcement of any claims against the Trust.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions,
and other communications to be given hereunder shall be in writing and
shall be sent or delivered to The receipt at the address set forth after
its name herein below:
To the Trust:
Millennium Income Trust c/o Trias Capital Management,
Inc.
140 S. Dearborn, Suite 1620
Chicago, IL 60601
Attn: James A. Casselberry, Jr.
Telephone: (312) 223-9400
Facsimile: (312)-223-9430
To the Custodian:
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attn: Area Manager - Trust Operations
Telephone: (513) 579-5300
Facsimile: (513) 579-4312
or at such other address as either party shall have provided to the other
by notice given in accordance with this Article XIII. Writing shall
include transmission by or through teletype, facsimile, central processing
unit connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.
14.2 References to Custodian. The Trust shall not circulate any
printed matter which contains any reference to Custodian without the prior
written approval of Custodian, excepting printed matter contained in the
prospectus or statems to be of
high quality and to its registration
statement for the Trust and such other printed matter as merely identifies
Custodian as custodian for the Trust. The Trust shall submit printed
matter requiring approval to Custodian in draft form, allowing sufficient
time for review by Custodian and its counsel prior to any deadline for
printing.
14.3 No Waiver. No failure by either party hereto to exercise and no
delay by such party in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by either party hereto of any right hereunder
shall not preclude the exercise of any other right, and the remedies
provided herein are cumulative and not exclusive of any remedies provided
at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an
instrument in writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of
which shall be deemed an original but all of which together shall
constitute but one and the same instrument.
14.6 Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining provisions shall
not be affected or impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement shall not be
assignable by either party hereto without the written consent of the other
party hereto.
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or
construction of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
ATTEST: MILLENNIUM INCOME TRUST
/s/ Nora J. Bustamante By: /s/ James A. Casselberry,
Jr.
- ------------------------------------ --------------------------
- ---
Its: President
--------------------------
- ---
ATTEST: THE FIFTH THIRD BANK
/s/ Elizabeth G. Goldthwait By: /s/ JKenneth O. Save
- --------------------------------- --------------------------
- ---
Its: Vice President
--------------------------
- ---
<PAGE> Dated: April
21, 1998
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
MILLENIUM INCOME AND THE FIFTH THIRD BANK
April 21, 1998
Name of Fund Date
------------ ----
Treasurers' Government Money Market Fund 4/21/98
MILLENNIUM INCOME TRUST
By: /s/ James A. Casselberry,
Jr.
--------------------------
- ---
Its: President
--------------------------
- ---
THE FIFTH THIRD BANK
By: /s/ JKenneth O. Save
--------------------------
- ---
Its: Vice President
--------------------------
- ---
Dated: April 21, 1998
EXHIBIT B
TO THE CUSTODY AGREEMENT BETWEEN
MILLENIUM INCOME AND THE FIFTH THIRD BANK
April 21, 1998
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to Administer each Custody Account.
Name Signature
James A. Casselberry, Jr. /s/ James A. Casselberry,
Jr.
- ------------------------- --------------------------
- ---
Janis S. England /s/ Janis S. England
- ------------------------- --------------------------
- ---
- ------------------------- --------------------------
- ---
- ------------------------- --------------------------
- ---
- ------------------------- --------------------------
- ---
- ------------------------- --------------------------
- ---
Dated: April 21,
1998
EXHIBIT C
TO THE CUSTODY AGREEMENT BETWEEN
MILLENIUM INCOME AND THE FIFTH THIRD BANK
April 21, 1998
MUTUAL FUND CUSTODY FEE SCHEDULE
Market Value Charge (per fund)
- ------------------------------
Total Fund Assets Under $25MM
0.0100%
$25MM - $100MM
0.0075%
$100MM - $200MM
0.0050%
Over $200MM
0.0025%
Yearly Minimum
$2,400.00
Transaction Charges
- -------------------
Book Entry Settlements $
9.00
Physical/Ineligible Settlements $
25.00
PTC (GNMAs) Settlements $
25.00
Futures & Options $
25.00
Euroclear Settlements $
50.00
Other Foreign
TBD
Mutual Fund Settlements $
15.00
A transaction is a purchase, sale, maturity, redemption, tender, exchange,
dividend reinvestment, deposit or withdrawal of a security (with the
exception of Fifth Third Certificates of Deposit, Commercial Paper &
Repurchase Agreements).
