Registration Nos. 33-56247
811-07235
================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. 1 /X/
Post-Effective Amendment No. _____ / /
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940/X/
Amendment No. __ / /
(Check appropriate box or boxes)
PRAIRIE INSTITUTIONAL FUNDS
(Exact Name of Registrant as Specified in Charter)
c/o The First National Bank of Chicago
Three First National Plaza
Chicago, Illinois 60670 60670
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (312)
732-4231
Bradford M. Markham, Esq.
c/o The First National Bank of Chicago
Three First National Plaza
Chicago, Illinois 60670
(Name and Address of Agent for Service)
copy to:
Lewis G. Cole, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
Approximate Date of Proposed Public Offering: As soon as
practicable
after this Registration Statement is declared effective.
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information *
4 General Description of Registrant 4, 21
5 Management of the Fund 11
5(a) Management's Discussion of Fund's *
Performance
6 Capital Stock and Other Securities 21
7 Purchase of Securities Being Offered 13
8 Redemption or Repurchase 15
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
10 Cover Page B-1
11 Table of Contents B-1
12 General Information and History *
13 Investment Objectives and Policies B-2
14 Management of the Fund B-11
15 Control Persons and Principal Holders
of Securities B-11
16 Investment Advisory and Other Services B-11
17 Brokerage Allocation B-18
Items in
Part B of
Form N-1A Caption Page
18 Capital Stock and Other Securities B-21
19 Purchase, Redemption and Pricing of
Securities Being Offered B-14
20 Tax Status *
21 Underwriters B-14
22 Calculations of Performance Data *
23 Financial Statements B-27
Items in
Part C of
Form N-1A
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under Common
Control with Registrant C-2
26 Number of Holders of Securities C-2
27 Indemnification C-2
28 Business and Other Connections of
Investment Adviser C-3
29 Principal Underwriters C-3
30 Location of Accounts and Records C-3
31 Management Services C-3
32 Undertakings C-4
- ---------
*Omitted since answer is negative or inapplicable.
PRAIRIE INSTITUTIONAL FUNDS
Cash Management Fund
Municipal Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash Management Fund
PROSPECTUS
The First National Bank of Chicago
Investment Adviser and Administrator
Concord Financial Group, Inc.
Distributor
Prospectus begins on page one.
PRAIRIE INSTITUTIONAL FUNDS
PROSPECTUS - November __, 1994
Prairie Institutional Funds (the "Trust") is an
open-end, management investment company, known as a series fund.
By this Prospectus, the Trust is offering Institutional and
Service shares of four separate diversified, money market series
(each, a "Fund"): Cash Management Fund, Municipal Cash
Management
Fund, Treasury Prime Cash Management Fund and U.S. Government
Securities Cash Management Fund. Each Fund's goal is to provide
investors with as high a level of current income as is consistent
with the preservation of capital and the maintenance of
liquidity,
and, in the case of the Municipal Cash Management Fund, exempt
from Federal income tax.
Each Fund is designed for institutional investors,
including banks, acting for themselves or in a fiduciary,
advisory, agency, custodial or similar capacity, public agencies
and municipalities. Fund shares may not be purchased directly by
individuals, although institutions may purchase shares for
accounts maintained by individuals. Such institutions have
agreed
to transmit copies of this Prospectus to each individual or
entity
for whose account the institution purchases Fund shares, to the
extent required by law.
Each Fund's shares are sold without a sales charge.
Investors can invest or reinvest in or redeem shares at any time
without charge or penalty imposed by the Fund.
Institutional shares and Service shares are identical,
except as to the services offered to and expenses borne by each
Class. Service shares bear certain costs pursuant to a Service
Plan adopted in accordance with Rule 12b-1 under the Investment
Company Act of 1940.
The First National Bank of Chicago (the "Manager")
serves as each Fund's investment adviser and administrator.
Concord Financial Group, Inc. (the "Distributor") serves
as each Fund's distributor.
An investment in a Fund is neither insured nor
guaranteed by the U.S. Government. There can be no assurance
that
each Fund will be able to maintain a stable net asset value of
$1.00 per share.
Mutual fund shares are not deposits or obligations of,
or guaranteed or endorsed by, any bank, and are not federally
insured by the Federal Deposit Insurance Corporation ("FDIC"),
the
Federal Reserve Board, or any other agency. Money market mutual
fund shares involve certain investment risks, including the
possible loss of principal.
______________________
This Prospectus sets forth concisely information about
the Trust and Funds that an investor should know before
investing.
It should be read and retained for future reference.
Part B (also known as the Statement of Additional
Information), dated November __, 1994, which may be revised from
time to time, provides a further discussion of certain areas in
this Prospectus and other matters which may be of interest to
some
investors. It has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. For a free
copy, write to the Trust at 125 West 55th Street, New York, New
York 10019, or call 1-800-_________.
________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
________________________________________________________________
Table of Contents
Annual Fund Operating Expenses. . . . . . . . . . . .
Description of the Funds. . . . . . . . . . . . . . .
Management of the Trust . . . . . . . . . . . . . . .
How to Buy Fund Shares. . . . . . . . . . . . . . . .
How to Redeem Fund Shares . . . . . . . . . . . . .
Service Plan. . . . . . . . . . . . . . . . . . . . .
Dividends, Distributions and Taxes. . . . . . . . . .
Yield Information . . . . . . . . . . . . . . . . . .
General Information . . . . . . . . . . . . . . . . .
Appendix. . . . . . . . . . . . . . . . . . . . . . .
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<TABLE>
<CAPTION>
Cash Management Municipal Cash
Series Management Series
Institutional Service Institutional Service
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Management Fees. . . . . . . .20% .20% .20% .20%
12b-1 Fees (distribution and
servicing) None .25% None .25%
Other Expenses .15% .15% .15% .15%
Total Fund Operating Expenses .35% .60% .35% .60%
Example:
An investor would pay
the following expenses on a
$1,000 investment, assuming
(1) 5% annual return and
(2) redemption at the end
of each time period:
Institutional Service Institutional Service
Shares Shares Shares Shares
1 Year. . . . . . . . . $ 4 $ 6 $ 4 $ 6
3 Years $10 $19 $10 $19
Treasury Prime Cash
Management Series U.S. Government
Securities Cash
Management Series
Institutional Service Institutional Service
Shares Shares Shares Shares
Management Fees. . . . . . . .20% .20% .20% .20%
12b-1 Fees
(distribution and servicing) None .25% None .25%
Other Expenses .15% .15% .15% .15%
Total Fund Operating Expenses .35% .60% .35% .60%
Example:
An investor would pay
the following expenses on a
$1,000 investment, assuming
(1) 5% annual return and
(2) redemption at the end
of each time period:
Institutional Service Institutional Service
Shares Shares Shares Shares
1 Year. . . . . . $4 $ 6 $ 4 $ 6
3 Years $10 $19 $10 $19
</TABLE>
The amounts listed in the examples should not be considered as
representative of future expenses and actual expenses may be
greater or less than those indicated. Moreover, while the
example assumes a 5% annual return, each Fund's actual
performance will vary and may result in an actual return greater
or less than 5%.
The purpose of the foregoing table is to assist investors in
understanding the various costs and expenses borne by a Fund,
and therefore indirectly by investors, the payment of which will
reduce investors' return on an annual basis. The Manager has
undertaken, as to each Fund, until such time as it gives
investors at least 90 days' notice to the contrary, that if, in
any fiscal year, certain expenses, including the investment
advisory and administration fees, exceed .35% and .60% of the
value of the average net assets of the Institutional shares and
Service shares, respectively, for the fiscal year, the Trust may
deduct from the payment to be made to the Manager under the
Investment Advisory or Administration Agreements, or the Manager
will bear, such excess expense. The information in the
foregoing table does not reflect any other fee waivers or
expense reimbursement arrangements that may be in effect.
Institutions effecting transactions in Fund shares may charge
their clients direct fees in connection with such transactions;
such fees are not reflected in the foregoing table. See
"Management of the Trust," "How to Buy Fund Shares" and "Service
Plan."
DESCRIPTION OF THE FUNDS
General
The Trust is a "series fund," which is a mutual fund
divided into separate portfolios. Each portfolio is treated as
a separate entity for certain matters under the Investment
Company Act of 1940, as amended (the "1940 Act"), and for other
purposes, and a shareholder of one portfolio is not deemed to be
a shareholder of any other portfolio. As described below, for
certain matters Trust shareholders vote together as a group; as
to others they vote separately by Fund.
By this Prospectus, two classes of shares of each Fund
are being offered--Institutional shares and Service shares (each
such class being referred to as a "Class"). The Classes are
identical, except that Service shares are subject to an annual
distribution and service fee at the rate of .25% of the value of
the average daily net assets of Service. The fee is payable to
the Trust's distributor for advertising, marketing and
distributing Service shares and for ongoing personal services
to the holders of Service shares relating to shareholder
accounts and services related to the maintenance of such
shareholder accounts pursuant to a Service Plan adopted in
accordance with Rule 12b-1 under the 1940 Act. The Trust's
distributor may make payments to certain financial institutions,
securities dealers and other industry professionals
(collectively, "Service Agents") in respect of these services.
See "Service Plan." The distribution and service fee paid by
the Service Class will cause such Class to have a higher expense
ratio and to pay lower dividends than the Institutional Class.
When used in this Prospectus and the Statement of
Additional Information, the terms "investor" and "shareholder"
refer to the institution purchasing Fund shares and do not refer
to any individual or entity for whose account the institution
may purchase Fund shares. Such institutions have agreed to
transmit copies of this Prospectus and all relevant Fund
materials, including proxy materials, to each individual or
entity for whose account the institution purchases Fund shares,
to the extent required by law.
Investment Objective
Each Fund's goal is to provide investors with as high
a level of current income as is consistent with the preservation
of capital and the maintenance of liquidity, and, in the case of
the Municipal Cash Management Fund, exempt from Federal income
tax. Each Fund's investment objective cannot be changed without
approval by the holders of a majority (as defined in the 1940
Act) of such Fund's outstanding voting shares. There can be no
assurance that the Fund's investment objective will be achieved.
Securities in which the Funds invest may not earn as high a
level of current income as long-term or lower quality securities
which generally have less liquidity, greater market risk and
more fluctuation in market value.
Management Policies
Each Fund seeks to maintain a net asset value of $1.00
per share for purchases and redemptions. To do so, the Trust
uses the amortized cost method of valuing each Fund's securities
pursuant to Rule 2a-7 under the 1940 Act, certain requirements
of which are summarized below.
In accordance with Rule 2a-7, each Fund is required to
maintain a dollar-weighted average portfolio maturity of 90 days
or less, purchase only instruments having remaining maturities
of 13 months or less and invest only in U.S. dollar denominated
securities determined in accordance with procedures established
by the Board of Trustees to present minimal credit risks and, in
the case of the Cash Management Fund and Municipal Cash
Management Fund, which are rated in one of the two highest
rating categories for debt obligations by at least two
nationally recognized statistical rating organizations (or one
rating organization if the instrument was rated by only one such
organization) or, if unrated, are of comparable quality as
determined in accordance with procedures established by the
Board of Trustees. The Cash Management Fund and Municipal Cash
Management Fund will purchase only instruments so rated in the
highest rating category or, if unrated, of comparable quality as
determined in accordance with procedures established by the
Board of Trustees. The nationally recognized statistical rating
organizations currently rating instruments of the type the Cash
Management Fund and Municipal Cash Management Fund may purchase
are Moody's Investors Service, Inc., ("Moody's"), Standard &
Poor's Corporation ("S&P"), Duff & Phelps Creditng Rating Co
., Fitch Investors Service, Inc. ("Fitch"), IBCA Limited and
IBCA Inc., and Thomson BankWatch, Inc. and their rating criteria
are described in the Appendix to the Statement of Additional
Information. For further information regarding the amortized
cost method of valuing securities, see "Determination of Net
Asset Value" in the Statement of Additional Information. There
can be no assurance that each Fund will be able to maintain a
stable net asset value of $1.00 per share.
Cash Management Fund invests in short-term money
market obligations, including securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities,
certificates of deposit, time deposits, bankers' acceptances and
other short-term obligations issued by domestic banks, foreign
branches of domestic banks, foreign subsidiaries of domestic
banks, domestic and foreign branches of foreign banks and thrift
institutions, repurchase agreements, and high quality domestic
and foreign commercial paper and other short-term corporate
obligations, including those with floating or variable rates of
interest. See "Appendix--Portfolio Securities." In addition,
the Fund is permitted to lend portfolio securities to the extent
described under "Appendix--Investment Practices." During normal
market conditions, at least 25% of the Fund's total assets will
be invested in bank obligations.
The Fund will not invest more than 5% of its total
assets in the securities (including the securities
collateralizing a repurchase agreement) of, or subject to puts
issued by, a single issuer, except that (i) the Fund may invest
more than 5% of its total assets in a single issuer for a period
of up to three business days in certain limited circumstances,
(ii) the Fund may invest in obligations issued or guaranteed by
the U.S. Government without any such limitation, and (iii) the
limitation with respect to puts does not apply to unconditional
puts if no more than 10% of the Fund's total assets is invested
in securities issued or guaranteed by the issuer of the
unconditional put. As to each security, these percentages are
measured at the time the Fund purchases the security.
Municipal Cash Management Fund invests at least 80%
of the value of its net assets (except when maintaining a
temporary defensive position) in Municipal Obligations.
Municipal Obligations are debt obligations issued by states,
territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies
and instrumentalities, or multi-state agencies or authorities,
the interest from which is, in the opinion of bond counsel to
the issuer, exempt from Federal income tax. See "Appendix--
Portfolio Securities."
From time to time, the Fund may invest more than 25%
of the value of its total assets in industrial development bonds
which, although issued by industrial development authorities,
may be backed only by the assets and revenues of the
non-governmental users. Interest on Municipal Obligations
(including certain industrial development bonds) which are
specified private activity bonds, as defined in the Internal
Revenue Code of 1986, as amended (the "Code"), issued after
August 7, 1986, while exempt from Federal income tax, is a
preference item for the purpose of the alternative minimum tax.
Where a regulated investment company receives such interest, a
proportionate share of any exempt-interest dividend paid by the
investment company may be treated as such a preference item to
the shareholder. The Fund may invest without limitation in such
Municipal Obligations if the Manager determines that their
purchase is consistent with the Fund's investment objective.
See "Risk Factors--Fixed-Income Securities" below.
From time to time, on a temporary basis other than for
temporary defensive purposes (but not to exceed 20% of the value
of the Fund's net assets) or for temporary defensive purposes,
the Fund may invest in taxable money market instruments of the
type in which the Cash Management Fund may invest. Dividends
paid by the Fund that are attributable to income earned by it
from these securities will be taxable to investors. See
"Dividends, Distributions and Taxes." If the Fund purchases
taxable money market instruments the Trust will value them using
the amortized cost method and comply with the provisions of Rule
2a-7 relating to purchases of taxable instruments. Under normal
market conditions, the Trust anticipates that not more than 5%
of the value of the Fund's total assets will be invested in any
one category of these securities. See "Appendix--Portfolio
Securities."
Treasury Prime Cash Management Fund invests only in
securities issued or guaranteed as to principal or interest by
the U.S. Government. These securities include U.S. Treasury
securities, which differ in their interest rates, maturities and
times of issuance. See "Appendix--Portfolio Securities." The
Fund does not invest in repurchase agreements, securities issued
by agencies or instrumentalities of the Federal government that
are not guaranteed by the U.S. Government or any other type of
money market instrument or security.
U.S. Government Securities Cash Management Fund
invests only in short-term securities issued or guaranteed as to
principal or interest by the U.S. Government, its agencies or
instrumentalities and may enter into repurchase agreements. See
"Appendix--Portfolio Securities." The Fund also may lend
securities from its portfolio as described under "Appendix--
Investment Practices."
Certain Fundamental Policies
Each Fund may (i) invest up to 25% of the value of its
total assets in the securities of issuers in a single industry,
provided there is no limitation on the purchase of obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or, in the case of the Municipal Cash
Management Fund, Municipal Obligations; and (ii) pledge,
hypothecate, mortgage or otherwise encumber its assets, but only
to secure permitted borrowings (this policy, however, is not
fundamental in the case of the Municipal Cash Management Fund
and Treasury Prime Cash Management Fund). In addition, (i) each
of the Municipal Cash Management Fund and Treasury Prime Cash
Management Fund may borrow money to the extent permitted under
the 1940 Act; (ii) each of the Cash Management Fund and U.S.
Government Securities Cash Management Fund may borrow money from
banks, but only for temporary or emergency (not leveraging)
purposes, in an amount up to 15% of the value of the Fund's
total assets (including the amount borrowed) valued at the
lesser of cost or market, less liabilities (not including the
amount borrowed) at the time the borrowing is made. While
borrowings exceed 5% of the value of the Fund's total assets,
the Fund will not make any additional investments; (iii) each of
the Cash Management Fund and Municipal Cash Management Fund may
invest up to 5% of its total assets in the obligations of any
one issuer, except that up to 25% of the value of the Fund's
total assets may be invested (subject to the provisions of Rule
2a-7), and obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities may be purchased,
without regard to any such limitation; and (iv) the Cash
Management Fund will invest, except when it has adopted a
temporary defensive position, at least 25% of its total assets
in securities issued by banks, including foreign banks and
branches. This paragraph describes, except as noted,
fundamental policies that cannot be changed as to a Fund without
approval by the holders of a majority (as defined in the 1940
Act) of such Fund's outstanding voting shares. See "Investment
Objective and Management Policies--Investment Restrictions" in
the Statement of Additional Information.
Certain Additional Non-Fundamental Policy
Each Fund may invest up to 10% of the value of its net
assets in illiquid securities. See "Appendix--Investment
Practices--Illiquid Securities" and "Investment Objective and
Management Policies--Investment Restrictions" in the Statement
of Additional Information.
Risk Factors
Foreign Securities--(Cash Management Fund) Since the Cash
Management Fund's portfolio may contain securities issued by
foreign branches of domestic and foreign banks, domestic and
foreign branches of foreign banks and thrift institutions, and
commercial paper issued by foreign issuers, the Fund may be
subject to additional investment risks with respect to such
securities that are different in some respects from those
incurred by a fund which invests only in debt obligations of
U.S. domestic issuers, although such obligations may be higher
yielding when compared to the securities of U.S. domestic
issuers. Such risks include possible future political and
economic developments, the possible imposition of foreign
withholding taxes on interest income payable on the securities,
the possible establishment of exchange controls or the adoption
of other foreign governmental restrictions which might adversely
affect the payment of principal and interest on these securities
and the possible seizure or nationalization of foreign deposits.
Fixed-Income Securities--(Municipal Cash Management Fund)
Certain provisions in the Code relating to the issuance of
Municipal Obligations may reduce the volume of Municipal
Obligations qualifying for Federal tax exemption. One effect of
these provisions could be to increase the cost of the Municipal
Obligations available for purchase by the Fund and thus reduce
the available yield. Shareholders of the Municipal Cash
Management Fund should consult their tax advisers concerning the
effect of these provisions on an investment in the Fund.
Proposals that may restrict or eliminate the income tax
exemption for interest on Municipal Obligations may be
introduced in the future. If any such proposal were enacted
that would reduce the availability of Municipal Obligations for
investment by the Fund so as to adversely affect the Fund's
shareholders, the Trust would reevaluate the Fund's investment
objective and policies and submit possible changes in the Fund's
structure to shareholders for their consideration. If
legislation were enacted that would treat a type of Municipal
Obligation as taxable, the Trust would treat such security as a
permissible taxable investment within the applicable limits set
forth herein.
The Municipal Cash Management Fund may invest more
than 25% of the value of its total assets in Municipal
Obligations which are related in such a way that an economic,
business or political development or change affecting one such
security also would affect the other securities; for example,
securities the interest upon which is paid from revenues of
similar types of projects, or securities of issuers that are
located in the same state. As a result, the Fund may be subject
to greater risk as compared to a fund that does not follow this
practice.
Certain municipal lease/purchase obligations in which
the Municipal Cash Management Fund may invest may contain "non-
appropriation" clauses which provide that the municipality has
no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis.
Although "non-appropriation" lease/purchase obligations are
secured by the leased property, disposition of the leased
property in the event of foreclosure might prove difficult. In
evaluating the credit quality of a municipal lease/purchase
obligation that is unrated, the Manager will consider, on an
ongoing basis, a number of factors including the likelihood that
the issuing municipality will discontinue appropriating funding
for the leased property.
Other Investment Considerations--Each Fund will attempt to
increase yields by trading to take advantage of short-term
market variations. This policy is expected to result in high
portfolio turnover but should not adversely affect the Funds
since each Fund usually will not pay brokerage commissions on
purchases of short-term debt obligations, including U.S.
Government securities. The value of the securities held by each
Fund will vary inversely to changes in prevailing interest
rates. Thus, if interest rates have increased from the time a
security was purchased, such security, if sold, might be sold at
a price less than its cost. Similarly, if interest rates have
declined from the time a security was purchased, such security,
if sold, might be sold at a price greater than its purchase
cost. In either instance, if the security is held to maturity,
no gain or loss will be realized.
Each Fund may purchase securities on a when-issued
basis, which means that the price is fixed at the time of
commitment, but delivery and payment ordinarily take place a
number of days after the date of the commitment to purchase.
The Fund will make commitments to purchase such securities only
with the intention of actually acquiring the securities, but the
Fund may sell these securities before the settlement date if it
is deemed advisable, although any gain realized on such sale
would be taxable. The Fund will not accrue income in respect of
a when-issued security prior to its stated delivery date. No
additional when-issued commitments will be made by the Municipal
Cash Management Fund if more than 20% of the value of such
Fund's net assets would be so committed.
Securities purchased on a when-issued basis and
certain other securities held in the Fund's portfolio are
subject to changes in value (both generally changing in the same
way, i.e., appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes,
real or anticipated, in the level of interest rates. Securities
purchased on a when-issued basis may expose the Fund to risk
because they may experience such fluctuations prior to their
actual delivery. Purchasing securities on a when-issued basis
can involve the additional risk that the yield available in the
market when the delivery takes place actually may be higher than
that obtained in the transaction itself. A segregated account
of the Fund consisting of cash, cash equivalents or U.S.
Government securities or other high quality liquid debt
securities at least equal at all times to the amount of the
when-issued commitments will be established and maintained at
the Trust's custodian bank. Purchasing securities on a when-
issued basis when the Fund is fully or almost fully invested may
result in greater potential fluctuation in the value of the
Fund's net assets and its net asset value per share.
Investment decisions for each Fund are made
independently from those of other investment companies or
investment advisory accounts that may be advised by the Manager.
However, if such other investment companies or managed accounts
are prepared to invest in, or desire to dispose of, securities
of the type in which a Fund may invest at the same time as such
Fund, available investments or opportunities for sales will be
allocated equitably to each of them. In some cases, this
procedure may adversely affect the size of the position obtained
for or disposed of by the Fund or the price paid or received by
the Fund.
MANAGEMENT OF THE TRUST
Investment Adviser and Administrator
The First National Bank of Chicago, located at Three
First National Plaza, Chicago, Illinois 60670, is the Fund's
investment adviser and administrator. The Manager, a wholly-
owned subsidiary of First Chicago Corporation, a registered bank
holding company, a commercial bank offering a wide range of
banking and investment services to customers throughout the
United States and around the world. As of June 30, 1994, the
Manager was one of the largest commercial banks in the United
States and the largest in the mid-western United States in terms
of assets ($41.8 billion) and deposits ($23.8 billion). As of
June 30, 1994, the Manager provided investment management
services to portfolios containing approximately $9.6 billion in
assets. The Manager serves as investment adviser for the Trust
pursuant to an Investment Advisory Agreement dated as of
November 18, 1994. Under the Investment Advisory Agreement,
the Manager provides the day-to-day management of each
Fund's investments, subject to the overall authority of the
Trust's Board of Trustees and in conformity with Massachusetts
law and the stated policies of the Trust. The Manager is
responsible for making investment decisions for the Trust,
placing purchase and sale orders (which may be allocated to
various dealers based on their sales of Fund shares) and
providing research, statistical analysis and continuous
supervision of each Fund's investment portfolio. The Manager
has advised the Trust that in making its investment decisions
the Manager does not obtain or use material inside information
in the possession of any other division or department of the
Manager or in the possession of any affiliate of the Manager.
Under the terms of the Investment Advisory Agreement
with the Trust, the Trust has agreed to pay the Manager a
monthly advisory fee at the annual rate of .20 of 1% of the
value of each Fund's average daily net assets.
The Manager serves as the Trust's administrator
pursuant to an Administration Agreement with the Trust. Under
the Administration Agreement, the Manager generally assists in
all aspects of the Trust's operations, other than providing
investment advice, subject to the overall authority of the
Trust's Board in accordance with Massachusetts law.
Under the terms of the Administration Agreement, the
Trust has agreed to pay the Manager a monthly administration fee
at the annual rate of .15 of 1% of the value of each Fund's
average daily net assets.
The Manager has engaged Concord Holding
Corporation, located at 125 West 55th Street, New York, New York
10019 (the "Sub-Administrator"), to assist it in providing
certain administrative services for the Trust pursuant to a
Master Sub-Administration Agreement between the Manager and the
Sub-Administrator. The Sub-Administrator currently provides
administrative services or sub-administrative services to other
investment companies with over $33 billion in assets. The
Manager, from its own funds, will pay the Sub-Administrator for
the Sub-Administrator's services.
Glass-Steagall Act
The Glass-Steagall Act and other applicable laws
prohibit Federally chartered or supervised banks from engaging
in certain aspects of the business of issuing, underwriting,
selling and/or distributing securities, although banks such as
the Manager are permitted to purchase and sell securities upon
the order and of the account of their customers. The Manager
has advised the Trust of its belief that, based on existing
judicial and regulatory interpretations of the Glass-Steagall
Act, it may perform the services for the Trust contemplated by
the Management Agreement and this Prospectus without violating
the Glass-Steagall Act or other applicable banking laws or
regulations. The Manager has pointed out, however, that future
changes in either Federal or state statutes and regulations
relating to permissible activities of banks and their
subsidiaries and affiliates, as well as future judicial or
administrative decisions or interpretations of present and
future statutes and regulations, could prevent the Manager from
continuing to perform such services for the Trust. If the
Manager were to be prevented from providing such services to the
Trust, the Trust's Board of Trustees would review the Trust's
relationship with the Manager and consider taking all actions
necessary in the circumstances.
Distributor
Concord Financial Group, Inc. (the "Distributor"),
located at 125 West 55th Street, New York, New York 10019,
serves as the Trust's principal underwriter and distributor of
the Funds' shares. The Distributor, a wholly-owned subsidiary
of the Sub-Administrator, was organized to distribute shares of
mutual funds to institutional and retail investors. The
Distributor distributes the shares of other investment companies
with over $21 billion in assets.
Transfer and Dividend Disbursing Agent and Custodian
Primary Funds Service Corp., One Post Office Square,
Boston, Massachusetts 02109, is the Trust's Transfer and
Dividend Disbursing Agent (the "Transfer Agent"). The Transfer
Agent is jointly owned by a subsidiary of the Sub-Administrator
and Putnam Investments, Inc. The Bank of New York, 110
Washington Street, New York, New York 10286, is the Trust's
Custodian.
Expenses
All expenses incurred in the operation of the Trust
are borne by the Trust, except to the extent specifically
assumed by the Manager. The expenses borne by the Trust
include: organizational costs, taxes, interest, brokerage fees
and commissions, if any, fees of Trustees who are not officers,
directors, employees or holders of 5% or more of the outstanding
voting securities of the Manager, Securities and Exchange
Commission fees, state Blue Sky qualification fees, advisory
fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association
fees, outside auditing and legal expenses, costs of maintaining
the Trust's existence, costs of independent pricing services,
costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of
shareholders' reports and meetings, costs of preparing and
printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing
shareholders, and any extraordinary expenses. In addition,
Service shares are subject to an annual distribution and service
fee pursuant to a plan adopted in accordance with Rule 12b-1
under the 1940 Act. See "Service Plan." Expenses attributable
to a particular Fund or Class are charged against the assets of
that Fund or Class, respectively; other expenses of the Trust
are allocated among the Funds on the basis determined by the
Board of Trustees, including, but not limited to,
proportionately in relation to the net assets of each Fund.
The Manager has undertaken, as to each Fund, until
such time as it gives investors at least 90 days' notice to the
contrary, that if, in any fiscal year the aggregate expenses of
the Fund, exclusive of taxes, brokerage, interest on borrowings
and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses, but including
the investment advisory and administration fees, exceed .35%
and .60 % of the value of the average net assets of the
Institutional Class and Service Class, respectively, for the
fiscal year, the Trust may deduct from the payment to be made to
the Manager under the Investment Advisory or Administration
Agreements, or the Manager will bear, such excess expense.
HOW TO BUY FUND SHARES
Each Fund is designed for institutional investors,
including banks (such as the Manager), acting for themselves or
in a fiduciary, advisory, agency, custodial or similar capacity,
public agencies and municipalities. Fund shares may not be
purchased directly by individuals, although institutions may
purchase shares for accounts maintained by individuals.
Generally, each investor will be required to open a single
master account with the Fund for all purposes. In certain
cases, the Trust may request investors to maintain separate
master accounts for shares held by the investor (i) for its own
account, for the account of other institutions and for accounts
for which the institution acts as a fiduciary, and (ii) for
accounts for which the investor acts in some other capacity. An
institution may arrange with the Transfer Agent for sub-
accounting services and will be charged directly for the cost of
such services. Certain accounts may be eligible for an
automatic investment privilege, commonly called a "sweep," under
which amounts in excess of a certain minimum held in those
accounts will be invested automatically in shares at pre-
determined intervals. Each investor desiring to use this
privilege should consult its bank for details.
The minimum initial investment is $1,000,000 or any
lesser amount if, in the Distributor's opinion, the investor has
adequate intent and availability of funds to reach a future
level of investment of $1,000,000. There is no minimum for
subsequent purchases. The initial investment must be
accompanied by the Account Application. The Trust does not
impose any sales charges in connection with purchases of Fund
shares, although Service Agents and other institutions may
charge their clients fees in connection with purchases for the
accounts of their clients. These fees would be in addition to
any amounts which might be received under the Service Plan.
Service Agents may receive different levels of compensation for
selling different classes of shares. Each Service Agent has
agreed to transmit to its clients a schedule of such fees. The
Fund does not issue share certificates. The Trust reserves the
right to reject any purchase order. It is not recommended that
the Municipal Cash Management Fund be used as a vehicle for
Keogh, IRA or other qualified retirement plans.
Fund shares may be purchased by wire, by telephone or
through compatible computer facilities. All payments should be
made in U.S. dollars and, to avoid fees and delays, should be
drawn only on U.S. banks. Investors may telephone orders for
purchases of Fund shares by calling ____________. For
instructions concerning purchases and to determine whether their
computer facilities are compatible with the Trust's, investors
should call _________________________.
Fund shares are sold on a continuous basis at the net
asset value per share next determined after an order in proper
form and Federal Funds (monies of member banks in the Federal
Reserve System which are held on deposit at a Federal Reserve
Bank) are received by the Transfer Agent. If an investor does
not remit Federal Funds, its payment must be converted into
Federal Funds. This usually occurs within one business day of
receipt of a bank wire and within two business days of receipt
of a check drawn on a member bank of the Federal Reserve System.
Checks drawn on banks which are not members of the Federal
Reserve System may take considerably longer to convert into
Federal Funds. Prior to receipt of Federal Funds, the
investor's money will not be invested.
Each Fund's net asset value per share is determined as
of 2:00 p.m., Central Standard time, on each Fund business day
(which, as used herein, shall included each day that the New
York Stock Exchange is open for business, except Martin Luther
King, Jr. Day, Columbus Day and Veterans Day). Net asset value
per share of each Class is computed by dividing the value of the
Fund's net assets represented by such Class (i.e., the value of
its assets less liabilities) by the total number of shares of
such Class outstanding. See "Determination of Net Asset Value"
in the Statement of Additional Information.
Investors whose payments are received in or converted
into Federal Funds by 2:00 p.m., Central Standard time, by the
Transfer Agent will receive the dividend declared that day.
Investors whose payments are received in or converted into
Federal Funds after 2:00 p.m., Central Standard time, by the
Transfer Agent will begin to accrue dividends on the following
Fund business day.
Federal Regulations require that an investor provide a
certified Taxpayer Identification Number ("TIN") upon opening or
reopening an account. See "Dividends, Distributions and Taxes"
and the Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the
Trust could subject an investor to a $50 penalty imposed by the
Internal Revenue Service (the "IRS").
HOW TO REDEEM FUND SHARES
An investor may redeem all or any portion of the
shares in the investor's account on any Fund business day at
the net asset value next determined after a redemption
request in proper form is received by the Transfer Agent .
Therefore, redemptions will be effected on the same day the
redemption order is received only if such order is received
prior to 2:00 p.m., Central Standard time on any Fund business
day. Shares that are redeemed earn dividends up to and
including the day prior to the day the redemption is effected.
The proceeds of a redemption will be paid in Federal Funds
ordinarily on the Fund business day the redemption is effected,
but in any event within seven days. Payment for redemption
requests received before 2:00 p.m., Central Standard time,
ordinarily is made in Federal Funds wired to the redeeming
shareholder on the same Fund business day. Payment for
redeemed shares for which a redemption order is received after
such time on a Fund business day is made in Federal Funds wired
to the redeeming shareholder on the next Fund business day
following redemption. To allow the Manager to manage the Funds'
portfolios more effectively, investors are urged to make
redemption requests as early in the day as possible. In making
redemption requests, the names of the registered shareholders
and their account numbers must be supplied. Although each Fund
generally retains the right to pay the redemption price of its
shares in kind with securities (instead of cash), the Trust has
filed an election under Rule 18f-1 under the 1940 Act committing
to pay in cash all redemptions by a shareholder of record up to
the amounts specified in such rule (in most cases approximately
$250,000).
A wire redemption may be requested by telephone or
wire to ______________. For telephone redemptions, please call
______________.
An investor may redeem shares by telephone if the
investor has checked the appropriate box on the Account
Application . By selecting a telephone redemption privilege,
an investor authorizes the Transfer Agent to act on telephone
instructions from any person representing himself or herself to
be an authorized representative of the investor and reasonably
believed by the Transfer Agent to be genuine. The Trust will
require the Transfer Agent to employ reasonable procedures, such
as requiring a form of identification, to confirm that
instructions are genuine and, if it does not follow such
procedures, the Trust or the Transfer Agent may be liable for
any losses due to unauthorized or fraudulent instructions.
Neither the Trust nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be
genuine.
The Trust makes available to institutions the
ability to redeem shares through compatible computer facilities.
Investors desiring to redeem shares in this manner should call
__________________ to determine whether their computer
facilities are compatible and to receive instructions for
redeeming shares in this manner.
The right of any investor to receive payments with
respect to any redemption may be suspended or the payment of the
redemption proceeds postponed during any period in which the New
York Stock Exchange is closed (other than weekends or holidays)
or trading on such Exchange is restricted or, to the extent
otherwise permitted by the 1940 Act, if an emergency exists.
SERVICE PLAN
(Service Shares Only)
Service shares are subject to a Service Plan adopted
pursuant to Rule 12b-1 under the 1940 Act. Under the Service
Plan, each Fund pays the Distributor for advertising, marketing
and distributing the Fund's Service shares and for the provision
of certain services to the holders of Service shares a fee at
the annual rate of .25 of 1% of the value of the average daily
net assets of the Service Class. The services provided may
include personal services relating to shareholder accounts, such
as answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to
the maintenance of such shareholder accounts. The fee payable
for such services is intended to be a "service fee" as defined
in Article III, Section 26 of the NASD Rules of Fair Practice.
Under the Service Plan, the Distributor may make payments to
Service Agents in respect of these services. The Manager and
its affiliates may act as Service Agents and receive fees under
the Service Plan. The Distributor determines the amounts to be
paid to Service Agents. Each Service Agent is required to
disclose to its clients any compensation payable to it by the
Fund pursuant to the Service Plan and any other compensation
payable by their clients in connection with the investment of
their assets in Fund shares. From time to time, the Distributor
may defer or waive receipt of fees under the Service Plan while
retaining the ability to be paid by the Fund under the Service
Plan thereafter. The fees payable to the Distributor under the
Service Plan for advertising, marketing and distributing Service
shares and for payments to Service Agents are payable without
regard to actual expenses incurred.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund ordinarily declares dividends from net
investment income on each Fund business day. Fund shares
begin earning income dividends on the day the purchase order is
effective. Dividends usually are paid on the last calendar day
of each month, and are automatically reinvested in additional
shares of the Fund from which they were paid at net asset value
or, at the investor's option, paid in cash. Each Fund's
earnings for Saturdays, Sundays and holidays are declared as
dividends on the preceding business day. If an investor redeems
all shares in its account at any time during the month, all
dividends to which the investor is entitled will be paid along
with the proceeds of the redemption. Distributions from net
realized securities gains, if any, generally are declared and
paid once a year, but a Fund may make distributions on a more
frequent basis to comply with the distribution requirements of
the Code, in all events in a manner consistent with the
provisions of the 1940 Act. No Fund will make distributions
from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired.
Investors may choose whether to receive distributions in cash or
to reinvest in additional shares of the Fund from which they
were paid at net asset value. All expenses are accrued daily
and deducted before declaration of dividends to investors.
Dividends paid by each Class will be calculated at the same time
and in the same manner and will be of the same amount, except
that the expenses attributable solely to the Institutional Class
or Service Class will be borne exclusively by such Class.
Service shares will receive lower per share dividends than
Institutional shares because of the higher expenses borne by the
Service Class. See "Annual Fund Operating Expenses."
