As filed with the Securities and Exchange Commission on
February 28, 1997
Securities Act File No. 33-94206
Investment Company Act File No. 811-9064
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 2 X
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 3
AMBAC TREASURERS TRUST
(Exact Name of Registrant as Specified in Charter)
900 Marconi Avenue
Ronkonkoma, New York,
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (203) 341-2300
Name and Address of Agent for Service: Copies to:
Stephen A. Attanasio Kenneth S. Gerstein, Esq.
900 Marconi Avenue Schulte Roth & Zabel LLP
Ronkonkoma, New York 11779 900 Third Avenue
New York, NY 10022
Approximate Date of Proposed Public Offering:
February 28, 1997
It is proposed that the filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on February 28, 1997 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
on __________ pursuant to paragraph (a)(2) of Rule
485.
The Registrant has previously filed a declaration of
indefinite registration of its shares pursuant to Rule 24f-2 under
the Investment Company Act of 1940, as amended. The Registrant's
Rule 24f-2 Notice for the fiscal year ended October 31, 1996 was
filed on December 30, 1996.
AMBAC TREASURES TRUST
FORM N-1A
CROSS REFERENCE SHEET
Part A.
Item No. Prospectus Caption
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Investment
Objective and Policies; General Information
5. Management of the Fund Management of the Fund
5A. Management's Discussion of Not Applicable
Fund Performance
6. Capital Stock and Other Securities Purchase of Shares;
Dividends and Distributions; Taxes; General Information
7. Purchase of Securities Being Offered Purchase of
Shares; Shareholder Accounts; Redeeming Shares; Exchange
Privilege; Net Asset Value
8. Redemption or Repurchase Shareholder Accounts;
Redeeming Shares; Exchange Privilege; Net Asset Value
9. Pending Legal Proceedings Not Applicable
Part B. Statement of Additional
Item No. Information Caption
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information
13. Investment Objectives and Policies Investment Policies
and Practices; Investment Restrictions
14. Management of the Fund Investment Advisory Arrangements;
Trustees and Officers
15. Control Persons and Principal Holders of Securities
General Information
16. Investment Advisory and Other Services Investment
Advisory Arrangements; Purchasing Shares; Expenses; General
Information
17. Brokerage Allocation and Other Practices Portfolio
Transactions and Brokerage
18. Capital Stock and Other Securities General Information
19. Purchase, Redemption and Pricing of Purchase of
Shares;
Securities Being Offered Shareholder Accounts;
Redeeming Shares; Exchange Privilege;
Determination of Net Asset Value
20. Tax Status Taxes
21. Underwriters Purchasing Shares
22. Calculation of Performance Data Performance
Information
23. Financial Statements Financial Statements
AMBAC TREASURERS TRUST
U.S. Treasury Money Market Fund
A SERIES OF AMBAC TREASURERS TRUST
905 Marconi Avenue
Ronkonkoma, New York 11779
AMBAC U.S. Treasury Money Market Fund (the "Fund") is a
series of AMBAC Treasurers Trust (the "Trust"), a diversified,
open-end management investment company. The Fund is a money
market fund and seeks to maintain a stable net asset value of
$1.00 per share. The investment objective of the Fund is to
seek high current income, consistent with preservation of
capital and maintenance of liquidity. The Fund pursues this
objective by investing exclusively in short-term debt
securities that are direct obligations of the U.S. Treasury
("Treasury Securities") and repurchase agreements
collateralized by debt obligations backed by the "full faith
and credit" of the United States. See "Investment Objective and
Policies." Cadre Financial Services, Inc. (formerly known as
AMBAC Investment Management, Inc.) (the "Investment Adviser")
serves as the investment adviser of the Fund. First Data
Investor Services Group, Inc. serves as the administrator of
the Fund (the "Administrator").
Shares of the Fund are offered for sale on a no-load
basis to states and municipalities, and their subdivisions and
agencies, as well as to other institutional investors. No sales
commissions or other charges are imposed upon the purchase or
redemption of shares. The minimum initial investment in the
Fund is $100,000. See "Purchasing Shares." Shares of the Fund
are not insured by AMBAC Indemnity Corporation.
An investment in the Fund is neither insured nor
guaranteed by the U.S. government and there can be no assurance
that the Fund will be able to maintain a stable net asset value
of $1.00 per share. See "Net Asset Value."
This Prospectus sets forth concisely the information
about the Fund and the Trust that a prospective investor should
know before investing. Additional information about the Fund
and the Trust has been filed with the Securities and Exchange
Commission (the "SEC") in a Statement of Additional Information
dated March 1, 1997, which is incorporated herein by reference
and is available without charge by writing to the transfer
agent or by calling 1-800-311-AMBAC (2622).
Investors are advised to read this Prospectus and retain it for
future reference.
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.
The date of this Prospectus is March 1, 1997
SUMMARY OF EXPENSES
The following table is designed to assist prospective
investors in understanding the various direct and indirect
costs and expenses that a shareholder in the Fund will bear.
The amounts set forth below under "Other Expenses," as well as
the amounts in the example below, are based upon estimates of
expenses for the current fiscal year.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends
None
Deferred Sales Load None
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses Net of Expense
(as a percentage of average net assets) Reimbursement
Management Fees (after waiver) . 0%
12b-1 Fees . None
Other Expenses (estimated) . .28%
Total Fund Operating Expenses . .28%
The Investment Adviser has voluntarily agreed to waive
its fees or absorb Fund expenses to the extent necessary to
assure that the ordinary operating expenses do not exceed .28%
of the Fund's average daily net assets. Absent this agreement,
management fees, estimated other expenses and estimated total
operating expenses of the Fund would have been 0.15%, 1.03% and
1.18%, respectively, of the Fund's average daily net assets.
The Investment Adviser reserves the right to modify or
terminate at any time its agreement to waive fees and absorb
expenses.
Example 1 Year 3 Years
You 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: $3 $9
The example is based upon estimated Total Fund Operating
Expenses, as set forth in the table above, after giving effect
to the fee waiver and absorption of expenses. Actual expenses
and annual return may be greater or less than the amounts shown
above. The example should not be considered a representation of
past or future expenses.
For a more complete description of fees and expenses, see
"Management of the Fund."
U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
The financial information in the table below has been
audited in conjunction with the audit of the financial
statements of the Trust by KPMG Peat Marwick LLP, independent
auditors, which financial statements and report thereon are
incorporated by reference in the Statement of Additional
Information, but not included herein. This table should be
read in conjunction with the Trust's financial statements and
notes thereto, which are an integral part of these financial
highlights and ratios.
Period ended October 31, 1996 (1)
Net Asset Value, Beginning of period $
1.000
Income from Investment Operations:
Net investment income (2) 0.026
Less Dividends:
Dividends from net investment income
(0.026)
Net increase in net asset value
- ----
Net Asset Value, End of period $
1.000
Total Return 2.63%*
Ratios/Supplemental Data:
Net Assets, End of period (000s) $
26,204
Ratios to average net assets:
Net investment income including reimbursement/waiver
4.99%**
Operating expenses including reimbursement/waiver
0.27%**
Operating expenses excluding reimbursement/waiver
1.18%**
* Not Annualized
** Annualized
(1) The Fund commenced investment operations on April 24, 1996.
(2) Net investment income per share before reimbursement/waiver
of fees and expenses by the Investment Adviser for the period
ended October 31, 1996 for the Fund was $0.021.
SUITABLE INVESTORS
The Fund is specifically designed for investors concerned
about the safety of their investments and is a low-cost,
professionally managed cash management vehicle for states,
municipalities, and their subdivisions and agencies, including
school and special purpose districts, and for other
institutional investors. It offers investment diversification,
administrative convenience and operating economies of scale to
investors whose investment policies and guidelines are
consistent with those of the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek high
current income, consistent with preservation of capital and
maintenance of liquidity. The Fund pursues this objective by
investing exclusively in short-term debt securities that are
direct obligations of the U.S. Treasury ("Treasury Securities")
and repurchase agreements collateralized by debt obligations
backed by the "full faith and credit" of the United States. The
Fund maintains a dollar-weighted average maturity of 90 days or
less, and invests only in securities having remaining
maturities of 397 days or less. As a money market fund, the
Fund seeks to maintain a stable net asset value of $1.00 per
share at all times. No assurance can be given that the Fund
will be able to achieve its investment objective or maintain a
stable net asset value. See "Net Asset Value."