Maintenance Charges
- -------------------
Amortized Securities $
5.00
Miscellaneous Charges
- ---------------------
5/3 Repurchase Agreement Sweep (monthly) $
50.00
Per addtl issue Repo collateral $
5.00
Voluntary Corporate Actions $
25.00
Wire Transfers $
7.00
Check Requests $
6.00
Special Services (per hour) $
75.00
Cash Offsets based on amounts and
rates
Maximum of 50% of fee
offset
SIGNATURE RESOLUTION
RESOLVED, That all of the following officers of Millennium Income Trust and
any of them, namely the Chairman, President, Vice President, Secretary and
Treasurer, are hereby authorized as signers for the conduct of business for
an on behalf of the Funds with THE FIFTH THIRD BANK:
CHAIRMAN
- ------------------------ --------------------------
- ---
James A. Casselberry, Jr. PRESIDENT /s/ James A. Casselberry,
Jr.
- ------------------------ --------------------------
- ---
VICE PRESIDENT
- ------------------------ --------------------------
- ---
VICE PRESIDENT
- ------------------------ --------------------------
- ---
VICE PRESIDENT
- ------------------------ --------------------------
- ---
VICE PRESIDENT
- ------------------------ --------------------------
- ---
Janis S. England TREASURER /s/ Janis S. England
- ------------------------ --------------------------
- ---
SECRETARY
- ------------------------ --------------------------
- ---
In addition, the following Assistant Treasurer is authorized to sign on
behalf of the Trust for the purpose of effecting securities transactions:
ASSISTANT TREASURER
- ------------------------ --------------------------
- ---
The undersigned officers of Millennium Income Trust hereby certify that the
foregoing is within the parameters of a Resolution adopted by Trustees of
the Trust in a meeting held May 27, 1997 , directing and authorizing
preparation of documents and to do everything necessary to effect the
Custody Agreement between Millennium Income Trust and THE FIFTH THIRD BANK.
By: /s/ Janis S. England
---------------------------
- ---
Its: Secretary & Treasurer
---------------------------
- ---
<PAGE>
[/TABLE]
EXHIBIT 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in
this Post-Effective Amendment No. 4 of our report dated November 6, 1998
and to all references to our Firm included in or made a part of this
Post-Effective Amendment.
/s/ ARTHUR ANDERSEN LLP
------------------------------
Arthur Andersen LLP
Cincinnati, Ohio
November 25, 1998
<PAGE>
Exhibit 16
Schedule of Performance Quotations
The yield and effective yield for the seven-day period ended
September 30, 1998 for the Treasurers' Government Money Market Fund were
calculated as follows.
Yield
5.26 = (.001008687/1) * (365/7)
Effective Yield
5.40 = [(.001008687 + 1)(365/7)] - 1
<PAGE>
EXHIBIT 19a
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints James A. Casselberry, Jr. and Janis S.
England, or either of them, her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for
her and in her name, place and stead, in any and all capacities to
sign the Registration Statement of Millennium Income Trust, a
Massachusetts business trust, on Form N-1A under the Securities
Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, and any or all amendments thereto, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as all
intents and purposes as she might or could do in person, hereby
ratifying and confirming all said attorney-in-fact and agent may
lawfully do or cause to be done by virtue hereof.
Dated: November 25, 1998
/s/MARJORIE H. O'LAUGHLIN
------------------------------
Marjorie H. O'Laughlin
<PAGE>
<PAGE>
EXHIBIT 19b
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints James A. Casselberry, Jr. and Janis S.