Dividends paid by the Cash Management, Treasury Prime
Cash Management and U.S. Government Securities Cash Management
Funds derived from net investment income and dividends paid by
the Municipal Cash Management Fund derived from taxable
investments, together with distributions from any net realized
short-term securities gains and all or a portion of any gain
realized from the sale or other disposition of certain market
discount bonds, will be taxable to U.S. investors as ordinary
income whether or not reinvested in additional Fund shares.
Distributions from net realized long-term securities gains, if
any, will be taxable as long-term capital gains for Federal
income tax purposes if the beneficial holder of Fund shares is a
citizen or resident of the United States, regardless of how long
investors have held shares and whether such distributions are
received in cash or reinvested in additional shares.
Except for dividends from taxable investments, the
Trust anticipates that substantially all dividends paid by the
Municipal Cash Management Fund will not be subject to Federal
income tax. Dividends and distributions paid by the Fund may be
subject to certain state and local taxes. Although all or a
substantial portion of the dividends paid by the Municipal Cash
Management Fund may be excluded by shareholders of the Fund from
their gross income for Federal income tax purposes, the Fund may
purchase specified private activity bonds, the interest from
which may be (i) a preference item for purposes of the
alternative minimum tax, (ii) a component of the "adjusted
current earnings" preference item for purposes of the corporate
alternative minimum tax as well as a component in computing the
corporate environmental tax or (iii) a factor in determining the
extent to which the Social Security benefits of a beneficial
holder of the Fund's shares are taxable. If the Fund purchases
such securities, the portion of its dividends related thereto
will not necessarily be tax exempt to a beneficial holder of the
Fund's shares who is subject to the alternative minimum tax
and/or tax on Social Security benefits and may cause such
investor to be subject to such taxes.
Dividends and distributions attributable to interest
from direct obligations of the United States and paid by the
Treasury Prime Cash Management Fund currently are not subject to
state personal income tax. The Trust intends to provide
shareholders of the Treasury Prime Cash Management Fund with a
statement which sets forth the percentage of dividends and
distributions paid by the Fund that is attributable to interest
income from direct obligations of the United States.
Dividends paid by a Fund derived from net investment
income, together with distributions from net realized short-term
securities gains and all or a portion of any gain realized from
the sale or other disposition of certain market discount bonds,
paid by such Fund to a foreign investor who is the beneficial
owner of such Fund's shares generally are subject to U.S.
nonresident withholding taxes at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in
a tax treaty. Distributions from net realized long-term
securities gains paid by the Fund to such foreign investor
generally will not be subject to U.S. nonresident withholding
tax. However, such distributions may be subject to backup
withholding, as described below, unless the foreign investor
certifies his non-U.S. residency status.
Federal regulations generally require the Trust to
withhold ("backup withholding") and remit to the U.S. Treasury
31% of dividends and distributions from net realized securities
gains paid to a shareholder if such shareholder fails to certify
either that the TIN furnished in connection with opening an
account is correct, or that such shareholder has not received
notice from the IRS of being subject to backup withholding as a
result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore,
the IRS may notify the Trust to institute backup withholding if
the IRS determines a shareholder's TIN is incorrect or if a
shareholder has failed to properly report taxable dividend and
interest income on a Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any
tax withheld as a result of backup withholding does not
constitute an additional tax imposed on the record owner of the
account, and may be claimed as a credit on the record owner's
Federal income tax return.
Notice as to the tax status of dividends and
distributions will be mailed to investors annually. Each
investor also will receive periodic summaries of its account
which will include information as to dividends and distributions
from securities gains, if any, paid during the year. For the
Municipal Cash Management Fund, these statements will set forth
the dollar amount of income exempt from Federal tax and the
dollar amount, if any, subject to Federal tax. These dollar
amounts will vary depending on the size and length of time of
the investor's investment in the Municipal Cash Management Fund.
If the Municipal Cash Management Fund pays dividends derived
from taxable income, it intends to designate as taxable the same
percentage of the day's dividend as the actual taxable income
earned on that day bears to total income earned on that day.
Thus, the percentage of the dividend designated as taxable, if
any, may vary from day to day. No dividend will qualify for the
dividends received deduction allowable to certain U.S.
corporations.
It is expected that each Fund will qualify as a
"regulated investment company" under the Code so long as such
qualification is in the best interests of its shareholders.
Qualification as a regulated investment company relieves the
Fund of any liability for Federal income tax to the extent its
earnings are distributed in accordance with applicable
provisions of the Code. Each Fund is subject to a non-
deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable income and capital gains, if
any.
Each investor and beneficial shareholder should
consult its tax adviser regarding questions as to Federal, state
or local taxes.
YIELD INFORMATION
From time to time, each Fund will advertise its yield
and effective yield. Both yield figures are based on historical
earnings and are not intended to indicate future performance.
It can be expected that these yields will fluctuate substantial-
ly. The yield of a Fund refers to the income generated by an
investment in the Fund over a seven-day period (which period
will be stated in the advertisement). This income is then
annualized. That is, the amount of income generated by the
investment during that week is assumed to be generated each week
over a 52-week period and is shown as a percentage of the
investment. The effective yield is calculated similarly, but,
when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The effective yield will be
slightly higher than the yield because of the compounding effect
of this assumed reinvestment. Each Fund's yield and effective
yield may reflect absorbed expenses pursuant to any undertaking
that may be in effect. See "Management of the Trust." Both
yield figures also take into account any applicable distribution
and service fees. As a result, at any given time, the
performance of the Service Class should be expected to be lower
than that of the Institutional Class. See "Service Plan."
Tax equivalent yield for the Municipal Cash Management
Fund is calculated by determining the pre-tax yield which, after
being taxed at a stated rate, would be equivalent to a stated
yield or effective yield calculated as described above.
Yield information is useful in reviewing a Fund's per-
formance, but because yields will fluctuate, under certain
conditions such information may not provide a basis for
comparison with domestic bank deposits, other investments which
pay a fixed yield for a stated period of time, or other
investment companies which may use a different method of
computing yield.
Comparative performance information may be used from
time to time in advertising or marketing Fund shares, including
data from Lipper Analytical Services, Inc., Bank Rate Monitor*,
N. Palm Beach, Fla. 33408, IBC/Donoghue's Money Fund Report and
other industry publications.
GENERAL INFORMATION
The Trust was organized as an unincorporated business
trust under the laws of the Commonwealth of Massachusetts
pursuant to an Agreement and Declaration of Trust (the "Trust
Agreement") dated October 19, 1994, and has not engaged in
active business to the date of this Prospectus. The Trust is
authorized to issue an unlimited number of shares of beneficial
interest, par value $.001 per share. Each Fund's shares are
classified into two classes. Each share has one vote and
shareholders will vote in the aggregate and not by class except
as otherwise required by law or with respect to any matter which
affects only one class. Holders of Service shares only,
however, will be entitled to vote on matters submitted to
shareholders pertaining to the Service Plan. Investors have
agreed to vote Fund shares for which they are the record owners
according to voting instructions received from the beneficial
holder of such shares.
To date, the Board of Trustees has authorized the
creation of four separate portfolios of shares. All
consideration received by the Trust for shares of one of the
portfolios and all assets in which such consideration is
invested will belong to that portfolio (subject only to the
rights of creditors of the Trust) and will be subject to the
liabilities related thereto. The income attributable to, and
the expenses of, one portfolio (and as to classes within a
portfolio) are treated separately from those of the other
portfolios (and classes). The Trust has the ability to create,
from time to time, new portfolios without shareholder approval.
Rule 18f-2 under the 1940 Act provides that any matter
required to be submitted under the provisions of the 1940 Act or
applicable state law or otherwise to the holders of the
outstanding voting securities of an investment company, such as
the Trust, will not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the
outstanding shares of each Fund affected by such matter. Rule
18f-2 further provides that a Fund shall be deemed to be
affected by a matter unless it is clear that the interests of
such Fund in the matter are identical or that the matter does
not affect any interest of such Fund. However, the Rule exempts
the selection of independent accountants and the election of
Trustees from the separate voting requirements of the Rule.
Under Massachusetts law, shareholders could, under
certain circumstances, be held liable for the obligations of the
Trust. However, the Trust Agreement 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 a
Trustee. The Trust Agreement provides for indemnification from
the Trust's property for all losses and expenses of any
shareholder held personally liable for the obligations of the
Trust. Thus, the risk of a shareholder incurring financial loss
on account of shareholder liability is limited to circumstances
in which the Trust itself would be unable to meet its
obligations, a possibility which management believes is remote.
Upon payment of any liability incurred by the Trust, the
shareholder paying such liability will be entitled to
reimbursement from the general assets of the Trust. The
Trustees intend to conduct the operations of the Trust in such a
way so as to avoid, as far as possible, ultimate liability of
the shareholders for liabilities of the Trust. As described
under "Management of the Trust" in the Statement of Additional
Information, the Trust ordinarily will not hold shareholder
meetings; however, shareholders under certain circumstances may
have the right to call a meeting of shareholders for the purpose
of voting to remove Trustees.
The Transfer Agent maintains a record of each
investor's ownership and sends confirmations and statements of
account.
Investor inquiries may be made by writing to the Trust
at the address shown on the front cover or by calling the
telephone number shown on the front cover.
No person has been authorized to give any information or to make
any representations other than those contained in this
Prospectus and in the Trust's official sales literature in
connection with the offer of the Funds' shares, and, if given or
made, such other information or representations must not be
relied upon as having been authorized by the Trust. This
Prospectus does not constitute an offer in any state in which,
or to any person to whom, such offering may not lawfully be
made.
APPENDIX
Portfolio Securities
To the extent set forth in this Prospectus and except
as noted below, each Fund may invest in the following
securities:
U.S. Treasury Securities--Each Fund may invest in U.S.
Treasury securities which include Treasury Bills, Treasury Notes
and Treasury Bonds that differ in their interest rates,
maturities and times of issuance. Treasury Bills have initial
maturities of one year or less; Treasury Notes have initial
maturities of one to ten years; and Treasury Bonds generally
have initial maturities of greater than ten years.
U.S. Government Securities--In addition to U.S.
Treasury securities, each Fund (the U.S. Treasury Prime Cash
Management Fund to a limited extent) may invest in securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Some obligations issued or guaranteed by
U.S. Government agencies and instrumentalities, for example,
Government National Mortgage Association pass-through
certificates, are supported by the full faith and credit of the
U.S. Treasury; others, such as those of the Federal Home Loan
Banks, by the right of the issuer to borrow from the Treasury;
others, such as those issued by the Federal National Mortgage
Association, by discretionary authority of the U.S. Government
to purchase certain obligations of the agency or
instrumentality; and others, such as those issued by the Student
Loan Marketing Association, only by the credit of the agency or
instrumentality. These securities bear fixed, floating or
variable rates of interest. Interest may fluctuate based on
generally recognized reference rates or the relationship of
rates. While the U.S. Government provides financial support to
such U.S. Government-sponsored agencies or instrumentalities, no
assurance can be given that it will always do so, since it is
not so obligated by law. Each Fund will invest in such
securities only when the Trust is satisfied that the credit risk
with respect to the issuer is minimal.
Repurchase Agreements--Each Fund, except the U.S.
Treasury Prime Cash Management Fund, may enter into repurchase
agreements, which involve the acquisition by a Fund of an
underlying debt instrument, subject to an obligation of the
seller to repurchase, and such Fund to resell, the instrument at
a fixed price usually not more than one week after its purchase.
The Trust's custodian or sub-custodian will have custody of, and
will hold in a segregated account, securities acquired by a Fund
under a repurchase agreement. Repurchase agreements are
considered by the staff of the Securities and Exchange
Commission to be loans by the Fund entering into them. In an
attempt to reduce the risk of incurring a loss on a repurchase
agreement, each of these Funds will enter into repurchase
agreements only with registered or unregistered securities
dealers or banks with total assets in excess of one billion
dollars, with respect to securities in which such Fund may
invest and will require that additional securities be deposited
with it if the value of the securities purchased should decrease
below resale price. The Manager will monitor on an ongoing
basis the value of the collateral to assure that it always
equals or exceeds the repurchase price. Certain costs may be
incurred by a Fund in connection with the sale of the securities
if the seller does not repurchase them in accordance with the
repurchase agreement. In addition, if bankruptcy proceedings
are commenced with respect to the seller of the securities,
realization on the securities by the Fund may be delayed or
limited. Each of these Funds will consider on an ongoing basis
the creditworthiness of the institutions with which it enters
into repurchase agreements. Pursuant to an order obtained from
the Securities and Exchange Commission, each Fund also is
permitted to enter into overnight repurchase agreements with the
Manager or an affiliate of the Manager subject to the terms and
conditions of such order.
Bank Obligations--The Cash Management Fund will, and,
to a limited extent, the Municipal Cash Management Fund may,
invest in bank obligations, including certificates of deposit,
time deposits, bankers' acceptances and other short-term
obligations of domestic banks, foreign subsidiaries of domestic
banks, foreign branches of domestic banks, and domestic and
foreign branches of foreign banks and thrift institutions.
Certificates of deposit are negotiable certificates evidencing
the obligation of a bank to repay funds deposited with it for a
specified period of time. Time deposits are non-negotiable
deposits maintained in a banking institution for a specified
period of time at a stated interest rate. Time deposits which
may be held by the Fund will not benefit from insurance from the
Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer.
These instruments reflect the obligation both of the bank and of
the drawer to pay the face amount of the instrument upon
maturity. The other short-term obligations may include
uninsured, direct obligations, bearing fixed, floating or
variable interest rates.
Commercial Paper and other Short-Term Corporate
Obligations--The Cash Management Fund and, to a limited extent,
the Municipal Cash Management Fund may invest in commercial
paper, which consists of short-term, unsecured promissory notes
issued to finance short-term credit needs. The commercial paper
purchased by these Series will consist only of direct
obligations issued by domestic and foreign entities. The other
corporate obligations in which these Funds may invest consist of
high quality, U.S. dollar denominated short-term bonds and notes
(including variable amount master demand notes) issued by
domestic and foreign corporations.
Floating and Variable Rate Obligations--The Cash
Management Fund and the Municipal Cash Management Fund also may
purchase floating and variable rate demand notes and bonds,
which are obligations ordinarily having stated maturities in
excess of 13 months, but which permit the holder to demand
payment of principal at any time, or at specified intervals not
exceeding 13 months, in each case upon not more than 30 days'
notice. Variable rate demand notes include master demand notes
which are obligations that permit the Fund to invest fluctuating
amounts, which may change daily without penalty, pursuant to
direct arrangements between the Fund, as lender, and the
borrower. The interest rates on these notes fluctuate from time
to time. The issuer of such obligations normally has a
corresponding right, after a given period, to prepay in its
discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days' notice to
the holders of such obligations. The interest rate on a
floating rate demand obligation is based on a known lending
rate, such as a bank's prime rate, and is adjusted automatically
each time such rate is adjusted. The interest rate on a
variable rate demand obligation is adjusted automatically at
specified intervals. Frequently, such obligations are secured
by letters of credit or other credit support arrangements
provided by banks. Because these obligations are direct lending
arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and
there generally is no established secondary market for these
obligations, although they are redeemable at face value.
Accordingly, where these obligations are not secured by letters
of credit or other credit support arrangements, the Fund's right
to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. Such obligations frequently
are not rated by credit rating agencies and, if not so rated,
each of these Funds may invest in them only if the Manager
determines that at the time of investment the obligations are of
comparable quality to the other obligations in which the Fund
may invest. The Manager, on behalf of the Fund will consider on
an ongoing basis the creditworthiness of the issuers of the
floating and variable rate demand obligations held by the Fund.
Neither of these Funds will invest more than 10% of the value of
its net assets in floating or variable rate demand obligations
as to which it cannot exercise the demand feature on not more
than seven days' notice if there is no secondary market
available for these obligations, and in other securities that
are illiquid.
Municipal Obligations--The Municipal Cash Management
Fund will invest in Municipal Obligations. Municipal
Obligations generally include debt obligations issued to obtain
funds for various public purposes as well as certain industrial
development bonds issued by or on behalf of public authorities.
Municipal Obligations are classified as general obligation
bonds, revenue bonds and notes. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing
power for the payment of principal and interest. Revenue bonds
are payable from the revenue derived from a particular facility
or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from
the general taxing power. Industrial development bonds, in most
cases, are revenue bonds and generally do not carry the pledge
of the credit of the issuing municipality, but generally are
guaranteed by the corporate entity on whose behalf they are
issued. Notes are short-term instruments which are obligations
of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes or receipt of
other revenues. Municipal Obligations include municipal
lease/purchase agreements which are similar to installment
purchase contracts for property or equipment issued by
municipalities. Municipal Obligations bear fixed, floating or
variable rates of interest. Certain Municipal Obligations are
subject to redemption at a date earlier than their stated
maturity pursuant to call options, which may be separated from
the related municipal obligation and purchased and sold
separately.
Participation Interests--The Municipal Cash Management
Fund may purchase from financial institutions participation
interests in Municipal Obligations (such as industrial
development bonds and municipal lease/purchase agreements). A
participation interest gives the Fund an undivided interest in
the Municipal Obligation in the proportion that the Fund's
participation interest bears to the total principal amount of
the Municipal Obligation. These instruments may have fixed,
floating or variable rates of interest, with remaining
maturities of 13 months or less. If the participation interest
is unrated, or has been given a rating below that which
otherwise is permissible for purchase by the Fund, the
participation interest will be backed by an irrevocable letter
of credit or guarantee of a bank that the Board of Trustees has
determined meets the prescribed quality standards for banks set
forth above, or the payment obligation otherwise will be
collateralized by U.S. Government securities. For certain
participation interests, the Fund will have the right to demand
payment, on not more than seven days' notice, for all or any
part of the Fund's participation interest in the Municipal
Obligation, plus accrued interest. As to these instruments, the
Fund intends to exercise its right to demand payment only upon a
default under the terms of the Municipal Obligation, as needed
to provide liquidity to meet redemptions, or to maintain or
improve the quality of its investment portfolio. The Municipal
Cash Management Fund will not invest more than 10% of the value
of its net assets in participation interests that do not have
this demand feature, and in other illiquid securities.
Tender Option Bonds--The Municipal Cash Management
Fund may purchase tender option bonds. A tender option bond is
a Municipal Obligation (generally held pursuant to a custodial
arrangement) having a relatively long maturity and bearing
interest at a fixed rate substantially higher than prevailing
short-term tax exempt rates, that has been coupled with the
agreement of a third party, such as a bank, broker-dealer or
other financial institution, pursuant to which such institution
grants the security holders the option, at periodic intervals,
to tender their securities to the institution and receive the
face value thereof. As consideration for providing the option,
the financial institution receives periodic fees equal to the
difference between the Municipal Obligation's fixed coupon rate
and the rate, as determined by a remarketing or similar agent at
or near the commencement of such period, that would cause the
securities, coupled with the tender option, to trade at par on
the date of such determination. Thus, after payment of this
fee, the security holder effectively holds a demand obligation
that bears interest at the prevailing short-term tax exempt
rate. The Manager, on behalf of the Fund, will consider on an
ongoing basis the creditworthiness of the issuer of the
underlying Municipal Obligation, of any custodian and of the
third party provider of the tender option. In certain instances
and for certain tender option bonds, the option may be
terminable in the event of a default in payment of principal or
interest on the underlying Municipal Obligations and for other
reasons. The Municipal Cash Management Fund will not invest
more than 10% of the value of its net assets in securities that
are illiquid, which would include tender option bonds as to
which it cannot exercise the tender feature on not more than
seven days' notice if there is no secondary market available for
these obligations.
Stand-By Commitments--The Municipal Cash Management
Fund may acquire "stand-by commitments" with respect to
Municipal Obligations held in its portfolio. Under a stand-by
commitment, the Fund obligates a broker, dealer or bank to
repurchase, at the Fund's option, specified securities at a
specified price and, in this respect, stand-by commitments are
comparable to put options. The exercise of a stand-by
commitment therefore is subject to the ability of the seller to
make payment on demand. The Municipal Cash Management Fund will
acquire stand-by commitments solely to facilitate portfolio
liquidity and does not intend to exercise its rights thereunder
for trading purposes. The Municipal Cash Management Fund may
pay for stand-by commitments if such action is deemed necessary,
thus increasing to a degree the cost of the underlying Municipal
Obligation and similarly decreasing such security's yield to
investors.
Investment Practices
Lending Portfolio Securities--From time to time, each
of the Cash Management Fund and U.S. Government Securities Cash
Management Fund may lend securities from its portfolio to
brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. Such loans
may not exceed 33-1/3% of the value of the relevant Fund's total
assets. In connection with such loans, each of these Funds will
receive collateral consisting of cash or U.S. Government
securities or, with respect to the Cash Management Fund only,
irrevocable letters of credit issued by financial institutions.
Such collateral will be maintained at all times in an amount
equal to at least 100% of the current market value of the loaned
securities. Each of these Funds can increase its income through
the investment of such collateral. Each of these Funds
continues to be entitled to payments in amounts equal to the
interest and other distributions payable on the loaned security
and receives interest on the amount of the loan. Such loans
will be terminable at any time upon specified notice. A Fund
might experience risk of loss if the institution with which it
has engaged in a portfolio loan transaction breaches its
agreement with such Fund.
Illiquid Securities--Each Fund may invest up to 10% of
the value of its net assets in securities as to which a liquid
trading market does not exist, provided such investments are
consistent with its investment objective. Such securities may
include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual
restrictions on resale, participation interests that are not
subject to the demand feature described above, floating and
variable rate demand obligations as to which the Fund cannot
exercise the related demand feature described above on not more
than seven days' notice and as to which there is no secondary
market and repurchase agreements providing for settlement in
more than seven days after notice. However, if a substantial
market of qualified institutional buyers develops pursuant to
Rule 144A under the Securities Act of 1933, as amended, for
certain unregistered securities held by a Fund, the Trust
intends to treat such securities as liquid securities in
accordance with procedures approved by the Trust's Board of
Trustees. Because it is not possible to predict with assurance
how the market for restricted securities pursuant to Rule 144A
will develop, the Trust's Board of Trustees has directed the
Manager to monitor carefully the investments of the Funds in
such securities with particular regard to trading activity,
availability of reliable price information and other relevant
information.
Borrowing Money--As a fundamental policy, each of the
Municipal Cash Management Fund and Treasury Prime Cash
Management Fund is permitted to borrow money to the extent
permitted under the 1940 Act. However, each of these Funds
currently intends to borrow money from banks for temporary or
emergency (not leveraging) purposes in an amount up to 15% of
the value of its total assets (including the amount borrowed)
valued at the lesser of cost or market, less liabilities (not
including the amount borrowed) at the time the borrowing is
made. While borrowings exceed 5% of a Fund's total assets, such
Fund will not make any additional investments.
PRAIRIE INSTITUTIONAL FUNDS
Cash Management Funds
Institutional AND Service SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
November __, 1994
This Statement of Additional Information, which is not
a prospectus, supplements and should be read in conjunction with
the current Prospectus of Cash Management Fund, Municipal Cash
Management Fund, Treasury Prime Cash Management Fund and U.S.
Government Securities Cash Management Fund (each, a "Fund") of
Prairie Institutional Funds (the "Trust"), dated November __,
1994, as it may be revised from time to time. To obtain a copy
of the Funds' Prospectus, please write to the Trust at 125
West 55th Street, New York, New York 10019, or call toll free
1-800-________.
The First National Bank of Chicago (the "Manager")
serves as each Fund's investment adviser and administrator.
Concord Financial Group, Inc. (the "Distributor") is
the distributor of the Funds' shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . . . B-2
Management of the Trust. . . . . . . . . . . . . . . . . . B-11
Management Arrangements. . . . . . . . . . . . . . . . . B-11
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . B-14
Service Plan . . . . . . . . . . . . . . . . . . . . . . . B-15
Redemption of Fund Shares. . . . . . . . . . . . . . . . . B-16
Determination of Net Asset Value . . . . . . . . . . . . . B-17
Portfolio Transactions . . . . . . . . . . . . . . . . . . B-18
Dividends, Distributions and Taxes . . . . . . . . . . . B-19
Yield Information. . . . . . . . . . . . . . . . . . . . . B-20
Information About the Trust. . . . . . . . . . . . . . . . B-21
Counsel and Independent Auditors . . . . . . . . . . . . . B-21
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . B-22
Financial Statements . . . . . . . . . . . . . . . . . . . B-27
Report of Independent Auditors . . . . . . . . . . . . . . B-__
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "Description of the Funds."
Bank Obligations. (Cash Management Fund and, to a
limited extent, Municipal Cash Management Fund) Domestic
commercial banks organized under Federal law are supervised and
examined by the Comptroller of the Currency and are required to
be members of the Federal Reserve System and to have their
deposits insured by the Federal Deposit Insurance Corporation
(the "FDIC"). Domestic banks organized under state law are
supervised and examined by state banking authorities but are
members of the Federal Reserve System only if they elect to
join. In addition, state banks whose certificates of deposit
("CDs") may be purchased by the Fund are insured by the FDIC
(although such insurance may not be of material benefit to the
Fund, depending on the principal amount of the CDs of each bank
held by the Fund) and are subject to Federal examination and to
a substantial body of Federal law and regulation. As a result
of Federal or state laws and regulations, domestic branches of
domestic banks whose CDs may be purchased by the Fund generally
are required, among other things, to maintain specified levels
of reserves, are limited in the amounts which they can loan to a
single borrower and are subject to other regulation designed to
promote financial soundness. However, not all of such laws and
regulations apply to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks,
foreign subsidiaries of domestic banks, and domestic and foreign
branches of foreign banks, such as CDs and time deposits
("TDs"), may be general obligations of the parent banks in
addition to the issuing branch, or may be limited by the terms
of a specific obligation and governmental regulation. Such
obligations are subject to different risks than are those of
domestic banks. These risks include foreign economic and
political developments, foreign governmental restrictions that
may adversely affect payment of principal and interest on the
obligations, foreign exchange controls and foreign withholding
and other taxes on interest income. These foreign branches and
subsidiaries are not necessarily subject to the same or similar
regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and
accounting, auditing and financial recordkeeping requirements.
In addition, less information may be publicly available about a
foreign branch of a domestic bank or about a foreign bank than
about a domestic bank.
Obligations of United States branches of foreign banks
may be general obligations of the parent bank in addition to the
issuing branch, or may be limited by the terms of a specific
obligation or by Federal or state regulation as well as
governmental action in the country in which the foreign bank has
its head office. A domestic branch of a foreign bank with
assets in excess of $1 billion may be subject to reserve
requirements imposed by the Federal Reserve System or by the
state in which the branch is located if the branch is licensed
in that state.
In addition, Federal branches licensed by the
Comptroller of the Currency and branches licensed by certain
states ("State Branches") may be required to: (1) pledge to the
regulator, by depositing assets with a designated bank within
the state, a certain percentage of their assets as fixed from
time to time by the appropriate regulatory authority; and (2)
maintain assets within the state in an amount equal to a
specified percentage of the aggregate amount of liabilities of
the foreign bank payable at or through all of its agencies or
branches within the state. The deposits of Federal and State
Branches generally must be insured by the FDIC if such branches
take deposits of less than $100,000.
In view of the foregoing factors associated with the
purchase of CDs and TDs issued by foreign branches of domestic
banks, by foreign subsidiaries of domestic banks, by foreign
branches of foreign banks or by domestic branches of foreign
banks, the Manager carefully evaluates such investments on a
case-by-case basis.
These Funds may purchase CDs issued by banks, savings
and loan associations and similar thrift institutions with less
than $1 billion in assets, which are members of the FDIC,
provided the Fund purchases any such CD in a principal amount of
not more than $100,000, which amount would be fully insured by
the Bank Insurance Fund or the Savings Association Insurance
Fund administered by the FDIC. Interest payments on such a CD
are not insured by the FDIC. Neither of these Funds will own
more than one such CD per such issuer.
Foreign Securities. (Cash Management Fund) Foreign
securities markets generally are not as developed or efficient
as those in the United States. Securities of some foreign
issuers are less liquid and more volatile than securities of
comparable U.S. issuers. Similarly, volume and liquidity in
most foreign securities markets are less than in the United
States and, at times, volatility of price can be greater than in
the United States.
Furthermore, some of these securities are subject to
brokerage taxes levied by foreign governments, which have the
effect of increasing the cost of such investment and reducing
the realized gain or increasing the realized loss on such
securities at the time of sale. Custodial expenses for a
portfolio of non-U.S. securities generally are higher than for a
portfolio of U.S. securities. Income earned or received by the
Cash Management Fund from sources within foreign countries may
be reduced by withholding and other taxes.
Municipal Obligations. (Municipal Cash Management
Fund) The term "Municipal Obligations" generally includes debt
obligations issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works.
Other public purposes for which Municipal Obligations may be
issued include refunding outstanding obligations, obtaining
funds for general operating expenses and lending such funds to
other public institutions and facilities. In addition, certain
types of industrial development bonds are issued by or on behalf
of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately
operated housing facilities, sports facilities, convention or
trade show facilities, airport, mass transit, industrial, port
or parking facilities, air or water pollution control facilities
and certain local facilities for water supply, gas, electricity,
or sewage or solid waste disposal; the interest paid on such
obligations may be exempt from Federal income tax, although
current tax laws place substantial limitations on the size of
such issues. Such obligations are considered to be Municipal
Obligations if the interest paid thereon qualifies as exempt
from Federal income tax in the opinion of bond counsel to the
issuer. There are, of course, variations in the security of
Municipal Obligations, both within a particular classification
and between classifications.
Floating and variable rate demand notes and bonds are
tax exempt obligations ordinarily having stated maturities in
excess of 13 months, but which permit the holder to demand
payment of principal at any time, or at specified intervals not
exceeding 13 months, in each case upon not more than 30 days'
notice. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its
discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days' notice to
the holders thereof. The interest rate on a floating rate
demand obligation is based on a known lending rate, such as a
bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable rate demand
obligation is adjusted automatically at specified intervals.
For the purpose of diversification under the
Investment Company Act of 1940 (the "1940 Act"), the
identification of the issuer of Municipal Obligations depends on
the terms and conditions of the security. When the assets and
revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government
creating the subdivision and the security is backed only by the
assets and revenues of the subdivision, such subdivision would
be deemed to be the sole issuer. Similarly, in the case of an
industrial development bond, if that bond is backed only by the
assets and revenues of the non-governmental user, then such non-
governmental user would be deemed to be the sole issuer. If,
however, in either case, the creating government or some other
entity guarantees a security, such a guaranty would be
considered a separate security and will be treated as an issue
of such government or other entity.
The yields on Municipal Obligations are dependent on a
variety of factors, including general economic and monetary
conditions, money market factors, conditions in the Municipal
Obligations market, size of a particular offering, maturity of
the obligation, and rating of the issue. The imposition of the
Fund's management fee, as well as other operating expenses, will
have the effect of reducing the yield to investors.
Municipal lease obligations or installment purchase
contract obligations (collectively, "lease obligations") have
special risks not ordinarily associated with Municipal
Obligations. Although lease obligations do not constitute
general obligations of the municipality for which the
municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget
for, appropriate and make the payments due under the lease
obligation. However, certain lease obligations contain "non-
appropriation" clauses which provide that the municipality has
no obligation to make lease or installment purchase payments in
future years unless money is appropriated for such purpose on a
yearly basis. Although "non-appropriation" lease obligations
are secured by the leased property, disposition of the property
in the event of foreclosure might prove difficult. The
Municipal Cash Management Fund will seek to minimize these risks
by investing only in those lease obligations that (1) are rated
in one of the two highest categories for debt obligations by at
least two nationally recognized statistical rating organizations
(or one rating organization if the lease obligation was rated by
only one such organization); or (2) if unrated, are purchased
principally from the issuer or domestic banks or other
responsible third parties, in each case only if the seller shall
have entered into an agreement with the Municipal Cash
Management Fund providing the seller or other responsible third
party will either remarket or repurchase the lease obligations
within a short period after demand by the Fund. Not more than
10% of the value of the Fund's net assets will be invested in
lease obligations that are illiquid and in other illiquid
securities. See "Investment Restrictions" below.
The Municipal Cash Management Fund will not purchase
tender option bonds unless (a) the demand feature applicable
thereto is exercisable by the Fund within 13 months of the date
of such purchase upon no more than 30 days' notice and
thereafter is exercisable by the Fund no less frequently than
annually upon no more than 30 days' notice and (b) at the time
of such purchase, the Manager reasonably expects (i) based upon
its assessment of current and historical interest rate trends,
that prevailing short-term tax exempt rates will not exceed the
stated interest rate on the underlying Municipal Obligations at
the time of the next tender option to terminate the tender
option would not occur prior to the time of the next tender
opportunity. At the time of each tender opportunity, the Fund
will exercise the tender option with respect to any tender
option bonds unless the Manager reasonably expects, (x) based
upon its assessment of current and historical interest rate
trends, that prevailing short-term tax exempt rates will not
exceed the stated interest rate on the underlying Municipal
Obligations at the time of the next tender fee adjustment, and
(y) that the circumstances which might entitle the grantor of a
tender option to terminate the tender option would not occur
prior to the time of the next tender opportunity. The Municipal
Cash Management Fund will exercise the tender feature with
respect to tender option bonds, or otherwise dispose of its
tender option bonds, prior to the time the tender option is
scheduled to expire pursuant to the terms of the agreement under
which the tender option is granted. The Municipal Cash
Management Fund otherwise will comply with the provisions of
Rule 2a-7 in connection with the purchase of tender option
bonds, including, without limitation, the requisite
determination by the Board of Trustees that the tender option
bonds in question meet the quality standards described in Rule
2a-7, which, in the case of a tender option bond subject to a
conditional demand feature, would include a determination that
the security has received both the required short-term and long-
term quality rating or is determined to be of comparable
quality. In the event of a default of the Municipal Obligation
underlying a tender option bond, or the termination of the
tender option agreement, the Municipal Cash Management Fund
would look to the maturity date of the underlying security for
purposes of compliance with Rule 2a-7 and, if its remaining
maturity was greater than 13 months, the Fund would sell the
security as soon as would be practicable. The Municipal Cash
Management Fund will purchase tender option bonds only when it
is satisfied that the custodial and tender option arrangements,
including the fee payment arrangements, will not adversely
affect the tax exempt status of the underlying Municipal
Obligations and that payment of any tender fees will not have
the effect of creating taxable income for the Fund. Based on
the tender option bond agreement, the Municipal Cash Management
Fund expects to be able to value the tender option bond at par;
however, the value of the instrument will be monitored to assure
that it is valued at fair value.
If, subsequent to its purchase by the Municipal Cash
Management Fund, (a) an issue of rated Municipal Obligations
ceases to be rated in the highest rating category by at least
two ratings organizations (or one rating organization if the
instrument was rated by only one such organization), or the
Trust's Board determines that it is no longer of comparable
quality; or (b) the Manager becomes aware that any portfolio
security not so highly rated or any unrated security has been
given a rating by any rating organization below the rating
organization's second highest rating category, the Trust's Board
will reassess promptly whether such security presents minimal
credit risk and will cause the Trust to take such action as it
determines is in the best interest of the Fund and its
shareholders, provided that the reassessment required by clause
(b) is not required if the portfolio security is disposed of or
matures within five business days of the Manager becoming aware
of the new rating and the Trust's Board is subsequently notified
of the Manager's actions.
To the extent that the ratings given by Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's
Corporation ("S&P") or Fitch Investors Service Inc. ("Fitch")
for Municipal Obligations may change as a result of changes in
such organizations or their rating systems, the Municipal Cash
Management Fund will attempt to use comparable ratings as
standards for its investments in accordance with the investment
policies contained in the Prospectus and this Statement of
Additional Information. The ratings of Moody's, S&P and Fitch
represent their opinions as to the quality of the Municipal
Obligations which they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective
and are not absolute standards of quality. Although these
ratings may be an initial criterion for selection of portfolio
investments, the Manager will also evaluate these securities and
the creditworthiness of the issuers of such securities.
Lending Portfolio Securities. (Cash Management Fund
and U.S. Government Securities Cash Management Fund) To a
limited extent, each of these Funds may lend its portfolio
securities to brokers, dealers and other financial institutions,
provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current
market value of the securities loaned. By lending its portfolio
securities, the Fund can increase its income through the
investment of the cash collateral. For purposes of this policy,
the Trust considers collateral consisting of U.S. Government
securities or, in the case of the Cash Management Fund only,
irrevocable letters of credit issued by banks whose securities
meet the standards for investment by the Fund to be the
equivalent of cash. Such loans may not exceed 33-1/3% of the
Fund's total assets. From time to time, the Fund may return to
the borrower or a third party which is unaffiliated with the
Fund, and which is acting as a "placing broker," a part of the
interest earned from the investment of collateral received for
securities loaned.
The Securities and Exchange Commission currently
requires that the following conditions must be met whenever
portfolio securities are loaned: (1) the Fund must receive at
least 100% cash collateral from the borrower; (2) the borrower
must increase such collateral whenever the market value of the
securities rises above the level of such collateral; (3) the
Fund must be able to terminate the loan at any time; (4) the
Fund must receive reasonable interest on the loan, as well as
any interest or other distributions payable on the loaned
securities, and any increase in market value; and (5) the Fund
may pay only reasonable custodian fees in connection with the
loan. These conditions may be subject to future modification.
Investment Restrictions
Cash Management and U.S. Government Securities Cash
Management Funds only. Each of the Cash Management Fund and
U.S. Government Securities Cash Management Fund has adopted
investment restrictions numbered 1 through 9 below as
fundamental policies. In addition, the Cash Management Fund has
adopted investment restrictions numbered 12 and 13 and the U.S.