Treasury Securities include Treasury bills, notes and
bonds. These obligations are issued by the U.S. Treasury and
backed by the full faith and credit of the U.S. government. All
securities purchased by the Fund, including repurchase
agreements, must be of high quality and be determined by the
Investment Adviser to present minimal credit risks pursuant to
procedures adopted by the Board of Trustees of the Trust. The
Fund may invest up to 35% of its total assets in repurchase
agreements that are collateralized by debt obligations which
are backed by the "full faith and credit" of the United States,
but which are not Treasury Securities.
The Fund does not invest in any securities commonly known
as derivatives.
The Fund's investment objective is fundamental and may
not be changed without the approval of the holders of a
majority of the outstanding voting securities of the Fund, as
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act").
Repurchase Agreements. A repurchase agreement involves
the purchase of a security by the Fund with an agreement by the
seller of the security to repurchase it from the Fund at a
mutually agreed upon day and price, frequently the next
business day. The resale price is in excess of the purchase
price and reflects the rate of return earned by the Fund. The
maturities of repurchase agreements entered into by the Fund
normally do not exceed seven days. However, the Fund may enter
into a repurchase agreement maturing in more than seven days
provided that not more than 10% of the Fund's net assets would,
as a result, be invested in repurchase agreements having
maturities in excess of seven days and under which the Fund
also does not have the right to repayment within seven days.
Repurchase agreements will at all times be fully collateralized
by their underlying securities ("collateral") in an amount at
least equal to the purchase price plus accrued interest, marked
to market daily. The collateral for repurchase agreements is
held by the Trust's custodian (or a subcustodian) and is
required to consist of obligations which are backed by the
"full faith and credit" of the United States (without regard to
the maturity of such obligations). If the seller defaults and
the value of the collateral securing a repurchase agreement
declines, the Fund may incur a loss. The Fund, however, enters
into repurchase agreements only with banks or primary dealers
designated as such by the Federal Reserve Bank of New York and
which have been determined by the Investment Adviser to present
minimal credit risk in accordance with guidelines established
by the Board of Trustees of the Trust.
When-Issued and Delayed Delivery Securities. The Fund may
purchase or sell securities on a when-issued or delayed
delivery basis. In these transactions, securities are purchased
or sold by the Fund with payment and delivery taking place as
much as a month or more in the future. The Fund engages in
these transactions to secure an advantageous price and yield at
the time of entering into the transactions. However, the value
of securities purchased on a when-issued basis is subject to
market fluctuation and no interest accrues to the purchaser
during the period between purchase and settlement.
Borrowings. The Fund does not borrow for purposes of
making investments (a practice known as "leverage"). However,
it may borrow money from banks in an amount not exceeding one-
third of the value of its total assets (calculated at the time
of the borrowing), for temporary extraordinary or emergency
purposes. The Fund may pledge its assets to secure these
borrowings. Additional investments will not be made by the Fund
while any borrowings are outstanding.
Investment Restrictions. The Fund is subject to various
additional restrictions on its investments. Certain of these
restrictions are deemed fundamental policies and cannot be
changed without the approval of the holders of a majority of
the Fund's outstanding voting securities, as defined in the
Investment Company Act. See "Investment Restrictions" in the
Statement of Additional Information.
Investment Characteristics. The Fund invests solely in
direct obligations of the United States Treasury and repurchase
agreements collateralized by such securities or by securities
which are backed by the "full faith and credit" of the United
States. Shares of the Fund are not insured or guaranteed by the
U.S. government or any government agency. The return on an
investment in the Fund will increase or decrease in response to
changes in short-term market interest rates. The market value
of the Fund's investments will fluctuate, with investments
increasing in value as interest rates fall and decreasing in
value as interest rates rise. However, due to the method used
by the Fund in valuing its assets, it is expected but cannot be
assured that the net asset value of shares of the Fund will be
a stable $1.00 per share. See "Net Asset Value." Virtually all
portfolio transactions for the Fund will be effected on a
principal basis with issuers, underwriters or dealers serving
as primary market-makers.
PURCHASING SHARES
Shares of the Fund are offered for sale, without sales
charge, at the net asset value per share next determined after
receipt and acceptance of a purchase order by First Data
Distributors, Inc. (formerly known as 440 Financial
Distributors, Inc.), as distributor of the Fund's shares (the
"Distributor"), subject to timely receipt of federal funds as
described below. Net asset value is computed as of 4:00 p.m.
(Eastern time) on each day on which both the New York Stock
Exchange is open for trading and the Federal Reserve Bank of
New York is open (each, a "Business Day"), except on days for
which the Public Securities Association (the "PSA") recommends
an early closing of the U.S. government securities markets when
the net asset value will be computed as of such earlier closing
time. See "Net Asset Value." A minimum initial investment of
$100,000 is required (except in special circumstances as
described in the Statement of Additional Information).
Subsequent investments may be made in any amount.
Shares become entitled to receive dividends beginning on
the day of purchase. For this reason, the Fund must have
federal funds available to it (i.e., monies credited to its
custodian bank by a Federal Reserve bank) on the day the
purchase order is accepted. An order for the purchase of shares
of the Fund is accepted (i) immediately upon receipt of federal
funds by wire as described below or (ii) when a check is
credited to the shareholder's account in the form of federal
funds (generally one Business Day after receipt of a check).
Shares will be issued at the net asset value next determined
after acceptance of the purchase order and will be entitled to
that day's dividend. The Fund reserves the right to reject any
purchase order and to modify or suspend the continuous offering
of its shares.
In order to permit the Investment Adviser to manage the
Fund most effectively, investors should place purchase orders
as early in the day as possible by calling the Fund's transfer
agent, First Data Investor Services Group, Inc. (the "Transfer
Agent"), toll-free at 1-800-311-AMBAC (2622), as described
below. Investors who anticipate making purchase transactions in
excess of $5,000,000 are encouraged to make an advisory call to
the Transfer Agent on the day prior to investment. This
advisory call does not replace the need to call the Transfer
Agent to place a purchase order.
Prior to making an initial investment by wire or check,
an account number must be obtained by calling the Transfer
Agent toll-free at 1-800-311-AMBAC (2622), or by mailing a
completed account application to:
AMBAC Funds
P.O. Box 5138
Westborough, Massachusetts 01581-5138
In order to receive an account number by telephone, an
investor must provide the name, address, and tax identification
number of the account owner, the amount being wired or mailed
as the initial investment, and the name of the wiring bank.
Promptly after opening accounts by telephone, investors should
mail an original completed account application for each account
opened to the Transfer Agent. Although share purchases can be
made before an account application is submitted, shares may not
be redeemed until a completed account application has been
submitted.
Purchases by Federal Funds. Shares may be purchased by
wiring federal funds directly to the Fund in accordance with
the instructions below. The Fund does not impose any
transaction charges; however, wire charges may be imposed by
the shareholder's transmitting bank. Shares will be issued at
the net asset value next determined after receipt of an order
to purchase shares and will be entitled to the dividend
declared on the date the order is received if the Trust's
custodian receives payment in federal funds in the amount of
the purchase order not later than the close of the Federal
Reserve wire on that day. If a purchase order is not received
and accepted prior to 4:00 p.m. (Eastern time) (2:00 p.m. for
remote trade entry orders), or as of the closing time of the
U.S. government securities markets on days when the PSA
recommends an early closing of such markets, or if federal
funds are not received by the close of the Federal Reserve
wire, shares will not be issued or entitled to receive
dividends until the next computation of net asset value
following the receipt of federal funds by the Trust's
custodian.
Additional purchases of shares can be made by calling the
Transfer Agent toll-free at 1-800-311-AMBAC (2622), to place a
purchase order and then wiring federal funds in the amount of
the purchase.