England, or either of them, her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for
her and in her name, place and stead, in any and all capacities to
sign the Registration Statement of Millennium Income Trust, a
Massachusetts business trust, on Form N-1A under the Securities
Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, and any or all amendments thereto, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as all
intents and purposes as she might or could do in person, hereby
ratifying and confirming all said attorney-in-fact and agent may
lawfully do or cause to be done by virtue hereof.
Dated: November 25, 1998
/s/COURTNEY C. SHEA
------------------------------
Courtney C. Shea
<PAGE>
<PAGE>
EXHIBIT 19c
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints James A. Casselberry, Jr. and Janis S.
England, or either of them, her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for
her and in her name, place and stead, in any and all capacities to
sign the Registration Statement of Millennium Income Trust, a
Massachusetts business trust, on Form N-1A under the Securities
Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, and any or all amendments thereto, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as all
intents and purposes as she might or could do in person, hereby
ratifying and confirming all said attorney-in-fact and agent may
lawfully do or cause to be done by virtue hereof.
Dated: November 25, 1998
/s/SALLY M. TASSANI
------------------------------
Sally M. Tassani
<PAGE>
<PAGE>
EXHIBIT 19d
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints James A. Casselberry, Jr. and Janis S.
England, or either of them, her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for
her and in her name, place and stead, in any and all capacities to
sign the Registration Statement of Millennium Income Trust, a
Massachusetts business trust, on Form N-1A under the Securities
Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, and any or all amendments thereto, and to file the
same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as all
intents and purposes as she might or could do in person, hereby
ratifying and confirming all said attorney-in-fact and agent may
lawfully do or cause to be done by virtue hereof.
Dated: November 25, 1998
/s/BARBARA E. WALLACE
------------------------------
Barbara E. Wallace
<PAGE>
<PAGE>
EXHIBIT 19e
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Janis S. England, his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities to sign the Registration Statement of
Millennium Income Trust, a Massachusetts business trust, on Form
N-1A under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and any or all
amendments thereto, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-
in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and
about the premises, as fully as all intents and purposes as she
might or could do in person, hereby ratifying and confirming all
said attorney-in-fact and agent may lawfully do or cause to be
done by virtue hereof.
Dated: November 25, 1998
/s/JAMES A. CASSELBERRY, JR.
------------------------------
James A. Casselberry, Jr.
<PAGE>
<PAGE>
EXHIBIT 19f
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints James A. Casselberry, Jr. her true and
lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for her and in her name, place and stead, in
any and all capacities to sign the Registration Statement of
Millennium Income Trust, a Massachusetts business trust, on Form
N-1A under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and any or all
amendments thereto, and to file the same, with all exhibits hereto
and other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the
premises, as fully as all intents and purposes as she might or
could do in person, hereby ratifying and confirming all said
attorney-in-fact and agent may lawfully do or cause to be done by
virtue hereof.
Dated: November 25, 1998
/s/JANIS S. ENGLAND
------------------------------
Janis S. England
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 33,770,291
<INVESTMENTS-AT-VALUE> 33,770,291
<RECEIVABLES> 50,937
<ASSETS-OTHER> 5,984
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,827,212
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 119,406
<TOTAL-LIABILITIES> 119,406
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 33,707,806
<SHARES-COMMON-STOCK> 33,707,806
<SHARES-COMMON-PRIOR> 111,210
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 33,707,806
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 701,015
<OTHER-INCOME> 0
<EXPENSES-NET> (27,589)
<NET-INVESTMENT-INCOME> 673,426
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 33,596,596
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (673,426)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33,475,179
<NUMBER-OF-SHARES-REDEEMED> (200,000)
<SHARES-REINVESTED> 321,417
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25,202
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 101,629
<AVERAGE-NET-ASSETS> 12,645,488
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .053
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.053)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .22
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