Government Securities Cash Management Fund has adopted
investment restriction number 14 as additional fundamental
policies. These restrictions cannot be changed, as to a Fund,
without approval by the holders of a majority (as defined in the
1940 Act) of such Fund's outstanding voting shares. Investment
restrictions numbered 10 and 11 below are not fundamental
policies and may be changed by vote of a majority of the Trust's
Trustees at any time. Neither of these Funds may:
1. Borrow money, except from banks for temporary or
emergency (not leveraging) purposes in an amount up to 15% of
the value of the Fund's total assets (including the amount
borrowed) based on the lesser of cost or market, less
liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the value of
the Fund's total assets, the Fund will not make any additional
investments.
2. Pledge, hypothecate, mortgage or otherwise
encumber its assets, except to secure borrowings for temporary
or emergency purposes.
3. Sell securities short or purchase securities on
margin.
4. Write or purchase put or call options or
combinations thereof.
5. Act as an underwriter of securities of other
issuers, except to the extent the Fund may be deemed an
underwriter under the Securities Act of 1933, as amended, by
virtue of disposing of portfolio securities.
6. Purchase or sell real estate, real estate
investment trust securities, commodities or commodity contracts,
or oil and gas interests.
7. Make loans to others, except through the purchase
of debt obligations referred to in the Fund's Prospectus, except
that the Fund may lend its portfolio securities in an amount not
to exceed 33-1/3% of the value of its total assets. Any loans
of portfolio securities will be made according to guidelines
established by the Securities and Exchange Commission and the
Trust's Trustees.
8. Invest in companies for the purpose of exercising
control.
9. Invest in securities of other investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets.
10. Enter into repurchase agreements providing for
settlement in more than seven days after notice or purchase
securities which are illiquid, if, in the aggregate, more than
10% of the value of the Fund's net assets would be so invested.
11. Invest in oil, gas and other mineral leases, or
real estate limited partnerships.
The following investment restrictions numbered 12 and
13 apply only to the Cash Management Fund. The Cash Management
Fund may not:
12. Invest more than 5% of its assets in the
obligations of any one issuer, except that up to 25% of the
value of the Cash Management Fund's total assets may be invested
(subject to Rule 2a-7 under the 1940 Act) without regard to any
such limitations.
13. Invest less than 25% of its total assets in
securities issued by banks or invest more than 25% of its assets
in the securities of issuers in any other industry, provided
that there shall be no limitation on the purchase of obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Notwithstanding the foregoing, for temporary
defensive purposes, the Cash Management Fund may invest less
than 25% of its total assets in bank obligations.
The following investment restriction number 14 applies
only to the U.S. Government Securities Cash Management Fund.
The U.S. Government Securities Cash Management Fund may not:
14. Invest more than 25% of its total assets in the
securities of issuers in any single industry, provided that
there shall be no such limitation on investments in obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
Municipal Cash Management and Treasury Prime Cash
Management Funds only. Each of the Municipal Cash Management
Fund and Treasury Prime Cash Management Fund has adopted
investment restrictions numbered 1 through 7 below as
fundamental policies. In addition, the Municipal Cash
Management Fund has adopted investment restriction number 13 and
the Treasury Prime Cash Management Fund has adopted investment
restriction number 14 as additional fundamental policies. These
restrictions cannot be changed, as to a Fund, without approval
by the holders of a majority (as defined in the 1940 Act) of
such Fund's outstanding voting shares. Investment restrictions
numbered 8 through 12 are not fundamental policies and may be
changed by vote of a majority of the Trust's Trustees at any
time. Neither of these Funds may:
1. Invest in commodities, except that each of these
Funds may purchase and sell options, forward contracts, futures
contracts, including those relating to indexes, and options on
futures contracts or indexes.
2. Purchase, hold or deal in real estate, or oil,
gas or other mineral leases or exploration or development
programs, but each of these Funds may purchase and sell
securities that are secured by real estate or issued by
companies that invest or deal in real estate.
3. Borrow money, except to the extent permitted
under the 1940 Act. For purposes of this investment
restriction, a Fund's entry into options, forward contracts,
futures contracts, including those relating to indexes, and
options on futures contracts or indexes shall not constitute
borrowing.
4. Make loans to others, except through the purchase
of debt obligations and the entry into repurchase agreements.
5. Act as an underwriter of securities of other
issuers, except to the extent a Fund may be deemed an under-
writer under the Securities Act of 1933, as amended, by virtue
of disposing of portfolio securities, and except that the
Municipal Cash Management Fund may bid separately or as part of
a group for the purchase of Municipal Obligations directly from
an issuer for its own portfolio to take advantage of the lower
purchase price available.
6. Issue any senior security (as such term is
defined in Section 18(f) of the 1940 Act), except to the extent
the activities permitted under Investment Restriction Nos. 1, 3,
9 and 10 may be deemed to give rise to senior securities.
7. Purchase securities on margin, but each of these
Funds may make margin deposits in connection with transactions
in options, forward contracts, futures contracts, including
those relating to indexes, and options on futures contracts or
indexes.
8. Invest in the securities of a company for the
purpose of exercising management or control, but each of these
Funds will vote the securities it owns in its portfolio as a
shareholder in accordance with its views.
9. Pledge, mortgage or hypothecate its assets,
except to the extent necessary to secure permitted borrowings
and to the extent related to the deposit of assets in escrow in
connection with writing covered put and call options and the
purchase of securities on a when-issued or forward commitment
basis and collateral and initial or variation margin
arrangements with respect to options, forward contracts, futures
contracts, including those relating to indexes, and options on
futures contracts or indexes.
10. Purchase, sell or write puts, calls or
combinations thereof, except as described in the Prospectus and
this Statement of Additional Information.
11. Enter into repurchase agreements providing for
settlement in more than seven days after notice or purchase
securities which are illiquid, if, in the aggregate, more than
10% of the value of the Fund's net assets would be so invested.
12. Invest in securities of other investment
companies, except to the extent permitted under the Act.
The following investment restriction number 13 applies
only to the Municipal Cash Management Fund. The Municipal Cash
Management Fund may not:
13. Invest more than 25% of its total assets in the
securities of issuers in any single industry, provided that
there shall be no such limitation on the purchase of Municipal
Obligations and, for temporary defensive purposes, obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
The following investment restriction number 14 applies
only to the Treasury Prime Cash Management Fund. The Treasury
Prime Cash Management Fund may not:
14. Invest more than 25% of its total assets in the
securities of issuers in any single industry, provided that
there shall be no such limitation on investments in obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
For purposes of the Municipal Cash Management Fund's
Investment Restriction No. 13, industrial development bonds,
where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are
grouped together as an "industry."
If a percentage restriction is adhered to at the time
of investment, a later increase or decrease in percentage
resulting from a change in values or assets will not constitute
a violation of such restriction.
The Trust may make commitments more restrictive than
the restrictions listed above so as to permit the sale of a
Fund's shares in certain states. Should the Trust determine
that a commitment is no longer in the best interests of a Fund
and its shareholders, the Trust reserves the right to revoke the
commitment by terminating the sale of such Fund's shares in the
state involved.
MANAGEMENT OF THE TRUST
Trustees and officers of the Trust, together with
information as to their principal business occupations during at
least the last five years, are shown below.
Trustees of the Trust
JOHN P. GOULD, Trustee. Distinguished Service Professor of
Economics of the University of Chicago Graduate School
of Business. From 1983 to 1993, Dean of the
University of Chicago Graduate School of Business.
Dean Gould also serves as Director of Harpor Capital
Advisors. His address is 1101 East 58th Street,
Chicago, Illinois 60637.
MARILYN McCOY, Trustee. Vice President of
Administration and Planning of Northwestern
University. From 1981 to 1985, she was the
Director of Planning and Policy Development
for the University of Colorado. She also
serves on the Board of Directors of Evanston
Hospital, the Chicago Metropolitan YMCA, the
Chicago Network and United Charities. Mrs.
McCoy is a member of the Chicago Economics
Club. Her address is 1100 North Lake Shore
Drive, Chicago, Illinois 60611.
RAYMOND D. ODDI, Trustee. Private consultant. A Director of
Caremark International, Inc. and Medisense, Inc.,
companies in the health care industry, and Baxter
Credit Union. From 1978 to 1986, Senior Vice
President of Baxter International, Inc., a company
engaged in the production of medical care products.
He also is a member of the Illinois Society of
Certified Public Accountants. His address is 1181
Loch Lane, Lake Forest, Illinois 60045.
For so long as a Fund's plan described in the section
captioned "Service Plan" remains in effect, the Trustees of the
Trust who are not "interested persons" of the Trust, as defined
in the 1940 Act, will be selected and nominated by the Trustees
who are not "interested persons" of the Trust.
Officers of the Trust
JOSEPH F. KISSEL, President. Executive Vice President of
Concord Holding Corporation, the Trust's sub-
administrator (the "Sub-Administrator"), and an
officer of other investment companies administered by
the Sub-Administrator. His address is 125 West 55th
Street, New York, New York 10019.
ANN E. BERGIN, Vice President. Senior Vice President of the
Sub-Administrator and an officer of other investment
companies administered by the Sub-Administrator. Her
address is 125 West 55th Street, New York, New York
10019.
STEPHEN A. SMITH, Vice President. Senior Vice President of the
Distributor, and an officer of other investment
comcpanies distributed by the Distributor. His
address is 125 West 55th Street, New York, New York
10019.
RICHARD A. FABIETTI, Treasurer. Senior Vice President and
Treasurer of the Sub-Administrator and the
Distributor, and an officer of other investment
companies administered by the Sub-Administrator. His
address is 125 West 55th Street, New York, New York
10019.
MARTIN G. FLANIGAN, Assistant Treasurer. Mutual Funds
Accounting Manager of the Sub-Administrator, and an
officer of other investment companies administered by
the Sub-Administrator. His address is 125 West 55th
Street, New York, New York 10019.
JAMES W. BERNAICHE, Secretary. Senior Vice President and
Director of Compliance of the Sub-Administrator and
Distributor, and an officer of other investment
companies administered by the Sub-Administrator. He
is also an officer of Vista Broker/Dealer Services,
Inc., Emerald Asset Management, Inc. and BNY Hamilton
Distributors, Inc., registered broker/dealers. His
address is 125 West 55th Street, New York, New York
10019.
MANAGEMENT ARRANGEMENTS
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "Management of the Trust."
Investment Advisory Agreement. The Manager provides
investment advisory services pursuant to the Investment
Advisory Agreement (the "Agreement") dated November 18, 1994,
with the Trust. As to each Fund, the Agreement is subject to
annual approval by (i) the Trust's Board of Trustees or (ii)
vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of such Fund, provided that in
either event the continuance also is approved by a majority of
the Trustees who are not "interested persons" (as defined in the
1940 Act) of the Trust or the Manager, by vote cast in person at
a meeting called for the purpose of voting on such approval. As
to each Fund, the Agreement is terminable without penalty, on 60
days' notice, by the Trust's Board of Trustees or by vote of the
holders of a majority of such Fund's shares, or, on not less
than 90 days' notice, by the Manager. The Agreement will
terminate automatically, as to the relevant Fund, in the event
of its assignment (as defined in the 1940 Act).
The Manager is responsible for investment decisions
for each Fund in accordance with the stated policies of such
Fund, subject to the approval of the Trust's Board of Trustees.
All purchases and sales are reported for the Trustees' review at
the meeting subsequent to such transactions.
As compensation for the Manager's investment advisory
services to the Trust, the Trust has agreed to pay the Manager a
monthly advisory fee at the annual rate of .20 of 1% of the
value of each Fund's average daily net assets.
Administration and Sub-Administration Agreements.
Pursuant to an Administration Agreement dated November 18, 1994
with the Trust, the Manager assists in all aspects of the
Trust's operations, other than providing investment advice,
subject to the overall authority of the Trust's Board in
accordance with Massachusetts law. As compensation for the
Manager's administrative services to the Trust, the Trust has
agreed to pay the Manager a monthly administrative fee at the
annual rate of .15 of 1% of the value of each Fund's average
daily net assets. The Manager has engaged Concord Holding
Corporation (the "Sub-Administrator") to assist it in providing
certain administrative services to the Trust. Pursuant to its
agreement with the Manager (the "Sub-Administration
Agreement"), the Sub-Administrator assists the Manager in
furnishing the Trust clerical help , data processing,
bookkeeping, internal auditing and legal services and certain
other services required by the Trust, preparing reports to the
Funds' shareholders, tax returns, reports to and filings with
the Securities and Exchange Commission and state Blue Sky
authorities, calculating the net asset value of each Fund's
shares and generally in providing for all aspects of the
Trust's operation, other than providing investment advice. The
fees payable to the Sub-Administrator for its services are paid
by the Manager.
The Trust has agreed that neither the Manager nor the
Sub-Administrator will be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in
connection with the matters to which each agreement with the
Manager or the Sub-Administration Agreement relates, except for
a loss resulting from wilful misfeasance, bad faith or gross
negligence on the part of the Manager in the performance of its
obligations or from reckless disregard by it of its obligations
and duties under the Agreement or Administration Agreement or on
the part of the Sub-Administrator in the performance of its
obligations or from reckless disregard by it of its obligations
and duties under the Sub-Administration Agreement. The Sub-
Administration Agreement contains a similar provision whereby
the Manager has agreed to limit the Sub-Administrator's
liability.
Expenses and Expense Information. All expenses
incurred in the operation of the Trust are borne by the Trust,
except to the extent specifically assumed by the Manager. The
expenses borne by the Trust include: organizational costs,
taxes, interest, brokerage fees and commissions, if any, fees of
Trustees who are not officers, directors, employees or holders
of 5% or more of the outstanding voting securities of the
Manager or the Administrator, Securities and Exchange Commission
fees, state Blue Sky qualification fees, advisory fees, charges
of custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining the Trust's
existence, costs of independent pricing services, costs
attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of
shareholders' reports and meetings, costs of preparing and
printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing
shareholders, and any extraordinary expenses. In addition, the
Service Class of each Fund is subject to an annual distribution
and service fee. See "Service Plan." Expenses attributable to
a particular Fund or Class are charged against the assets of
that Fund or Class, respectively; other expenses of the Trust
are allocated among the Funds on the basis determined by the
Board of Trustees, including, but not limited to,
proportionately in relation to the net assets of each Fund.
The Manager has undertaken, as to each Fund, until
such time as it gives investors at least 90 days' notice to the
contrary, that if, in any fiscal year the aggregate expenses of
the Fund, exclusive of taxes, brokerage, interest on borrowings
and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses, but including
the investment advisory and administration fees, exceed .35%
and .60 % of the value of the average net assets of the
Institutional Class and the Service Class, respectively, for the
fiscal year, the Trust may deduct from the payment to be made to
the Manager under the Agreement or Administration Agreement, or
the Manager will bear, such excess expense.
In addition, the Agreement provides that if, in any
fiscal year, the aggregate expenses of a Fund, exclusive of
taxes, brokerage, interest on borrowings and (with the prior
written consent of the necessary state securities commissions)
extraordinary expenses, but including the investment advisory
fee, exceed the expense limitation of any state having
jurisdiction over the Fund, the Trust may deduct from the
payment to be made to the Manager under the Agreement, or the
Manager will bear, such excess expense to the extent required by
state law. Such deduction or payment, if any, will be estimated
daily, and reconciled and effected or paid, as the case may be,
on a monthly basis.
The aggregate of the fees payable to the Manager is
not subject to reduction as the value of the Fund's net assets
increases.
PURCHASE OF FUND SHARES
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "How to Buy Fund Shares."
The Distributor. The Distributor serves as the
Trust's distributor pursuant to an agreement which is renewable
annually.
Using Federal Funds. Primary Fund Services Corp.,
the Trust's transfer and dividend disbursing agent (the
"Transfer Agent"), or the Trust may attempt to notify the
investor upon receipt of checks drawn on banks that are not
members of the Federal Reserve System as to the possible delay
in conversion into Federal Funds and may attempt to arrange for
a better means of transmitting the money. If the investor is a
customer of a securities dealer, bank or other financial
institution and his order to purchase Fund shares is paid for
other than in Federal Funds, the securities dealer, bank or
other financial institution, acting on behalf of its customer,
generally will complete the conversion into, or itself advance,
Federal Funds on the business day following receipt of the
customer order. The order is effective only when so converted
and received by the Transfer Agent. An order for the purchase
of Fund shares placed by an investor with a sufficient Federal
Funds or cash balance in his brokerage account with a securities
dealer, bank or other financial institution will become
effective on the day that the order, including Federal Funds, is
received by the Transfer Agent. In some states, banks or other
institutions effecting transactions in Fund shares may be
required to register as dealers pursuant to state law.
SERVICE PLAN
(Service Shares Only)
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "Service Plan."
Rule 12b-1 (the "Rule") adopted by the Securities and
Exchange Commission under the 1940 Act provides, among other
things, that an investment company may bear expenses of
distributing its shares only pursuant to a plan adopted in
accordance with the Rule. The Trust's Board of Trustees has
adopted such a plan (the "Service Plan") with respect to each
Fund's Service shares, pursuant to which each Fund pays the
Distributor for advertising, marketing and distributing such
Fund's Service shares and for the provision of certain services
to the holders of Service shares. Under the Service Plan, the
Distributor may make payments to certain financial institutions,
securities dealers and other financial industry professionals
(collectively, "Service Agents") in respect to these services.
The Trust's Board of Trustees believes that there is a
reasonable likelihood that the Service Plan will benefit each
Fund and the holders of Service shares.
A quarterly report of the amounts expended under the
Service Plan, and the purposes for which such expenditures were
incurred, must be made to the Trustees for their review. In
addition, the Service Plan provides that it may not be amended
to increase materially the costs which holders of Service shares
may bear pursuant to the Service Plan without the approval of
the holders of Service shares and that other material amendments
of the Service Plan must be approved by the Board of Trustees
and by the Trustees who are not "interested persons" (as defined
in the 1940 Act) of the Trust and have no direct or indirect
financial interest in the operation of the Service Plan or in
any agreements entered into in connection with the Service Plan,
by vote cast in person at a meeting called for the purpose of
considering such amendments. The Service Plan is subject to
annual approval by such vote of the Trustees cast in person at a
meeting called for the purpose of voting on the Service Plan.
The Service Plan was so approved by the Trustees at a meeting
held on October 28, 1994. As to each Fund, the Service Plan may
be terminated at any time by vote of a majority of the Trustees
who are not "interested persons" and have no direct or indirect
financial interest in the operation of the Service Plan or in
any agreements entered into in connection with the Service Plan
or by vote of the holders of a majority of such Fund's Service
shares.
REDEMPTION OF FUND SHARES
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "How to Redeem Fund Shares."
Redemption Commitment. The Trust has committed itself
to pay in cash all redemption requests by any shareholder of
record of a Fund, limited in amount during any 90-day period to
the lesser of $250,000 or 1% of the value of such Fund's net
assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and
Exchange Commission. In the case of requests for redemption in
excess of such amount, the Board of Trustees reserves the right
to make payments in whole or in part in securities or other
assets in case of an emergency or any time a cash distribution
would impair the liquidity of the Fund to the detriment of the
existing shareholders. In such event, the securities would be
valued in the same manner as the Fund's securities are valued.
If the recipient sold such securities, brokerage charges would
be incurred.
Suspension of Redemptions. The right of redemption
may be suspended or the date of payment postponed (a) during any
period when the New York Stock Exchange is closed (other than
customary weekend and holiday closing), (b) when trading in the
markets the Fund ordinarily utilizes is restricted, or when an
emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the Securities and
Exchange Commission by order may permit to protect the Fund's
shareholders.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "How to Buy Fund Shares."
Amortized Cost Pricing. The valuation of each Fund's
portfolio securities is based upon their amortized cost which
does not take into account unrealized capital gains or losses.
This involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates
on the market value of the instrument. While this method pro-
vides certainty in valuation, it may result in periods during
which value, as determined by amortized cost, is higher or lower
than the price the Fund would receive if it sold the instrument.
The Board of Trustees has established procedures, as a
particular responsibility within the overall duty of care owed
to each Fund's investors, reasonably designed to stabilize the
Fund's price per share as computed for purposes of purchases and
redemptions at $1.00. Such procedures include review of each
Fund's portfolio holdings by the Board of Trustees, at such
intervals as it deems appropriate, to determine whether the
Fund's net asset value calculated by using available market
quotations or market equivalents deviates from $1.00 per share
based on amortized cost. In such review of the portfolio of the
Cash Management Fund, Treasury Prime Cash Management Fund and
U.S. Government Securities Cash Management Fund, investments for
which market quotations are readily available will be valued at
the most recent bid price or yield equivalent for such
securities or for securities of comparable maturity, quality and
type, as obtained from one or more of the major market makers
for the securities to be valued. Other investments and assets
of these Funds will be valued at fair value as determined in
good faith by the Board of Trustees. Market quotations and
market equivalents used in such review of the Municipal Cash
Management Fund are obtained from an independent pricing service
(the "Service") approved by the Board of Trustees. The Service
will value the Municipal Cash Management Fund's investments
based on methods which include consideration of: yields or
prices of municipal obligations of comparable quality, coupon,
maturity and type; indications of values from dealers; and
general market conditions. The Service also may employ
electronic data processing techniques and/or a matrix system to
determine valuations.
The extent of any deviation between a Fund's net asset
value based upon available market quotations or market equiva-
lents and $1.00 per share based on amortized cost will be ex-
amined by the Board of Trustees. If such deviation exceeds 1/2
of 1%, the Board of Trustees will consider what actions, if any,
will be initiated. In the event the Board of Trustees
determines that a deviation exists which may result in material
dilution or other unfair results to investors or existing
shareholders, it has agreed to take such corrective action as it
regards as necessary and appropriate, including: selling
portfolio instruments prior to maturity to realize capital gains
or losses or to shorten average portfolio maturity; withholding
dividends or paying distributions from capital or capital gains;
redeeming shares in kind; or establishing a net asset value per
share by using available market quotations or market
equivalents.
New York Stock Exchange Closings. The holidays (as
observed) on which the New York Stock Exchange is closed
currently are: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
PORTFOLIO TRANSACTIONS
Newly-issued portfolio securities of the Municipal
Cash Management Fund and portfolio securities of each other Fund
ordinarily are purchased directly from the issuer or from an
underwriter or a market maker for the securities. Other
purchases and sales for the Municipal Cash Management Fund
usually are placed with those dealers from which it appears that
the best price or execution will be obtained. Ordinarily, no
brokerage commissions are paid by the Fund for such purchases.
Purchases from underwriters of portfolio securities may include
a concession paid by the issuer to the underwriter and the
purchase price paid to, and sales price received from, market
makers for the securities may reflect the spread between the bid
and asked price. No brokerage commissions have been paid by any
Fund to date.
Transactions are allocated to various dealers by the
Trust's investment personnel in their best judgment. The
primary consideration is prompt and effective execution of
orders at the most favorable price. Subject to that primary
consideration, dealers may be selected for research, statistical
or other services to enable the Manager to supplement its own
research and analysis with the views and information of other
securities firms and may be selected based upon their sales of
Fund shares.
Research services furnished by brokers through which
the Fund effects securities transactions may be used by the
Manager in advising other funds or accounts it advises and,
conversely, research services furnished to the Manager by
brokers in connection with other funds or accounts the Manager
advises may be used by the Manager in advising the Fund.
Although it is not possible to place a dollar value on these
services, it is the opinion of the Manager that the receipt and
study of such services should not reduce the Manager's overall
research expenses.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be
read in conjunction with the section in Funds' Prospectus
entitled "Dividends, Distributions and Taxes."
Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gain or loss. However,
all or a portion of the gain realized from the disposition of
certain market discount bonds will be treated as ordinary income
under Section 1276 of the Internal Revenue Code of 1986, as
amended.
YIELD INFORMATION
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "Yield Information."
Yield will be computed in accordance with a
standardized method which involves determining the net change in
the value of a hypothetical pre-existing Fund account having a
balance of one share at the beginning of a seven calendar day
period for which yield is to be quoted, dividing the net change
by the value of the account at the beginning of the period to
obtain the base period return, and annualizing the results
(i.e., multiplying the base period return by 365/7). The net
change in the value of the account reflects the value of
additional shares purchased with dividends declared on the
original share and any such additional shares and fees that may
be charged to the shareholder's account, in proportion to the
length of the base period and the Fund's average account size,
but does not include realized gains and losses or unrealized
appreciation and depreciation. Effective yield is computed by
adding 1 to the base period return (calculated as described
above), raising that sum to a power equal to 365 divided by 7,
and subtracting 1 from the result.
Tax equivalent yield for the Municipal Cash Management
Fund is computed by dividing that portion of the yield or
effective yield (calculated as described above) which is tax
exempt by 1 minus a stated tax rate and adding the quotient to
that portion, if any, of the yield of the Fund that is not tax
exempt.
The tax equivalent figure, however, does not include
the potential effect of any state or local (including, but not
limited to, county, district or city) taxes, including
applicable surcharges. In addition, there may be pending
legislation which could affect such stated tax rates or yields.
Each investor should consult its tax adviser, and consider its
own factual circumstances and applicable tax laws, in order to
ascertain the relevant tax equivalent yield.
Yields will fluctuate and are not necessarily
representative of future results. Each investor should remember
that yield is a function of the type and quality of the
instruments in the portfolio, portfolio maturity and operating
expenses. An investor's principal in the Fund is not
guaranteed. See "Determination of Net Asset Value" for a
discussion of the manner in which the Fund's price per share is
determined.
INFORMATION ABOUT THE TRUST
The following information supplements and should be
read in conjunction with the section in the Funds' Prospectus
entitled "General Information."
Each Fund share has one vote and, when issued and paid
for in accordance with the terms of the offering, is fully paid
and non-assessable. Fund shares have no preemptive,
subscription or conversion rights and are freely transferable.
The Trust will send annual and semi-annual financial
statements to all its shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan, 7 Hanover Square, New York,
New York 10004-2594, as counsel for the Trust, has rendered its
opinion as to certain legal matters regarding the due
authorization and valid issuance of the shares of beneficial
interest being sold pursuant to the Funds' Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New
York 10019, independent auditors, have been selected as auditors
of the Trust.
APPENDIX
Description of the highest commercial paper, municipal
bond and note and other short- and long-term rating categories
assigned by Standard & Poor's Corporation ("S&P"), Moody's
Investors Service, Inc. ("Moody's"), Fitch Investors Service,
Inc. ("Fitch"), Duff & Phelps Credit Rating Co. ("Duff"),
IBCA Limited and IBCA Inc. ("IBCA") and Thomson BankWatch, Inc.
("BankWatch"):
S&P
Commercial Paper and Short-Term Ratings
The designation A-1 by S&P indicates that the degree
of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming
safety characteristics are denoted with a plus sign (+)
designation.
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment
of the creditworthiness of an obligor with respect to a specific
obligation.
The ratings are based on current information furnished
by the issuer or obtained by S&P from other sources it considers
reliable, and will include: (1) likelihood of default-capacity
and willingness of the obligor as to the timely payment of
interest and repayment of principal in accordance with the terms
of the obligation; (2) nature and provisions of the obligation;
and (3) protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws
affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely
strong.
AA
Debt rated AA has a very strong capacity to pay
interest and repay principal and differs from the highest rated
issues only in small degree. The AA ratings may be modified by
the addition of a plus (+) or a minus (-) sign, which is used to
show relative standing within the category.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very
strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics
are given a plus (+) designation.
SP-2
The issuers of these municipal notes exhibit
satisfactory capacity to pay principal and interest.
Moody's
Commercial Paper and Short-Term Ratings
The rating Prime-1 (P-1) is the highest commercial
paper rating assigned by Moody's. Issuers of P-1 paper must
have a superior capacity for repayment of short-term promissory
obligations and ordinarily will be evidenced by leading market
positions in well established industries, high rates of return
of funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad
margins and earnings coverage of fixed financial charges and
high internal cash generation, and well established access to a
range of financial markets and assured sources of alternate
liquidity.
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what generally are known as high grade bonds. They are
rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
Moody's applies the numerical modifiers 1, 2 and 3 to
show relative standing within the AA rating category. The
modifier 1 indicates a ranking for the security in the higher
end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and
other short-term loans are designated Moody's Investment Grade
(MIG). Such ratings recognize the difference between short-term
credit risk and long-term risk. Factors affecting the liquidity
of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in
bond risk, long-term secular trends for example, may be less
important over the short run.
A short-term rating may also be assigned on an issue
having a demand feature. Such ratings will be designated as
VMIG or, if the demand feature is not rated, as NR. Short-term
ratings on issues with demand features are differentiated by the
use of the VMIG symbol to reflect such characteristics as
payment upon periodic demand rather than fixed maturity dates
and payment relying on external liquidity. Additionally,
investors should be alert to the fact that the source of payment
may be limited to the external liquidity with no or limited
legal recourse to the issuer in the event the demand is not met.
Moody's short-term ratings are designated Moody's
Investment Grade as MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As
the name implies, when Moody's assigns a MIG or VMIG rating, all
categories define an investment grade situation.
MIG 1/VMIG 1
This designation denotes best quality. There is
present strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding
group.
Fitch
Commercial Paper and Short-Term Ratings
The rating Fitch-1 (Highest Grade) is the highest
commercial paper rating assigned by Fitch. Paper rated Fitch-1
is regarded as having the strongest degree of assurance for
timely payment.
Municipal Bond Ratings
The ratings represent Fitch's assessment of the
issuer's ability to meet the obligations of a specific debt
issue or class of debt. The ratings take into consideration
special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and
operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect
the issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade
and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably
foreseeable events.
AA
Bonds rated AA are considered to be investment grade
and of very high credit quality. The obligor's ability to apply
interest and repay principal is very strong, although not quite
as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these
issuers is generally rated F-1+. Plus (+) and minus (-) signs
are used with a rating symbol to indicate the relative position
of a credit within the rating category.
Duff
Commercial Paper and Short-Term Ratings
The rating Duff-1 is the highest commercial paper
rating assigned by Duff. Paper rated Duff-1 is regarded as
having very high certainty of timely payment with excellent
liquidity factors which are supported by ample asset protection.
Risk factors are minor.
AAA
Bonds rated AAA are considered highest credit quality.
The risk factors are negligible, being only slightly more than
for risk-free U.S. Treasury debt.
AA
Bonds rated AA are considered high credit quality.
Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions. Plus
(+) and minus (-) signs are used with a rating to indicate the
relative position of a credit within the AA rating category.
IBCA
Commercial Paper and Short-Term Ratings
The designation A-1 by IBCA indicates that the
obligation is supported by a very strong capacity for timely
repayment. Those obligations rated A1+ are supported by the
highest capacity for timely repayment.
Bond and Long-Term Ratings
Obligations rated AAA by IBCA have the lowest
expectation of investment risk. Capacity for timely repayment
of principal and interest is substantial, such that adverse
changes in business, economic or financial conditions are
unlikely to increase investment risk significantly.
IBCA also assigns a rating to certain international
and U.S. banks. An IBCA bank rating represents IBCA's current
assessment of the strength of the bank and whether such bank
would receive support should it experience difficulties. In its
assessment of a bank, IBCA uses a dual rating system comprised
of Legal Ratings and Individual Ratings. In addition, IBCA
assigns banks Long- and Short-Term Ratings as used in the
corporate ratings discussed above. Legal Ratings, which range
in gradation from 1 through 5, address the question of whether
the bank would receive support provided by central banks or
shareholders if it experienced difficulties, and such ratings
are considered by IBCA to be a prime factor in its assessment of
credit risk. Individual Ratings, which range in gradations from
A through E, represent IBCA's assessment of a bank's economic
merits and address the question of how the bank would be viewed
if it were entirely independent and could not rely on support
from state authorities or its owners.
BankWatch
Commercial Paper and Short-Term Ratings
The rating TBW-1 is the highest short-term rating
assigned by BankWatch; the rating indicates that the degree of
safety regarding timely repayment of principal and interest is
very strong.
In addition to ratings of short-term obligations,
BankWatch assigns a rating to each issuer it rates, in
gradations of A through E. BankWatch examines all segments of
the organization including, where applicable, the holding
company, member banks or associations, and other subsidiaries.
In those instances where financial disclosure is incomplete or
untimely, a qualified rating (QR) is assigned to the
institution. BankWatch also assigns, in the case of foreign
banks, a country rating which represents an assessment of the
overall political and economic stability of the country in which
the bank is domiciled.
FINANCIAL STATEMENTS
Prairie Institutional Funds
Statement of Assets and Liabilities
November 16, 1994
<TABLE>
<CAPTION>
Treasury U.S. Government
Municipal Prime Securities
Cash Cash Cash Cash
Management Management Management Management
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
Assets
Cash . . . . . . . . . $ 12,501 $ 37,499 $ 37,499 $ 12,501
deferred organization
costs 31,250 31,250 31,250 31,250
Total Assets. . . . . 43,751 68,749 68,749 43,751
Liabilities
Organization costs payable 31,250 31,250 31,250 31,250
Net Assets . . . . . . . $ 12,501 $ 37,499 $ 37,499 $ 12,501
Shares Outstanding ($0.001 par value,
unlimited number of shares authorized,
issued at $1.00 per share):
Institutional Shares . . . 1 24,999 24,999 1
Service Shares . . . . . 12,500 12,500 12,500 12,500
Total Shares Outstanding 12,501 37,499 37,499 12,501
Net Asset Value, Offering
Price and
Redemption Price per Share $ 1.00 $ 1.00 $ 1.00 $ 1.00
Composition of Net Assets:
Shares of beneficial
interest, at par $ 13 $ 37 $ 37 $ 13
Additional
paid-in capital 12,488 37,482 37,452 12,488
Net Assets,
November 16, 1994 $ 12,501 $ 37,499 $ 37,499 $ 12,501
</TABLE>
Prairie Institutional Funds
Notes to Financial Statements
November 16, 1994
Note 1 - General
Prairie Institutional Funds (the "Trust") was organized as
Massachusetts Business Trust on October 19, 1994. The Trust
consists of four portfolios; Cash Management Fund, Municipal
Cash Management Fund, Treasury Prime Cash Management Fund and
U.S. Government Securities Cash Management Fund (collectively,
the "Funds").
The First National Bank of Chicago ("First Chicago") serves as
investment adviser to the Trust. Concord Financial Group, Inc.
(the "Distributor"), a wholly-owned subsidiary of Concord
Holding Corporation ("Concord"), serves as cash Fund's
distributor.
The Funds each offer two classes of shares - Institutional
Shares and Service Shares, Institutional Shares and Service
Shares are essentially the same except that Service Shares bear
the fees that are payable under a Service Plan (the "Service
Plan"), adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, at an annual rate of 0.25% of the average
daily net assets of the outstanding Service Shares.
The Funds have had no operations other than the sale to Concord
of 12,501 shares of the Cash Management Fund or $12,501, 37,499
shares of the Municipal Cash Management Fund for $37,499 shares
of the Treasury Prime Cash Management Fund for $37,499 and
12,501 shares of the U.S. Government Securities Cash Management
Fund for $12,501.
Organization costs incurred in connection with the organization
and initial registration of the Funds will be paid initially by
Concord and reimbursed by the Funds. Such organizational costs
have been deferred and will be amortized ratably over a period
of sixty months from the commencement of operations.
Note 2 - Agreements
The Trust has an Investment Advisory Agreement with First
Chicago. Pursuant to the terms of the Investment Advisory
Agreement, First Chicago is responsible for the purchases and
sales of each Fund's portfolio securities. For its advisory
services, First Chicago is entitled to a fee, accrued daily and
paid monthly, at an annual rate of 0.20% of each Fund's average
daily net assets. The Trust also has an Administration
Agreement with First Chicago, pursuant to which it has agreed to
pay First Chicago 0.15% of each Fund's average daily net assets.
First Chicago has entered into a Master Sub-Administration
Agreement with Concord. Pursuant to the terms of this
agreement, Concord has agreed to assist in providing certain
administrative services for the Trust. For its services,
Concord will receive a fee from First Chicago.
The Distributor has entered into a Distribution Agreement with
the Trust. The Distributor does not receive a fee under the
Distribution Agreement.
Under the Service Plan with respect to the Funds' Service
Shares, each Fund pays the Distributor for advertising,
marketing and distributing such Fund's Service Shares and for
providing certain services to the holders of Service Shares at
an annual rate of 0.25% of the average net assets of the
outstanding Service Shares. Under the Service Plan, the
Distributor may make payments to other service organizations in
respect of the provision of these services to their clients who
are the beneficial owners of Service Shares. Such service
organizations may include First Chicago, Concord and their
affiliates.
First Chicago has voluntarily agreed to waive a portion of its
fees to the extent that the ordinary operating expenses
(excluding fees incurred under the Service Plan) of any Fund
exceeds 0.35% of such Fund's average daily net assets.
REPORT OF INDEPENDENT AUDITORS
Shareholder and Board of Trustees
Prairie Institutional Funds
We have audited the accompanying statement of assets and liabil-
ities of each portfolio of Prairie Institutional Funds as of
November 16, 1994. This statement of assets and liabilities is
the responsibility of the Fund's management. Our responsibility
is to express an opinion on this statement of assets and
liabilities based on our audit.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
this statement of assets and liabilities is free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement
of assets and liabilities. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall statement of
assets and liabilities presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred
to above presents fairly, in all material respects, the
financial position of each portfolio of Prairie Institutional
Funds at November 16, 1994, in conformity with generally
accepted accounting principles.