With respect to both initial and subsequent purchases of
shares, the wiring bank should be instructed to wire federal
funds to:
AMBAC U.S. Treasury Money Market Fund
C/o BSD&T Co. ABA # 011001234
CR DDA # 05-338-4
CR FDISG A/C # __________
[insert your account number]
Purchases by Check. Shares may be purchased by check in
accordance with the instructions below. Shares will be issued
on the next Business Day after receipt of a check at the net
asset value determined on such day. Shareholders will begin
accruing dividends when a check is credited to the
shareholder's account in the form of federal funds (generally
one Business Day after receipt of a check).
Checks for both initial and subsequent purchases of
shares should indicate the account name and number and be made
payable to AMBAC U.S. Treasury Money Market Fund and sent by
regular mail to the Transfer Agent at:
AMBAC Funds
P.O. Box 5138
Westborough, MA 01581-5138
Check purchases sent by registered or certified mail or
overnight delivery should be sent to the Transfer Agent at:
AMBAC Funds
c/o First Data Investor Services Group, Inc.
4400 Computer Drive - 2CW65
Westborough, MA 01581-5120
In certain circumstances, shares of the Fund may also be
purchased through the Remote Trade Entry System. See "Remote
Trade Entry."
SHAREHOLDER ACCOUNTS
The Transfer Agent maintains one or more accounts for
each shareholder reflecting full and fractional shares of the
Fund the shareholder owns. Shareholders are sent confirmations
of each account transaction, and monthly statements showing
account balances. The Trust does not issue certificates for
shares of the Fund.
Sub-Account Services. Special sub-accounting procedures
are available for investors wishing to open multiple accounts
to meet requirements regarding the commingling of funds or for
accounting convenience. Sub-accounts can be established at any
time by calling the Transfer Agent. Please call toll-free at 1-
800-311-AMBAC (2622) for further information and appropriate
forms. Investors who have established sub-accounts will receive
periodic confirmations and statements of holdings and
transactions for the master account and each sub-account.
Minimum Account Balance. There is no minimum account
balance for the Fund. In order to avoid costs to the Fund that
are associated with maintaining inactive accounts, if there has
been no activity in an account with no balance for a period of
six months, the Fund has the right to close the account.
However, a shareholder will first be sent written notice of the
Fund's intention to close the account, and given 60 days to
purchase shares to increase the account balance.
REDEEMING SHARES
Shareholders may redeem all or any portion of the shares
in their accounts at any time at the net asset value next
computed after the receipt of a redemption request in proper
form. Redemption proceeds will be paid by federal funds wire to
one or more of the bank accounts that have been predesignated
by the shareholder, normally on the day the redemption request
is received. Redemption may also be made by check as described
below. If a redemption request is not received prior to 2:00
p.m. (Eastern time), or as of the closing time of the U.S.
government securities markets on days when the PSA recommends
an early closing of such markets, it will be processed on the
following Business Day. Shares are not entitled to receive
dividends declared on the day the shares are redeemed. See
"Dividends and Distributions." In the case of complete
redemption of all shares in an account, the redemption payment
will include the amount of all dividends declared for the
month-to-date on shares held in the account. Except in unusual
circumstances described in the Statement of Additional
Information, the Fund will not suspend the right of redemption
or postpone the payment of redemption proceeds for more than
seven days, except that when shares are purchased by check or
acquired by means of an exchange of shares purchased by check
(including, in each case, certified checks and cashiers
checks), payment of redemption proceeds will be delayed until
the purchase check has cleared (the time varies from state to
state) which may take up to 15 days. Shareholders who
anticipate the need for immediate access to their investment
should purchase shares with federal funds.
A completed account application must be on file with the
Transfer Agent in order to redeem shares. See "Purchasing
Shares." Shareholders will be asked to designate a primary
recipient bank account on their account application. The
primary recipient account may be changed at any time, and any
number of secondary recipient bank accounts can be added,
provided proper written instructions are on file. Please call
the Transfer Agent to receive additional information and
appropriate forms.
In order to permit the Investment Adviser to manage the
Fund most effectively, investors should place telephone
redemption requests as early in the day as possible by calling
the Transfer Agent toll-free at 1-800-311-AMBAC (2622) as
described below. Investors who anticipate making redemptions in
excess of $5,000,000 are encouraged to make an advisory call to
the Transfer Agent at least one day in advance. This advisory
call does not replace the need to place the redemption request
in writing or by telephone.
Telephone Redemption Procedures. A request to redeem
shares may be placed by calling the Transfer Agent at 1-800-
311-AMBAC (2622). The shareholder will be asked to provide the
account name and number, and the amount of the redemption.
Proceeds of the redemption will be sent to the primary
recipient bank account designated by the shareholder unless the
shareholder requests that payment be made to a predesignated
secondary recipient bank account. Proceeds will be sent by
Federal Reserve wire, normally on the day the redemption
request is received. Redemption requests that are not received
prior to 2:00 p.m. (Eastern time), or as of the closing time of
the U.S. government securities markets on days when the PSA
recommends an early closing of such markets, will be processed
the following Business Day.
The Transfer Agent employs reasonable procedures to
confirm that telephone redemption instructions are genuine such
as recording telephone calls, providing written confirmation of
transactions, or requiring a form of personal identification or
other information prior to effecting a telephone redemption.
To the extent such procedures are used, neither the Trust or
the Fund, nor the Investment Adviser, Administrator,
Distributor or Transfer Agent, will be liable for any loss due
to fraudulent or unauthorized telephone instructions. A
redemption by telephone may be made only if the telephone
redemption privilege has been selected on the account
application, or written instructions have been filed with the
Transfer Agent.
During periods of severe market or economic conditions,
it may be difficult to contact the Transfer Agent by telephone.
In such an event a shareholder should send a written redemption
request by overnight delivery to the Transfer Agent and follow
the procedures for written redemption requests described below.
Written Redemption Requests. Shares of the Fund may be
redeemed by written redemption request. A written redemption
request must be signed by each of the persons who the
shareholder has specified as required to sign such requests.
The request must include the complete account name and address,
the amount of the redemption, and the predesignated primary or
secondary recipient bank account to which the proceeds of the
redemption are to be sent. The signature of each person signing
the request must be guaranteed by an eligible guarantor
institution. Organizations that may qualify as eligible
guarantor institutions include banks, brokers, dealers,
national securities exchanges, clearing agencies, credit
unions, and savings associations. The Transfer Agent reserves
the right to request additional information from, and to make
reasonable inquiries of, any eligible guarantor institution.
Written redemption requests sent by regular mail should be sent
to:
AMBAC Funds
P.O. Box 5138
Westborough, Massachusetts 01581-5138
Written redemption requests sent by overnight delivery should
be sent to:
AMBAC Funds
c/o First Data Investor Services Group, Inc.
4400 Computer Drive - 2CW65
Westborough, Massachusetts 01581-5120
Redemption by Check. Shares of the Fund may be redeemed
by writing checks ("Redemption Checks") against the account
balance. Redemption Checks may be obtained by election of the
checkwriting option on the account application or by later
written request to the Transfer Agent. Redemption Checks may
be made payable to the order of any person. The account will
continue to earn dividends until the check is presented to the
Fund for payment. Redemption Checks will be returned by the
Transfer Agent if there are insufficient funds to meet the
withdrawal amount. Redemption Checks should not be used to
close an account because the exact balance at the time the
check clears will not be known at the time the check is
written. Redemption Checks are free, but the Fund may impose a
fee for stopping payment of a Redemption Check at the
shareholders request or if a Redemption Check cannot be
honored due to insufficient funds or other valid reasons.
In certain circumstances, shares of the Fund may also be
redeemed through the Remote Trade Entry System described below.
REMOTE TRADE ENTRY
The Fund offers to certain eligible institutional clients
trade order entry capabilities through the Remote Trade Entry
("RTE") system. RTE is Windows-based and the necessary
software can be installed on standard IBM-compatible personal
computer systems. RTE allows a shareholder access to account
information and provides transaction capabilities for purchases
and sales of Fund shares. Through RTE, shareholders have the
opportunity to invest as well as to track short-term cash
flows.