New York, New York
November 16, 1994
Ernst & Young LLP
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Statement of Assets and Liabilities as of
November 16,1994
(2) Report of Ernst & Young LLP, Independent
Auditors, dated November 16, 1994
(b) Exhibits:
(1) Amended and Restated Agreement and
Declaration of Trust
(2) By-Laws
(5) Investment Advisory Agreement
(6) Distribution Agreement
(8) Custody Agreement
(9)(a) Administration Agreement
(9)(b) Master Sub-Administration Agreement
(10) Opinion (including consent) of
Stroock & Stroock & Lavan
(11) Consent of Independent Auditors
(15) Service Plan
Other Exhibit:
Secretary's Certificate
Item 25. Persons Controlled by or Under Common Control with
Registrant
Not applicable.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Title of Class Holders
Shares of beneficial interest,
par value $.001 per share
Cash Management Fund 1
Municipal Cash Management Fund 1
Treasury Prime Cash Management Fund 1
U.S. Government Securities Cash
Management Fund 1
Item 27. Indemnification
Reference is made to Article EIGHTH of the Registrant's
Declaration of Trust filed as Exhibit 1 hereto. The
application of these provisions is limited by Article 10 of the
Registrant's By-Laws filed as Exhibit 2 hereto and by the
following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission:
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may
be permitted to trustees, officers and
controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the
registrant has been advised that in the
opinion of the Securities and Exchange Commis-
sion such indemnification is against public
policy as expressed in such Act and is,
therefore, unenforceable. In the event that a
claim for indemnification against such
liabilities (other than the payment by the
registrant of expenses incurred or paid by a
trustee, officer or controlling person of the
registrant in the successful defense of any
action, suit or proceeding) is asserted by
such trustee, officer or controlling person in
connection with the securities being
registered, the registrant will, unless in the
opinion of its counsel the matter has been
settled by controlling precedent, submit to a
court of appropriate jurisdiction the question
whether such indemnification by it is against
public policy as expressed in such Act and
will be governed by the final adjudication of
such issue.
Reference also is made to the Distribution Agreement to
be filed as Exhibit 6 hereto.
Item 28. Business and Other Connections of Investment Adviser
The Investment Adviser is a commercial bank providing a
wide range of banking and investment services.
To the knowledge of the Registrant, none of the
directors or executive officers of the Investment Adviser,
except those described below, are or have been, at any time
during the past two years, engaged in any other business,
profession, vocation or employment of a substantial nature,
except that certain directors and executive officers of the
Investment Adviser also hold or have held various positions with
bank and non-bank affiliates of the Investment Adviser,
including its parent, First Chicago Corporation.
Principal Occupation or
Name Position with the Employment of a Substantial
Investment Adviser Nature
Richard L.
Thomas Chairman of the
Board, Chief
Executive Officer
and President Also serves as Chairman of
the Board, Chief Executive
Officer and President of
First Chicago Corporation
John H. Bryan Director Chairman of the Board and
Chief Executive Officer, Sara
Lee Corporation*
Dean L. Buntrock Director Chairman of the Board and Chief
Executive Officer, Waste
Management, Inc.*
Frank W. Considine Director Honorary Chairman of the
Board
and Chairman of the
Executive
Committee, American National Can
Company*
James S. Crown Director General Partner, Henry Crown
and
Company (Not Incorporated)*
Donald P. Jacobs Director Dean of the J.L. Kellogg
Graduate School of Management,
Northwestern University*
Charles S. Locke Director Chairman of the Board and
Chief
Executive Officer, Morton
International, Inc.*
Richard M. Morrow Director Retired Chairman and Chief
Executive Officer, Amoco
Corporation*
Leo F. Mullin Director Chairman and Chief
Executive
Officer, American National
Corporation and Executive
Vice President of First
Chicago Corporation
Earl L. Neal Director Principal, Earl L. Neal &
Associates, a Law firm
James J. O'Connor Director Chairman and Chief Executive
Officer, Commonwealth Edison
Company*
Jerry K. Pearlman Director Chairman, President and Chief
Executive Officer, Zenith
Electronics Corporation
Ernestine M. Raclin Director Chairman of the Board, 1st
Source Corporation*
Jack F. Reichert Director Chairman of the Board,
President
and Chief Executive Officer,
Brunswick Corporation
Patrick G. Ryan Director President and Chief Executive
Officer, Aon Corporation*
George A. Shaefer Director Chairman of the Board, Retired,
and Director, Caterpillar Inc.*
Adele Simmons Director President, John D. and
Catherine T. MacArthur
Foundation
Roger W. Stone Director Chairman of the Board,
President
and Chief Executive Officer,
Stone Container Corporation*
David J. Vitale Director and
Executive Vice
President Executive Vice President of
First Chicago Corporation*
Name Position with the Investment Adviser
Marvin J. Alef, Jr. Executive Vice President
John W. Ballantine Executive Vice President
Jerry C. Bradshaw Executive Vice President
John A. Canning, Jr. Executive Vice President
Sherman I. Goldberg Executive Vice President,
General Counsel and Secretary
Donald R. Hollis Executive Vice President
W. G. Jurgensen Executive Vice President and
Chief Financial Officer
Scott P. Marks, Jr. Executive Vice President
J. Mikesell Thomas Executive Vice President
Item 29. Principal Underwriters
(a) Other investment companies for which Registrant's
principal underwriter (exclusive distributor) acts as principal
underwriter or exclusive distributor:
The Infinity Mutual Funds, Inc.
Emerald Fund, Inc.
Pacific Horizon Funds, Inc.
(b) The information required by this Item 29(b)
regarding each director or officer of Concord Financial Group,
Inc. is incorporated by reference to Schedule A of Form BD filed
by Concord Financial Group, Inc. pursuant to the Securities
Exchange Act of 1934 (SEC File No. 8-37601).
Item 30. Location of Accounts and Records
1. The First National Bank of Chicago
Three First National Plaza
Chicago, Illinois 60670
2. Concord Financial Group, Inc.
125 West 55th Street
11th Floor
New York, New York 10019
Item 31. Management Services
Not Applicable
Item 32. Undertakings
Registrant hereby undertakes
(1) to file a post-effective amendment, using
financial statements which need not be certified,
within four to six months from the effective date
of Registrant's 1933 Act Registration Statement.
(2) to call a meeting of shareholders for the purpose
of voting upon the question of removal of a
trustee or trustees when requested in writing to
do so by the holders of at least 10% of the
Registrant's outstanding shares of beneficial
interest and in connection with such meeting to
comply with the provisions of Section 16(c) of
the Investment Company Act of 1940 relating to
shareholder communications.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant has
duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, and State of Illinois on the
18th day of November, 1994.
PRAIRIE INSTITUTIONAL FUNDS
BY: /s/Joseph F. Kissel*
Joseph F. Kissel, President
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, this Amendment to
the
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signatures Title Date
/s/Joseph F. Kissel* President (Principal November 18,1994
Joseph F. Kissel Executive Officer)
/s/ Richard A. Fabietti* Treasurer (Principal November 18, 1994
Richard A. Fabietti Financial and
Accounting Officer)
/s/John P. Gould* Trustee November 18, 1994
John P. Gould
/s/Marilyn McCoy* Trustee November 18, 1994
Marilyn McCoy
/s/Raymond D. Oddi* Trustee November 18, 1994
Raymond D. Oddi
*By: /s/James W. Bernaiche November 18, 1994
James W. Bernaiche,
as Attorney-in-fact
PRAIRIE INSTITUTIONAL FUNDS
Pre-Effective Amendment No. 1 to
Registration Statement on Form N-1A under
the Securities Act of 1933 and
the Investment Company Act of 1940
EXHIBITS
INDEX TO EXHIBITS
Page
(1) Amended and Restated Agreement
and Declaration of Trust . . . . . . . . . .
(2) By-laws. . . . . . . . . . . . . . . . . . . .
(5) Investment Advisory Agreement . . . . . . . . . . . . .
(6) Distribution Agreement . . . . . . . . . . . .
(8) Custody Agreement. . . . . . . . . . . . . . .
(9)(a) Administration Agreement
(9)(b) Master Sub-Administration Agreement. . . . . . . .
(10) Opinion (including consent) of Stroock &
Stroock & Lavan. . . . . . . . . . . . . . .
(11) Consent of Independent Auditors. . . . . . . .
(15) Service Plan . . . . . . . . . . . . . . . . .
Other Exhibit: Secretary's Certificate . . . . . .
<PAGE>
EXHIBIT 1
PRAIRIE INSTITUTIONAL FUNDS
(formerly, SSL-1994-2)
Amended and Restated Agreement and Declaration of Trust
THIS AMENDED AND RESTATED AGREEMENT AND DECLARATION OF
TRUST, made this 20th day of October, 1994, hereby amends and
restates in its entirety the Agreement and Declaration of Trust
made at Boston, Massachusetts, dated October 19, 1994, by the
Trustee hereunder (hereinafter with any additional and successor
trustees referred to as the "Trustees") and by the holders of
shares of beneficial interest to be issued hereunder as
hereinafter provided.
W I T N E S S E T H :
WHEREAS, the Trustees have agreed to manage all property
coming into their hands as trustees of a Massachusetts business
trust in accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they
will hold all cash, securities and other assets, which they may
from time to time acquire in any manner as Trustees hereunder IN
TRUST to manage and dispose of the same upon the following terms
and conditions for the pro rata benefit of the holders from time
to time of Shares, whether or not certificated, in this Trust as
hereinafter set forth.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as "Prairie
Institutional Funds."
Section 2. Definitions. Whenever used herein, unless
otherwise required by the context or specifically provided:
(a) The term "Commission" shall have the meaning
provided in the 1940 Act;
(b) The "Trust" refers to the Massachusetts business
trust established by this Agreement and Declaration of Trust, as
amended from time to time;
(c) "Shareholder" means a record owner of Shares of the
Trust;
(d) "Shares" means the equal proportionate transferable
units of interest into which the beneficial interest in the Trust
shall be divided from time to time or, if more than one series or
class of Shares is authorized by the Trustees, the equal
proportionate transferable units into which each series or class
of Shares shall be divided from time to time, and includes a
fraction of a Share as well as a whole Share;
(e) The "1940 Act" refers to the Investment Company Act
of 1940, and the Rules and Regulations thereunder, all as amended
from time to time;
(f) The term "Manager" is defined in Article IV, Section 5;
(g) The term "Person" shall mean an individual or any
corporation, partnership, joint venture, trust or other
enterprise;
(h) "Declaration of Trust" shall mean this Agreement
and Declaration of Trust as amended or restated from time to
time;
(i) "Bylaws" shall mean the Bylaws of the Trust as
amended from time to time;
(j) The term "series" or "series of Shares" refers to
the one or more separate investment portfolios of the Trust into
which the assets and liabilities of the Trust may be divided and
the Shares of the Trust representing the beneficial interest of
Shareholders in such respective portfolios; and
(k) The term "class" or "class of Shares" refers to the
division of Shares representing any series into two or more
classes as provided in Article III, Section 1 hereof.
ARTICLE II
Purposes of Trust
This Trust is formed for the following purpose or purposes:
(a) to conduct, operate and carry on the business of an
investment company;
(b) to subscribe for, invest in, reinvest in, purchase
or otherwise acquire, hold, pledge, sell, assign, transfer, lend,
write options on, exchange, distribute or otherwise dispose of
and deal in and with securities of every nature, kind, character,
type and form, including, without limitation of the generality of
the foregoing, all types of stocks, shares, futures contracts,
bonds, debentures, notes, bills and other negotiable or
non-negotiable
instruments, obligations, evidences of interest, certificates of
interest, certificates of participation, certificates, interests,
evidences of ownership, guarantees, warrants, options or
evidences of indebtedness issued or created by or guaranteed as
to principal and interest by any state or local government or any
agency or instrumentality thereof, by the United States
Government or any agency, instrumentality, territory, district or
possession thereof, by any foreign government or any agency,
instrumentality, territory, district or possession thereof, by
any corporation organized under the laws of any state, the United
States or any
territory or possession thereof or under the laws of any foreign
country, bank certificates of deposit, bank time deposits,
bankers' acceptances and commercial paper; to pay for the same in
cash or by the issue of stock, including treasury stock, bonds or
notes of the Trust or otherwise; and to exercise any and all
rights, powers and privileges of ownership or interest in respect
of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise
act with respect thereto, with power to designate one or more
persons, firms, associations or corporations to exercise any of
said rights, powers and privileges in respect of any said
instruments;
(c) to borrow money or otherwise obtain credit and to
secure the same by mortgaging, pledging or otherwise subjecting
as security the assets of the Trust;
(d) to issue, sell, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in, Shares including Shares in fractional
denominations, and to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of Shares any funds or
other assets of the appropriate series or class of Shares,
whether capital or surplus or otherwise, to the full extent now
or hereafter permitted by the laws of The Commonwealth of
Massachusetts;
(e) to conduct its business, promote its purposes, and
carry on its operations in any and all of its branches and
maintain offices both within and without The Commonwealth of
Massachusetts, in any and all States of the United States of
America, in the District of Columbia, and in any other parts of
the world; and
(f) to do all and everything necessary, suitable,
convenient, or proper for the conduct, promotion, and attainment
of any of the businesses and purposes herein specified or which
at any time may be incidental thereto or may appear conducive to
or
expedient for the accomplishment of any of such businesses and
purposes and which might be engaged in or carried on by a Trust
organized under the Massachusetts General Laws, and to have and
exercise all of the powers conferred by the laws of The Common-
wealth of Massachusetts upon a Massachusetts business trust.
The foregoing provisions of this Article II shall be
construed both as purposes and powers and each as an independent
purpose and power.
ARTICLE III
Beneficial Interest
Section 1. Shares of Beneficial Interest. The Shares
of the Trust shall be issued in one or more series as the
Trustees may, without Shareholder approval, authorize. Each
series shall be preferred over all other series in respect of the
assets allocated to that series and shall represent a separate
investment portfolio of the Trust. The beneficial interest in
each series at all times shall be divided into Shares, with or
without par value as the Trustees may from time to time
determine, each of which
shall, except as provided in the following sentence, represent an
equal proportionate interest in the series with each other Share
of the same series, none having priority or preference over
another. The Trustees may, without Shareholder approval, divide
Shares of any series into two or more classes, Shares of each
such class having such preferences and special or relative rights
and privileges (including conversion rights, if any) as the
Trustees may determine. The number of Shares authorized shall be
unlimited, and the Shares so authorized may be represented in
part by fractional shares. From time to time, the Trustees may
divide or combine the Shares of any series or class into a
greater or lesser number without thereby changing the
proportionate beneficial interests in the series or class.
Section 2. Ownership of Shares. The ownership of
Shares will be recorded in the books of the Trust or a transfer
agent. The record books of the Trust or any transfer agent, as
the case may be, shall be conclusive as to who are the holders of
Shares of each series and class and as to the number of Shares of
each series and class held from time to time by each. No
certificates certifying the ownership of Shares need be issued
except as the Trustees may otherwise determine from time to time.
Section 3. Issuance of Shares. The Trustees are
authorized, from time to time, to issue or authorize the issuance
of Shares at not less than the par value thereof, if any, and to
fix the price or the minimum price or the consideration (in cash
and/or such other property, real or personal, tangible or
intangible, as from time to time they may determine) or minimum
consideration for such Shares. Anything herein to the contrary
notwithstanding, the Trustees may issue Shares pro rata to the
Shareholders of a series at any time as a stock dividend, except
to the extent otherwise required or permitted by the preferences
and special or relative rights and privileges of any classes of
Shares of that series, and any stock dividend to the Shareholders
of a particular class of Shares shall be made to such
Shareholders pro rata in proportion to the number of Shares of
such class held by each of them.
All consideration received by the Trust for the issue or
sale of Shares of each series, together with all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from
the sale, exchange or liquidation thereof, and any funds or
payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall belong irrevocably to the
series of Shares with respect to which the same were received by
the Trust for all purposes, subject only to the rights of
creditors, and shall be so handled upon the books of account of
the Trust and are herein referred to as "assets of" such series.
Shares may be issued in fractional denominations to the
same extent as whole Shares, and Shares in fractional
denominations shall be Shares having proportionately to the
respective fractions represented thereby all the rights of whole
Shares, including, without limitation, the right to vote, the
right to receive dividends and distributions, and the right to
participate upon liquidation of the Trust or of a particular
series of Shares.
Section 4. No Preemptive Rights; Derivative Suits.
Shareholders shall have no preemptive or other right to subscribe
for any additional Shares or other securities issued by the
Trust.
No action may be brought by a Shareholder on behalf of the Trust
or a series unless a prior demand regarding such matter has been
made on the Trustees and the Shareholders of the Trust or such
series.
Section 5. Status of Shares and Limitation of Personal
Liability. Shares shall be deemed to be personal property giving
only the rights provided in this instrument. Every Shareholder
by virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the same
nor entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against
the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of
the Trust property or right to call for a partition or division
of the same or for an accounting, nor shall the ownership of
Shares constitute the Shareholders partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind any Shareholder or Trustee
personally or to call upon any Shareholder for the payment of any
sum of money or assessment whatsoever other than such as the
Shareholder at any
time personally may agree to pay by way of subscription for any
Shares or otherwise. Every note, bond, contract or other
undertaking issued by or on behalf of the Trust shall include a
recitation limiting the obligation represented thereby to the
Trust and its assets or the assets of a particular series (but
the omission of such a recitation shall not operate to bind any
Shareholder or Trustee personally).
ARTICLE IV
Trustees
Section 1. Election. A Trustee may be elected either
by the Trustees or the Shareholders. The Trustees named herein
shall serve until the first meeting of the Shareholders or until
the election and qualification of their successors. Prior to the
first meeting of Shareholders the initial Trustees hereunder may
elect additional Trustees to serve until such meeting and until
their successors are elected and qualified. The Trustees also at
any time may elect Trustees to fill vacancies in the number of
Trustees. The number of Trustees shall be fixed from time to
time
by the Trustees and, at or after the commencement of the business
of the Trust, shall be not less than three. Each Trustee,
whether
referred to hereinafter or hereafter becoming a Trustee, shall
serve as a Trustee during the lifetime of this Trust, until such
Trustee dies, resigns, retires, or is removed, or, if sooner,
until the next meeting of Shareholders called for the purpose of
electing Trustees and the election and qualification of his
successor. Subject to Section 16(a) of the 1940 Act, the
Trustees may elect their own successors and, pursuant to this
Section, may appoint Trustees to fill vacancies.
Section 2. Powers. The Trustees shall have all powers
necessary or desirable to carry out the purposes of the Trust,
including, without limitation, the powers referred to in Article
II hereof. Without limiting the generality of the foregoing, the
Trustees may adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business of the Trust
and may amend and repeal them to the extent that they do not
reserve that right to the Shareholders; they may fill vacancies
in their number, including vacancies resulting from increases in
their own number, and may elect and remove such officers and
employ, appoint and terminate such employees or agents as they
consider appropriate; they may appoint from their own number and
terminate any one or more committees; they may employ one or more
custodians of the assets of the Trust and may authorize such
custodians to employ subcustodians and to deposit all or any part
of such assets in a system or systems for the central handling of
securities, retain a transfer agent and a Shareholder servicing
agent, or both, provide for the distribution of Shares through a
principal underwriter or otherwise, set record dates, and in
general delegate such authority as they consider desirable
(including, without limitation, the authority to purchase and
sell securities and to invest funds, to determine the net income
of the Trust for any period, the value of the total assets
of the Trust and the net asset value of each Share, and to
execute such deeds, agreements or other instruments either in the
name of the Trust or the names of the Trustees or as their
attorney or attorneys or
otherwise as the Trustees from time to time may deem expedient)
to any officer of the Trust, committee of the Trustees, any such
employee, agent, custodian or underwriter or to any Manager.
Without limiting the generality of the foregoing, the
Trustees shall have full power and authority:
(a) To invest and reinvest cash and to hold cash
uninvested;
(b) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property;
and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to
such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(c) To hold any security or property in a form not
indicating any trust whether in bearer, unregistered or other
negotiable form or in the name of the Trust or a custodian,
subcustodian or other depository or a nominee or nominees or
otherwise;
(d) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
concern, any security of which is held in the Trust; to consent
to
any contract, lease, mortgage, purchase or sale of property by
such corporation or concern, and to pay calls or subscriptions
with respect to any security held in the Trust;
(e) To join with other security holders in acting
through a committee, depositary, voting trustee or otherwise, and
in that connection to deposit any security with, or transfer any
security to, any such committee, depositary or trustee, and to
delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper;
(f) To compromise, arbitrate, or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy, including, but not limited to, claims for taxes;
(g) Subject to the provisions of Article III, Section
3, to allocate assets, liabilities, income and expenses of the
Trust to a particular series of Shares or to apportion the same
among two or more series, provided that any liabilities or
expenses incurred by a particular series of Shares shall be
payable solely out of the assets of that series; and to the
extent
necessary or appropriate to give effect to the preferences and
special or relative rights and privileges of any classes of
Shares, to allocate assets, liabilities, income and expenses of a
series to a particular class of Shares of that series or to
apportion the same among two or more classes of Shares of that
series;
(h) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(i) To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or appropriate
for the conduct of the business, including, without limitation,
insurance policies insuring the assets of the Trust and payment
of
distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers or Managers, principal
underwriters, or independent contractors of the Trust
individually
against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken
or omitted by any such person as Shareholder, Trustee, officer,
employee, agent, investment adviser or Manager, principal
underwriter, or independent contractor, including any action
taken
or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such
person against such liability; and
(j) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry
out
pension, profit-sharing, share bonus, share purchase, savings,
thrift and other retirement, incentive and benefit plans, trusts
and provisions, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and
other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust.
Further, without limiting the generality of the
foregoing, the Trustees shall have full power and authority to
incur and pay out of the principal or income of the Trust such
expenses and liabilities as may be deemed by the Trustees to be
necessary or proper for the purposes of the Trust; provided,
however, that all expenses and liabilities incurred by or arising
in connection with a particular series of Shares, as determined
by the Trustees, shall be payable solely out of the assets of
that series.
Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally
accepted accounting principles by or pursuant to the authority
granted by the Trustees, as to the amount of the assets, debts,
obligations or liabilities of the Trust or a particular series or
class of Shares; the amount of any reserves or charges set up and
the propriety thereof; the time of or purpose for creating such
reserves or charges; the use, alteration or cancellation of any
reserves or charges (whether or not any debt, obligation or
liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then or
thereafter required to be paid or discharged); the price or
closing bid or asked price of any investment owned or held by the
Trust or a particular series; the market value of any investment
or fair value of any other asset of the Trust or a particular
series; the number of Shares outstanding; the estimated expense
to
the Trust or a particular series in connection with purchases of
its Shares; the ability to liquidate investments in an orderly
fashion; and the extent to which it is practicable to deliver a
cross-section of the portfolio of the Trust or a particular
series
in payment for any such Shares, or as to any other matters
relating to the issue, sale, purchase and/or other acquisition or
disposition of investments or Shares of the Trust or a particular
series, shall be final and conclusive, and shall be binding upon
the Trust or such series and its Shareholders, past, present and
future, and Shares are issued and sold on the condition and
understanding that any and all such determinations shall be
binding as aforesaid.
Section 3. Meetings. At any meeting of the Trustees, a
majority of the Trustees then in office shall constitute a
quorum.
Any meeting may be adjourned from time to time by a majority of
the votes cast upon the question, whether or not a quorum is
present, and the meeting may be held as adjourned without further
notice.
When a quorum is present at any meeting, a majority of
the Trustees present may take any action, except when a larger
vote is required by this Declaration of Trust, the By-Laws or the
1940 Act.
Any action required or permitted to be taken at any
meeting of the Trustees or of any committee thereof may be taken
without a meeting, if a written consent to such action is signed
by a majority of the Trustees or members of any such committee
then in office, as the case may be, and such written consent is
filed with the minutes of proceedings of the Trustees or any such
committee.
The Trustees or any committee designated by the Trustees
may participate in a meeting of the Trustees or such committee by
means of a conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other at the same time. Participation by
such means shall constitute presence in person at a meeting.
Section 4. Ownership of Assets of the Trust. Title to
all of the assets of each series of Shares of the Trust at all
times shall be considered as vested in the Trustees.
Section 5. Investment Advice and Management Services.
The Trustees shall not in any way be bound or limited by any
present or future law or custom in regard to investments by
trustees. The Trustees from time to time may enter into a
written contract or contracts with any person or persons (herein
called the "Manager"), including any firm, corporation, trust or
association in which any Trustee or Shareholder may be
interested, to act as investment advisers and/or managers of the
Trust and to provide such investment advice and/or management as
the Trustees from time to time may consider necessary for the
proper management of the assets of the Trust, including, without
limitation, authority to determine from time to time what
investments shall be
purchased, held, sold or exchanged and what portion, if any, of
the assets of the Trust shall be held uninvested and to make
changes in the Trust's investments. Any such contract shall be
subject to the requirements of the 1940 Act with respect to its
continuance in effect, its termination and the method of
authorization and approval of such contract, or any amendment
thereto or renewal thereof.
Any Trustee or any organization with which any Trustee
may be associated also may act as broker for the Trust in making
purchases and sales of securities for or to the Trust for its
investment portfolio, and may charge and receive from the Trust
the usual and customary commission for such service. Any
organization with which a Trustee may be associated in acting as
broker for the Trust shall be responsible only for the proper
execution of transactions in accordance with the instructions of
the Trust and shall be subject to no further liability of any
sort whatever.
The Manager, or any affiliate thereof, also may be a
distributor for the sale of Shares by separate contract or may be
a person controlled by or affiliated with any Trustee or any
distributor or a person in which any Trustee or any distributor
is
interested financially, subject only to applicable provisions of
law. Nothing herein contained shall operate to prevent any
Manager, who also acts as such a distributor, from also receiving
compensation for services rendered as such distributor.
Section 6. Removal and Resignation of Trustees. The
Trustees or the Shareholders (by vote of 66-2/3% of the
outstanding Shares entitled to vote thereon) may remove at any
time any Trustee with or without cause, and any Trustee may
resign
at any time as Trustee, without penalty by written notice to the
Trust; provided that sixty days' advance written notice shall be
given in the event that there are only three or fewer Trustees at
the time a notice of resignation is submitted.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. The Shareholders shall have
power to vote only (i) for the election of Trustees as provided
in Article IV, Section 1, of this Declaration of Trust; provided,
however, that no meeting of Shareholders is required to be called
for the purpose of electing Trustees unless and until such time
as less than a majority of the Trustees have been elected by the
Shareholders, (ii) for the removal of Trustees as provided in
Article IV, Section 6, (iii) with respect to any Manager as pro-
vided in Article IV, Section 5, (iv) with respect to any
amendment of this Declaration of Trust as provided in Article IX,
Section 8, (v) with respect to the termination of the Trust or a
series of Shares as provided in Article IX, Section 5, and (vi)
with respect
to such additional matters relating to the Trust as may be
required by law, by this Declaration of Trust, or the By-Laws of
the Trust or any registration of the Trust with the Commission or
any state, or as the Trustees may consider desirable. Each whole
Share shall be entitled to one vote as to any matter on which it
is entitled to vote (except that in the election of Trustees said
vote may be cast for as many persons as there are Trustees to be
elected), and each fractional Share shall be entitled to a
proportionate fractional vote. Notwithstanding any other
provision of this Declaration of Trust, on any matter submitted
to a vote of Shareholders, all Shares of the Trust then entitled
to
vote shall be voted in the aggregate as a single class without
regard to series or classes of Shares, except (i) when required
by the 1940 Act or when the Trustees shall have determined that
the
matter affects one or more series or classes differently Shares
shall be voted by individual series or class and (ii) when the
Trustees have determined that the matter affects only the
interests of one or more series or classes then only Shareholders
of such series or classes shall be entitled to vote thereon.
There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. A proxy with respect
to Shares held in the name of two or more persons shall be valid
if executed by any one of them, unless at or prior to exercise of
the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed
by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Whenever no Shares of
any series or class are issued and outstanding, the Trustees may
exercise with respect to such series or class all rights of
Shareholders and may take any action required by law, this
Declaration of Trust or any By-Laws of the Trust to be taken by
Shareholders.
Section 2. Meetings. Meetings of the Shareholders may
be called by the Trustees or such other person or persons as may
be specified in the By-Laws and shall be called by the Trustees
upon the written request of Shareholders owning at least 30% of
the outstanding Shares entitled to vote. Shareholders shall be
entitled to at least ten days' prior notice of any meeting.
Section 3. Quorum and Required Vote. Thirty percent
(30%) of the outstanding Shares shall be a quorum for the
transaction of business at a Shareholders' meeting, except that
where any provision of law or of this Declaration of Trust
permits
or requires that holders of any series or class shall vote as a
series or class, then thirty percent (30%) of the aggregate
number
of Shares of that series or class entitled to vote shall be
necessary to constitute a quorum for the transaction of business
by that series or class. Any lesser number, however, shall be
sufficient for adjournment and any adjourned session or sessions
may be held within 90 days after the date set for the original
meeting without the necessity of further notice. Except when a
larger vote is required by any provision of this Declaration of
Trust or the By-Laws of the Trust and subject to any applicable
requirements of law, a majority of the Shares voted shall decide
any question and a plurality shall elect a Trustee, provided that
where any provision of law or of this Declaration of Trust
permits
or requires that the holders of any series or class shall vote as
a series or class, then a majority of the Shares of that series
or class voted on the matter (or a plurality with respect to the
election of a Trustee) shall decide that matter insofar as that
series or class is concerned.
Section 4. Action by Written Consent. Any action
required or permitted to be taken at any meeting may be taken
without a meeting if a consent in writing, setting forth such
action, is signed by a majority of Shareholders entitled to vote
on the subject matter thereof (or such larger proportion thereof
as shall be required by any express provision of this Declaration
of Trust) and such consent is filed with the records of the
Trust.
Section 5. Additional Provisions. The By-Laws may
include further provisions for Shareholders' votes and meetings
and related matters.
ARTICLE VI
Distributions and Redemptions
Section 1. Distributions. The Trustees shall
distribute periodically to the Shareholders of each series of
Shares an amount approximately equal to the net income of that
series, determined by the Trustees or as they may authorize and
as herein provided. Distributions of income may be made in one
or more payments, which shall be in Shares, cash or otherwise,
and on a date or dates and as of a record date or dates
determined by the Trustees. At any time and from time to time in
their discretion,
the Trustees also may cause to be distributed to the Shareholders
of any one or more series as of a record date or dates determined
by the Trustees, in Shares, cash or otherwise, all or part of any
gains realized on the sale or disposition of the assets of the
series or all or part of any other principal of the Trust
attributable to the series. Each distribution pursuant to this
Section 1 shall be made ratably according to the number of Shares
of the series held by the several Shareholders on the record date
for such distribution, except to the extent otherwise required or
permitted by the preferences and special or relative rights and
privileges of any classes of Shares of that series, and any
distribution to the Shareholders of a particular class of Shares
shall be made to such Shareholders pro rata in proportion to the
number of Shares of such class held by each of them. No
distribution need be made on Shares purchased pursuant to orders
received, or for which payment is made, after such time or times
as the Trustees may determine.
Section 2. Determination of Net Income. In determining
the net income of each series or class of Shares for any period,
there shall be deducted from income for that period (a) such
portion of all charges, taxes, expenses and liabilities due or
accrued as the Trustees shall consider properly chargeable and
fairly applicable to income for that period or any earlier period
and (b) whatever reasonable reserves the Trustees shall consider
advisable for possible future charges, taxes, expenses and
liabilities which the Trustees shall consider properly chargeable
and fairly applicable to income for that period or any earlier
period. The net income of each series or class for any period
may
be adjusted for amounts included on account of net income in the
net asset value of Shares issued or redeemed or repurchased
during
that period. In determining the net income of a series or class
for a period ending on a date other than the end of its fiscal
year, income may be estimated as the Trustees shall deem fair.
Gains on the sale or disposition of assets shall not be treated
as income, and losses shall not be charged against income unless
appropriate under applicable accounting principles, except in the
exercise of the discretionary powers of the Trustees. Any amount
contributed to the Trust which is received as income pursuant to
a decree of any court of competent jurisdiction shall be applied
as required by the said decree.
Section 3. Redemptions. Any Shareholder shall be
entitled to require the Trust to redeem and the Trust shall be
obligated to redeem at the option of such Shareholder all or any
part of the Shares owned by said Shareholder, at the redemption
price, pursuant to the method, upon the terms and subject to the
conditions hereinafter set forth:
(a) Certificates for Shares, if issued, shall be
presented for redemption in proper form for transfer to the Trust
or the agent of the Trust appointed for such purpose, and these
shall be presented with a written request that the Trust redeem
all or any part of the Shares represented thereby.
(b) The redemption price per Share shall be the net
asset value per Share when next determined by the Trust at such
time or times as the Trustees shall designate, following the time
of presentation of certificates for Shares, if issued, and an
appropriate request for redemption, or such other time as the
Trustees may designate in accordance with any provision of the
1940 Act, or any rule or regulation made or adopted by any
securities association registered under the Securities Exchange
Act of 1934, as determined by the Trustees, less any applicable
charge or fee imposed from time to time as determined by the
Trustees.
(c) Net asset value of each series or class of Shares
(for the purpose of issuance of Shares as well as redemptions
thereof) shall be determined by dividing:
(i) the total value of the assets of such series
or class determined as provided in paragraph (d) below
less, to the extent determined by or pursuant to the
direction of the Trustees in accordance with generally
accepted accounting principles, all debts, obligations
and liabilities of such series or class (which debts,
obligations and liabilities shall include, without
limitation of the generality of the foregoing, any and
all debts, obligations, liabilities, or claims, of any
and every kind and nature, fixed, accrued and otherwise,
including the estimated accrued expenses of management
and supervision, administration and distribution and any
reserves or charges for any or all of the foregoing,
whether for taxes, expenses, or otherwise, and the price
of Shares redeemed but not paid for) but excluding the
Trust's liability upon its Shares and its surplus, by
(ii) the total number of Shares of such series or
class outstanding.
The Trustees are empowered, in their absolute
discretion, to establish other methods for determining such net
asset value whenever such other methods are deemed by them to be
necessary to enable the Trust to comply with applicable law, or
are deemed by them to be desirable, provided they are not
inconsistent with any provision of the 1940 Act.
(d) In determining for the purposes of this
Declaration of Trust the total value of the assets of each series
or class of Shares at any time, investments and any other assets
of such series or class shall be valued in such manner as may be
determined from time to time by or pursuant to the order of the
Trustees.
(e) Payment of the redemption price by the Trust may be
made either in cash or in securities or other assets at the time
owned by the Trust or partly in cash and partly in securities or
other assets at the time owned by the Trust. The value of any
part of such payment to be made in securities or other assets of
the Trust shall be the value employed in determining the
redemption price. Payment of the redemption price shall be made
on or before the seventh day following the day on which the
Shares
are properly presented for redemption hereunder, except that
delivery of any securities included in any such payment shall be
made as promptly as any necessary transfers on the books of the
issuers whose securities are to be delivered may be made and,
except as postponement of the date of payment may be permissible
under the 1940 Act.
Pursuant to resolution of the Trustees, the Trust may
deduct from the payment made for any Shares redeemed a
liquidating charge not in excess of an amount determined by the
Trustees from time to time.
(f) The right of any holder of Shares redeemed by the
Trust as provided in this Article VI to receive dividends or
distributions thereon and all other rights of such Shareholder
with respect to such Shares shall terminate at the time as of
which the redemption price of such Shares is determined, except
the right of such Shareholder to receive (i) the redemption price
of such Shares from the Trust in accordance with the provisions
hereof, and (ii) any dividend or distribution to which such
Shareholder previously had become entitled as the record holder
of such Shares on the record date for such dividend or
distribution.
(g) Redemption of Shares by the Trust is conditional
upon the Trust having funds or other assets legally available
therefor.
(h) The Trust, either directly or through an agent, may
repurchase its Shares, out of funds legally available therefor,
upon such terms and conditions and for such consideration as the
Trustees shall deem advisable, by agreement with the owner at a
price not exceeding the net asset value per Share as determined
by
or pursuant to the order of the Trustees at such time or times as
the Trustees shall designate, less any applicable charge, if and
as fixed by the Trustees from time to time, and to take all other
steps deemed necessary or advisable in connection therewith.
(i) Shares purchased or redeemed by the Trust shall be
cancelled or held by the Trust for reissue, as the Trustees from
time to time may determine.
(j) The obligations set forth in this Article VI may be
suspended or postponed, (1) for any period (i) during which the
New York Stock Exchange is closed other than for customary
weekend and holiday closings, or (ii) during which trading on the
New York Stock Exchange is restricted, (2) for any period during
which an emergency exists as a result of which (i) the disposal
by the Trust of investments owned by it is not reasonably
practicable, or
(ii) it is not reasonably practicable for the Trust fairly to
determine the value of its net assets, or (3) for such other
periods as the Commission or any successor governmental authority
by order may permit.
Notwithstanding any other provision of this Section 3 of
Article VI, if certificates representing such Shares have been
issued, the redemption or repurchase price need not be paid by
the Trust until such certificates are presented in proper form
for transfer to the Trust or the agent of the Trust appointed for
such purpose; however, the redemption or repurchase shall be
effective,
in accordance with the resolution of the Trustees, regardless of
whether or not such presentation has been made.
Section 4. Redemptions at the Option of the Trust. The
Trust shall have the right at its option and at any time to
redeem
Shares of any Shareholder at the net asset value thereof as
determined in accordance with Section 3 of Article VI of this
Declaration of Trust: (i) if at such time such Shareholder owns
fewer Shares than, or Shares having an aggregate net asset value
of less than, an amount determined from time to time by the
Trustees; or (ii) to the extent that such Shareholder owns Shares
of a particular series or class of Shares equal to or in excess
of
a percentage of the outstanding Shares of that series or class
determined from time to time by the Trustees; or (iii) to the
extent that such Shareholder owns Shares of the Trust
representing
a percentage equal to or in excess of such percentage of the
aggregate number of outstanding Shares of the Trust or the
aggregate net asset value of the Trust determined from time to
time by the Trustees.
Section 5. Dividends, Distributions, Redemptions and
Repurchases. No dividend or distribution (including, without
limitation, any distribution paid upon termination of the Trust
or
of any series) with respect to, nor any redemption or repurchase
of, the Shares of any series shall be effected by the Trust other
than from the assets of such series.
ARTICLE VII
Compensation and Limitation of
Liability of Trustees
Section 1. Compensation. The Trustees shall be
entitled to reasonable compensation from the Trust and may fix
the amount of their compensation.
Section 2. Limitation of Liability. The Trustees shall
not be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee or Manager of the
Trust, nor shall any Trustee be responsible for the act or
omission of any other Trustee, but nothing herein contained shall
protect any Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his office.
Every note, bond, contract, instrument, certificate,
share, or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or
any of them in connection with the Trust, shall be deemed
conclusively to have been executed or done only in their or his
capacity as Trustees or Trustee, and such Trustees or Trustee
shall not be personally liable thereon.
ARTICLE VIII
Indemnification
Section 1. Indemnification of Trustees, Officers,
Employees and Agents. Each person who is or was a Trustee,
officer, employee or agent of the Trust or who serves or has
served at the Trust's request as a director, officer or trustee
of
another entity in which the Trust has or had any interest as a
shareholder, creditor or otherwise shall be entitled to
indemnification out of the assets of the Trust to the extent
provided in, and subject to the provisions of, the By-Laws,
provided that no indemnification shall be granted by the Trust in
contravention of the 1940 Act.
Section 2. Merged Corporations. For the purposes of
this Article VIII references to "the Trust" include any
constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or
agents as well as the resulting or surviving entity; so that any
person who is or was a director, officer, employee or agent of
such a constituent corporation or is or was serving at the
request
of such a constituent corporation as a trustee, director,
officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise shall stand in the same
position under the provisions of this Article VIII with respect
to the resulting or surviving entity as he would have with
respect to such a constituent corporation if its separate
existence had continued.
Section 3. Shareholders. In case any Shareholder or
former Shareholder shall be held to be personally liable solely
by reason of his being or having been a Shareholder and not
because of his acts or omissions or for some other reason, the
Shareholder
or former Shareholder (or his heirs, executors, administrators or
other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be
entitled out of the assets of the particular series of Shares of
which he is or was a Shareholder to be held harmless from and
indemnified against all losses and expenses arising from such
liability. Upon request, the Trust shall cause its counsel to
assume the defense of any claim which, if successful, would
result in an obligation of the Trust to indemnify the Shareholder
as aforesaid.
ARTICLE IX
Status of the Trust and Other General Provisions
Section 1. Trust Not a Partnership. It is hereby
expressly declared that a trust and not a partnership is created
hereby. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind
personally either the Trust's Trustees or officers or any Share-
holders. All persons extending credit to, contracting with or
having any claim against the Trust or a particular series of
Shares shall look only to the assets of the Trust or the assets
of
that particular series for payment under such credit, contract or
claim; and neither the Shareholders nor the Trustees, nor any of
the Trust's officers, employees or agents, whether past, present
or future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect any Trustee against any
liability to which such Trustee otherwise would be subject by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder.
Section 2. Trustee's Good Faith Action, Expert Advice,
No Bond or Surety. The exercise by the Trustees of their powers
and discretion hereunder under the circumstances then prevailing,
shall be binding upon everyone interested. A Trustee shall be
liable for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and for nothing else, and shall
not be liable for errors of judgment or mistakes of fact or law.
The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of
Trust,
and subject to the provisions of Section 1 of this Article IX
shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice. The
Trustees shall not be required to give any bond as such, nor any
surety if a bond is required.
Section 3. Liability of Third Persons Dealing with
Trustees. No person dealing with the Trustees shall be bound to
make any inquiry concerning the validity of any transaction made
or to be made by the Trustees pursuant hereto or to see to the
application of any payments made or property transferred to the
Trust or upon its order.
Section 4. Trustees, Shareholders, etc. Not Personally
Liable; Notice. All persons extending credit to, contracting
with or having any claim against the Trust or a particular series
of Shares shall look only to the assets of the Trust or the
assets of that particular series of Shares for payment under such
credit, contract or claim; and neither the Shareholders nor the
Trustees, nor any of the Trust's officers, employees or agents,
whether past, present or future, shall be personally liable
therefor.
Section 5. Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of
time. The Trust may be terminated at any time by vote of
Shareholders holding at least a majority of the Shares of each
series entitled to vote or by the Trustees by written notice to
the Shareholders. Any series of Shares may be terminated at any
time by vote of Shareholders holding at least a majority of the
Shares of such series entitled to vote or by the Trustees by
written notice to the Shareholders of such series.
Upon termination of the Trust or of any one or more
series of Shares, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued
or anticipated as may be determined by the Trustees, the Trust
shall reduce, in accordance with such procedures as the Trustees
consider appropriate, the remaining assets to distributable form
in cash or shares or other securities, or any combination
thereof,
and distribute the proceeds to the Shareholders of the series
involved, ratably according to the number of Shares of such
series
held by the several Shareholders of such series on the date of
termination, except to the extent otherwise required or permitted
by the preferences and special or relative rights and privileges
of any classes of Shares of that series, provided that any
distribution to the Shareholders of a particular class of Shares
shall be made to such Shareholders pro rata in proportion to the
number of Shares of such class held by each of them.
Section 6. Filing of Copies, References, Headings. The
original or a copy of this instrument and of each amendment
hereto and of each Declaration of Trust supplemental hereto shall
be kept at the office of the Trust where it may be inspected by
any Shareholder. A copy of this instrument and of each such
amendment and supplemental Declaration of Trust shall be filed by
the Trust with
the Secretary of State of The Commonwealth of Massachusetts and
the Boston City Clerk, as well as any other governmental office
where such filing may from time to time be required. Anyone
dealing with the Trust may rely on a certificate by an officer of
the Trust as to whether or not any such amendments or
supplemental
Declarations of Trust have been made and as to matters in
connection with the Trust hereunder; and, with the same effect as
if it were the original, may rely on a copy certified by an
officer of the Trust to be a copy of this instrument or of any
such amendment or supplemental Declaration of Trust. In this
instrument or in any such amendment or supplemental Declaration
of Trust, references to this instrument, and all expressions like
"herein," "hereof," and "hereunder," shall be deemed to refer to
this instrument as amended or affected by any such amendment or
supplemental Declaration of Trust. Headings are placed herein
for
convenience of reference only and in case of any conflict, the
text of this instrument, rather than the headings, shall control.
This instrument may be executed in any number of counterparts
each of which shall be deemed an original.
Section 7. Applicable Law. The Trust set forth in this
instrument is made in The Commonwealth of Massachusetts, and it
is
created under and is to be governed by and construed and
administered according to the laws of said Commonwealth. The
Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by
such a trust.
Section 8. Amendments. This Declaration of Trust may
be amended at any time by an instrument in writing signed by a
majority of the then Trustees when authorized so to do by a vote
of Shareholders holding a majority of the Shares outstanding and
entitled to vote, except that an amendment which shall affect the
holders of one or more series or class of Shares but not the
holders of all outstanding series or classes of Shares shall be
authorized by vote of the Shareholders holding a majority of the
Shares entitled to vote of the series or classes affected and no
vote of Shareholders of a series or class not affected shall be
required. Amendments having the purpose of changing the name of
the Trust or of supplying any omission, curing any ambiguity or
curing, correcting or supplementing any defective or inconsistent
provision contained herein shall not require authorization by
Shareholder vote.
IN WITNESS WHEREOF, the undersigned Trustee has hereunto
set his hand and seal for himself and him assigns as of the day
and year first above written.
/s/ David Stephens
David Stephens, Trustee
Address of Trust
c/o Stroock & Stroock & Lavan
7 Hanover Square
19th Floor
New York, New York 10004-2696
Address of Trustee
c/o Stroock & Stroock & Lavan
7 Hanover Square
19th Floor
New York, New York 10004-2696
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
Then personally appeared the above-named David Stephens
and acknowledged the foregoing instrument to be his free act and
deed, before me.
_______________________
Notary Public
<PAGE>
EXHIBIT 2
BY-LAWS
OF
PRAIRIE INSTITUTIONAL FUNDS
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1. Agreement and Declaration of Trust. These
By-Laws
shall be subject to the Agreement and Declaration of Trust, as
from time to time in effect (the "Declaration of Trust"), of the
above-captioned Massachusetts business trust established by the
Declaration of Trust (the "Trust").
1.2. Principal Office of the Trust. The principal
office of the Trust shall be located in New York, New York. Its
resident agent in Massachusetts shall be CT Corporation System, 2
Oliver Street, Boston, Massachusetts, or such other person as the
Trustees from time to time may select.
ARTICLE 2
Meetings of Trustees
2.1. Regular Meetings. Regular meetings of the
Trustees may be held without call or notice at such places and at
such times as the Trustees from time to time may determine,
provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees.
2.2. Special Meetings. Special meetings of the
Trustees may be held at any time and at any place designated in
the call of the meeting when called by the President or the
Treasurer or by two or more Trustees, sufficient notice thereof
being given to each Trustee by the Secretary or an Assistant
Secretary or by the officer or the Trustees calling the meeting.
2.3. Notice of Special Meetings. It shall be
sufficient notice to a Trustee of a special meeting to send
notice by mail at least forty-eight hours or by telegram at least
twenty-four hours before the meeting addressed to the Trustee at
his or her usual or last known business or residence address or
to give
notice to him or her in person or by telephone at least twenty-
four hours before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by
him or her before or after the meeting, is filed with the records
of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of
notice to him or her. Neither notice of a meeting nor a waiver
of a notice need specify the purposes of the meeting.
2.4. Notice of Certain Actions by Consent. If in
accordance with the provisions of the Declaration of Trust any
action is taken by the Trustees by a written consent of less than
all of the Trustees, then prompt notice of any such action shall
be furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not
be impaired by any delay or failure to furnish such notice.
ARTICLE 3
Officers
3.1. Enumeration; Qualification. The officers of the
Trust shall be a President, a Treasurer, a Secretary, and such
other officers, if any, as the Trustees from time to time may in
their discretion elect. The Trust also may have such agents as
the Trustees from time to time may in their discretion appoint.
Officers may be but need not be a Trustee or shareholder. Any
two or more offices may be held by the same person.
3.2. Election. The President, the Treasurer and the
Secretary shall be elected by the Trustees upon the occurrence of
any vacancy in any such office. Other officers, if any, may be
elected or appointed by the Trustees at any time. Vacancies in
any such other office may be filled at any time.
3.3. Tenure. The President, Treasurer and Secretary
shall hold office in each case until he or she sooner dies,
resigns, is removed or becomes disqualified. Each other officer
shall hold office and each agent shall retain authority at the
pleasure of the Trustees.
3.4. Powers. Subject to the other provisions of these
By-Laws, each officer shall have, in addition to the duties and
powers herein and in the Declaration of Trust set forth, such
duties and powers as commonly are incident to the office occupied
by him or her as if the Trust were organized as a Massachusetts
business corporation or such other duties and powers as the
Trustees may from time to time designate.
3.5. President. Unless the Trustees otherwise provide,
the President shall preside at all meetings of the shareholders
and of the Trustees. Unless the Trustees otherwise provide, the
President shall be the chief executive officer.
3.6. Treasurer. The Treasurer shall be the chief
financial and accounting officer of the Trust, and, subject to
the provisions of the Declaration of Trust and to any arrangement
made by the Trustees with a custodian, investment adviser or
manager, or transfer, shareholder servicing or similar agent,
shall be in
charge of the valuable papers, books of account and accounting
records of the Trust, and shall have such other duties and powers
as may be designated from time to time by the Trustees or by the
President.
3.7. Secretary. The Secretary shall record all
proceedings of the shareholders and the Trustees in books to be
kept therefor, which books or a copy thereof shall be kept at the
principal office of the Trust. In the absence of the Secretary
from any meeting of the shareholders or Trustees, an Assistant
Secretary, or if there be none or if he or she is absent, a
temporary Secretary chosen at such meeting shall record the
proceedings thereof in the aforesaid books.
3.8. Resignations and Removals. Any Trustee or officer
may resign at any time by written instrument signed by him or her
and delivered to the President or Secretary or to a meeting of
the Trustees. Such resignation shall be effective upon receipt
unless specified to be effective at some other time. The
Trustees may remove any officer elected by them with or without
cause. Except
to the extent expressly provided in a written agreement with the
Trust, no Trustee or officer resigning and no officer removed
shall have any right to any compensation for any period following
his or her resignation or removal, or any right to damages on
account of such removal.
ARTICLE 4
Committees
4.1. Appointment. The Trustees may appoint from their
number an executive committee and other committees. Except as
the Trustees otherwise may determine, any such committee may make
rules for conduct of its business.
4.2. Quorum; Voting. A majority of the members of any
Committee of the Trustees shall constitute a quorum for the
transaction of business, and any action of such a Committee may
be taken at a meeting by a vote of a majority of the members
present (a quorum being present).
ARTICLE 5
Reports
The Trustees and officers shall render reports at the
time and in the manner required by the Declaration of Trust or
any
applicable law. Officers and Committees shall render such
additional reports as they may deem desirable or as may from time
to time be required by the Trustees.
ARTICLE 6
Fiscal Year
The fiscal year of the Trust shall be fixed, and shall
be subject to change, by the Board of Trustees.
ARTICLE 7
Seal
The seal of the Trust shall consist of a flat-faced die
with the word "Massachusetts," together with the name of the
Trust and the year of its organization cut or engraved thereon
but, unless otherwise required by the Trustees, the seal shall
not be necessary to be placed on, and in its absence shall not
impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
Except as the Trustees generally or in particular cases
may authorize the execution thereof in some other manner, all
deeds, leases, contracts, notes and other obligations made by the
Trustees shall be signed by the President, any Vice President, or
by the Treasurer and need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1. Sale of Shares. Except as otherwise determined by
the Trustees, the Trust will issue and sell for cash or
securities
from time to time, full and fractional shares of its shares of
beneficial interest, such shares to be issued and sold at a price
of not less than net asset value per share as from time to time
determined in accordance with the Declaration of Trust and these
By-Laws and, in the case of fractional shares, at a proportionate
reduction in such price. In the case of shares sold for
securities, such securities shall be valued in accordance with
the
provisions for determining value of assets of the Trust as stated
in the Declaration of Trust and these By-Laws. The officers of
the Trust are severally authorized to take all such actions as
may be necessary or desirable to carry out this Section 9.1.
9.2. Share Certificates. In lieu of issuing
certificates for shares, the Trustees or the transfer agent
either may issue receipts therefor or may keep accounts upon the
books of
the Trust for the record holders of such shares, who shall in
either case, for all purposes hereunder, be deemed to be the
holders of certificates for such shares as if they had accepted
such certificates and shall be held to have expressly assented
and agreed to the terms hereof.
The Trustees at any time may authorize the issuance of
share certificates. In that event, each shareholder shall be
entitled to a certificate stating the number of shares owned by
him, in such form as shall be prescribed from time to time by the
Trustees. Such certificate shall be signed by the President or
Vice President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimile if the certificate is signed by a
transfer agent, or by a registrar, other than a Trustee, officer
or employee of the Trust. In case any officer who has signed or
whose facsimile signature has been placed on such certificate
shall cease to be such officer before such certificate is issued,
it may be issued by the Trust with the same effect as if he or
she were such officer at the time of its issue.
9.3. Loss of Certificates. The Trust, or if any
transfer agent is appointed for the Trust, the transfer agent
with the approval of any two officers of the Trust, is authorized
to issue and countersign replacement certificates for the shares
of the Trust which have been lost, stolen or destroyed subject to
the deposit of a bond or other indemnity in such form and with
such security, if any, as the Trustees may require.
9.4. Discontinuance of Issuance of Certificates. The
Trustees at any time may discontinue the issuance of share
certificates and by written notice to each shareholder, may
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
ARTICLE 10
Indemnification
10.1. Trustees, Officers, etc. The Trust shall
indemnify each of its Trustees and officers (including persons
who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any
interest as a shareholder, creditor or otherwise) (hereinafter
referred to as a
"Covered Person") against all liabilities and expenses, including
but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees reasonably
incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether
civil
or criminal, before any court or administrative or legislative
body, in which such Covered Person may be or may have been
involved as a party or otherwise or with which such person may be
or may have been threatened, while in office or thereafter, by
reason of being or having been such a Trustee or officer, except
with respect to any matter as to which such Covered Person shall
have been finally adjudicated in a decision on the merits in any
such action, suit or other proceeding not to have acted in good
faith in the reasonable belief that such Covered Person's action
was in the best interests of the Trust and except that no Covered
Person shall be indemnified against any liability to the Trust or
its Shareholders to which such Covered Person would otherwise be
subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office. Expenses, including
counsel fees so incurred by any such Covered Person (but
excluding
amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time by the Trust
in
advance of the final disposition or any such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such
Covered Person to repay amounts so paid to the Trust if it is
ultimately determined that indemnification of such expenses is
not
authorized under this Article, provided that (a) such Covered
Person shall provide security for his undertaking, (b) the Trust
shall be insured against losses arising by reason of such Covered
Person's failure to fulfill his undertaking, or (c) a majority of
the Trustees who are disinterested persons and who are not
Interested Persons (as that term is defined in the Investment
Company Act of 1940) (provided that a majority of such Trustees
then in office act on the matter), or independent legal counsel
in a written opinion, shall determine, based on a review of
readily available facts (but not a full trial-type inquiry), that
there is reason to believe such Covered Person ultimately will be
entitled to indemnification.
10.2. Compromise Payment. As to any matter disposed of
(whether by a compromise payment, pursuant to a consent decree or
otherwise) without an adjudication in a decision on the merits by
a court, or by any other body before which the proceeding was
brought, that such Covered Person either (a) did not act in good
faith in the reasonable belief that such Covered Person's action
was in the best interests of the Trust or (b) is liable to the
Trust or its Shareholders by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's office,
indemnification shall be provided if (a) approved as in the best
interest of the Trust, after notice that it involves such
indemnification, by at least a majority of the Trustees who are
disinterested persons and are not Interested Persons (provided
that a majority of such Trustees then in office act on the
matter), upon a determination, based upon a review of readily
available facts (but not a full trial-type inquiry) that such
Covered Person acted in good faith in the reasonable belief that
such Covered Person's action was in the best interests of the
Trust and is not liable to the Trust or its Shareholders by
reason
of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office, or (b) there has been obtained an opinion in
writing of independent legal counsel, based upon a review of
readily available facts (but not a full trial-type inquiry) to
the
effect that such Covered Person appears to have acted in good
faith in the reasonable belief that such Covered Person's action
was in the best interests of the Trust and that such
indemnification would not protect such Covered Person against any
liability to the Trust to which such Covered Person would
otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his office. Any approval pursuant to this Section
shall not prevent the recovery from any Covered Person of any
amount paid to such Covered Person in accordance with this
Section
as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have
acted
in good faith in the reasonable belief that such Covered Person's
action was in the best interests of the Trust or to have been
liable to the Trust or its shareholders by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's
office.
10.3. Indemnification Not Exclusive. The right of
indemnification hereby provided shall not be exclusive of or
affect any other rights to which any such Covered Person may be
entitled. As used in this Article 10, the term "Covered Person"
shall include such person's heirs, executors and administrators,
and a "disinterested person" is a person against whom none of the
actions, suits or other proceedings in question or another
action,
suit, or other proceeding on the same or similar grounds is then
or has been pending. Nothing contained in this article shall
affect any rights to indemnification to which personnel of the
Trust, other than Trustees and officers, and other persons may be
entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of
such person.
10.4. Limitation. Notwithstanding any provisions in
the Declaration of Trust and these By-Laws pertaining to
indemnification, all such provisions are limited by the following
undertaking set forth in the rules promulgated by the Securities
and Exchange Commission:
In the event that a claim for
indemnification is asserted by a Trustee,
officer or controlling person of the Trust in
connection with the registered securities of
the Trust, the Trust will not make such
indemnification unless (i) the Trust has
submitted, before a court or other body, the
question of whether the person to be
indemnified was liable by reason of wilful
misfeasance, bad faith, gross negligence, or
reckless disregard of duties, and has obtained
a final decision on the merits that such
person was not liable by reason of such
conduct or (ii) in the absence of such
decision, the Trust shall have obtained a
reasonable determination, based upon a review
of the facts, that such person was not liable
by virtue of such conduct, by (a) the vote of
a majority of Trustees who are neither
interested persons as such term is defined in
the Investment Company Act of 1940, nor
parties to the proceeding or (b) an
independent legal counsel in a written
opinion.
The Trust will not advance attorneys'
fees or other expenses incurred by the person
to be indemnified unless the Trust shall have
(i) received an undertaking by or on behalf of
such person to repay the advance unless it is
ultimately determined that such person is
entitled to indemnification and one of the
following conditions shall have occurred:
(x) such person shall provide security for his
undertaking, (y) the Trust shall be insured
against losses arising by reason of any lawful
advances or (z) a majority of the
disinterested, non-party Trustees of the
Trust, or an independent legal counsel in a
written opinion, shall have determined that
based on a review of readily available facts
there is reason to believe that such person
ultimately will be found entitled to
indemnification.
ARTICLE 11
Shareholders
11.1. Meetings. A meeting of the shareholders shall be
called by the Secretary whenever ordered by the Trustees, or
requested in writing by the holder or holders of at least 10% of
the outstanding shares entitled to vote at such meeting. If the
meeting is a meeting of the shareholders of one or more series or
class of shares, but not a meeting of all shareholders of the
Trust, then only the shareholders of such one or more series or
classes shall be entitled to notice of and to vote at the
meeting.
If the Secretary, when so ordered or requested, refuses or
neglects for more than five days to call such meeting, the
Trustees, or the shareholders so requesting may, in the name of
the Secretary, call the meeting by giving notice thereof in the
manner required when notice is given by the Secretary.
11.2. Access to Shareholder List. Shareholders of
record may apply to the Trustees for assistance in communicating
with other shareholders for the purpose of calling a meeting in
order to vote upon the question of removal of a Trustee. When
ten or more shareholders of record who have been such for at
least six
months preceding the date of application and who hold in the
aggregate shares having a net asset value of at least $25,000 or
at least 1% of the outstanding shares, whichever is less, so
apply, the Trustees shall within five business days either:
(i) afford to such applicants access to a list of
names and addresses of all shareholders as recorded on the books
of the Trust; or
(ii) inform such applicants of the approximate
number of shareholders of record and the approximate cost of
mailing material to them and, within a reasonable time
thereafter,
mail, materials submitted by the applicants, to all such
shareholders of record. The Trustees shall not be obligated to
mail materials which they believe to be misleading or in
violation of applicable law.
11.3. Record Dates. For the purpose of determining the
shareholders of any series or class who are entitled to vote or
act at any meeting or any adjournment thereof, or who are
entitled
to receive payment of any dividend or of any other distribution,
the Trustees from time to time may fix a time, which shall be not
more than 90 days before the date of any meeting of shareholders
or the date of payment of any dividend or of any other
distribution, as the record date for determining the shareholders
of such series or class having the right to notice of and to vote
at such meeting and any adjournment thereof or the right to
receive such dividend or distribution, and in such case only
shareholders of record on such record date shall have such right
notwithstanding any transfer of shares on the books of the Trust
after the record date; or without fixing such record date the
Trustees may for any such purposes close the register or transfer
books for all or part of such period.
11.4. Place of Meetings. All meetings of the
shareholders shall be held at the principal office of the Trust
or at such other place within the United States as shall be
designated by the Trustees or the President of the Trust.
11.5. Notice of Meetings. A written notice of each
meeting of shareholders, stating the place, date and hour and the
purposes of the meeting, shall be given at least ten days before
the meeting to each shareholder entitled to vote thereat by
leaving such notice with him or at his residence or usual place
of
business or by mailing it, postage prepaid, and addressed to such
shareholder at his address as it appears in the records of the
Trust. Such notice shall be given by the Secretary or an
Assistant Secretary or by an officer designated by the Trustees.
No notice of any meeting of shareholders need be given to a
shareholder if a written waiver of notice, executed before or
after the meeting by such shareholder or his attorney thereunto
duly authorized, is filed with the records of the meeting.
11.6. Ballots. No ballot shall be required for any
election unless requested by a shareholder present or represented
at the meeting and entitled to vote in the election.
11.7. Proxies. Shareholders entitled to vote may vote
either in person or by proxy in writing dated not more than six
months before the meeting named therein, which proxies shall be
filed with the Secretary or other person responsible to record
the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall
entitle the holders thereof to vote at any adjournment of such
meeting but shall not be valid after the final adjournment of
such meeting.
ARTICLE 12
Amendments to the By-Laws
These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting
of the Trustees, or by one or more writings signed by such a
majority.
Dated: October 20, 1994
<PAGE>
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
PRAIRIE INSTITUTIONAL FUNDS
125 West 55th Street
New York, New York 10019
November 18, 1994
The First National Bank of Chicago
Three First National Plaza
Chicago, Illinois 60670
Dear Sirs:
The above-named investment company (the "Fund")
consisting of the series named on Schedule 1 hereto, as such
Schedule may be revised from time to time (each, a "Series"),
herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing
and reinvesting the same in investments of the type and in
accordance with the limitations specified in its charter
documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have
been or will be submitted to you, and in such manner and to such
extent as from time to time may be approved by the Fund's Board.
The Fund desires to employ you to act as its investment adviser.
In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or
persons may be officers or employees who are employed by both
you and the Fund. The compensation of such person or persons
shall be paid by you and no obligation may be incurred on the
Fund's behalf in any such respect.
Subject to the supervision and approval of the Fund's
Board, you will provide investment management of each Series'
portfolio in accordance with such Series' investment objectives
and policies as stated in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment
research and will supervise each Series' investments and conduct
a continuous program of investment, evaluation and, if
appropriate, sale and reinvestment of such Series' assets. You
will furnish to the Fund such statistical information, with
respect to the investments which a Series may hold or
contemplate purchasing, as the Fund may reasonably request. The
Fund wishes to be informed of important developments materially
affecting any Series' portfolio and shall expect you, on your
own initiative, to furnish to the Fund from time to time such
information as you may believe appropriate for this purpose.
You shall exercise your best judgment in rendering the
services to be provided to the Fund hereunder and the Fund
agrees as an inducement to your undertaking the same that you
shall not be liable hereunder for any error of judgment or
mistake of law or for any loss suffered by one or more Series,
provided that nothing herein shall be deemed to protect or
purport to protect you against any liability to the Fund or a
Series or to its security holders to which you would otherwise
be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties
hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee at the rate set forth opposite each Series'
name on Schedule 1 hereto. Net asset value shall be computed on
such days and at such time or times as described in the Fund's
then-current Prospectus and Statement of Additional Information.
The fee for the period from the date of the commencement of the
public sale of a Series' shares to the end of the month during
which such sale shall have been commenced shall be pro-rated
according to the proportion which such period bears to the full
monthly period, and upon any termination of this Agreement
before the end of any month, the fee for such part of a month
shall be pro-rated according to the proportion which such period
bears to the full monthly period and shall be payable upon the
date of termination of this Agreement.
For the purpose of determining fees payable to you,
the value of each Series' net assets shall be computed in the
manner specified in the Fund's charter documents for the
computation of the value of each Series' net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Fund will be
borne by the Fund, except to the extent specifically assumed by
you. The expenses to be borne by the Fund include, without
limitation, the following: organizational costs, taxes,
interest, loan commitment fees, interest and distributions paid
on securities sold short, brokerage fees and commissions, if
any, fees of Board members, Securities and Exchange Commission
fees and state Blue Sky qualification fees, advisory fees,
charges of custodians, transfer and dividend disbursing agents'
fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of independent
pricing services, costs of maintaining the Series' existence,
costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of
preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to
existing stockholders, costs of stockholders' reports and
meetings, and any extraordinary expenses.
As to each Series, if in any fiscal year the aggregate
expenses of a Series (including fees pursuant to this Agreement,
but excluding interest, taxes, brokerage and, with the prior
written consent of the necessary state securities commissions,
extraordinary expenses) exceed the expense limitation of any
state having jurisdiction over such Series, the Fund may deduct
from the fees to be paid hereunder, or you will bear, such
excess expense to the extent required by state law. Your
obligation pursuant hereto will be limited to the amount of your
fees hereunder. Such deduction or payment, if any, will be
estimated daily, and reconciled and effected or paid, as the
case may be, on a monthly basis.
The Fund understands that you now act, and that from
time to time hereafter you may act, as investment adviser to one
or more other investment companies and fiduciary or other
managed accounts, and the Fund has no objection to your so
acting, provided that when the purchase or sale of securities of
the same issuer is suitable for the investment objectives of two
or more companies or accounts managed by you which have
available funds for investment, the available securities will be
allocated in a manner believed by you to be equitable to each
company or account. It is recognized that in some cases this
procedure may adversely affect the price paid or received by one
or more Series or the size of the position obtainable for or
disposed of by one or more Series.
In addition, it is understood that the persons
employed by you to assist in the performance of your duties
hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict
your right or the right of any of your affiliates to engage in
and devote time and attention to other businesses or to render
services of whatever kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates,
except for a loss resulting from willful misfeasance, bad faith
or gross negligence in the performance of your duties hereunder,
or by reason of your reckless disregard of your obligations and
duties hereunder. Any person, even though also your officer,
director, partner, employee or agent, who may be or become an
officer, Board member, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting
solely for the Fund and not as your officer, director, partner,
employee or agent or one under your control or direction even
though paid by you.
As to each Series, this Agreement shall continue until
the date set forth opposite such Series' name on Schedule 1
hereto (the "Reapproval Date") and thereafter shall continue
automatically for successive annual periods ending on the day of
each year set forth opposite the Series' name on Schedule 1
hereto (the "Reapproval Day"), provided such continuance is
specifically approved at least annually by (i) the Fund's Board
or (ii) vote of a majority (as defined in the Investment Company
Act of 1940, as amended) of such Series' outstanding voting
securities, provided that in either event its continuance also
is approved by a majority of the Fund's Board members who are
not "interested persons" (as defined in said Act) of any party
to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. As to each Series,
this Agreement is terminable without penalty, on 60 days'
notice, by the Fund's Board or by vote of holders of a majority
of such Series' shares or, upon not less than 90 days' notice,
by you. This Agreement also will terminate automatically, as to
the relevant Series, in the event of its assignment (as defined
in said Act).
The Fund recognizes that from time to time your
directors, officers and employees may serve as directors,
trustees, partners, officers and employees of other
corporations, business trusts, partnerships or other entities
(including other investment companies) and that such other
entities may include the name "Prairie" as part of their name,
and that your corporation or its affiliates may enter into
investment advisory or other agreements with such other
entities. If you cease to act as the Fund's investment adviser,
the Fund agrees that, at your request, the Fund will take all
necessary action to change the name of the Fund to a name not
including "Prairie" in any form or combination of words.
This Agreement has been executed on behalf of the Fund
by the undersigned officer of the Fund in his capacity as an
officer of the Fund. The obligations of this Agreement shall
only be binding upon the assets and property of the Fund and
shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
<PAGE>
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
PRAIRIE INSTITUTIONAL FUNDS
By:__________________________
Accepted:
THE FIRST NATIONAL BANK
OF CHICAGO
By:______________________________
SCHEDULE 1
Name of Series Annual Fee
as a
Percentage
of Average
Daily Net Reapproval Reapproval
Assets Date Day
Cash Management Fund .20%
Municipal Cash Management
Fund .20%
Treasury Prime Cash
Management Fund .20%
U.S. Government Securities
Cash Management Fund .20%
<PAGE>
EXHIBIT 6
DISTRIBUTION AGREEMENT
PRAIRIE INSTITUTIONAL FUNDS
125 West 55th Street
New York, New York 10019
October 28, 1994
Concord Financial Group, Inc.
125 West 55th Street
11th Floor
New York, New York 10019
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the above-named investment company (the
"Fund") has agreed that you shall be, for the period of this
agreement, the distributor of (a) shares of each series of the
Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if
no Series are set forth on such Exhibit, shares of the Fund. For
purposes of this agreement the term "Shares" shall mean the
authorized shares of the relevant Series, if any, and otherwise
shall mean the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of Shares
covered by, and in accordance with, the registration statement
and prospectus then in effect under the Securities Act of 1933,
as amended, and will transmit promptly any orders received by you
for purchase or redemption of
Shares to the Transfer and Dividend Disbursing Agent for the Fund
of which the Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit orders
for the sale of Shares. It is contemplated that you will enter
into sales or servicing agreements with securities dealers,
financial institutions and
other industry professionals, such as investment advisers,
accountants and estate planning firms, and in so doing you will
act only on your own behalf as principal.
1.3 You shall act as distributor of Shares in compliance
with all applicable laws, rules and regulations, including,
without
limitation, all rules and regulations made or adopted pursuant to
the Investment Company Act of 1940, as amended, by the Securities
and Exchange
Commission or any securities association registered under the
Securities Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is warranted by
market, economic or political conditions, or by abnormal
circumstances of
any kind, the Fund's officers may decline to accept any orders
for, or make
any sales of, any Shares until such time as they deem it
advisable to
accept such orders and to make such sales and the Fund shall
advise you promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in
connection with the registration of Shares under the Securities
Act of 1933, as amended, and all expenses in connection with
maintaining
facilities for the issue and transfer of Shares and for supplying
information, prices and other data to be furnished by the Fund
hereunder,
and all expenses in connection with the preparation and printing
of the Fund's prospectuses and statements of additional
information for regulatory
purposes and for distribution to shareholders; provided, however,
that nothing contained herein shall be deemed to require the Fund
to pay any of the costs of advertising the sale of Shares.
1.6 The Fund agrees to execute any and all
documents and to
furnish any and all information and otherwise to take all actions
which may
be reasonably necessary in the discretion of the Fund's officers
in connection with the qualification of Shares for sale in such
states as you may
designate to the Fund and the Fund may approve, and the Fund
agrees to pay
all expenses which may be incurred in connection with such
qualification.
You shall pay all expenses connected with your own qualification
as a dealer under state or Federal laws and, except as otherwise
specifically provided in this agreement, all other expenses
incurred by you in connection with the sale of Shares as
contemplated in this agreement.
1.7 The Fund shall furnish you from time to time, for use
in connection with the sale of Shares, such information with
respect to the
Fund or any relevant Series and the Shares as you may reasonably
request, all of which shall be signed by one or more of the
Fund's duly authorized
officers; and the Fund warrants that the statements contained in
any such information, when so signed by the Fund's officers,
shall be true and correct. The Fund also shall furnish you upon
request with: (a) semi-annual reports and annual audited reports
of the Fund's books and accounts
made by independent public accountants regularly retained by the
Fund,
(b) quarterly earnings statements prepared by the Fund, (c) a
monthly
itemized list of the securities in the Fund's or, if applicable,
each
Series' portfolio, (d) monthly balance sheets as soon as
practicable after
the end of each month, and (e) from time to time such additional
information regarding the Fund's financial condition as you may
reasonably request.
1.8 The Fund represents to you that all
registration statements and prospectuses filed by the Fund with
the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and
under the
Investment Company Act of 1940, as amended, with respect to the
Shares have
been carefully prepared in conformity with the requirements of
said Acts
and rules and regulations of the Securities and Exchange
Commission thereunder. As used in this agreement the terms
"registration statement" and
"prospectus" shall mean any registration statement and
prospectus,
including the statement of additional information incorporated by
reference
therein, filed with the Securities and Exchange Commission and
any amendments and supplements thereto which at any time shall
have been filed with
said Commission. The Fund represents and warrants to you that
any registration statement and prospectus, when such registration
statement becomes
effective, will contain all statements required to be stated
therein in
conformity with said Acts and the rules and regulations of said
Commission;
that all statements of fact contained in any such registration
statement
and prospectus will be true and correct when such registration
statement
becomes effective; and that neither any registration statement
nor any prospectus when such registration statement becomes
effective will include an
untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements
therein not misleading. The Fund may but shall not be obligated
to propose from time to time such amendment or amendments to any
registration statement and such supplement or supplements to any
prospectus as, in the light of future
developments, may, in the opinion of the Fund's counsel, be
necessary or advisable. If the Fund shall not propose such
amendment or amendments
and/or supplement or supplements within fifteen days after
receipt by the Fund of a written request from you to do so, you
may, at your option,
terminate this agreement or decline to make offers of the Fund's
securities until such amendments are made. The Fund shall not
file any amendment to
any registration statement or supplement to any prospectus
without giving
you reasonable notice thereof in advance; provided, however, that
nothing contained in this agreement shall in any way limit the
Fund's right to file
at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as the Fund
may deem advisable, such right being in all respects absolute and
unconditional.