Orders to purchase trades placed by 2:00 p.m. (Eastern
time) or as of the closing time of the U.S. government
securities markets on days when the PSA recommends an early
closing of such markets, will be processed the same day and
will begin accruing dividends that day provided that federal
funds have been received. Purchases and redemptions can be
placed individually and transactions can be tracked and printed
in a summary report. Safeguards are in place to protect
against unauthorized trading and account overdrafts.
Confirmations acknowledging receipt of trades on the Transfer
Agent's system are available immediately following a trade
entry and wire instructions are included with each
confirmation. For redemptions, federal fund wires are
generated automatically and sent to the shareholder's
designated recipient bank account. Month-to-date accruals,
principal value and total balances are displayed for an account
when a transaction is in process, and full account histories
are available through reporting menus. Current, 7-day and 30-
day yield quotations are updated daily.
Please call the Transfer Agent toll-free at 1-800-311-
AMBAC(2622) if you have questions about the RTE system and its
availability.
EXCHANGE PRIVILEGE
Shareholders may exchange shares of the Fund for shares
of any other fund advised by the Investment Adviser based upon
the relative net asset values per share of the funds at the
time the exchange is effected. Currently, shares of the Fund
may be exchanged for shares of AMBAC U.S. Government Money
Market Fund and AMBAC Short-Term U.S. Government Income Fund.
No sales charge or other fee is imposed in connection with
exchanges. Before requesting an exchange, shareholders should
obtain and read the prospectus of the fund whose shares will be
acquired in the exchange. Prospectuses can be obtained by
calling the Transfer Agent at 1-800-311-AMBAC (2622) or writing
to the Transfer Agent at P.O. Box 5138, Westborough,
Massachusetts 01581-5138.
All exchanges are subject to applicable minimum initial
and subsequent investment requirements of the fund whose shares
will be acquired. In addition, an exchange is permitted only
between accounts that have identical registrations. The Fund
does not impose limitations on the frequency of exchanges.
Shares of a fund may be acquired in an exchange only if the
shares are currently being offered and are legally available
for sale in the state of the shareholder's residence.
An exchange involves the redemption of shares of the Fund
and the purchase of shares of another fund. Shares of the Fund
will be redeemed at the net asset value per share of the Fund
next computed after receipt of an exchange request in proper
form. See "Net Asset Value." Shares of the fund being acquired
in the exchange will be purchased when the proceeds of the
redemption become available (normally, on the day the exchange
request is received) at the net asset value of those shares
then in effect. See "Redeeming Shares." The acquired shares
will be entitled to receive dividends in accordance with the
policies of the applicable fund. Shareholders that are not
exempt from taxation may realize a taxable gain or loss on an
exchange transaction. See "Taxes."
The exchange privilege may be modified or terminated at
any time. However, 60 days' prior notification of any
modification or termination will be given to shareholders.
Telephone Exchange Procedures. A request to exchange
shares may be placed by calling the Transfer Agent at 1-800-
311-AMBAC (2622). The shareholder will be asked to provide the
account name and number, the amount of shares being exchanged
and the name of the fund whose shares are being acquired.
Telephone exchange requests that are not received prior to 2:00
p.m. (Eastern time), or as of the closing time of the U.S.
government securities markets on days when the PSA recommends
an early closing of such markets, will be processed the
following Business Day. A written confirmation of the exchange
transaction will be sent to the shareholder. As in the case of
telephone redemption requests, the Transfer Agent employs
reasonable procedures to confirm that telephone exchange
instructions are genuine. To the extent such procedures are
used, neither the Trust or the Fund, nor the Investment
Adviser, Administrator, Distributor or Transfer Agent, will be
liable for a loss due to fraudulent or unauthorized telephone
exchange instructions. An exchange by telephone may be made
only if the telephone exchange privilege has been selected on
the account application, or written instructions have been
filed with the Transfer Agent.
During periods of severe market or economic conditions,
it may be difficult to contact the Transfer Agent by telephone.
In such event, a shareholder should send a written exchange
request by overnight delivery to the Transfer Agent and follow
the procedures for written exchange requests described below.
Written Exchange Procedures. Requests to exchange shares
may be submitted in writing. Each written exchange request
should specify the complete account name and number of the
shareholder's account with the Fund, the amount to be
exchanged, and the name of the fund whose shares are to be
acquired in the exchange. The request must be signed by each of
the persons who the shareholder has specified as required to
sign redemption requests. The signature of each person signing
the exchange request must be guaranteed by an eligible
guarantor institution. Written exchange requests should be sent
to the Transfer Agent at the address indicated above under
"Redeeming Shares--Written Redemption Requests."
NET ASSET VALUE
The Fund's share price, or net asset value per share, is
calculated as of 4:00 p.m. (Eastern time) each Business Day,
except on days for which the PSA recommends an early closing of
the U.S. government securities markets when the net asset value
will be computed as of such earlier closing time. Net asset
value per share is determined by subtracting the Fund's
liabilities (including accrued expenses and dividends payable)
from the total value of the Fund's investments and other assets
and dividing the result by the total number of outstanding
shares of the Fund.
For purposes of calculating net asset value per share,
the Fund's portfolio securities are valued using the "amortized
cost" method of valuation. This method involves valuing each
investment at 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 investment. Amortized cost valuation provides certainty
in valuation, but may result in periods during which the value
of an investment, as determined by amortized cost, is higher or
lower than the price the Fund would receive if it sold the
investment. Use of this valuation method permits the
maintenance of the Fund's net asset value at $1.00 per share,
absent unusual circumstances. There can be no assurance,
however, that the Fund will be able to maintain a stable net
asset value of $1.00 per share.
In using this method, the Trust has adopted certain
procedures and adheres to various investment limitations as
required by Rule 2a-7 under the Investment Company Act. These
procedures, among other things, require the Investment Adviser
to monitor the deviation between the Fund's net asset value
determined by using available market quotations or market
equivalents and its net asset value determined by using
amortized cost.
FUND EXPENSES
The Fund's expenses are deducted from total income before
dividends are paid. The Fund bears all expenses of its
operations other than those expressly assumed by the Investment
Adviser, including the Fund's proportionate share of the
Trust's expenses. Expenses borne by the Fund include but are
not limited to: the fees of the Investment Adviser, the
Administrator and Transfer Agent; the fees and expenses of the
Trust's independent auditors, legal counsel, accounting
services agent and custodian; taxes; brokerage fees and
commissions; interest; costs incident to meetings of Trustees
and shareholders, printing and mailing prospectuses and reports
to shareholders, and the filing of reports with regulatory
bodies and the maintenance of the Trust's legal existence;
federal and state registration fees; the fees and expenses of
non-interested Trustees of the Trust; and any extraordinary
expenses of a non-recurring nature.
As discussed under "Summary of Expenses," the Investment
Adviser has voluntarily undertaken to waive its fee or to
absorb expenses of the Fund as may be necessary to limit total
ordinary operating expenses of the Fund to a specified
percentage of the Fund's average daily net assets. The
Investment Adviser may modify or terminate this undertaking at
any time.
DIVIDENDS AND DISTRIBUTIONS
Dividends are declared and accrued daily on each Business
Day based upon the Fund's net investment income (i.e., income
other than net realized capital gains), and are paid monthly.
Distributions of net realized capital gains, if any, are
declared and paid annually at the end of the Fund's fiscal year
in which they have been earned. All dividends and other
distributions are automatically reinvested in full and
fractional shares of the Fund at net asset value unless
otherwise requested by the shareholder. A shareholder can
request that dividends and other distributions be paid by wire
transfer to a predesignated bank account by sending a written
request to the Transfer Agent. Any such request must be
received by the Transfer Agent at least five Business Days
prior to a payment date in order to be effective on such date.
Dividends are payable to all shareholders of record as of
the time of declaration. Shareholders will begin receiving
dividends on shares the day the shares are purchased, but will
not be entitled to receive dividends declared on shares the day
the shares are redeemed. Shares purchased through dividend
reinvestment will begin earning dividends the day after they
are credited to the shareholder's account.
The Fund does not expect to realize any long-term capital
gains. Should any such gains be realized, they will be
distributed annually. In addition, in order to satisfy certain
distribution requirements of the Tax Reform Act of 1986, the
Fund may declare special or regular year-end dividend and
capital gains distributions during December. Such
distributions, if received by shareholders by January 31, are
deemed to have been paid by the Fund and received by
shareholders on December 31 of the prior year.