1.9 The Fund authorizes you to use any prospectus in the
form furnished to you from time to time, in connection with the
sale of Shares. The Fund agrees to indemnify, defend and hold
you, your several
officers and directors, and any person who controls you within
the meaning
of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands,
liabilities and expenses
(including the cost of investigating or defending such claims,
demands or
liabilities and any counsel fees incurred in connection
therewith) which
you, your officers and directors, or any such controlling person,
may incur
under the Securities Act of 1933, as amended, or under common law
or otherwise, arising out of or based upon any untrue statement,
or alleged untrue statement, of a material fact contained in any
registration statement or any prospectus or arising out of or
based upon any omission, or
alleged omission, to state a material fact required to be stated
in either
any registration statement or any prospectus or necessary to make
the statements in either thereof not misleading; provided,
however, that the
Fund's agreement to indemnify you, your officers or directors,
and any such
controlling person shall not be deemed to cover any claims,
demands, liabilities or expenses arising out of any untrue
statement or alleged
untrue statement or omission or alleged omission made in any
registration
statement or prospectus in reliance upon and in conformity with
written
information furnished to the Fund by you specifically for use in
the preparation thereof. The Fund's agreement to indemnify you,
your officers
and directors, and any such controlling person, as aforesaid, is
expressly
conditioned upon the Fund's being notified of any action brought
against
you, your officers or directors, or any such controlling person,
such
notification to be given by letter or by telegram addressed to
the Fund at
its address set forth above within ten days after the summons or
other
first legal process shall have been served. The failure so to
notify the
Fund of any such action shall not relieve the Fund from any
liability which
the Fund may have to the person against whom such action is
brought by
reason of any such untrue, or alleged untrue, statement or
omission, or
alleged omission, otherwise than on account of the Fund's
indemnity agreement contained in this paragraph 1.9. The Fund
will be entitled to assume
the defense of any suit brought to enforce any such claim, demand
or liability, but, in such case, such defense shall be conducted
by counsel of
good standing chosen by the Fund and approved by you. In the
event the
Fund elects to assume the defense of any such suit and retain
counsel of
good standing approved by you, the defendant or defendants in
such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not
elect to assume the defense of any
such suit, or in case you do not approve of counsel chosen by the
Fund, the Fund will reimburse you, your officers and directors,
or the controlling
person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by you or them.
The Fund's
indemnification agreement contained in this paragraph 1.9 and the
Fund's
representations and warranties in this agreement shall remain
operative and
in full force and effect regardless of any investigation made by
or on behalf of you, your officers and directors, or any
controlling person, and
shall survive the delivery of any Shares. This agreement of
indemnity will
inure exclusively to your benefit, to the benefit of your several
officers
and directors, and their respective estates, and to the benefit
of any
controlling persons and their successors. The Fund agrees
promptly to
notify you of the commencement of any litigation or proceedings
against the
Fund or any of its officers or Board members in connection with
the issue and sale of Shares.
1.10 You agree to indemnify, defend and hold the Fund, its
several officers and Board members, and any person who controls
the Fund
within the meaning of Section 15 of the Securities Act of 1933,
as amended,
free and harmless from and against any and all claims, demands,
liabilities
and expenses (including the cost of investigating or defending
such claims,
demands or liabilities and any counsel fees incurred in
connection therewith) which the Fund, its officers or Board
members, or any such controlling person, may incur under the
Securities Act of 1933, as amended, or under common law or
otherwise, but only to the extent that such liability
or expense incurred by the Fund, its officers or Board members,
or such
controlling person resulting from such claims or demands, shall
arise out
of or be based upon any untrue, or alleged untrue, statement of a
material
fact contained in information furnished in writing by you to the
Fund
specifically for use in the Fund's registration statement and
used in the
answers to any of the items of the registration statement or in
the corresponding statements made in the prospectus, or shall
arise out of or
be based upon any omission, or alleged omission, to state a
material fact
in connection with such information furnished in writing by you
to the Fund
and required to be stated in such answers or necessary to make
such
information not misleading. Your agreement to indemnify the
Fund, its
officers and Board members, and any such controlling person, as
aforesaid,
is expressly conditioned upon your being notified of any action
brought against the Fund, its officers or Board members, or any
such controlling
person, such notification to be given by letter or telegram
addressed to
you at your address set forth above within ten days after the
summons or
other first legal process shall have been served. You shall have
the right
to control the defense of such action, with counsel of your own
choosing,
satisfactory to the Fund, if such action is based solely upon
such alleged
misstatement or omission on your part, and in any other event the
Fund, its
officers or Board members, or such controlling person shall each
have the
right to participate in the defense or preparation of the defense
of any
such action. The failure so to notify you of any such action
shall not
relieve you from any liability which you may have to the Fund,
its officers
or Board members, or to such controlling person by reason of any
such
untrue, or alleged untrue, statement or omission, or alleged
omission,
otherwise than on account of your indemnity agreement contained
in this paragraph 1.10. This agreement of indemnity will inure
exclusively to the Fund's benefit, to the benefit of the Fund's
officers and Board members,
and their respective estates, and to the benefit of any
controlling persons and their successors.
You agree promptly to notify the Fund of the commencement of any
litigation or proceedings against you or any of your officers or
directors in connection with the issue and sale of Shares.
1.11 No Shares shall be offered by either you or the Fund
under any of the provisions of this agreement and no orders for
the purchase or sale of such Shares hereunder shall be accepted
by the Fund if and so long as the effectiveness of the
registration statement then in effect or any necessary amendments
thereto shall be suspended under any of
the provisions of the Securities Act of 1933, as amended, or if
and so long
as a current prospectus as required by Section 10 of said Act, as
amended,
is not on file with the Securities and Exchange Commission;
provided,
however, that nothing contained in this paragraph 1.11 shall in
any way
restrict or have an application to or bearing upon the Fund's
obligation to
repurchase any Shares from any shareholder in accordance with the
provisions of the Fund's prospectus or charter documents.
1.12 The Fund agrees to advise you immediately in
writing:
(a) of any request by the Securities and
Exchange Commission for amendments to the registration statement
or prospectus then in effect or for additional information;
(b) in the event of the issuance by the
Securities and Exchange Commission of any stop order suspending
the effectiveness of the registration statement or prospectus
then in effect or the initiation of any proceeding for that
purpose;
(c) of the happening of any event which makes
untrue any statement of a material fact made in the
registration statement or prospectus then in effect or which
requires the making of a change in such registration state-
ment or prospectus in order to make the statements therein
not misleading; and
(d) of all actions of the Securities and
Exchange Commission with respect to any amendments to any
registration statement or prospectus which may from time to
time be filed with the Securities and Exchange Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you
shall be offered for sale at a price per share (the "offering
price") approximately equal to (a) their net asset value
(determined in the manner set forth in the Fund's charter
documents) plus (b) a sales charge, if any
and except to those persons set forth in the then-current
prospectus, which
shall be the percentage of the offering price of such Shares as
set forth in the Fund's then-current prospectus. The offering
price, if not an exact
multiple of one cent, shall be adjusted to the nearest cent. In
addition, Shares of any class of the Fund offered for sale by you
may be subject to a
contingent deferred sales charge as set forth in the Fund's
then-current
prospectus. You shall be entitled to receive any sales charge or
contingent deferred sales charge in respect of the Shares. Any
payments to
dealers shall be governed by a separate agreement between you and
such dealer and the Fund's then-current prospectus.
3. Term
This agreement shall continue until the date (the
"Reapproval Date") set forth on Exhibit A hereto (and, if the
Fund has Series, a separate Reapproval Date shall be specified on
Exhibit A for each
Series), and thereafter shall continue automatically for
successive annual
periods ending on the day (the "Reapproval Day") of each year set
forth on
Exhibit A hereto, provided such continuance is specifically
approved at
least annually by (i) the Fund's Board or (ii) vote of a majority
(as defined in the Investment Company Act of 1940) of the Shares
of the Fund or
the relevant Series, as the case may be, provided that in either
event its
continuance also is approved by a majority of the Board members
who are not
"interested persons" (as defined in said Act) of any party to
this agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This agreement is
terminable without penalty, on 60 days' notice, by vote of
holders of a majority of the Fund's or, as to
any relevant Series, such Series' outstanding voting securities
or by the
Fund's Board as to the Fund or the relevant Series, as the case
may be.
[This agreement is terminable by you, upon 270 days' notice,
effective on or after the fifth anniversary of the date hereof.]
This agreement also will terminate automatically, as to the Fund
or relevant Series, as the case may be, in the event of its
assignment (as defined in said Act).
4. Exclusivity
The Fund acknowledges that the persons employed by you to
assist in the performance of your duties under this agreement may
not devote their full time to such service and nothing contained
in this agreement shall be deemed to limit or restrict your or
any of your affiliates' right to engage in and devote time and
attention to other
businesses or to render services of whatever kind or nature.
5. Miscellaneous
This agreement has been executed on behalf of the Fund by
the undersigned officer of the Fund in his capacity as an officer
of the Fund. The obligations of this agreement shall only be
binding upon the
assets and property of the Fund and shall not be binding upon any
Board member, officer or shareholder of the Fund individually.
Please confirm that the foregoing is in accordance with
your understanding and indicate your acceptance hereof by signing
below, whereupon it shall become a binding agreement between us.
Very truly yours,
PRAIRIE INSTITUTIONAL FUNDS
By:
Accepted:
CONCORD FINANCIAL GROUP, INC.
By:________________________
<PAGE>
EXHIBIT A
Name of Series Reapproval Date Reapproval
Day
Cash Management Fund
Municipal Cash Management Fund
Treasury Prime Cash Management
Fund
U.S. Government Securities Cash
Management Fund
<PAGE>
EXHIBIT 8
CUSTODY AND FUND ACCOUNTING AGREEMENT
Custody and Fund Accounting Agreement made as of
October 28, 1994 between PRAIRIE INSTITUTIONAL FUNDS, a business
trust organized and
existing under the laws of the Commonwealth of Massachusetts,
having its principal office and place of business at 125 West
55th Street, New York, New York 10019 (hereinafter called the
"Fund"), and THE BANK OF NEW YORK, a New York corporation
authorized to do a banking business, having its principal
office and place of business at 110 Washington Street, New York,
New York 10286 (hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter
set forth the Fund and the Custodian 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. "Authorized Person" shall be deemed to include the
Treasurer, the Controller or any other person, whether or not any
such person is an Officer or employee of the Fund, duly
authorized by the Fund's Board to
give Oral Instructions and Written Instructions on behalf of the
Fund and listed in the Certificate annexed hereto as Appendix A
or such other Certificate as may be received by the Custodian
from time to time.
2. "Available Balance" shall mean for any given day
during a calendar year the aggregate amount of Federal Funds held
in the Fund's custody account(s) at The Bank of New York, or its
successors, as of the
close of such day or, if such day is not a business day, the
close of the preceding business day.
3. "Bankruptcy" shall mean with respect to a party such
party's making a general assignment, arrangement or composition
with or for the benefit of its creditors, or instituting or
having instituted against it
a proceeding seeking a judgment of insolvency or bankruptcy or
the entry of
an order for relief under the Federal bankruptcy law or any other
relief under any bankruptcy or insolvency law or other similar
law affecting creditors' rights, or if a petition is presented
for the winding up or
liquidation of the party or a resolution is passed for its
winding up or
liquidation, or it seeks, or becomes subject to, the appointment
of an administrator, receiver, trustee, custodian or other
similar official for it
or for all or substantially all of its assets or its taking any
action in
furtherance of, or indicating its consent to approval of, or
acquiescence in, any of the foregoing.
4. "Book-Entry System" shall mean the Federal Reserve/
Treasury book-entry system for United States and Federal agency
securities, its successor or successors and its nominee or
nominees.
5. "Call Option" shall mean an exchange traded option with
respect to Securities other than Stock Index Options, Futures
Contracts and
Futures Contract Options entitling the holder, upon timely
exercise and
payment of the exercise price, as specified therein, to purchase
from the writer thereof the specified underlying Securities.
6. "Certificate" shall mean any notice, instruction, or
other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, which is actually
received by the Custodian and signed on behalf of the Fund by any
two Officers of the Fund.
7. "Clearing Member" shall mean a registered broker-dealer
which is a clearing member under the rules of O.C.C. and a member
of a national securities exchange qualified to act as a custodian
for an investment company, or any broker-dealer reasonably
believed by the Custodian to be such a clearing member.
8. "Collateral Account" shall mean a segregated account so
denominated and pledged to the Custodian as security for, and in
consideration of, the Custodian's issuance of (a) any Put Option
guarantee letter or similar document described in paragraph 8 of
Article V herein, or (b) any receipt described in Article V or
VIII herein.
9. "Consumer Price Index" shall mean the U.S. Consumer
Price Index, all items and all urban consumers, U.S. city average
l982-84 equals 100, as first published without seasonal
adjustment by the Bureau of Labor
Statistics, the Department of Labor, without regard to subsequent
revisions or corrections by such Bureau.
10. "Covered Call Option" shall mean an exchange traded
option entitling the holder, upon timely exercise and payment of
the exercise price, as specified therein, to purchase from the
writer thereof the specified Securities (excluding Futures
Contracts) which are owned by the writer thereof and subject to
appropriate restrictions.
11. "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and
Exchange Commission, its successor or successors and its nominee
or nominees, provided the Custodian has received a certified copy
of a resolution of the Fund's Board specifically approving
deposits in DTC. The term "Depository" shall
further mean and include any other person authorized to act as a
depository under the Investment Company Act of 1940, as amended,
its successor or successors and its nominee or nominees,
specifically identified in a certified copy of a resolution of
the Fund's Board specifically approving deposits therein by the
Custodian.
12. "Earnings Credit" shall mean for any given day during a
calendar year the product of (a) the Federal Funds Rate for such
date minus .25%, and (b) 82% of the Available Balance.
13. "Federal Funds" shall mean immediately
available same day funds.
14. "Federal Funds Rate" shall mean, for any day, the
Federal Funds (Effective) interest rate so denominated as
published in Federal
Reserve Statistical Release H.15 (519) and applicable to such day
and each succeeding day which is not a business day.
15. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities, including,
without limitation, U.S. Treasury Bills, U.S. Treasury Notes,
U.S. Treasury Bonds,
domestic bank certificates of deposit, and Eurodollar
certificates of deposit, during a specified month at an agreed
upon price.
16. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.
17. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.
18. "Margin Account" shall mean a segregated
account in the
name of a broker, dealer, futures commission merchant or Clearing
Member, or in the name of the Fund for the benefit of a broker,
dealer, futures commission merchant or Clearing Member, or
otherwise, in accordance with an
agreement between the Fund, the Custodian and a broker, dealer,
futures
commission merchant or Clearing Member (a "Margin Account
Agreement"),
separate and distinct from the custody account, in which certain
Securities
and/or money of the Fund shall be deposited and withdrawn from
time to time
in connection with such transactions as the Fund may from time to
time determine. Securities held in the Book-Entry System or the
Depository shall be deemed to have been deposited in, or
withdrawn from, a Margin Account upon the Custodian's effecting
an appropriate entry on its books and records.
19. "Merger" shall mean with respect to a party, the
consolidation or amalgamation with, merger into, or transfer of
all or substantially all of such party's assets to, another
entity, where such party is not the surviving entity.
20. "Money Market Security" shall be deemed to include,
without limitation, debt obligations issued or guaranteed as to
principal and
interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, certificates of
deposit and
bankers' acceptances, repurchase and reverse repurchase
agreements with
respect to the same and bank time deposits, where the purchase
and sale of
such securities ordinarily requires settlement in Federal funds
on the same date as such purchase or sale.
21. "O.C.C." shall mean Options Clearing Corporation, a
clearing agency registered under Section 17A of the Securities
Exchange Act of 1934, its successor or successors, and its
nominee or nominees.
22. "Officers" shall be deemed to include the
President, any
Vice President, the Secretary, the Treasurer, the Controller, any
Assistant
Secretary, any Assistant Treasurer or any other person or persons
duly authorized by the Fund's Board to execute any Certificate,
instruction, notice or other instrument on behalf of the Fund and
listed in the
Certificate annexed hereto as Appendix B or such other
Certificate as may be received by the Custodian from time to
time.
23. "Option" shall mean a Call Option, Covered
Call Option, Stock Index Option and/or a Put Option.
24. "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from an Authorized Person or
from a person
reasonably believed by the Custodian to be an Authorized Person.
25. "Prospectus" shall mean the last Fund
prospectus actually
received by the Custodian from the Fund with respect to which the
Fund has
indicated a registration statement under the Federal Securities
Act of 1933
has become effective, including the statement of additional
information incorporated by reference therein.
26. "Put Option" shall mean an exchange traded option with
respect to Securities other than Stock Index Options, Futures
Contracts, and
Futures Contract Options entitling the holder, upon timely
exercise and
tender of the specified underlying Securities, to sell such
Securities to the writer thereof for the exercise price.
27. "Reverse Repurchase Agreement" shall mean an agreement
pursuant to which the Fund sells Securities and agrees to
repurchase such
Securities at a described or specified date and price.
28. "Security" shall be deemed to include, without
limitation, Money Market Securities, Call Options, Put Options,
Stock Index Options, Stock Index Futures Contracts, Stock Index
Futures Contract Options, Financial Futures Contracts, Financial
Futures Contract Options, Reverse Repurchase Agreements, common
stock and other instruments or rights having characteristics
similar to common stocks, preferred stocks, debt
obligations issued by state or municipal governments and by
public authorities (including, without limitation, general
obligation bonds, revenue bonds and
industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or
other instruments representing rights to receive, purchase, sell
or subscribe
for the same, or evidencing or representing any other rights or
interest therein, or any property or assets.
29. "Segregated Security Account" shall mean an account
maintained under the terms of this Agreement as a segregated
account, by
recordation or otherwise, within the custody account in which
certain Securities and/or other assets of the Fund shall be
deposited and withdrawn
from time to time in accordance with Certificates received by the
Custodian in connection with such transactions as the Fund may
from time to time determine.
30. "Series" shall mean (i) the Series of the
Fund specified on Appendix D hereto, or, where the context
requires each such Series, or
(ii) if no Series are set forth on such Appendix, the Fund.
31. "Shares" shall mean the shares of beneficial interest
of any Series of the Fund, each of which is allocated to a
particular Series.
32. "Stock Index Futures Contract" shall mean a bilateral
agreement pursuant to which the parties agree to take or make
delivery of an
amount of cash equal to a specified dollar amount times the
difference
between the value of a particular stock index at the close of the
last
business day of the contract and the price at which the futures
contract is originally struck.
33. "Stock Index Option" shall mean an exchange traded option
entitling the holder, upon timely exercise, to receive an amount
of cash determined by reference to the difference between the
exercise price and the
value of the index on the date of exercise.
34. "Written Instructions" shall mean written communications
actually received by the Custodian from an Authorized Person or
from a person reasonably believed by the Custodian to be an
Authorized Person by telex or
any other such system whereby the receiver of such communications
is able to
verify by codes or otherwise with a reasonable degree of
certainty the authenticity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian
as custodian of all the Securities and moneys at any time owned
by the Fund during the period of this Agreement, except that (a)
if the Custodian fails to provide for the custody of any of the
Fund's Securities and moneys located
or to be located outside the United States in a manner
satisfactory to the Fund, the Fund shall be permitted to arrange
for the custody of such
Securities and moneys located or to be located outside the United
States other than through the Custodian at rates to be negotiated
and borne by the
Fund and (b) if the Custodian fails to continue any existing
sub-custodial or
similar arrangements on substantially the same terms as exist on
the date of
this Agreement, the Fund shall be permitted to arrange for such
or similar
services other than through the Custodian at rates to be
negotiated and borne
by the Fund. The Custodian shall not charge the Fund for any
such terminated
services after the date of such termination. The Fund also
hereby engages the Custodian to perform certain recordkeeping and
fund accounting services for the Fund.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof and in
connection with recordkeeping
and fund accounting for the Fund as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, the Fund will deliver or cause to be
delivered
to the Custodian all Securities and all moneys owned by any
Series, including
cash received for the issuance of such Series' shares, at any
time during the period of this Agreement and shall specify the
Series, if any, to which the same are to be specifically
allocated. The Custodian will not be responsible
for such Securities and such moneys until actually received by
it. The Custodian will be entitled to reverse any credits made
on a Series' behalf where such credits have been previously made
and moneys are not finally collected. The Fund shall deliver to
the Custodian a certified resolution of
the Fund's Board approving, authorizing and instructing the
Custodian on a
continuous and on-going basis to deposit in the Book-Entry System
all Securities eligible for deposit therein and to utilize the
Book-Entry System to the extent possible 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
Securities collateral. Prior to a deposit of Securities of a
Series in the
Depository, the Fund shall deliver to the Custodian a certified
resolution of
the Fund's Board approving, authorizing and instructing the
Custodian on a
continuous and on-going basis until instructed to the contrary by
a Certificate actually received by the Custodian to deposit in
the Depository all Securities eligible for deposit therein and to
utilize the Depository to
the extent possible 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
Securities collateral. Securities and moneys of such Series
deposited in either the
Book-Entry System or the Depository will be represented in
accounts which
include only assets held by the Custodian for customers,
including, but not
limited to, accounts in which the Custodian acts in a fiduciary
or representative capacity. Prior to the Custodian's accepting,
utilizing and
acting with respect to Clearing Member confirmations for Options
and transactions in Options as provided in this Agreement, the
Custodian shall
have received a certified resolution of the Fund's Board
approving, authorizing and instructing the Custodian on a
continuous and on-going basis,
until instructed to the contrary by a Certificate actually
received by the
Custodian, to accept, utilize and act in accordance with such
confirmations as provided in this Agreement.
2. The Custodian shall credit to a separate account in the
name of the Fund for each Series all moneys received by it for
the account of the Fund, with respect to such Series. Money
credited to the separate
account for a Series shall be disbursed by the Custodian only:
(a) In payment for Securities purchased, as
provided in Article IV hereof;
(b) In payment of dividends or distributions, as
provided in Article XI hereof;
(c) In payment of original issue or other taxes,
as provided in Article XII hereof;
(d) In payment for Shares redeemed by it, as
provided in Article XII hereof;
(e) Pursuant to Certificates setting forth the name and
address of the person to whom the payment is to be made, the
Series account
from which payment is to be made and the purpose for which
payment is to be made; or
(f) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian, as provided in Article
XV hereof.
3. Promptly after the close of business on each day, the
Custodian shall furnish the Fund with confirmations and a summary
of all transfers to or from the account of each Series during
said day. Where Securities are transferred to the account of a
Series, the Custodian shall
also by book-entry or otherwise identify as belonging to such
Series a quantity of Securities in a fungible bulk of Securities
registered in the
name of the Custodian (or its nominee) or shown on the
Custodian's account on
the books of the Book-Entry System or the Depository. At least
monthly and from time to time, the Custodian shall furnish the
Fund with a detailed
statement of the Securities and moneys held for each Series under
this Agreement.
4. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, all Securities held for a Series,
which are
issued or issuable only in bearer form, except such Securities as
are held in
the Book-Entry System, shall be held by the Custodian in that
form; all other
Securities held for a Series may be registered in the name of
such Series, in
the name of any duly appointed registered nominee of the
Custodian as the
Custodian may from time to time determine, or in the name of the
Book-Entry
System or the Depository or their successor or successors, or
their nominee
or nominees. The Fund agrees to 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 its registered nominee or
in the name
of the Book-Entry System or the Depository, any Securities which
it may hold
for the account of a Series and which may from time to time be
registered in the name of such Series. The Custodian shall hold
all such Securities which
are not held in the Book-Entry System or in the Depository in a
separate account in the name of such Series physically segregated
at all times from those of any other person or persons.
5. Except as otherwise provided in this Agreement
and unless otherwise instructed to the contrary by a Certificate,
the Custodian by
itself, or through the use of the Book-Entry System or the
Depository with respect to Securities therein deposited, shall
with respect to all Securities
held for each Series in accordance with this Agreement:
(a) Collect all income due or payable and, in any event,
if the Custodian receives a written notice from the Fund
specifying that an amount of income should have been received by
the Custodian within the last
90 days, the Custodian will provide a conditional payment of
income within 60
days from the date the Custodian received such notice, unless the
Custodian
reasonably concludes that such income was not due or payable to
the Fund,
provided that the Custodian may reverse any such conditional
payment upon its
reasonably concluding that all or any portion of such income was
not due or
payable, and provided further that the Custodian shall not be
liable for
failing to collect on a timely basis the full amount of income
due or payable
in respect of a "floating rate instrument" or "variable rate
instrument" (as such terms are defined under Rule 2a-7 under the
Investment Company Act of l940, as amended) if it has acted in
good faith, without negligence or willful misconduct.
(b) Present for payment and collect the amount payable
upon such Securities which are called, but only if either (i) the
Custodian receives a written notice of such call, or (ii) notice
of such call appears in one or more of the publications listed in
Appendix C annexed hereto, which
may be amended at any time by the Custodian upon five business
days' prior notification to the Fund;
(c) Present for payment and collect the amount payable upon
all Securities which may mature;
(d) Surrender Securities in temporary form for definitive
Securities;
(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
(f) Hold directly, or through the Book-Entry
System or the Depository with respect to Securities therein
deposited, for the account of each Series all rights and similar
securities issued with respect to any Securities held by the
Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the
Custodian, directly or through the use of the Book-Entry System
or the Depository, shall:
(a) Execute and deliver to such persons as may be
designated
in such Certificate proxies, consents, authorizations, and any
other instruments whereby the authority of the Fund as owner of
any Securities may be exercised;
(b) Deliver any Securities held for the Series in exchange
for other Securities or cash issued or paid in connection with
the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the
exercise of any conversion privilege;
(c) Deliver any Securities held for the Series to any
protective committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger,
consolidation, recapitalization
or sale of assets of any corporation, and receive and hold under
the terms of
this Agreement such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to evidence
such delivery;
(d) Make such transfers or exchanges of the
assets of the Series and take such other steps as shall be stated
in said order to be for the purpose of effectuating any duly
authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the
Fund; and
(e) Present for payment and collect the amount payable upon
Securities not described in preceding paragraph 5(b) of this
Article which
may be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere
contained herein, the Custodian shall not be required to obtain
possession of any instrument or certificate representing any
Futures Contract, Option or Futures Contract Option until after
it shall have determined, or shall have received a Certificate
from the Fund stating, that any such instruments or
certificates are available. The Fund shall deliver to the
Custodian such a Certificate no later than the business day
preceding the availability of any such instrument
or certificate. Prior to such availability, the Custodian shall
comply with Section 17(f) of the Investment Company Act of 1940,
as amended, in connection with the purchase, sale, settlement,
closing out or writing of Futures Contracts, Options or Futures
Contract Options by making
payments or deliveries specified in Certificates received by the
Custodian in connection
with any such purchase, sale, writing, settlement or closing out
upon its receipt from a broker, dealer or futures commission
merchant of a statement
or confirmation reasonably believed by the Custodian to be in the
form
customarily used by brokers, dealers, or futures commission
merchants with
respect to such Futures Contracts, Options or Futures Contract
Options, as
the case may be, confirming that such Security is held by such
broker, dealer
or futures commission merchant, in book-entry form or otherwise,
in the name of the Custodian (or any nominee of the Custodian) as
custodian for the Fund,
provided, however, that payments to or deliveries from the Margin
Account
shall be made in accordance with the terms and conditions of the
Margin Account Agreement. Whenever any such instruments or
certificates are
available, the Custodian shall, notwithstanding any provision in
this Agreement to the contrary, make payment for any Futures
Contract, Option or
Futures Contract Option for which such instruments or such
certificates are available only against the delivery to the
Custodian of such instrument or
such certificate, and deliver any Futures Contract, Option or
Futures Contract Option for which such instruments or such
certificates are available
only against receipt by the Custodian of payment therefor. Any
such instrument or certificate delivered to the Custodian shall
be held by the
Custodian hereunder in accordance with, and subject to, the
provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN
OPTIONS, FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS AND REVERSE
REPURCHASE AGREEMENTS
1. Promptly after each purchase of Securities by the Fund,
other than a purchase of any Option, Futures Contract, Futures
Contract
Option or Reverse Repurchase Agreement, the Fund shall deliver to
the
Custodian (i) with respect to each purchase of Securities which
are not Money
Market Securities, a Certificate, and (ii) with respect to each
purchase of
Money Market Securities, a Certificate, Oral Instructions or
Written
Instructions, specifying with respect to each such purchase: (a)
the Series
to which the Securities purchased are to be specifically
allocated; (b) the
name of the issuer and the title of the Securities; (c) the
number of shares
or the principal amount purchased and accrued interest, if any;
(d) the date
of purchase and settlement; (e) the purchase price per unit; (f)
the total
amount payable upon such purchase; (g) the name of the person
from whom or
the broker through whom the purchase was made, and the name of
the clearing
broker, if any; and (h) the name of the broker to which payment
is to be
made. The Custodian shall, upon receipt of Securities purchased
by or for
such Series, pay out of the moneys held for the account of such
Series the
total amount payable to the person from whom, or the broker
through whom, the
purchase was made, provided that the same conforms to the total
amount
payable as set forth in such Certificate, Oral Instructions or
Written Instructions.
2. Promptly after each sale of Securities by the Fund,
other
than a sale of any Option, Futures Contract, Futures Contract
Option or
Reverse Repurchase Agreement, the Fund shall deliver to the
Custodian (i)
with respect to each sale of Securities which are not Money
Market
Securities, a Certificate, and (ii) with respect to each sale of
Money Market
Securities, a Certificate, Oral Instructions or Written
Instructions,
specifying with respect to each such sale: (a) the Series to
which such
Securities sold were specifically allocated; (b) the name of the
issuer and
the title of the Security; (c) the number of shares or principal
amount sold,
and accrued interest, if any; (d) the date of sale; (e) the sale
price per
unit; (f) the total amount payable to such Series upon such sale;
(g) the
name of the broker through whom or the person to whom the sale
was made, and
the name of the clearing broker, if any; and (h) the name of the
broker to
whom the Securities are to be delivered. The Custodian shall
deliver the
Securities upon receipt of the total amount payable to the Fund
for the
account of such Series upon such sale, provided that the same
conforms to the
total amount payable as set forth in such Certificate, Oral
Instructions or
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.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by
the Fund, the
Fund shall deliver to the Custodian a Certificate specifying with
respect to
each Option purchased: (a) the Series to which the Option
purchased is to be
specifically allocated; (b) the type of Option (put or call); (c)
the name of
the issuer and the title and number of shares subject to such
Option or, in the case of a Stock Index Option, the stock index
to which such Option
relates and the number of Stock Index Options purchased; (d) the
expiration
date; (e) the exercise price; (f) the dates of purchase and
settlement;
(g) the total amount payable by the Fund for the account of such
Series in connection with such purchase; (h) the name of the
Clearing Member through
which such Option was purchased; and (i) the name of the broker
to whom payment is to be made. The Custodian shall pay, upon
receipt of a Clearing
Member's statement confirming the purchase of such Option held by
such
Clearing Member for the account of the Custodian (or any duly
appointed and
registered nominee of the Custodian) as custodian for the Fund,
out of moneys
held for the account of such Series, the total amount payable
upon such
purchase to the Clearing Member through whom the purchase was
made, provided
that the same conforms to the total amount payable as set forth
in such Certificate.
2. Promptly after the sale of any Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver
to the
Custodian a Certificate specifying with respect to each such
sale: (a) the
Series to which the Option sold was specifically allocated; (b)
the type of
Option (put or call); (c) the name of the issuer and the title
and number of
shares subject to such Option or, in the case of a Stock Index
Option, the
stock index to which such Option relates and the number of Stock
Index Options sold; (d) the date of sale; (e) the sale price; (f)
the date of
settlement; (g) the total amount payable to the Fund for the
account of such
Series upon such sale; and (h) the name of the Clearing Member
through which the sale was made. The Custodian shall consent to
the delivery of the Option
sold by the Clearing Member which previously supplied the
confirmation
described in preceding paragraph 1 of this Article with respect
to such Option against payment to the Custodian of the total
amount payable to the
Fund for the account of such Series, provided that the same
conforms to the
total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying with
respect to such Call Option:
(a) the Series to which the Call Option exercised was
specifically allocated;
(b) the name of the issuer and the title and number of shares
subject to the
Call Option; (c) the expiration date; (d) the date of exercise
and settlement; (e) the exercise price per share; (f) the total
amount to be paid
by the Fund for the account of such Series upon such exercise;
and (g) the name of the Clearing Member through which such Call
Option was exercised.
The Custodian shall, upon receipt of the Securities underlying
the Call Option which was exercised, pay out of the moneys held
for the account of
such Series the total amount payable to the Clearing Member
through whom the
Call Option was exercised, provided that the same conforms to the
total amount payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put
Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver
to the Custodian a Certificate specifying with respect to such
Put Option:
(a) the Series to which the Put Option exercised was specifically
allocated;
(b) the name of the issuer and the title and number of shares
subject to the
Put Option; (c) the expiration date; (d) the date of exercise and
settlement;
(e) the exercise price per share; (f) the total amount to be paid
to the Fund
for the account of such Series upon such exercise; and (g) the
name of the
Clearing Member through which such Put Option was exercised. The
Custodian
shall, upon receipt of the amount payable upon the exercise of
the Put
Option, deliver or direct the Depository to deliver the
Securities, provided
the same conforms to the amount payable to the Fund for the
account of such Series as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any
Stock Index
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying with
respect to such Stock
Index Option: (a) the Series to which the Stock Index Option
exercised was
specifically allocated; (b) the type of Stock Index Option (put
or call);
(c) the number of Options being exercised; (d) the stock index to
which such Option relates; (e) the expiration date; (f) the
exercise price; (g) the
total amount to be received by the Fund for the account of such
Series in
connection with such exercise; and (h) the Clearing Member from
which such payment is to be received.
6. Whenever the Fund writes a Covered Call
Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect
to such Covered Call Option: (a) the Series to which the Covered
Call Option
written is to be specifically allocated; (b) the name of the
issuer and the
title and number of shares for which the Covered Call Option was
written and
which underlie the same; (c) the expiration date; (d) the
exercise price;
(e) the premium to be received by the Fund for the account of
such Series;
(f) the date such Covered Call Option was written; and (g) the
name of the
Clearing Member through which the premium is to be received. The
Custodian
shall deliver or cause to be delivered, in exchange for receipt
of the
premium specified in the Certificate with respect to such Covered
Call
Option, such receipts as are required in accordance with the
customs
prevailing among Clearing Members dealing in Covered Call Options
and shall
impose, or direct the Depository to impose, upon the underlying
Securities
specified in the Certificate such restrictions as may be required
by such
receipts. Notwithstanding the foregoing, the Custodian has the
right, upon
prior written notification to the Fund, at any time to refuse to
issue any
receipts for Securities in the possession of the Custodian and
not deposited
with the Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and
described in the preceding paragraph of this Article is
exercised, the Fund
shall promptly deliver to the Custodian a Certificate instructing
the
Custodian to deliver, or to direct the Depository to deliver, the
Securities
subject to such Covered Call Option and specifying: (a) the
Series to which
the Covered Call Option exercised was specifically allocated; (b)
the name of
the issuer and the title and number of shares subject to the
Covered Call
Option; (c) the Clearing Member to whom the underlying Securities
are to be
delivered; and (d) the total amount payable to the Fund for the
account of
such Series upon such delivery. Upon the return and/or
cancellation of any
receipts delivered pursuant to paragraph 6 of this Article, the
Custodian
shall deliver, or direct the Depository to deliver, the
underlying Securities
as specified in the Certificate for the amount to be received as
set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to
such Put Option: (a) the Series to which the Put Option written
is to be
specifically allocated; (b) the name of the issuer and the title
and number
of shares for which the Put Option is written and which underlie
the same;
(c) the expiration date; (d) the exercise price; (e) the premium
to be
received by the Fund for the account of such Series; (f) the date
such Put
Option is written; (g) the name of the Clearing Member through
which the
premium is to be received and to whom a Put Option guarantee
letter is to be
delivered; (h) the amount of cash, and/or the amount and kind of
Securities, if any, to be deposited in the Segregated Security
Account; and (i) the
amount of cash and/or the amount and kind of Securities to be
deposited into
the Collateral Account. The Custodian shall, after making the
deposits into
the Collateral Account specified in the Certificate, issue a Put
Option
guarantee letter substantially in the form utilized by the
Custodian on the
date hereof, and deliver the same to the Clearing Member
specified in the
Certificate against receipt of the premium specified in said
Certificate.
Notwithstanding the foregoing, the Custodian shall be under no
obligation to
issue any Put Option guarantee letter or similar document if it
is unable to
make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described
in the preceding paragraph is exercised, the Fund shall promptly
deliver to the
Custodian a Certificate specifying: (a) the Series to which the
Put Option exercised was specifically allocated; (b) the name of
the issuer and title
and number of shares subject to the Put Option; (c) the Clearing
Member from
which the underlying Securities are to be received; (d) the total
amount
payable by the Fund upon such delivery; (e) the amount of cash
and/or the
amount and kind of Securities to be withdrawn from the Collateral
Account;
and (f) the amount of cash and/or the amount and kind of
Securities, if any,
to be withdrawn from the Segregated Security Account. Upon the
return and/or
cancellation of any Put Option guarantee letter or similar
document issued by
the Custodian in connection with such Put Option, the Custodian
shall pay out
of the moneys held for the account of such Series the total
amount payable to
the Clearing Member specified in the Certificate as set forth in
such
Certificate, and shall make the withdrawals specified in such
Certificate.
10. Whenever the Fund writes a Stock Index Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect
to such Stock Index Option: (a) the Series to which the Stock
Index Option
written is to be specifically allocated; (b) whether such Stock
Index Option
is a put or a call; (c) the number of Options written; (d) the
stock index to
which such Option relates; (e) the expiration date; (f) the
exercise price;
(g) the Clearing Member through which such Option was written;
(h) the premium to be received by the Fund for the account of
such Series; (i) the
amount of cash and/or the amount and kind of Securities, if any,
to be
deposited in the Segregated Security Account; (j) the amount of
cash and/or
the amount and kind of Securities, if any, to be deposited in the
Collateral
Account; and (k) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in a Margin Account, and the
name in which such
account is to be or has been established. The Custodian shall,
upon receipt
of the premium specified in the Certificate, make the deposits,
if any, into
the Segregated Security Account specified in the Certificate, and
either (1)
deliver such receipts, if any, which the Custodian has
specifically agreed to
issue, which are in accordance with the customs prevailing among
Clearing
Members in Stock Index Options and make the deposits into the
Collateral
Account specified in the Certificate, or (2) make the deposits
into the Margin Account specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund and
described in the preceding paragraph of this Article is
exercised, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect
to such Stock Index Option: (a) the Series to which the Stock
Index Option
exercised was specifically allocated; (b) such information as may
be necessary to identify the Stock Index Option being exercised;
(c) the
Clearing Member through which such Stock Index Option is being
exercised; (d)
the total amount payable upon such exercise, and whether such
amount is to be
paid by or to the Fund for the account of such Series; (e) the
amount of cash
and/or amount and kind of Securities, if any, to be withdrawn
from the Margin
Account; and (f) the amount of cash and/or amount and kind of
Securities, if
any, to be withdrawn from the Segregated Security Account and the
amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from
the Collateral Account.