TAXES
Taxation of the Fund. The Fund has elected and intends to
qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code (the "Code"). If so
qualified, the Fund will not be subject to federal income tax
to the extent it distributes its net income to shareholders.
Certain federal income and excise taxes would be imposed on the
Fund if it failed to make certain required distributions of its
income to shareholders. The Fund intends to make distributions
in a manner which will avoid the imposition of any such tax. If
the Fund should fail to qualify as a "regulated investment
company," it would be subject to regular federal income tax on
its taxable income, and its distributions generally would be
taxable. The Fund intends to carry on its operations so that it
will continue to qualify as a regulated investment company.
Federal Taxation of Shareholders. Dividend distributions,
whether received in cash or reinvested in additional shares,
will be taxable as ordinary income. Although the Fund does not
expect to distribute any long-term capital gains, investors
will also be subject to tax on any capital gains distributions
they receive. Since the Fund does not expect to earn dividend
income, dividends and other distributions from the Fund will
generally not qualify for the dividends-received deduction
available to corporate investors. In January of each year, the
Fund sends each shareholder a statement showing the tax status
of distributions for the past calendar year.
Section 115(1) of the Code provides, in part, that gross
income does not include income derived from the exercise of any
essential government function accruing to a state or any
political subdivision thereof. Shareholders are urged to
consult their own tax advisors to determine any limitations on
the applicability of Section 115(1) to earnings from their
investment in the Fund. A portion of the earnings derived from
funds which are subject to the arbitrage limitations or rebate
requirements of the Code maybe required to be paid to the U.S.
Treasury as computed in accordance with such requirements.
A sale of shares of the Fund, either by redemption or
exchange, is a taxable event, and may result in a capital gain
or loss. However, because the Fund seeks to maintain a stable
net asset value of $1.00 per share for both purchases and
redemptions, it is generally expected that shareholders will
not realize any capital gain or loss upon redemptions of
shares.
The Fund is required to withhold 31% of all taxable
distributions and redemption proceeds paid to shareholders who
either have not complied with IRS taxpayer identification
regulations or are otherwise subject to backup withholding.
Shareholders are asked to certify on their account applications
that their taxpayer identification numbers are correct and that
they are not subject to backup withholding. Failure to so
certify will result in backup withholding.
State and Local Taxes. Investors may be subject to state
and local taxes on their investment. For example, dividends and
other distributions made by the Fund and received by an
investor may be subject to state and local taxes. Although
shareholders of the Fund do not directly receive interest on
Treasury Securities held by the Fund, certain states may allow
the character of the Fund's income to pass through to
shareholders. If so, the portion of dividends paid by the Fund
that is derived from interest on Treasury Securities may be
exempt from state and local taxes. State laws vary, however,
and any exemption from state and local income taxes does not
preclude states from assessing other taxes (such as intangible
property taxes) on the ownership of Treasury Securities. The
United States Supreme Court has ruled that income from certain
types of repurchase agreements involving Treasury Securities
does not constitute interest on Treasury Securities for this
purpose. However, it is not clear whether the Court's holding
extends to all types of repurchase agreements involving
Treasury Securities in which the Fund may invest.
The tax discussion set forth above regarding federal and
state income taxation is included for general information only.
Prospective investors should consult their own tax advisors
concerning the federal and state tax consequences of an
investment in the Fund.
MANAGEMENT OF THE FUND
The Board of Trustees of the Trust is responsible for
supervising the operations and affairs of the Trust and the
Fund. The Trust's officers, who are all officers or employees
of the Investment Adviser or the Administrator, are responsible
for the daily management and administration of the Fund's
operations.
Investment Adviser. The Investment Adviser, Cadre
Financial Services, Inc., 905 Marconi Avenue, Ronkonkoma, New
York 11779, is a wholly owned subsidiary of AMBAC Capital
Corporation which, in turn, is a wholly owned subsidiary of
AMBAC Inc. ("AMBAC"). Through its subsidiaries, AMBAC is a
leading insurer of municipal and structured finance obligations
and a provider of investment contracts, and investment advisory
and administration services to state municipalities and
municipal authorities. AMBAC is a publicly held company whose
shares are traded on the New York Stock Exchange.
As of January 31, 1997, the Investment Adviser provided
investment management services to 19 investment funds and had
aggregate assets under management in excess of $2 billion. In
addition, through its subsidiaries, AMBAC manages its own
investment portfolios of approximately $5 billion.
Subject to overall supervision of the Board of Trustees,
the Investment Adviser is responsible for managing the
investment operations of the Fund in accordance with the Fund's
investment objective and policies. The Investment Adviser
formulates a continuing investment program for the Fund and
makes all decisions regarding securities to be purchased or
sold for the Fund. The Investment Adviser is required to
provide certain administrative services to the Trust to the
extent those services are not provided by other organizations
retained by the Fund, and furnishes, without expense to the
Fund, the services of its personnel to serve as officers and
Trustees of the Trust. The Fund pays the Investment Adviser a
monthly fee computed at the annual rate of 0.15% of the Fund's
average daily net assets during the month.
Evelyn R. Robertson, a Vice President of the Investment
Adviser, is the person primarily responsible for managing the
Fund's investments. Ms. Robertson has over 13 years of
experience managing money market funds. Prior to joining the
Investment Adviser in June, 1995, Ms. Robertson was a Vice
President of Smith Barney, Inc., where she served as portfolio
manager of various money market funds.
Administrator. The Trust has entered into an
Administration Agreement with the Administrator, First Data
Investor Services Group, Inc., One Exchange Place, Boston,
Massachusetts 02109, a wholly owned subsidiary of First Data
Corporation. The Administrator provides various services
required in connection with the operations of the Trust and the
Fund, including, but not limited to: overseeing the preparation
and maintenance of all documents and records required to be
maintained by the Trust; preparing and updating required
regulatory filings, prospectuses and shareholder reports;
providing, at its own expense, the services of its personnel to
serve as officers of the Trust; and preparing and disseminating
material for meetings of the Board of Trustees. For these
services, the Fund pays the Administrator a monthly fee
calculated at an annual rate of 0.05% of the Trust's average
daily net assets on the first $500 million of net assets of the
Trust, 0.04% on the next $500 million of net assets of the
Trust and 0.03% on net assets of the Trust in excess of $1
billion, subject to a minimum monthly fee paid by the Trust to
the Administrator of $10,000. The Administrator also provides
the Trust with fund accounting services for which it is paid a
monthly fee by the Fund of $3,000 if monthly average net assets
of the Fund are $50 million or less, $4,000 if the Fund's
monthly average net assets are between $50-$200 million, or
$5,000 if the Fund's monthly average net assets exceed $200
million.
PERFORMANCE INFORMATION
The Fund may publish its "current yield" and "effective
yield" in advertisements, sales materials and shareholder
reports. Current yield refers to the income generated by an
investment in the Fund over a seven-day period; the income is
then annualized. In annualizing income, the amount of income
generated by the investment during the period 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
in the same manner, 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 current yield
because of the compounding effect of the assumed reinvestment.
All quotations of investment performance are based upon
historical investment results and are not intended to predict
future performance.
In addition, comparative performance information may be
used from time to time in advertisements, sales literature and
shareholder reports. This information may include data, ratings
and rankings from Lipper Analytical Services, Inc., IBC
Financial Data Money Fund Report, The Bank Rate Monitor,
Morningstar and other industry publications, business
periodicals and services. Comparisons to recognized market
indices and to the returns on specific money market securities
or types of securities or investments may also be used. The
Fund may disseminate yields for periods longer than seven days,
and may report its total return. The "total return" of the Fund
refers to the average annual compounded rate of return over a
specified period (as stated in the advertisement) that would
equate an initial amount invested at the beginning of the
period to the end of period redeemable value of the investment,
assuming the reinvestment of all dividends and distributions.
GENERAL INFORMATION
Description of Shares. The Trust is a Delaware business
trust organized pursuant to a Certificate of Trust dated June
27, 1995 and is authorized to issue an unlimited number of
shares of beneficial interest, $.001 par value. As of the date
of this Prospectus, the Trust has established three series of
its shares, each representing interests in a separate portfolio
of investments. One series of shares represents interests in
the Fund. The other series represent interests in AMBAC U.S.
Government Money Market Fund and AMBAC Short-Term U.S.
Government Income Fund. The Board of Trustees has the power to
establish additional series of shares and, subject to
applicable laws and regulations, to issue two or more classes
of shares of each series. Shares are fully paid and non-
assessable, and have no preemptive or conversion rights.
Shareholders of the Fund, together with shareholders of
each other series of the Trust, are entitled to vote on the
election of Trustees and the ratification of the Trust's
independent auditors when those matters are voted upon at a
meeting of shareholders. On other matters affecting the Fund on
which shareholders of the Fund are entitled to vote, shares of
the Fund will generally be voted as a separate class. Each
share (and fractional share) is entitled to that number of
votes which equals the net asset value of such share (or
fraction thereof). All shares of the Trust have non-cumulative
voting rights, meaning that shareholders entitled to cast more
than 50% of the votes for the election of Trustees can elect
all of the Trustees standing for election if they choose to do
so.
Under Delaware law, shareholders of the Fund could, under
certain circumstances, be held personally liable for the
obligations of the Trust but only to the extent of the
shareholder's investment. However, the Declaration of Trust
disclaims liability of the shareholders, Trustees or officers
of the Trust for acts or obligations of the Trust, which are
binding only on the assets and property of the Trust and
requires that notice of the disclaimer be given in each
contract or obligation entered into or executed by the Trust or
the Trustees. 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 and should be considered remote.
Annual meetings of shareholders will not be held except
as required by the Investment Company Act or other applicable
law. A meeting will be held on the removal of a Trustee or
Trustees of the Trust if requested in writing by holders of not
less than 10% of the outstanding shares of the Trust.
Control Persons. As of January 31, 1997, AMBAC Indemnity
Corporation, an affiliate of the Investment Adviser owned more
than 25% of the outstanding shares of the Fund and the Trust.
So long as such ownership of shares of the Fund (or of the
Trust) continues to exceed 25% of the outstanding shares of the
Fund (or of the outstanding shares of the Trust), AMBAC
Indemnity Corporation and its parent, AMBAC Inc., will be
deemed to control the Fund (and the Trust) by virtue of such
ownership.
Transfer Agent. The Transfer Agent, First Data Investor
Services Group, Inc., P.O. Box 5138, Westborough, Massachusetts
01581-5138, serves as the Trust's shareholder servicing agent
and dividend disbursing agent. Shareholders of the Fund should
contact the Transfer Agent with their questions regarding
transactions in shares of the Fund and share account balances.
Custodian. Bankers Trust Company, 130 Liberty Street, New
York, New York 10006, serves as custodian of the Trust, and in
that capacity maintains custody of all securities and cash
assets of the Fund. The custodian is authorized to hold the
Fund's investments in securities depositories and to use
subcustodians approved by the Trust.
Distributor. First Data Distributors, Inc., 4400 Computer
Drive, Westborough, Massachusetts 01581-5120, serves as
Distributor of the Fund's shares. The Distributor may, from
time to time, enter into selling agreements with dealers or
other financial institutions, and in accordance therewith, pay
to such dealers or institutions, in connection with sales or
the distribution of shares of the Fund, material compensation
or promotional incentives, in the form of cash or other
compensation. Such compensation and incentives are not paid by
the Fund and will not be a Fund expense.
Additional Information. This Prospectus, including the
Statement of Additional Information which has been incorporated
by reference herein, does not contain all the information set
forth in the Registration Statement filed by the Trust with the
SEC under the Securities Act of 1933. Copies of the
Registration Statement may be obtained at a reasonable charge
from the SEC or may be examined, without charge, at the office
of the SEC in Washington, D.C.
Shareholder Reports. The Trust sends shareholders annual
and semi-annual reports without charge. These reports include
further information regarding the Fund's performance. The
financial statements of the Fund appearing in the Trust's
annual reports are audited by KPMG Peat Marwick LLP, the
Trust's independent auditors.
Shareholder Inquiries. For questions concerning
shareholder accounts, dividends and share purchase and
redemption procedures, contact the Transfer Agent toll free at
1-800-311-AMBAC (2622) or at P.O. Box 5138, Westborough,
Massachusetts 01581-5138.
INVESTMENT ADVISER
Cadre Financial Services, Inc.
905 Marconi Avenue,
Ronkonkoma, New York 11779
ADMINISTRATOR
First Data Investor Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
TRANSFER AGENT
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581-5120
DISTRIBUTOR
First Data Distributors, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581-5120
CUSTODIAN
Bankers Trust Company
130 Liberty Street
New York, New York 10006
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
99 High Street
Boston, Massachusetts 02110
LEGAL COUNSEL
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Investors are advised to read this Prospectus and retain it for
future reference.
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS.
IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY
THE TRUST OR BY THE DISTRIBUTOR TO SELL OR A SOLICITATION OR AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH JURISDICTION.
U.S. Treasury Money Market
Fund
TABLE OF CONTENTS A SERIES OF AMBAC TREASURERS
TRUST
SUMMARY OF EXPENSES 2
FINANCIAL HIGHLIGHTS 3
SUITABLE INVESTORS 4
INVESTMENT OBJECTIVE AND POLICIES 4
PURCHASING SHARES 5
SHAREHOLDER ACCOUNTS 7
REDEEMING SHARES 8
REMOTE TRADE ENTRY 10
EXCHANGE PRIVILEGE 10
NET ASSET VALUE 11
FUND EXPENSES 12
DIVIDENDS AND DISTRIBUTIONS 12
TAXES 13
MANAGEMENT OF THE FUND 14
PERFORMANCE INFORMATION 15
GENERAL INFORMATION 16
AMBAC TREASURERS TRUST
U.S. Government Money Market Fund
A SERIES OF AMBAC TREASURERS TRUST
905 Marconi Avenue
Ronkonkoma, New York 11779
AMBAC U.S. Government Money Market Fund (the "Fund") is a
series of AMBAC Treasurers Trust (the "Trust"), a diversified,
open-end management investment company. The Fund is a money
market fund and seeks to maintain a stable net asset value of
$1.00 per share. The investment objective of the Fund is high
current income, consistent with preservation of capital and
maintenance of liquidity. The Fund pursues this objective by
investing exclusively in short-term debt securities that are
issued or guaranteed by the U.S. government or an agency or
instrumentality of the U.S. government ("Government
Securities") and repurchase agreements collateralized by
Government Securities. See "Investment Objective and Policies."
Cadre Financial Services, Inc. (formerly known as AMBAC
Investment Management, Inc.) (the "Investment Adviser") serves
as the investment adviser of the Fund. First Data Investor
Services Group, Inc. serves as the administrator of the Fund
(the "Administrator").
Shares of the Fund are offered for sale on a no-load
basis to states and municipalities, and their subdivisions and
agencies, as well as to other institutional investors. No sales
commissions or other charges are imposed upon the purchase or
redemption of shares. The minimum initial investment in the
Fund is $2,000,000. See "Purchasing Shares." Shares of the Fund
are not insured by AMBAC Indemnity Corporation.
An investment in the Fund is neither insured nor
guaranteed by the U.S. government and there can be no assurance
that the Fund will be able to maintain a stable net asset value
of $1.00 per share. See "Net Asset Value."
This Prospectus sets forth concisely the information
about the Fund and the Trust that a prospective investor should
know before investing. Additional information about the Fund
and the Trust has been filed with the Securities and Exchange
Commission (the "SEC") in a Statement of Additional Information
dated March 1, 1997, which is incorporated herein by reference
and is available without charge by writing to the transfer
agent or by calling 1-800-311-AMBAC (2622).
Investors are advised to read this Prospectus and retain it for
future reference.
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.