Upon the return and/or cancellation of the receipt, if any,
delivered
pursuant to the preceding paragraph of this Article, the
Custodian shall pay
to the Clearing Member specified in the Certificate the total
amount payable, if any, as specified therein.
12. Whenever the Fund purchases any Option identical to a
previously written Option described in paragraphs 6, 8 or 10 of
this Article
in a transaction expressly designated as a "Closing Purchase
Transaction" in
order to liquidate its position as a writer of an Option, the
Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to
the Option being purchased: (a) the Series to which the Option
purchased is
to be specifically allocated; (b) that the transaction is a
Closing Purchase
Transaction; (c) the name of the issuer and the title and number
of shares
subject to the Option, or, in the case of a Stock Index Option,
the stock
index to which such Option relates and the number of Options
held; (d) the
exercise price; (e) the premium to be paid by the Fund for the
account of
such Series; (f) the expiration date; (g) the type of Option (put
or call);
(h) the date of such purchase; (i) the name of the Clearing
Member to which
the premium is to be paid; and (j) the amount of cash and/or the
amount and
kind of Securities, if any, to be withdrawn from the Collateral
Account, a
specified Margin Account or the Segregated Security Account.
Upon the
Custodian's payment of the premium and the return and/or
cancellation of any
receipt issued pursuant to paragraphs 6, 8 or 10 of this Article
with respect
to the Option being liquidated through the Closing Purchase
Transaction, the
Custodian shall remove, or direct the Depository to remove, the
previously imposed restrictions on the Securities underlying the
Call Option.
13. Upon the expiration or exercise of, or
consummation of a
Closing Purchase Transaction with respect to, any Option
purchased or written
by the Fund and described in this Article, the Custodian shall
delete such
Option from the statements delivered to the Fund for the account
of a Series
pursuant to paragraph 3 of Article III herein, and upon the
return and/or
cancellation of any receipts issued by the Custodian, shall make
such withdrawals from the Collateral Account, the Margin Account
and/or the
Segregated Security Account as may be specified in a Certificate
received in
connection with such expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract,
the
Fund shall deliver to the Custodian a Certificate specifying with
respect to
such Futures Contract (or with respect to any number of identical
Futures
Contract(s)): (a) the Series to which the Futures Contract
entered into is
to be specifically allocated; (b) the category of Futures
Contract (the name
of the underlying stock index or financial instrument); (c) the
number of
identical Futures Contracts entered into; (d) the delivery or
settlement date
of the Futures Contract(s); (e) the date the Futures Contract(s)
was (were)
entered into and the maturity date; (f) whether the Fund is
buying (going
long) or selling (going short) on such Futures Contract(s); (g)
the amount of
cash and/or the amount and kind of Securities, if any, to be
deposited in the
Segregated Security Account; (h) the name of the broker, dealer
or futures
commission merchant through which the Futures Contract was
entered into; and
(i) the amount of fee or commission, if any, to be paid and the
name of the
broker, dealer or futures commission merchant to whom such amount
is to be
paid. The Custodian shall make the deposits, if any, to the
Margin Account
in accordance with the terms and conditions of the Margin Account
Agreement.
The Custodian shall make payment of the fee or commission, if
any, specified
in the Certificate and deposit in the Segregated Security Account
the amount
of cash and/or the amount and kind of Securities specified in
said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund for the account of a Series to a
broker,
dealer or futures commission merchant with respect to an
outstanding Futures
Contract shall be made by the Custodian in accordance with the
terms and
conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from
a broker, dealer or futures commission merchant to the Fund with
respect to
an outstanding Futures Contract shall be received and dealt with
by the
Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement is
made on
such Futures Contract, the Fund shall deliver to the Custodian a
Certificate
specifying: (a) the Series to which the Futures Contract
retained is to be
specifically allocated; (b) the Futures Contract; (c) with
respect to a Stock
Index Futures Contract, the total cash settlement amount to be
paid or received, and with respect to a Financial Futures
Contract, the Securities
and/or amount of cash to be delivered or received; (d) the
broker, dealer or
futures commission merchant to or from which payment or delivery
is to be
made or received; and (e) the amount of cash and/or Securities to
be
withdrawn from the Segregated Security Account. The Custodian
shall make the
payment or delivery specified in the Certificate and delete such
Futures
Contract from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures
Contract to
offset a Futures Contract held by the Custodian hereunder, the
Fund shall
deliver to the Custodian a Certificate specifying: (a) the
Series to which
the offsetting Futures Contract is to be specifically allocated;
(b) the
items of information required in a Certificate described in
paragraph 1 of
this Article, and (c) the Futures Contract being offset. The
Custodian shall
make payment of the fee or commission, if any, specified in the
Certificate
and delete the Futures Contract being offset from the statements
delivered to
the Fund for the account of such Series pursuant to paragraph 3
of
Article III herein, and make such withdrawals from the Segregated
Security
Account as may be specified in such Certificate. The
withdrawals, if any, to
be made from the Margin Account shall be made by the Custodian in
accordance
with the terms and conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures
Contract Option
by the Fund, the Fund shall deliver to the Custodian a
Certificate specifying
with respect to such Futures Contract Option: (a) the Series to
which the
Futures Contract Option purchased is to be specifically
allocated; (b) the
type of Futures Contract Option (put or call); (c) the type of
Futures
Contract and such other information as may be necessary to
identify the
Futures Contract underlying the Futures Contract Option
purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of
purchase and
settlement; (g) the amount of premium to be paid by the Fund for
the account
of such Series upon such purchase; (h) the name of the broker or
futures
commission merchant through which such option was purchased; and
(i) the name
of the broker or futures commission merchant to whom payment is
to be made.
The Custodian shall pay the total amount to be paid upon such
purchase to the
broker or futures commission merchant through whom the purchase
was made, provided that the same conforms to the amount set forth
in such Certificate.
2. Promptly after the sale of any Futures Contract
Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall promptly
deliver to the Custodian a Certificate specifying with respect to
each such
sale: (a) the Series to which the Futures Contract Option sold
was specifically allocated; (b) the type of Futures Contract
Option (put or
call); (c) the type of Futures Contract and such other
information as may be
necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the date of sale; (e) the sale price; (f)
the date of settlement;
(g) the total amount payable to the Fund for the account of such
Series upon
such sale; and (h) the name of the broker or futures commission
merchant
through which the sale was made. The Custodian shall consent to
the
cancellation of the Futures Contract Option being closed against
payment to
the Custodian of the total amount payable to the Fund for the
account of such
Series, provided the same conforms to the total amount payable as
set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the
Fund
pursuant to paragraph 1 is exercised by the Fund, the Fund shall
promptly
deliver to the Custodian a Certificate specifying: (a) the Series
to which
the Futures Contract Option exercised was specifically allocated;
(b) the
particular Futures Contract Option (put or call) being exercised;
(c) the
type of Futures Contract underlying the Futures Contract Option;
(d) the date
of exercise; (e) the name of the broker or futures commission
merchant
through which the Futures Contract Option is exercised; (f) the
net total
amount, if any, payable by the Fund; (g) the amount, if any, to
be received
by the Fund for the account of such Series; and (h) the amount of
cash and/or
the amount and kind of Securities to be deposited in the
Segregated Security
Account. The Custodian shall make the payments, if any, and the
deposits, if
any, into the Segregated Security Account as specified in the
Certificate.
The deposits, if any, to be made to the Margin Account shall be
made by the
Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract
Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with
respect to such Futures Contract Option: (a) the Series to which
the Futures
Contract Option written is to be specifically allocated; (b) the
type of
Futures Contract Option (put or call); (c) the type of Futures
Contract and
such other information as may be necessary to identify the
Futures Contract
underlying the Futures Contract Option; (d) the expiration date;
(e) the
exercise price; (f) the premium to be received by the Fund for
the account of
such Series; (g) the name of the broker or futures commission
merchant
through which the premium is to be received; and (h) the amount
of cash
and/or the amount and kind of Securities, if any, to be deposited
in the
Segregated Security Account. The Custodian shall, upon receipt
of the
premium specified in the Certificate, make the deposits into the
Segregated
Security Account, if any, as specified in the Certificate. The
deposits, if
any, to be made to the Margin Account shall be made by the
Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
5. Whenever a Futures Contract Option written by
the Fund
which is a call is exercised, the Fund shall promptly deliver to
the Custodian a Certificate specifying: (a) the Series to which
the Futures
Contract Option exercised was specifically allocated; (b) the
particular Futures Contract Option exercised; (c) the type of
Futures Contract
underlying the Futures Contract Option; (d) the name of the
broker or futures
commission merchant through which such Futures Contract Option
was exercised; (e) the net total amount, if any, payable to the
Fund for the account of such Series upon such exercise; (f) the
net total amount, if any, payable by the
Fund for the account of such Series upon such exercise; and (g)
the amount of
cash and/or the amount and kind of Securities to be deposited in
the Segregated Security Account. The Custodian shall, upon its
receipt of the
net total amount payable to the Fund for the account of such
Series, if any,
specified in such Certificate make the payments, if any, and the
deposits, if
any, into the Segregated Security Account as specified in the
Certificate.
The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is
written by the Fund and which is a Put Option is exercised, the
Fund shall promptly deliver
to the Custodian a Certificate specifying: (a) the Series to
which the
Futures Contract Option exercised was specifically allocated; (b)
the particular Futures Contract Option exercised; (c) the type of
Futures
Contract underlying such Futures Contract Option; (d) the name of
the broker
or futures commission merchant through which such Futures
Contract Option is
exercised; (e) the net total amount, if any, payable to the Fund
for the
account of such Series upon such exercise; the net total amount,
if any,
payable by the Fund for the account of such Series upon such
exercise; and
(g) the amount and kind of Securities and/or cash to be withdrawn
from or
deposited in the Segregated Security Account, if any. The
Custodian shall,
upon its receipt of the net total amount payable to the Fund for
the account
of such Series, if any, specified in the Certificate, make the
payments, if
any, and the deposits, if any, into the Segregated Security
Account as
specified in the Certificate. The deposits to and/or withdrawals
from the Margin Account, if any, shall be made by the Custodian
in accordance with the terms and conditions of the Margin Account
Agreement.
7. Whenever the Fund purchases any Futures
Contract Option
identical to a previously written Futures Contract Option
described in this
Article in order to liquidate its position as a writer of such
Futures
Contract Option, the Fund shall promptly deliver to the Custodian
a
Certificate specifying with respect to the Futures Contract
Option being
purchased: (a) the Series to which the Futures Contract Option
purchased is
to be specifically allocated; (b) that the transaction is a
closing transaction; (c) the type of Futures Contract and such
other information as
may be necessary to identify the Futures Contract underlying the
Futures
Contract Option; (d) the exercise price; (e) the premium to be
paid by the
Fund for the account of such Series; (f) the expiration date; (g)
the name of
the broker or futures commission merchant to which the premium is
to be paid;
and (h) the amount of cash and/or the amount and kind of
Securities, if any,
to be withdrawn from the Segregated Security Account. The
Custodian shall
effect the withdrawals from the Segregated Security Account
specified in the
Certificate. The withdrawals, if any, to be made from the Margin
Account
shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
8. Upon the expiration or exercise of, or
consummation of a
closing transaction with respect to, any Futures Contract Option
written or
purchased by the Fund and described in this Article, the
Custodian shall (a)
delete such Futures Contract Option from the statements delivered
to the Fund
pursuant to paragraph 3 of Article III herein, and (b) make such
withdrawals
from, and/or, in the case of an exercise, such deposits into, the
Segregated
Security Account as may be specified in a Certificate. The
deposits to
and/or withdrawals from the Margin Account, if any, shall be made
by the
Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the
exercise of a Futures Contract Option described in this Article
shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sale, the Fund shall
deliver to the Custodian a Certificate specifying: (a) the
Series to which the short
sale is to be specifically allocated; (b) the name of the issuer
and the
title of the Security; (c) the number of shares or principal
amount sold, and
accrued interest or dividends, if any; (d) the dates of the sale
and settlement; (e) the sale price per unit; (f) the total amount
credited to the
Fund for the account of such Series upon such sales, if any; (g)
the amount
of cash and/or the amount and kind of Securities, if any, which
are to be
deposited in a Margin Account and the name in which such Margin
Account has
been or is to be established; (h) the amount of cash and/or the
amount and
kind of Securities, if any, to be deposited in a Segregated
Security Account;
and (i) the name of the broker through which such short sale was
made. The
Custodian shall upon its receipt of a statement from such broker
confirming
such sale and that the total amount credited to the Fund upon
such sale, if
any, as specified in the Certificate is held by such broker for
the account
of the Custodian (or any nominee of the Custodian) as custodian
of the Fund,
issue a receipt or make the deposits into the Margin Account and
the Segregated Security Account specified in the Certificate.
2. In connection with the closing-out of any
short sale, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with
respect to each such closing-out: (a) the Series to which the
short sale being closed-out was specifically allocated; (b) the
name of the issuer and
the title of the Security; (c) the number of shares or the
principal amount,
and accrued interest or dividends, if any, required to effect
such closing-out to be delivered to the broker; (d) the dates of
the closing-out and
settlement; (e) the purchase price per unit; (f) the net total
amount payable
to the Fund for the account of such Series upon such closing-out;
(g) the net
total amount payable to the broker upon such closing-out; (h) the
amount of
cash and the amount and kind of Securities to be withdrawn, if
any, from the
Margin Account; (i) the amount of cash and/or the amount and kind
of
Securities, if any, to be withdrawn from the Segregated Security
Account; and
(j) the name of the broker through which the Fund is effecting
such closing-out. The Custodian shall, upon receipt of the net
total amount payable to
the Fund for the account of such Series upon such closing-out and
the return
and/or cancellation of the receipts, if any, issued by the
custodian with
respect to the short sale being closed-out, pay out of the moneys
held for the account of the Series to the broker the net total
amount payable to the
broker, and make the withdrawals from the Margin Account and the
Segregated
Security Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund, on behalf of a
Series, enters
into a Reverse Repurchase Agreement with respect to Securities
and money held
by the Custodian hereunder, the Fund shall deliver to the
Custodian a
Certificate or in the event such Reverse Repurchase Agreement is
a Money
Market Security, a Certificate, Oral Instructions or Written
Instructions
specifying: (a) the Series to which the Reverse Repurchase
Agreement is to
be specifically allocated; (b) the total amount payable to the
Fund for the
account of such Series in connection with such Reverse Repurchase
Agreement;
(c) the broker or dealer through or with which the Reverse
Repurchase
Agreement is entered; (d) the amount and kind of Securities to be
delivered
by the Fund to such broker or dealer; (e) the date of such
Reverse Repurchase
Agreement; and (f) the amount of cash and/or the amount and kind
of
Securities, if any, to be deposited in a Segregated Security
Account in
connection with such Reverse Repurchase Agreement. The Custodian
shall, upon
receipt of the total amount payable to the Fund specified in the
Certificate,
Oral Instructions or Written Instructions make the delivery to
the broker or
dealer, and the deposits, if any, to the Segregated Security
Account,
specified in such Certificate, Oral Instructions or Written
Instructions.
2. Upon the termination of a Reverse Repurchase
Agreement
described in paragraph 1 of this Article, the Fund shall promptly
deliver a
Certificate or, in the event such Reverse Repurchase Agreement is
a Money
Market Security, a Certificate, Oral Instructions or Written
Instructions to
the Custodian specifying: (a) the Series to which the Reverse
Repurchase
Agreement terminated was specifically allocated; (b) the Reverse
Repurchase
Agreement being terminated; (c) the total amount payable by the
Fund for the
account of such Series in connection with such termination; (d)
the amount
and kind of Securities to be received by the Fund for the account
of such
Series in connection with such termination; (e) the date of
termination; (f)
the name of the broker or dealer with or through which the
Reverse Repurchase
Agreement is to be terminated; and (g) the amount of cash and/or
the amount
and kind of Securities to be withdrawn from the Segregated
Security Account.
The Custodian shall, upon receipt of the amount and kind of
Securities to be
received by the Fund specified in the Certificate, Oral
Instructions or
Written Instructions, make the payment to the broker or dealer,
and the
withdrawals, if any, from the Segregated Security Account,
specified in such
Certificate, Oral Instructions or Written Instructions.
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make
such deposits
to, or withdrawals from, a Segregated Security Account as
specified in a
Certificate received by the Custodian. Such Certificate shall
specify the
amount of cash and/or the amount and kind of Securities to be
deposited in,
or withdrawn from, the Segregated Security Account. In the event
that the
Fund fails to specify in a Certificate the designated Series, the
name of the
issuer, the title and the number of shares or the principal
amount of any
particular Securities to be deposited by the Custodian into, or
withdrawn
from, a Segregated Securities Account, the Custodian shall be
under no
obligation to make any such deposit or withdrawal and shall so
notify the Fund.
2. The Custodian shall make deliveries or
payments from a
Margin Account to the broker, dealer, futures commission merchant
or Clearing
Member in whose name, or for whose benefit, the account was
established as
specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any Margin
Account
shall be dealt with in accordance with the terms and conditions
of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security
interest in and to any property at any time held by the Custodian
in any
Collateral Account described herein. In accordance with
applicable law, the
Custodian may enforce its lien and realize on any such property
whenever the
Custodian has made payment or delivery pursuant to any Put Option
guarantee
letter or similar document or any receipt issued hereunder by the
Custodian.
In the event the Custodian should realize on any such property
net proceeds
which are less than the Custodian's obligations under any Put
Option
guarantee letter or similar document or any receipt, such
deficiency shall be
a debt owed the Custodian by the Fund within the scope of Article
XIII herein.
5. On each business day, the Custodian shall
furnish the Fund
with respect to each Series a statement with respect to each
Margin Account
in which money or Securities are held specifying as of the close
of business
on the previous business day: (a) the name of the Margin
Account; (b) the
amount and kind of Securities held therein; and (c) the amount of
money held
therein. The Custodian shall make available upon request to any
broker,
dealer or futures commission merchant specified in the name of a
Margin
Account a copy of the statement furnished the Fund with respect
to such Margin Account.
6. Promptly after the close of business on each
business day
in which cash and/or Securities are maintained in a Collateral
Account, the
Custodian shall furnish the Fund with a Statement with respect to
such
Collateral Account specifying the amount of cash and/or the
amount and kind
of Securities held therein. No later than the close of business
next
succeeding the delivery to the Fund of such statement, the Fund
shall furnish
to the Custodian a Certificate or Written Instructions specifying
the then
market value of the securities described in such statement. In
the event
such then market value is indicated to be less than the
Custodian's
obligation with respect to any outstanding Put Option, guarantee
letter or
similar document, the Fund shall promptly specify in a
Certificate the
additional cash and/or Securities to be deposited in such
Collateral Account to eliminate such deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. For each Series, the Fund shall furnish to the
Custodian a
copy of the resolution of the Fund's Board, certified by the
Secretary or any
Assistant Secretary, either (i) setting forth the date of the
declaration of
a dividend or distribution, the date of payment thereof, the
record date as
of which shareholders entitled to payment shall be determined,
the amount
payable per share to the shareholders of record as of that date
and the total
amount payable to the Dividend Agent of the Fund on the payment
date, or (ii)
authorizing the declaration of dividends and distributions on a
daily basis
and authorizing the Custodian to rely on Oral Instructions,
Written
Instructions or a Certificate setting forth the date of the
declaration of
such dividend or distribution, the date of payment thereof, the
record date
as of which shareholders entitled to payment shall be determined,
the amount
payable per share to the shareholders of record as of that date
and the total
amount payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such
resolution, Oral
Instructions, Written Instructions or Certificate, as the case
may be, the
Custodian shall pay out of the moneys held for the account of the
Series the
total amount payable to the Dividend Agent of the Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Series'
Shares, the Fund
shall deliver to the Custodian a Certificate duly specifying:
(a) The number of Shares sold, trade date, and
price; and
(b) The amount of money to be received by the
Custodian for the sale of such Shares.
2. Upon receipt of such money from the Transfer Agent, the
Custodian shall credit such money to the account of such Series.
3. Upon issuance of any Series' Shares in accordance with
the
foregoing provisions of this Article, the Custodian shall pay,
out of the
money held for the account of such Series, all original issue or
other taxes
required to be paid by the Fund for the account of such Series in
connection
with such issuance upon the receipt of a Certificate specifying
the amount to be paid.
4. Except as provided hereinafter, whenever the
Fund shall
hereafter redeem any Series' Shares, the Fund shall furnish to
the Custodian a Certificate specifying:
(a) The number of Shares redeemed; and
(b) The amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent of an advice
setting
forth the number of a Series' Shares received by the Transfer
Agent for
redemption and that such Shares are valid and in good form for
redemption,
the Custodian shall make payment to the Transfer Agent out of the
moneys held
for the account of such Series of the total amount specified in
the
Certificate issued pursuant to the foregoing paragraph 4 of this
Article.
6. Notwithstanding the above provisions regarding the
redemption of any of Series' Shares, whenever a Series' Shares
are redeemed
pursuant to any check redemption privilege which may from time to
time be
offered by the Fund, the Custodian, unless otherwise instructed
by a
Certificate, shall, upon receipt of an advice from the Fund or
its agent
setting forth that the redemption is in good form for redemption
in
accordance with the check redemption procedure, honor the check
presented as
part of such check redemption privilege out of the money held in
the account of the Fund for such purposes.
ARTICLE XIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance
funds on behalf of a Series which results in an overdraft because
the moneys
held by the Custodian for the account of such Series shall be
insufficient to
pay the total amount payable upon a purchase of Securities as set
forth in a
Certificate or Oral Instructions issued pursuant to Article IV,
or which
results in an overdraft in the account for such Series for some
other reason,
or if a Series is for any other reason indebted to the Custodian
(except a
borrowing for investment or for temporary or emergency purposes
using
Securities as collateral pursuant to a separate agreement and
subject to the
provisions of paragraph 2 of this Article XIII), such overdraft
or
indebtedness shall be deemed to be a loan made by the Custodian
to such
Series payable on demand and shall bear interest from the date
incurred at a
rate per annum (based on a 360-day year for the actual number of
days
involved) equal to the Federal Funds Rate plus l/2%, such rate to
be adjusted
on the effective date of any change in such Federal Funds Rate
but in no
event to be less than 6% per annum, except that any overdraft
resulting from
an error by the Custodian shall bear no interest. Any such
overdraft or
indebtedness shall be reduced by an amount equal to the total of
all amounts
due such Series which have not been collected by the Custodian on
behalf of
such Series when due because of the failure of the Custodian to
make timely
demand or presentment for payment. In addition, the Fund hereby
agrees that
the Custodian shall have a continuing lien and security interest
in and to
any property at any time held by it for the benefit of such
Series or in
which such Series may have an interest which is then in the
Custodian's
possession or control or in possession or control of any third
party acting
in the Custodian's behalf. The Fund authorizes the Custodian, in
its sole
discretion, at any time to charge any such overdraft or
indebtedness together
with interest due thereon against any balance of account standing
to such
Series' credit on the Custodian's books. For purposes of this
Section 1 of
Article XIII, "overdraft" shall mean a negative Available
Balance.
2. The Fund will cause to be delivered to the
Custodian by
any bank (including, if the borrowing is pursuant to a separate
agreement,
the Custodian) from which it borrows money for investment or for
temporary or
emergency purposes using Securities in a Series' portfolio as
collateral for
such borrowings, a notice or undertaking in the form currently
employed by
any such bank setting forth the amount which such bank will loan
to the Fund
against delivery of a stated amount of collateral. The Fund
shall promptly
deliver to the Custodian a Certificate specifying with respect to
each such
borrowing: (a) the Series to which the borrowing relates; (b)
the name of
the bank; (c) the amount and terms of the borrowing, which may be
set forth
by incorporating by reference an attached promissory note, duly
endorsed by
the Fund, or other loan agreement; (d) the time and date, if
known, on which
the loan is to be entered into; (e) the date on which the loan
becomes due
and payable; (f) the total amount payable to the Fund for the
account of such
Series on the borrowing date; (g) the market value of Securities
to be
delivered as collateral for such loan, including the name of the
issuer, the
title and the number of shares or the principal amount of any
particular
Securities; and (h) a statement specifying whether such loan is
for
investment purposes or for temporary or emergency purposes and
that such loan
is in conformance with the Investment Company Act of 1940, as
amended, and
the Fund's prospectus. The Custodian shall deliver on the
borrowing date
specified in a Certificate the specified collateral and the
executed
promissory note, if any, against delivery by the lending bank of
the total
amount of the loan payable, provided that the same conforms to
the total
amount payable as set forth in the Certificate. The Custodian
may, at the
option of the lending bank, keep such collateral in its
possession, but such
collateral shall be subject to all rights therein given the
lending bank by
virtue of any promissory note or loan agreement. The Custodian
shall deliver
such Securities as additional collateral as may be specified in a
Certificate
to collateralize further any transaction described in this
paragraph. The
Fund shall cause all Securities released from collateral status
to be
returned directly to the Custodian, and the Custodian shall
receive from time
to time such return of collateral as may be tendered to it. In
the event
that the Fund fails to specify in a Certificate the Series, the
name of the
issuer, the title and number of shares or the principal amount of
any
particular Securities to be delivered as collateral by the
Custodian, the
Custodian shall not be under any obligation to deliver any
Securities.
ARTICLE XIV
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its
organization
documents and as disclosed in its most recent and currently
effective
prospectus to lend the portfolio Securities of a Series, within
24 hours
after each loan of portfolio Securities the Fund shall deliver or
cause to be
delivered to the Custodian a Certificate specifying with respect
to each such
loan: (a) the Series to which the Securities to be loaned are
specifically
allocated; (b) the name of the issuer and the title of the
Securities;
(c) the number of shares or the principal amount loaned; (d) the
date of loan
and delivery; (e) the total amount to be delivered to the
Custodian against
the loan of the Securities, including the amount of cash
collateral and the
premium, if any, separately identified; and (f) the name of the
broker,
dealer or financial institution to which the loan was made. The
Custodian
shall deliver the Securities thus designated to the broker,
dealer or
financial institution to which the loan was made upon receipt of
the total
amount designated as to be delivered against the loan of
Securities. The
Custodian may accept payment in connection with a delivery
otherwise than
through the Book-Entry System or Depository only in the form of a
certified
or bank cashier's check payable to the order of the Fund or the
Custodian
drawn on New York Clearing House funds and may deliver Securities
in
accordance with the customs prevailing among dealers in
securities.
2. Promptly after each termination of the loan of
Securities
by the Fund, the Fund shall deliver or cause to be delivered to
the Custodian
a Certificate specifying with respect to each such loan
termination and
return of Securities: (a) the Series to which the Securities to
be returned
are specifically allocated; (b) the name of the issuer and the
title of the
Securities to be returned; (c) the number of shares or the
principal amount
to be returned; (d) the date of termination; (e) the total amount
to be
delivered by the Custodian (including the cash collateral for
such Securities
minus any offsetting credits as described in said Certificate);
and (f) the
name of the broker, dealer or financial institution from which
the Securities
will be returned. The Custodian shall receive all Securities
returned from
the broker, dealer, or financial institution to which such
Securities were
loaned and upon receipt thereof shall pay, out of the moneys held
for the
account of the Series specified in the Certificate, the total
amount payable
upon such return of Securities as set forth in the Certificate.
ARTICLE XV
RECORDKEEPING AND FUND ACCOUNTING
1. The Custodian shall compute the net asset value per
share
and offering price per share of each Series at such times and
dates and in
the manner specified in the Prospectus. The Custodian also shall
compute the
net income and capital gains of each Series for dividend purposes
and the net
income and capital gains per share at such times and dates and in
the manner
specified in the Prospectus. The Custodian shall advise the Fund
and its
transfer agent, of the net asset value and offering price per
share, the net
income and capital gains and the net income and capital gains per
share of
each Series upon completion of the computations required to be
made by the
Custodian pursuant to this Article.
2. Securities of each Series shall be valued as
set forth in
the Prospectus and the Fund shall have sole responsibility for
determining
the method of valuation of a Series' Securities. To the extent
valuation of
a Series' Securities on such basis is at any time inconsistent
with any
applicable laws and/or regulations, the Fund, or its authorized
agent, shall
immediately so notify the Custodian in writing and thereafter
shall either
furnish the Custodian at all appropriate times with the values of
such
Securities or, subject to the prior approval of the Custodian,
instruct the
Custodian in writing to value such Series' Securities in a manner
which the
Fund, or its authorized agent, then represents in writing to be
consistent
with all applicable laws and regulations.
3. The Fund, or its authorized agent, from time
to time, may
instruct the Custodian in writing to compute the value of the
Securities of a
Series, such Series' net asset value and offering price per
share, the net
income and capital gains of such Series, or the net income and
capital gains
per share of such Series in a manner other than as specified in
the preceding
paragraphs of this Article; provided, however, that any such
other methods of
computation shall not be inconsistent with any applicable laws
and regulations.
4. The Fund, or its authorized agent, shall
furnish the
Custodian with any and all instructions, explanations,
information,
specifications and documentation deemed necessary by the
Custodian in the
performance of its duties set forth under this Article,
including, without
limitation, the amounts, and/or written formula for calculating
the amounts,
and times of accrual of each Series' liabilities and expenses.
The Fund, or
its authorized agent, also shall from time to time furnish the
Custodian with
bid, offer, and/or market values of the securities held by each
Series if the
same are not available to the Custodian from a security pricing
or similar
service utilized, or subscribed to, by the Custodian at the time
such
information is required for calculations set forth under this
Article, and if
any broker or other third party selected by the Fund is unable to
readily
obtain market quotations with respect to such securities from the
appropriate
securities exchange, NASDAQ service or other similar wire
service. At no
time shall the Custodian be required or obligated to commence or
maintain any
utilization of, or subscriptions to, any securities pricing or
similar
service except those of its own choosing sufficient to permit it
to perform
its duties set forth under this Article; provided that the
Custodian shall
neither use any security pricing or similar service, nor shall it
discontinue
its use of any such service, in connection with the performance
of its
services under this Article except upon adequate prior written
notice to the
Fund. Any specifications of the assets of a Series given to the
Custodian by
the Fund or its authorized agent, and any changes in such
specifications,
including, without limitation, any additions thereto or deletions
therefrom, shall be signed by two Officers.
5. The Custodian shall maintain and keep current
the books,
accounts and other documents, if any, listed in Appendix E hereto
and made a
part hereof, as such Appendix E may be amended from time to time,
and shall
preserve any such books, accounts and other documents in
accordance with the
applicable provisions of the Investment Company Act of 1940, as
amended, in
particular, Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, and
other applicable securities laws and rules and regulations. All
records
maintained and preserved by the Custodian pursuant to this
Article which the
Fund is required to maintain and preserve in accordance with such
rules shall
be and remain the property of the Fund and shall be surrendered
to the Fund
promptly upon request in the form in which such records have been
maintained and preserved.
6. The Custodian, in performing the services
required of it
under the terms of this Article, shall be entitled to rely fully
on the accuracy and validity of any and all instructions,
explanations, information,
specifications and documentation furnished to it by the Fund or
its
authorized agent and shall have no duty or obligation to review
the accuracy,
validity or propriety of such instructions, explanations,
information,
specifications or documentation, including, without limitation,
evaluations
of Securities held as part of the Fund's Series; the amounts
and/or formula
for calculating the amounts and times of accrual of a Series'
liabilities and
expenses; the amounts receivable and the amounts payable on the
sale or
purchase of the portfolio Securities of a Series; and amounts
receivable or
amounts payable for the sale or redemption of Shares effected by
or on behalf
of the Fund, provided that the Custodian shall be fully
responsible for the
accuracy and validity of any and all instructions, explanations,
information,
specifications and documentation furnished by itself in
connection with the
performance of its duties hereunder. In the event the
Custodian's
computations hereunder require information, including, without
limitation,
bid, offer and/or market values of Securities or other assets, or
accruals of
interest or earnings thereon, furnished to the Custodian by a
pricing or
similar service utilized or subscribed to by the Custodian which
the
Custodian in its judgment deems reliable and which has been
previously
approved in writing by the Fund, or by a broker or other third
party selected
by the Fund, the Custodian shall not be responsible for, under
any duty to
inquire into, or deemed to make any assurances with respect to,
the accuracy
or completeness of such information; provided that the Custodian
shall not
waive, release, or give up the respective rights, if any, of the
Fund to
obtain recovery from any such service for any loss suffered by
the Fund as a
result of the negligence of such service. The Custodian shall
not be
obligated or expected to obtain from any pricing or similar
service, or any
third party, any rights in addition to the rights, if any, such
pricing,
similar service or third party generally provides under its
typical
agreement; provided, however, that the Custodian may execute any
such typical
agreement in connection with its obtaining such services that
includes as a
standard provision limitations and waivers of any or all such
rights.
ARTICLE XVI
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the
Custodian nor
its nominee shall be liable for any loss or damage, including
counsel fees,
resulting from its action or omission to act or otherwise, either
hereunder
or under any Margin Account Agreement, except for any such loss
or damage
arising out of its own negligence or willful misconduct. The
Custodian may,
with respect to questions of law arising hereunder or under any
Margin
Account Agreement, apply for and obtain the advice and opinion of
counsel to
the Fund or of its own counsel, at the expense of the Fund, and
shall be
fully protected with respect to anything done or omitted by it in
good faith
in conformity with such advice or opinion. The Custodian shall
be liable to
the Fund for any loss or damage resulting from the use of the
Book-Entry
System or any Depository arising by reason of any negligence,
misfeasance or
willful misconduct on the part of the Custodian or any of its
employees or agents.
2. Without limiting the generality of the
foregoing, the
Custodian shall be under no obligation to inquire into, and shall
not be
liable for:
(a) The validity of the issue of any Securities
purchased,
sold or written by or for the Fund, the legality of the purchase,
sale or
writing thereof, or the propriety of the amount paid or received
therefor;
(b) The legality of the issue or sale of any of
the Fund's
Shares, or the sufficiency of the amount to be received therefor;
(c) The legality of the redemption of any of the Fund's
Shares, or the propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of any
dividend by the Fund;
(e) The legality of any borrowing by the Fund using
Securities as collateral;
(f) The legality of any loan of portfolio Securities
pursuant
to Article XIV of this Agreement, nor shall the Custodian be
under any duty
or obligation to see to it that any cash collateral delivered to
it by a
broker, dealer or financial institution or held by it at any time
as a result
of such loan of portfolio Securities of the Fund is adequate
collateral for
the Fund against any loss it might sustain as a result of such
loan. The
Custodian specifically, but not by way of limitation, shall not
be under any
duty or obligation periodically to check or notify the Fund that
the amount
of such cash collateral held by it for the Fund is sufficient
collateral for
the Fund, but such duty or obligation shall be the sole
responsibility of the
Fund. In addition, the Custodian shall be under no duty or
obligation to see
that any broker, dealer or financial institution to which
portfolio
Securities of the Fund are lent pursuant to Article XIV of this
Agreement
makes payment to it of any dividends or interest which are
payable to or for
the account of the applicable Series of the Fund during the
period of such
loan or at the termination of such loan, provided, however, that
the
Custodian shall promptly notify the Fund in the event that such
dividends or
interest are not paid and received when due; or
(g) The sufficiency or value of any amounts of
money and/or
Securities held in any Margin Account, Segregated Security
Account or
Collateral Account in connection with transactions by the Fund.
In addition,
the Custodian shall be under no duty or obligation to see that
any broker,
dealer, futures commission merchant or Clearing Member makes
payment to the
Fund of any variation margin payment or similar payment which the
Fund may be
entitled to receive from such broker, dealer, futures commission
merchant or
Clearing Member, to see that any payment received by the
Custodian from any
broker, dealer, futures commission merchant or Clearing Member is
the amount
the Fund is entitled to receive, or to notify the Fund of the
Custodian's
receipt or non-receipt of any such payment; provided however that
the
Custodian, upon the Fund's written request, shall, as Custodian,
demand from
any broker, dealer, futures commission merchant or Clearing
Member identified
by the Fund the payment of any variation margin payment or
similar payment
that the Fund asserts it is entitled to receive pursuant to the
terms of a
Margin Account Agreement or otherwise from such broker, dealer,
futures
commission merchant or Clearing Member.
3. The Custodian shall not be liable for, or
considered to be
the Custodian of, any money, whether or not represented by any
check, draft
or other instrument for the payment of money, received by it on
behalf of the
Fund until the Custodian actually receives and collects such
money directly
or by the final crediting of the account representing the Fund's
interest at
the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and
shall not
be liable for ascertaining or acting upon any calls, conversions,
exchange,
offers, tenders, interest rate changes or similar matters
relating to
Securities held in the Depository, unless the Custodian shall
have actually
received timely notice from the Depository. In no event shall
the Custodian
have any responsibility or liability for the failure of the
Depository to
collect, or for the late collection or late crediting by the
Depository of
any amount payable upon Securities deposited in the Depository
which may
mature or be redeemed, retired, called or otherwise become
payable. However,
upon receipt of a Certificate from the Fund of an overdue amount
on
Securities held in the Depository, the Custodian shall make a
claim against
the Depository on behalf of the Fund, except that the Custodian
shall not be
under any obligation to appear in, prosecute or defend any
action, suit or
proceeding in respect to any Securities held by the Depository
which in its
opinion may involve it in expense or liability, unless indemnity
satisfactory
to it against all expense and liability be furnished as often as
may be
required.