The date of this Prospectus is March 1, 1997 </R
SUMMARY OF EXPENSES
The following table is designed to assist prospective
investors in understanding the various direct and indirect costs and
expenses that a shareholder in the Fund will bear. The amounts set
forth below under "Other Expenses," as well as the amounts in the
example below, are based upon estimates of expenses for the current
fiscal year.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends
None
Deferred Sales Load None
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses Net of Expense
(as a percentage of average net assets)
Reimbursement
Management Fees (after waiver) 0%
12b-1 Fees None
Other Expenses (estimated) .20%
Total Fund Operating Expenses .20%
The Investment Adviser has voluntarily agreed to waive its
fees or absorb Fund expenses to the extent necessary to assure that
the ordinary operating expenses do not exceed .20% of the Funds
average daily net assets. Absent this agreement, management fees,
other estimated expenses and estimated total operating expenses of
the Fund would be .15%, .60% and .75%, respectively, of the Funds
average daily net assets. The Investment Adviser reserves the right
to modify or terminate at any time its agreement to waive fees and
absorb expenses.
Example 1 Year 3
Years
You 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: $2 $6
The example is based upon estimated Total Fund Operating
Expenses, as set forth in the table above, after giving effect to
the fee waiver and absorption of expenses. Actual expenses and
annual return may be greater or less than the amounts shown above.
The example should not be considered a representation of past or
future expenses.
For a more complete description of costs and expenses, see
"Management of the Fund."
U.S. GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
The financial information in the table below has been
audited in conjunction with the audit of the financial statements
of the Trust by KPMG Peat Marwick LLP, independent auditors, which
financial statements and report thereon are incorporated by
reference in the Statement of Additional Information, but not
included herein. This table should be read in conjunction with
the Trusts financial statements and notes thereto, which are an
integral part of these financial highlights and ratios.
Period ended October 31, 1996 (1)
Net Asset Value, Beginning of period $
1.000
Income from Investment Operations:
Net investment income (2) 0.027
Less Dividends:
Dividends from net investment income
(0.027)
Net increase in net asset value ----
Net Asset Value, End of period $ 1.000
Total Return 2.72%*
Ratios/Supplemental Data:
Net Assets, End of period (000s) $ 70,881
Ratios to average net assets:
Net investment income including reimbursement/waiver
5.18%**
Operating expenses including reimbursement/waiver
0.20%**
Operating expenses excluding reimbursement/waiver
0.75%**
* Not Annualized
** Annualized
(1) The Fund commenced investment operations on April 24, 1996.
(2) Net investment income per share before reimbursement/waiver of
fees and expenses by the Investment Adviser for the period ended
October 31, 1996 for the Fund was $0.024.
SUITABLE INVESTORS
The Fund is specifically designed for investors concerned
about the safety of their investments and is a low-cost,
professionally managed cash management vehicle for states,
municipalities, and their subdivisions and agencies, including
school and special purpose districts, and for other institutional
investors. It offers investment diversification, administrative
convenience and operating economies of scale to investors whose
investment policies and guidelines are consistent with those of
the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek high current
income, consistent with preservation of capital and maintenance of
liquidity. The Fund pursues this objective by investing
exclusively in short-term debt securities issued or guaranteed by
the U.S. government or an agency or instrumentality of the U.S.
government ("Government Securities") and repurchase agreements
collateralized by Government Securities. The Fund maintains a
dollar-weighted average maturity of 90 days or less, and invests
only in securities having remaining maturities of 397 days or
less. As a money market fund, the Fund seeks to maintain a stable
net asset value of $1.00 per share at all times. No assurance can
be given that the Fund will be able to achieve its investment
objective or maintain a stable net asset value. See "Net Asset
Value."
Government Securities include obligations that are issued by
the U.S. Treasury. These obligations, which include Treasury
bills, notes and bonds, are backed by the full faith and credit of
the U.S. government. Government Securities also include
obligations issued by federal agencies and instrumentalities
("Agency Securities"). Certain Agency Securities, such as the
Export-Import Bank of the United States, the General Services
Administration, the Government National Mortgage Association, and
the Small Business Administration, are backed by the full faith
and credit of the U.S. government. Other Agency Securities, such
as obligations of the Federal Farm Credit Banks, Federal Home Loan
Banks, Federal Home Loan Mortgage Corporation, Federal National
Mortgage Association and Student Loan Marketing Association, are
backed by the right of the issuer to borrow from the U.S. Treasury
under certain circumstances or are backed by the credit of the
agency or instrumentality issuing the obligation. These types of
Agency Securities are not deemed direct obligations of the United
States, and therefore involve more risk than obligations which are
backed by the full faith and credit of the U.S. government. All
securities purchased by the Fund, including repurchase agreements,
must be of high quality and be determined by the Investment
Adviser to present minimal credit risks pursuant to procedures
adopted by the Board of Trustees of the Trust.
The Fund may invest in certain variable and floating rate
securities, as described below, but does not invest in any other
securities commonly known as derivatives.
The Funds investment objective is fundamental and may not be
changed without the approval of the holders of a majority of the
outstanding voting securities of the Fund, as defined in the
Investment Company Act of 1940, as amended (the "Investment
Company Act").
Repurchase Agreements. A repurchase agreement involves the
purchase of a security by the Fund with an agreement by the seller
of the security to repurchase it from the Fund at a mutually
agreed upon day and price, frequently the next business day. The
resale price is in excess of the purchase price and reflects the
rate of return earned by the Fund. The maturities of repurchase
agreements entered into by the Fund normally do not exceed seven
days. However, the Fund may enter into a repurchase agreement
maturing in more than seven days provided that not more than 10%
of the Funds net assets would, as a result, be invested in
repurchase agreements having maturities in excess of seven days
and under which the Fund also does not have the right to repayment
within seven days. Repurchase agreements will at all times be
fully collateralized by their underlying securities ("collateral")
in an amount at least equal to the purchase price plus accrued
interest, marked to market daily. The collateral for repurchase
agreements is held by the Trusts custodian (or a subcustodian) and
is required to consist of Government Securities (without regard to
the maturity of such obligations). If the seller defaults and the
value of the collateral securing a repurchase agreement declines,
the Fund may incur a loss. The Fund, however, enters into
repurchase agreements only with banks or primary dealers
designated as such by the Federal Reserve Bank of New York and
which have been determined by the Investment Adviser to present
minimal credit risk in accordance with guidelines established by
the Board of Trustees of the Trust.
Variable and Floating Rate Securities. Government Securities
purchased by the Fund may include variable and floating rate
securities. The interest rates payable on these securities are
adjusted either at predesignated intervals or whenever there is a
change in an established benchmark rate of interest, and, upon
reset, the market value approximates par. These securities may
also have a demand feature under which the Fund can demand
repayment of principal on specified dates or after giving
specified notice. The Fund only purchases variable and floating
rate Government Securities that are eligible for purchase by money
market funds under applicable regulations, and therefore does not
purchase securities such as inverse floaters, range floaters, COFI
floaters, capped floaters or dual index floaters. In determining
the maturities of the Funds portfolio securities and calculating
the Funds dollar-weighted average portfolio maturity, variable
rate Government Securities are deemed to have a maturity equal to
the period remaining until the next readjustment of the interest
rate. Floating rate Government Securities with demand features are
deemed to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
When-Issued and Delayed Delivery Securities. The Fund may
purchase or sell securities on a when-issued or delayed delivery
basis. In these transactions, securities are purchased or sold by
the Fund with payment and delivery taking place as much as a month
or more in the future. The Fund engages in these transactions to
secure an advantageous price and yield at the time of entering
into the transactions. However, the value of securities purchased
on a when-issued basis is subject to market fluctuation and no
interest accrues to the purchaser during the period between
purchase and settlement.
Borrowings. The Fund does not borrow for purposes of making
investments (a practice known as "leverage"). However, it may
borrow money from banks in an amount not exceeding one-third of
the value of its total assets (calculated at the time of the
borrowing), for temporary extraordinary or emergency purposes. The
Fund may pledge its assets to secure these borrowings. Additional
investments will not be made by the Fund while any borrowings are
outstanding.
Investment Restrictions. The Fund is subject to various
additional restrictions on its investments. Certain of these
restrictions are deemed fundamental policies and cannot be changed
without the approval of the holders of a majority of the Funds
outstanding voting securities, as defined in the Investment
Company Act. See "Investment Restrictions" in the Statement of
Additional Information.