5. The Custodian shall not be under any duty or
obligation to
take action to effect collection of any amount due to the Fund
from the
Transfer Agent of the Fund nor to take any action to effect
payment or
distribution by the Transfer Agent of the Fund of any amount paid
by the
Custodian to the Transfer Agent of the Fund in accordance with
this Agreement.
6. The Custodian shall not be under any duty or
obligation to
take action to effect collection of any amount, if the Securities
upon which
such amount is payable are in default, or if payment is refused
after due
demand or presentation, unless and until (i) it shall be directed
to take
such action by a Certificate and (ii) it shall be assured to its
satisfaction
of reimbursement of its costs and expenses in connection with any
such action.
7. The Custodian may appoint one or more banking
institutions
as Depository or Depositories or as Sub-Custodian or
Sub-Custodians,
including, but not limited to, banking institutions located in
foreign
countries, of Securities and moneys at any time owned by the
Fund, upon terms
and conditions approved in the Certificate, which shall, if
requested by the
Custodian, be accompanied by an approving resolution of the
Fund's Board
adopted in accordance with Rule 17f-5 under the Investment
Company Act of
1940, as amended. Notwithstanding anything to the contrary
contained in this
Agreement, the Custodian shall hold harmless and indemnify the
Fund from and
against any losses, actions, claims, demands, expenses and
proceedings,
including counsel fees, that occur as a result of any act or
omission of any
Foreign Sub-Custodian or Depository with respect to the
safekeeping of moneys
and securities of the Fund.
8. The Custodian shall not be under any duty or
obligation to
ascertain whether any Securities at any time delivered to or held
by it for
the account of the Fund are such as properly may be held by the
Fund under
the provisions of its organization documents.
9. (a) The Custodian shall be entitled to
receive and the
Fund agrees to pay to the Custodian all reasonable out-of-pocket
expenses and
such compensation and fees as are specified on Schedule A hereto.
The
Custodian shall not deem amounts payable in respect of foreign
custodial
services to be out-of-pocket expenses, it being the parties'
intention that
all fees for such services shall be as set forth on Schedule B
hereto and
shall be provided for the term of this Agreement without any
automatic or
unilateral increase. The Custodian shall have the right to
unilaterally
increase the figures on Schedule A on or after _______, 1995 and
on or after
each succeeding ____________ thereafter by an amount equal to 50%
of the
increase in the Consumer Price Index for the calendar year ending
on the
December 31 immediately preceding the calendar year in which such
occurs, provided, however, that during each such annual period
commencing on
a ____________________, the aggregate increase during such period
shall not
be in excess of 10%. Any increase by the Custodian shall be
specified in a
written notice delivered to the Fund at least thirty days prior
to the
effective date of the increase. The Custodian may charge such
compensation
and any expenses incurred by the Custodian in the performance of
its duties
pursuant to such agreement against any money held by it for the
account of
the Fund. The Custodian shall also be entitled to charge against
any money
held by it for the account of the Fund the amount of any loss,
damage,
liability or expense, including counsel fees, for which it shall
be entitled
to reimbursement under the provisions of this Agreement. The
expenses which
the Custodian may charge against the account of the Fund include,
but are not
limited to, the expenses of Sub-Custodians and foreign branches
of the
Custodian incurred in settling outside of New York City
transactions
involving the purchase and sale of Securities of the Fund.
(b) The Fund shall receive a credit for each calendar
month against such compensation and fees of the Custodian as may
be payable
by the Fund with respect to such calendar month in an amount
equal to the
aggregate of its Earnings Credit for such calendar month. In no
event may
any Earnings Credits be carried forward to any fiscal year other
than the
fiscal year in which it was earned, or, unless permitted by
applicable law,
transferred to, or utilized by, any other person or entity,
provided that any
such transferred Earnings Credit can be used only to offset
compensation and
fees of the Custodian for services rendered to such transferee
and cannot be
used to pay the Custodian's out-of-pocket expenses. For purposes
of this
sub-section (b), the Fund is permitted to transfer Earnings
Credits only to
The First National Bank of Chicago, its affiliates and/or any
investment
company now or in the future for which The First National Bank of
Chicago, or
any of its affiliates acts as investment adviser. For purposes
of this sub-
section (b), a fiscal year shall mean the twelve-month period
commencing on
the effective date of this Agreement and on each anniversary
thereof.
10. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian
and reasonably believed by the Custodian to be a Certificate.
The Custodian
shall be entitled to rely upon any Oral Instructions and any
Written
Instructions actually received by the Custodian pursuant to
Article IV or XI
hereof. The Fund agrees to forward to the Custodian a
Certificate or
facsimile thereof, confirming such Oral Instructions or Written
Instructions
in such manner so that such Certificate or facsimile thereof is
received by
the Custodian, whether by hand delivery, telex or otherwise, by
the close of
business of the same day that such Oral Instructions or Written
Instructions
are given to the Custodian. The Fund agrees that the fact that
such
confirming instructions are not received by the Custodian shall
in no way
affect the validity of the transactions or enforceability of the
transactions
hereby authorized by the Fund. The Fund agrees that the
Custodian shall
incur no liability to the Fund in acting upon Oral Instructions
given to the
Custodian hereunder concerning such transactions, provided such
instructions
reasonably appear to have been received from an Authorized
Person.
11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian and
reasonably
believed by the Custodian to be given in accordance with the
terms and
conditions of any Margin Account Agreement. Without limiting the
generality
of the foregoing, the Custodian shall be under no duty to inquire
into, and
shall not be liable for, the accuracy of any statements or
representations
contained in any such instrument or other notice including,
without
limitation, any specification of any amount to be paid to a
broker, dealer,
futures commission merchant or Clearing Member.
12. The books and records pertaining to the Fund
which are in
the possession of the Custodian shall be the property of the
Fund. Such
books and records shall be prepared and maintained as required by
the
Investment Company Act of 1940, as amended, and other applicable
securities
laws and rules and regulations. The Fund, or the Fund's
authorized
representatives, shall have access to such books and records
during the
Custodian's normal business hours. Upon the reasonable request
of the Fund,
copies of any such books and records shall be provided by the
Custodian to
the Fund or the Fund's authorized representative at the Fund's
expense.
13. The Custodian shall provide the Fund with any report
obtained by the Custodian on the system of internal accounting
control of the
Book-Entry System or the Depository, or O.C.C., and with such
reports on its
own systems of internal accounting control as the Fund may
reasonably request from time to time.
14. The Fund agrees to indemnify the Custodian
against and
save the Custodian harmless from all liability, claims, losses
and demands
whatsoever, including attorney's fees, howsoever arising or
incurred because
of or in connection with the Custodian's payment or non-payment
of checks
pursuant to paragraph 6 of Article XII as part of any check
redemption
privilege program of the Fund, except for any such liability,
claim, loss and
demand arising out of the Custodian's own negligence or willful
misconduct.
15. Subject to the foregoing provisions of this
Agreement,
the Custodian may deliver and receive Securities, and receipts
with respect
to such Securities, and arrange for payments to be made and
received by the
Custodian in accordance with the customs prevailing from time to
time among brokers or dealers in such Securities.
16. The Custodian shall have no duties or
responsibilities
whatsoever except such duties and responsibilities as are
specifically set
forth in this Agreement, and no covenant or obligation shall be
implied in this Agreement against the Custodian.
ARTICLE XVII
TERMINATION
1. (a) Any termination may be effected only by the
terminating party giving to the other party a notice in writing
specifying
the date of such termination, which shall be not less than two
hundred
seventy (270) days after the date of giving of such notice.
(b) The Fund may at any time terminate this
Agreement if
the Custodian has materially breached its obligations under this
Agreement
and such breach has remained uncured for a period of thirty days
after the
Custodian's receipt from the Fund of written notice specifying
such breach.
(c) Either party, immediately upon written
notice to the
other party, may terminate this Agreement upon the Merger or
Bankruptcy of
the other party.
In the event notice of termination is given by the
Fund, it
shall be accompanied by a copy of a resolution of the Fund's
Board, certified
by the Secretary or any Assistant Secretary, electing to
terminate this
Agreement and designating a successor custodian or custodians,
each of which
shall be a bank or trust company having not less than $2,000,000
aggregate
capital, surplus and undivided profits. In the event notice of
termination
is given by the Custodian, the Fund shall, on or before the
termination date,
deliver to the Custodian a copy of a resolution of its Board,
certified by
the Secretary or any Assistant Secretary, designating a successor
custodian
or custodians. In the absence of such designation by the Fund,
the Custodian
may designate a successor custodian which shall be a bank or
trust company
having not less than $2,000,000 aggregate capital, surplus and
undivided
profits. Upon the date set forth in such notice, this Agreement
shall
terminate and the Custodian shall, upon receipt of a notice of
acceptance by
the successor custodian, on that date deliver directly to the
successor
custodian all Securities and moneys then owned by the Fund and
held by it as
Custodian, after deducting all fees, expenses and other amounts
for the
payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by
the Fund or
the Custodian in accordance with the preceding paragraph, the
Fund shall,
upon the date specified in the notice of termination of this
Agreement and
upon the delivery by the Custodian of all Securities (other than
Securities
held in the Book-Entry System which cannot be delivered to the
Fund) and
moneys then owned by the Fund, be deemed to be its own custodian,
and the
Custodian shall thereby be relieved of all duties and
responsibilities
pursuant to this Agreement, other than the duty with respect to
Securities
held in the Book-Entry System, in any Depository or by a Clearing
Member
which cannot be delivered to the Fund, to hold such Securities
hereunder in
accordance with this Agreement.
ARTICLE XVIII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate setting
forth the names of the present Authorized Persons. The Fund
agrees to
furnish to the Custodian a new Certificate in similar form in the
event that
any such present Authorized Person ceases to be an Authorized
Person or in
the event that other or additional Authorized Persons are elected
or
appointed. Until such new Certificate shall be received, the
Custodian shall
be fully protected in acting under the provisions of this
Agreement upon Oral
Instructions or signatures of the present Authorized Persons as
set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by
two of the present Officers of the Fund setting forth the names
of the
present Officers of the Fund. The Fund agrees to furnish to the
Custodian a
new Certificate in similar form in the event any such present
Officer ceases
to be an Officer of the Fund, or in the event that other or
additional
Officers are elected or appointed. Until such new Certificate
shall be
received, the Custodian shall be fully protected in acting under
the
provisions of this Agreement upon the signatures of the Officers
as set forth in the last delivered Certificate.
3. Any notice or other instrument in writing,
authorized or
required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or
delivered to
it at its offices at 110 Washington Street, 13th Floor, New York,
New York
10286, or at such other place as the Custodian may from time to
time
designate in writing.
4. Any notice or other instrument in writing,
authorized or
required by this Agreement to be given to the Fund, shall be
sufficiently
given if addressed to the Fund and mailed or delivered to it at
its offices
at 125 West 55th Street, New York, New York 10019, or at such
other place as
the Fund may from time to time designate in writing.
5. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties
with the same
formality as this Agreement and approved by a resolution of the
Fund's Board.
6. This Agreement shall extend to and shall be
binding upon
the parties hereto, and their respective successors and assigns;
provided,
however, that this Agreement shall not be assignable by the Fund
without the
written consent of the Custodian, or by the Custodian without the
written
consent of the Fund, authorized or approved by a resolution of
its Board.
7. This Agreement shall be construed in
accordance with the laws of the State of New York.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such
counterparts shall, together, constitute only one instrument.
9. This Agreement has been executed on behalf of
the Fund by
the undersigned officer of the Fund in his capacity as an officer
of the
Fund. The obligations of this Agreement shall only be binding
upon the
assets and property of the Fund and shall not be binding upon any
Board
member, officer or shareholder of the Fund individually.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers, thereunto
duly authorized, as of the day and year first above written.
PRAIRIE INSTITUTIONAL FUNDS
By:
Attest:
THE BANK OF NEW YORK
By:
Attest:
Appendix A
AUTHORIZED SIGNATORIES
Appendix B
The undersigned Officers of the Fund do hereby certify that
the
following individuals, whose specimen signatures are on file with
The Bank of New York, have been duly elected or appointed by the
Fund's Board to the
position set forth opposite their names and have qualified
therefor:
Name Position
Assistant Secretary Assistant Secretary
Appendix C
The following are designated publications for purposes of
paragraph 5(b) of Article III:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
The New York Times
Standard & Poor's Called Bond Record
The Wall Street Journal
Appendix D
Name of Series
Prairie Institutional Funds:
Cash Management Fund
Municipal Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash Management Fund
Schedule A
The fees payable to the Custodian with respect to securities
held in domestic custody are annexed hereto.
Schedule B
The fees payable to the Custodian with respect to
securities held in foreign custody are annexed hereto.
Appendix E
CUSTODY AND FUND ACCOUNTING AGREEMENT
I. The Bank of New York, as agent (the "Bank")
shall maintain the following records.
1. General Ledger
2. General Journal
3. Cash Receipts Journal
4. Cash Disbursements Journal
5. Subscriptions Journal
6. Redemptions Journal
7. Accounts Receivable Reports/Portfolio Sales
Dividend/Interest/Subscriptions
8. Accounts Payable Reports/Portfolio
Purchase/Liquidation
9. Transaction (Securities) Journal/Portfolio Purchases
and Sales
10. Broker Commission Ledger
11. Broker Commission by Trade Ledger
12. Security Ledger
PORTFOLIO ACCOUNTING AND GENERAL LEDGER SERVICES
* Daily pricing.
* Computation of daily net asset value and reporting to
transfer agent, fund management, NASDAQ and others as
requested.
* Prepare daily cash availability report for portfolio
managers.
* Daily posting of all Fund activity and preparation of all
applicable daily reports.
* Accrue expenses daily.
* Daily reconciliation of cash, receivable, payable
accounts and shares outstanding.
* Compute daily dividend rates for appropriate funds.
* Compute yields for money market and fixed income funds
pursuant to S.E.C. formulas.
* Prepare mark to market reports for money market funds.
* Monthly analysis and reconciliation of all general
ledger accounts.
* Generate and maintain monthly broker ledgers, commission
ledgers and net trade reports.
* Verify accuracy and propriety of bills and invoices,
maintain expense files and coordinate the payment of
bills and invoices in a timely manner.
* Prepare report on expense limitation as needed.
* Maintain and verify portfolio trade tickets with broker
confirmations.
* Determine income available for monthly, quarterly
and/or annual dividend/distribution.
* Maintain historical record of all fund net
asset values and dividends/distributions.
* Coordinate audit examination by outside
auditors, including preparation of audit workpaper package.
* Produce documents and respond to inquires
during S.E.C. audits.
<PAGE>
EXHIBIT 9(a)
ADMINISTRATION AGREEMENT
PRAIRIE INSTITUTIONAL FUNDS
125 West 55th Street
New York, New York 10019
November 18, 1994
The First National Bank of Chicago
Three First National Plaza
Chicago, Illinois 60670
Dear Sirs:
The above-named investment company (the "Fund")
consisting of the series named on Schedule 1 hereto, as such
Schedule may be revised from time to time (each, a "Series"),
herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing
and
reinvesting the same in investments of the type and in accordance
with the limitations specified in its charter documents and in
its
Prospectus and Statement of Additional Information as from time
to
time in effect, copies of which have been or will be submitted to
you, and in such manner and to such extent as from time to time
may be approved by the Fund's Board. The Fund desires to employ
you to act as its administrator.
In this connection it is understood that from time to
time you will employ or associate with itself such person or
persons as you may believe to be particularly fitted to assist it
in the performance of this Agreement. Such person or persons may
be officers or employees who are employed by both you and the
Fund. The compensation of such person or persons shall be paid
by
you and no obligation may be incurred on the Fund's behalf in any
such respect. We have discussed and concur in your employing on
this basis Concord Holding Corporation (the "Sub-Administrator").
Pursuant to this agreement and subject to the
supervision and control of the Fund's Board, you will assist in
supervising all aspects of the Fund's operations, except
investment management of the Series' portfolios. It is
understood
that, pursuant to this Agreement, you shall not act and shall not
be required to act as an investment adviser or have any authority
to supervise the investment or reinvestment of the cash,
securities or other property comprising the Series' assets or to
determine what securities or other property may be purchased or
sold by the Fund.
You will supply office facilities (which may be in
your
own offices), data processing services, clerical, accounting and
bookkeeping services, internal auditing and legal services,
internal executive and administrative services, and stationery
and
office supplies; prepare reports to each Series' stockholders,
tax
returns, reports to and filings with the Securities and Exchange
Commission and state Blue Sky authorities; calculate the net
asset
value of each Series' shares; and generally assist in all aspects
of the Fund's operations.
You shall exercise your best judgment in rendering
the
services to be provided to the Fund hereunder and the Fund agrees
as an inducement to your undertaking the same that neither you
nor
the Sub-Administrator shall be liable hereunder for any error of
judgment or mistake of law or for any loss suffered by one or
more
Series, provided that nothing herein shall be deemed to protect
or
purport to protect you or the Sub-Administrator against any
liability to the Fund or a Series or to its security holders to
which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder, or to which the Sub-
Administrator would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
its duties under the agreement by which you engage it (the
"Master
Sub-Administration Agreement"), or by reason of its reckless
disregard of its obligations and duties under such agreement.
In consideration of the services rendered pursuant to
this Agreement, the Fund will pay you on the first business day
of
each month a fee at the rate set forth opposite each Series' name
on Schedule 1 hereto. Net asset value shall be computed on such
days and at such time or times as described in the Fund's then-
current Prospectus and Statement of Additional Information. The
fee for the period from the date of the commencement of the
public
sale of a Series' shares to the end of the month during which
such
sale shall have been commenced shall be pro-rated according to
the
proportion which such period bears to the full monthly period,
and
upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination
of this Agreement.
For the purpose of determining fees payable to you,
the
value of each Series' net assets shall be computed in the manner
specified in the Fund's charter documents for the computation of
the value of each Series' net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement and will pay
all
fees of the Sub-Administrator in connection with its duties in
respect of the Series. All other expenses to be incurred in the
operation of the Fund will be borne by the Fund, except to the
extent specifically assumed by you. The expenses to be borne by
the Fund include, without limitation, the following:
organizational costs, taxes, interest, loan commitment fees,
interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members,
Securities and Exchange Commission fees and state Blue Sky
qualification fees, advisory fees, charges of custodians,
transfer
and dividend disbursing agents' fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses,
costs of independent pricing services, costs of maintaining the
Series' existence, costs attributable to investor services
(including, without limitation, telephone and personnel
expenses),
costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for
distribution to existing stockholders, costs of stockholders'
reports and corporate meetings, and any extraordinary expenses.
The Fund understands that, from time to time
hereafter,
you may act as administrator to one or more other investment
companies and fiduciary or other managed accounts, and the Fund
has no objection to your so acting. In addition, it is
understood
that the persons employed by you to assist in the performance of
your duties hereunder will not devote their full time to such
service and nothing contained herein shall be deemed to limit or
restrict your right or the right of any of your affiliates to
engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
Neither you nor the Sub-Administrator shall be liable
for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement or the Master Sub-Administration Agreement relates,
except, in the case of you, for a loss resulting from willful
misfeasance, bad faith or gross negligence on your part in the
performance of your duties or from reckless disregard by you of
your obligations and duties under this Agreement and, in the case
of the Sub-Administrator, for a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its
obligations and duties under the Master Sub-Administration
Agreement. Any person, even though also your officer, Board
member, partner, employee or agent, who may be or become an
officer, Board member, partner, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or acting on
any business of the Fund, to be rendering such services to or
acting solely for the Fund and not as your officer, Board member,
partner, employee, or agent or one under your control or
direction
even though paid by you.
As to each Series, this Agreement shall continue
until
the date set forth opposite such Series' name on Schedule 1
hereto
(the "Reapproved Date"), and thereafter shall continue
automatically for successive annual periods ending on the day of
each year set forth opposite the Series' name on Schedule 1
hereto
(the "Reapproval Day"), provided such continuance is specifically
approved at least annually by (i) the Fund's Board or (ii) vote
of
a majority (as defined in the Investment Company Act of 1940, as
amended) of such Series' outstanding voting securities, provided
that in either event its continuance also is approved by a
majority of the Fund's Board members who are not "interested
persons" (as defined in said Act) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of
voting on such approval. As to each Series, after the Reapproval
Date, this Agreement is terminable without penalty, on 60 days'
notice, by the Fund's Board or by vote of holders of a majority
of
such Series' shares or, upon not less than 90 days' notice, by
you. This Agreement also will terminate automatically, as to the
relevant Series, in the event of its assignment (as defined in
said Act).
The Fund is agreeing to the provisions of this
Agreement
that limit the Sub-Administrator's liability and other provisions
relating to the Sub-Administrator so as to induce the Sub-
Administrator to enter into the Master Sub-Administration
Agreement with you and to perform its obligations thereunder.
The
Sub-Administrator is expressly made a third party beneficiary of
this Agreement with rights as respects the Fund to the same
extent
as if it had been a party hereto.
The Fund recognizes that from time to time your
directors, officers and employees may serve as directors,
trustees, partners, officers and employees of other corporations,
business trusts, partnerships or other entities (including other
investment companies) and that such other entities may include
the
name "Prairie" as part of their name, and that your corporation
or
its affiliates may enter into administration or other agreements
with such other entities. If you cease to act as the Fund's
administrator, the Fund agrees that, at your request, the Fund
will take all necessary action to change the name of the Fund to
a
name not including "Prairie" in any form or combination of words.
This Agreement has been executed on behalf of the
Fund
by the undersigned officer of the Fund in his capacity as an
officer of the Fund. The obligations of this Agreement shall
only
be binding upon the assets and property of the Fund and shall not
be binding upon any Board member, officer or shareholder of the
Fund individually.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
PRAIRIE INSTITUTIONAL FUNDS
By:
Accepted:
THE FIRST NATIONAL BANK OF CHICAGO
By:
SCHEDULE 1
Name of Series Annual Fee as
a Percentage
of Average
Daily Net Reapproval Reapproval
Assets Date Day
Cash Management Fund .15%
Municipal Cash Management
Fund .15%
Treasury Prime Cash
Management Fund .15%
U.S. Government Securities
Cash Management Fund .15%
EXHIBIT 9(b)
MASTER SUB-ADMINISTRATION AGREEMENT
THE FIRST NATIONAL BANK OF CHICAGO
Three First National Plaza
Chicago, Illinois 60670
November 18, 1994
Concord Holding Corporation
125 West 55th Street
11th Floor
New York, New York 10019
Dear Sirs:
The First National Bank of Chicago (the "Administrator"),
in
its capacity as the administrator to Prairie Institutional Funds,
an open-end, management investment company (the "Fund"),
consisting of the series set forth on Exhibit A hereto, as such
Exhibit may be revised from time to time (each, a "Series"),
desires to employ you to perform administrative services in
respect of each Series and in that regard herewith confirms its
agreement with you as follows:
Subject to the Administrator's supervision and approval,
you
will assist the Administrator by supervising all aspects of each
Series' operations, except that you shall not act and shall not
be
required to act as an investment adviser or have any authority to
supervise the investment or reinvestment of the cash, securities
or other property comprising a Series' assets or to determine
what
securities or other property may be purchased or sold by any
Series. In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you
in the performance of this Agreement. Such person or persons may
be officers or employees who are employed by both you and the
Fund. The compensation of such person or persons shall be paid
by
you and no obligation may be incurred on the Series' behalf in
any
such respect.
You will supply office facilities (which may be in your own
offices), statistical and research data, data processing
services,
clerical, accounting and bookkeeping services, internal auditing
and legal services, internal executive and administrative
services, and stationery and office supplies; prepare reports to
each Series' shareholders, tax returns, reports to and filings
with the Securities and Exchange Commission and state Blue Sky
authorities; and calculate the net asset value of each Series'
shares and dividends and capital gains distributions to
shareholders.
You shall exercise your best judgment in rendering the
services to be provided hereunder and the Administrator agrees as
an inducement to your undertaking the same that you shall not be
liable hereunder for any error of judgment or mistake of law or
for any loss suffered by any Series or the Administrator,
provided
that nothing herein shall be deemed to protect or purport to
protect you against any liability to a Series or to its security
holders to which you otherwise would be subject by reason of
willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder.
In consideration of services rendered pursuant to this
Agreement, the Administrator agrees to pay you on the first
business day of each month the fee at the annual rate set forth
opposite each Series' name on Exhibit A hereto, based upon the
value of each Series' average daily net assets for the previous
month. Net asset value shall be computed on such days and at
such
time or times as described in the Fund's then-current Prospectus
and Statement of Additional Information. The fee for the period
from the date of the commencement of the initial public sale of
each Series' shares to the end of the month during which such
sale
shall have been commenced shall be pro-rated according to the
proportion which such period bears to the full monthly period,
and
upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination
of this Agreement.
For the purpose of determining fees payable to you, the
value
of each Series' net assets shall be computed in the manner
specified in the Fund's charter documents for the computation of
the value of its net assets.
You will bear all expenses in connection with the
performance
of your services under this Agreement. The Administrator hereby
agrees that all other expenses to be incurred in the operation of
the Fund shall not be borne by you. The Administrator and the
Fund have agreed that such other expenses will be borne by the
Fund, except to the extent specifically assumed by the
Administrator. The expenses to be borne by the Fund include,
without limitation, the following, as relevant: organizational
costs, taxes, interest, loan commitment fees, interest and
distributions paid on securities sold short, brokerage fees and
commissions, if any, fees of Board members, Securities and
Exchange Commission fees and state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of
independent pricing services, costs of maintaining the Series'
existence, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of
preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to
existing shareholders, costs of shareholders' reports and
meetings, and any extraordinary expenses.
The Administrator understands that you now act and will
continue to act as administrator or sub-administrator of, or in
other capacities with respect to, one or more other investment
companies and other managed accounts, and the Administrator has
no
objection to your so acting. In addition, it is understood that
the persons employed by you to assist in the performance of your
duties hereunder will not devote their full time to such services
and nothing contained herein shall be deemed to limit or restrict
your right or the right of any of your affiliates to engage in
and
devote time and attention to other businesses or to render
services of whatever kind or nature.
You shall not be liable for any error of judgment or
mistake
of law or for any loss suffered by the Fund or the Administrator
in connection with the matters to which this Agreement relates,
except for a loss resulting from willful misfeasance, bad faith
or
gross negligence on your part in the performance of your duties
or
from reckless disregard by you of your obligations and duties
under this Agreement.
As to each Series, this Agreement shall continue until the
date set forth opposite such Series' name on Exhibit A hereto
(the
"Continuation Date"), and thereafter shall continue automatically
for successive annual periods ending on the day of each year set
forth opposite such Series' name on Exhibit A hereto (the
"Continuation Day"); provided that, after the Continuation Date,
this Agreement is terminable without penalty, on not more than 60
days' notice, by us, or upon 270 days' notice, by you. In
addition, notwithstanding anything herein to the contrary, if the
Administration Agreement terminates for any reason, this
Agreement
shall terminate effective upon the date the Administration
Agreement terminates.
If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the
enclosed copy hereof.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
By:_______________________________
Accepted:
CONCORD HOLDING CORPORATION
By:_____________________
<PAGE>
EXHIBIT 10
STROOCK & STROOCK & LAVAN
Seven Hanover Square
New York, New York 10004-2696
November 21, 1994
Prairie Institutional Funds
125 West 55th Street
New York, New York 10019
Gentlemen:
We have acted as counsel to Prairie Institutional Funds (the
"Fund") in connection with the preparation of a Registration
Statement on Form N-1A, Registration No. 33-56247 (the
"Registration Statement"), covering shares of beneficial interest
(the "Shares") of the Fund.
We have examined copies of the Agreement and Declaration of Trust
and By-Laws of the Fund, the Registration Statement and such
other documents, records, papers, statutes and authorities as we
deemed necessary to form a basis for the opinion hereinafter
expressed. In our examination of such material, we have assumed
the genuineness of all signatures and the conformity to original
documents of all copies submitted to us. As to various questions
of fact material to such opinion, we have relied upon statements
and certificates of officers and representatives of the Fund and
others.
Attorneys involved in the preparation of this opinion are
admitted only to the bar of the State of New York. As to various
questions arising under the laws of the Commonwealth of
Massachusetts, we have relied on the opinion of Messrs. Ropes &
Gray, a copy of which is attached hereto. Qualifications set
forth in their opinion are deemed incorporated herein.
Based upon the foregoing, we are of the opinion that the Fund is
authorized to issue an unlimited number of Shares, and that, when
the Shares are issued and sold after the Registration Statement
has been declared effective and the authorized consideration
therefor is received by the Fund, they will be validly issued,
fully paid and nonassessable by the Fund.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us in the
Prospectus included in the Registration Statement, and to the
filing of this opinion as an exhibit to any application made by
or on behalf of the Fund or any distributor or dealer in
connection with the registration and qualification of the Fund or
its Shares under the securities laws of any state or
jurisdiction. In giving such permission, we do not admit hereby
that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
ROPES & GRAY
One International Place
Boston, Massachusetts 02110-2624
November 21, 1994
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004
Gentlemen:
We are furnishing this opinion in connection with the
proposed offer and sale from time to time by Prairie
Institutional Funds (the "Trust") of an indefinite number of
shares of beneficial interest (the "Shares") of the Trust
pursuant to the Trust's Registration Statement on Form N-1A under
the Securities Act of 1933, as amended.
We are familiar with the action taken by the Trustees of the
Trust to authorize the issuance of the Shares. We have examined
the Trust's records of Trustee action, its By-Laws and its
Agreement and Declaration of Trust, as amended to date, on file
at the Office of the Secretary of State of The Commonwealth of
Massachusetts. We have examined such other documents as we deem
necessary for the purposes of this opinion.
We assume that, upon sale of the Shares, the Trust will
receive the net asset value thereof which will at least be equal
to the par value thereof. We also assume that, in connection
with any offer and sale of the Shares, the Trust will take proper
steps to effect compliance with applicable federal and state laws
regulating offerings and sales of securities.
Based upon the foregoing, we are of the opinion that the
Trust is authorized to issue an unlimited number of Shares, and
that, when the Shares are issued and sold after the Registration
Statement has been declared effective and the authorized
consideration therefor is received by the Trust, they will be
validly issued, fully paid and nonassessable by the Trust.
The Trust is an entity of the type commonly known as a
"Massachusetts business trust". Under Massachusetts law,
shareholders could, under certain circumstances, be held
personally liable for the obligations of the Trust. However, the
Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust and requires that
notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Trust or the
Trustees. The Agreement and Declaration of Trust provides for
indemnification out of the Trust property for all loss and
expense of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be
unable to meet its obligations.
We consent to the filing of this opinion as an exhibit to
the aforesaid Registration Statement.
Sincerely,
Ropes & Gray
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
Ww consent to the reference to our firm under the caption
"Counsel and Independent Auditors" and to the use of our report
dated November 16, 1994, in this Registration Statement
(Form N-1A No. 33-56247) of Prairie Institutional Funds.
ERNST & YOUNG LLP
New York, New York
November 16, 1994
<PAGE>
EXHIBIT 15
PRAIRIE INSTITUTIONAL FUNDS
SERVICE PLAN
Introduction: It has been proposed that the
above-referenced investment company (the "Fund") adopt a Service
Plan (the "Plan"), in accordance with Rule
12b-1 promulgated under the Investment Company Act of 1940, as
amended (the "Act"), under which the Fund would pay the Fund's
distributor (the
"Distributor") for (a) advertising, marketing and distributing
shares of each series of the Fund or class of Fund shares set
forth on Exhibit A hereto, as such Exhibit may be revised from
time to time (each, a "Series"), or if no series or classes are
set forth on such Exhibit, shares of the Fund and (b)
providing services to shareholders of each Series, or if no
series or classes are set forth on Exhibit A hereto, shareholders
of the Fund. The Distributor would be permitted to pay third
parties in respect of these services. If the
proposal is to be implemented, the Act and Rule 12b-1 require
that a written plan describing all material aspects of the
proposed financing be adopted by the Fund.
The Fund's Board, in considering whether the Fund should
implement a written plan, has requested and evaluated such
information as it deemed necessary to an informed determination
as to whether a written plan should be implemented and has
considered such pertinent factors as it deemed necessary to
form the basis for a decision to use Series' assets for such
purposes.
In voting to approve the implementation of such a plan, the
Board has concluded, in the exercise of its reasonable business
judgment and in light of applicable fiduciary duties, that there
is a reasonable likelihood that the plan set forth below will
benefit the Series and its shareholders.
The Plan: The material aspects of this Plan are as follows:
13. (a) As to each Series, the Fund shall pay to the
Distributor a fee at the annual rate set forth opposite each
Series' name on Exhibit A hereto of
the value of the relevant Series' average daily net assets for
(i) advertising,
marketing and distributing such shares and (ii) the provision of
personal services to shareholders and/or the maintenance of
shareholder accounts. The Distributor may pay one or more
financial institutions, securities dealers and
other industry professionals a fee in respect of these services.
The Distributor shall determine the amounts to be paid to third
parties and the
basis on which such payments will be made. Payments to financial
institutions,
securities dealers and other industry professionals are subject
to compliance
by each such party with the terms of any related Plan agreement
between it and the Distributor.
(b) The Fund shall pay all costs of preparing and
printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing
shareholders. As to each Series set forth on Exhibit B hereto,
the Fund also shall pay an amount of the costs and expenses
in connection with (a) preparing, printing and distributing the
Fund's prospectuses used for other purposes and (b) implementing
and operating this Plan, in each case not to exceed in any fiscal
year of the Fund the greater of $100,000 or .005 of 1% of the
average daily value of the net assets
attributable to the Series for such fiscal year.
14. For the purpose of determining the fees payable under
this Plan, the value of the net assets of a Series (which term,
as provided on any Exhibit hereto, may relate to a class of
shares) shall be computed in the manner specified in the Fund's
charter documents for the computation of net asset value.
15. The Board shall be provided, at least quarterly, with a
written report of all amounts expended with respect to each
Series pursuant to this Plan. The report shall state the purpose
for which the amounts were expended.
16. As to each Series, this Plan will become effective
immediately upon approval by (a) holders of a majority of a
Series' outstanding shares, and
(b) a majority of the Board members, including a majority of the
Board members
who are not "interested persons" (as defined in the Act) of the
Fund and have
no direct or indirect financial interest in the operation of this
Plan or in
any agreements entered into in connection with this Plan,
pursuant to a vote cast in person at a meeting called for the
purpose of voting on the approval of this Plan.
17. As to each Series, this Plan shall continue for a
period of one year from its effective date, unless earlier
terminated in accordance with its terms, and thereafter shall
continue automatically for successive annual periods, provided
such continuance is approved at least annually in the manner
provided in paragraph 4(b) hereof.
18. As to each Series, this Plan may be amended at any time
by the Board, provided that (a) any amendment to increase
materially the costs which a Series
may bear pursuant to this Plan shall be effective only upon
approval by a vote of holders of a majority of the Series'
outstanding shares, and (b) any material amendments of the terms
of this Plan shall become effective only upon approval as
provided in paragraph 4(b) hereof.
19. As to each Series, this Plan is terminable without
penalty at any
time by (a) vote of a majority of the Board members who are not
"interested
persons" (as defined in the Act) of the Fund and have no direct
or indirect
financial interest in the operation of this Plan or in any
agreements entered
into in connection with this Plan, or (b) vote of holders of a
majority of the Series' outstanding shares.
20. The obligations hereunder and under any related Plan
agreement shall only be binding upon the assets and property of
the Fund and shall not be
binding upon any Board member, officer or shareholder of the Fund
individually.
Dated: October 28, 1994
<PAGE>
EXHIBIT A
Names of Series Fee
Cash Management Fund .25%
Municipal Cash Management Fund1 .25%
Treasury Prime Cash Management Fund1 .25%
U.S. Government Securities Cash
Management Fund1 .25%
<PAGE>
EXHIBIT B
Name of Series
Cash Management Fund
Municipal Cash Management Fund1
Treasury Prime Cash Management Fund1
U.S. Government Securities Cash Management Fund1
<PAGE>
OTHER EXHIBIT
PRAIRIE INSTITUTIONAL FUNDS
Secretary's Certificate
The undersigned, James W. Bernaiche, Secretary of Prairie
Institutional Funds (the "Fund"), hereby certifies that set forth
below is a copy of the resolution adopted by the Fund's Board
authorizing the signing of the Fund's Registration Statement and
all amendments and supplements thereto on behalf of the proper
officers of the Fund pursuant to a power of attorney.
RESOLVED, that the Registration Statement and any and all
amendments
and supplements thereto, may be signed by any one of Richard A.
Fabietti, Martin G. Flanigan, James W. Bernaiche, Ann E. Bergin
and Steven A. Smith as the attorney-in-fact for the proper
officers of the Fund, with full power of substitution and
resubstitution; and
that the appointment of each of such persons as such
attorney-in-fact hereby is authorized and approved; and that such
attorneys-in-fact, and each of them, shall have full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in connection with such
Registration Statement and any and all amendments and supplements
thereto, as fully to all intents and purposes as the officer, for
whom he is acting as attorney-in-fact, might or could do in
person.
IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the Seal of the Fund on November 18, 1994.
/s/James W. Bernaiche
James W. Bernaiche, Secretary
(SEAL)