Investment Characteristics. The Fund invests solely in
obligations issued or guaranteed by the U.S. government or an
agency or instrumentality of the U.S. government, and repurchase
agreements collateralized by such securities. Government
Securities are of very high credit quality. Shares of the Fund are
not insured or guaranteed by the U.S. government or any government
agency. The return on an investment in the Fund will increase or
decrease in response to changes in short-term market interest
rates. The market value of the Funds investments will fluctuate,
with investments increasing in value as interest rates fall and
decreasing in value as interest rates rise. However, due to the
method used by the Fund in valuing its assets, it is expected but
cannot be assured that the net asset value of shares of the Fund
will be a stable $1.00 per share. See "Net Asset Value." Virtually
all portfolio transactions for the Fund will be effected on a
principal basis with issuers, underwriters or dealers serving as
primary market-makers.
PURCHASING SHARES
Shares of the Fund are offered for sale, without sales
charge, at the net asset value per share next determined after
receipt and acceptance of a purchase order by First Data
Distributors, Inc. (formerly known as 440 Financial Distributors,
Inc.), as distributor of the Funds shares (the "Distributor"),
subject to timely receipt of federal funds as described below. Net
asset value is computed as of 4:00 p.m. (Eastern time) on each day
on which both the New York Stock Exchange is open for trading and
the Federal Reserve Bank of New York is open (each, a "Business
Day"), except on days for which the Public Securities Association
(the "PSA") recommends an early closing of the U.S. government
securities markets when the net asset value will be computed as of
such earlier closing time. See "Net Asset Value." A minimum
initial investment of $2,000,000 is required (except in special
circumstances as described in the Statement of Additional
Information). Subsequent investments may be made in any amount,
subject to a $100,000 minimum.
Shares become entitled to receive dividends beginning on the
day of purchase. For this reason, the Fund must have federal funds
available to it (i.e., monies credited to its custodian bank by a
Federal Reserve bank) on the day the purchase order is accepted.
An order for the purchase of shares of the Fund is accepted (i)
immediately upon receipt of federal funds by wire as described
below or (ii) when a check is credited to the shareholders account
in the form of federal funds (generally one Business Day after
receipt of a check). Shares will be issued at the net asset value
next determined after acceptance of the purchase order and will be
entitled to that days dividend. The Fund reserves the right to
reject any purchase order and to modify or suspend the continuous
offering of its shares.
In order to permit the Investment Adviser to manage the Fund
most effectively, investors should place purchase orders as early
in the day as possible by calling the Funds transfer agent, First
Data Investor Services Group, Inc. (the "Transfer Agent"), toll-
free at 1-800-311-AMBAC (2622), as described below. Investors who
anticipate making purchase transactions in excess of $5,000,000
are encouraged to make an advisory call to the Transfer Agent on
the day prior to investment. This advisory call does not replace
the need to call the Transfer Agent to place a purchase order.
Prior to making an initial investment by wire or check, an
account number must be obtained by calling the Transfer Agent
toll-free at 1-800-311-AMBAC (2622), or by mailing a completed
account application to:
AMBAC Funds
P.O. Box 5138
Westborough, Massachusetts 01581-5138
In order to receive an account number by telephone, an
investor must provide the name, address, and tax identification
number of the account owner, the amount being wired or mailed as
the initial investment, and the name of the wiring bank. Promptly
after opening accounts by telephone, investors should mail an
original completed account application for each account opened to
the Transfer Agent. Although share purchases can be made before an
account application is submitted, shares may not be redeemed until
a completed account application has been submitted.
Purchases by Federal Funds. Shares may be purchased by
wiring federal funds directly to the Fund in accordance with the
instructions below. The Fund does not impose any transaction
charges; however, wire charges may be imposed by the shareholders
transmitting bank. Shares will be issued at the net asset value
next determined after receipt of an order to purchase shares and
will be entitled to the dividend declared on the date the order is
received if the Trusts custodian receives payment in federal funds
in the amount of the purchase order not later than the close of
the Federal Reserve wire on that day. If a purchase order is not
received and accepted prior to 4:00 p.m. (Eastern time) (2:00 p.m.
for remote trade entry orders), or as of the closing time of the
U.S. government securities markets on days when the PSA recommends
an early closing of such markets, or if federal funds are not
received by the close of the Federal Reserve wire, shares will not
be issued or entitled to receive dividends until the next
computation of net asset value following the receipt of federal
funds by the Trusts custodian.
Additional purchases of shares can be made by calling the
Transfer Agent toll-free at 1-800-311-AMBAC (2622), to place a
purchase order and then wiring federal funds in the amount of the
purchase.
With respect to both initial and subsequent purchases of
shares, the wiring bank should be instructed to wire federal funds
to:
AMBAC U.S. Government Money Market Fund
C/o BSD&T Co. ABA # 011001234
CR DDA # 05-338-4
CR FDISG A/C # __________
[insert your account number]
Purchases by Check. Shares may be purchased by check in
accordance with the instructions below. Shares will be issued on
the next Business Day after receipt of a check at the net asset
value determined on such day. Shareholders will begin accruing
dividends when a check is credited to the shareholders account in
the form of federal funds (generally one Business Day after
receipt of a check).
Checks for both initial and subsequent purchases of shares
should indicate the account name and number and be made payable to
AMBAC U.S. Government Money Market Fund and sent by regular mail
to the Transfer Agent at:
AMBAC Funds
P.O. Box 5138
Westborough, MA 01581-5138
Check purchases sent by registered or certified mail or
overnight delivery should be sent to the Transfer Agent at:
AMBAC Funds
c/o First Data Investor Services Group, Inc.
4400 Computer Drive - 2CW65
Westborough, MA 01581-5120
In certain circumstances, shares of the Fund may also be
purchased through the Remote Trade Entry System. See "Remote
Trade Entry."
SHAREHOLDER ACCOUNTS
The Transfer Agent maintains one or more accounts for each
shareholder reflecting full and fractional shares of the Fund the
shareholder owns. Shareholders are sent confirmations of each
account transaction, and monthly statements showing account
balances. The Trust does not issue certificates for shares of the
Fund.
Sub-Account Services. Special sub-accounting procedures are
available for investors wishing to open multiple accounts to meet
requirements regarding the commingling of funds or for accounting
convenience. Sub-accounts can be established at any time by
calling the Transfer Agent. Please call toll-free at 1-800-311-
AMBAC (2622) for further information and appropriate forms.
Investors who have established sub-accounts will receive periodic
confirmations and statements of holdings and transactions for the
master account and each sub-account.
Minimum Account Balance. In order to avoid costs to the Fund
that are associated with maintaining small accounts, shareholders
should maintain account balances of not less than $100,000. If an
account balance falls below $100,000 as a result of share
redemptions, the Fund has the right to redeem all shares held in
the account. In such event, the proceeds will be wired to the
primary bank account of record. However, a shareholder will first
be sent written notice of the Funds intention to close the
account, and given 60 days to purchase additional shares to
increase the account balance to $100,000.
REDEEMING SHARES
Shareholders may redeem all or any portion of the shares in
their accounts at any time at the net asset value next computed
after the receipt of a redemption request in proper form.
Redemption proceeds will be paid by federal funds wire to one or
more of the bank accounts that have been predesignated by the
shareholder, normally on the day the redemption request is
received. If a redemption request is not received prior to 2:00
p.m. (Eastern time), or as of the closing time of the U.S.
government securities markets on days when the PSA recommends an
early closing of such markets, it will be processed on the
following Business Day. Shares are not entitled to receive
dividends declared on the day the shares are redeemed. See
"Dividends and Distributions." In the case of complete redemption
of all shares in an account, the redemption payment will include
the amount of all dividends declared for the month-to-date on
shares held in the account. Except in unusual circumstances
described in the Statement of Additional Information, the Fund
will not suspend the right of redemption or postpone the payment
of redemption proceeds for more than seven days, except that when
shares are purchased by check or acquired by means of an exchange
of shares purchased by check (including, in each case, certified
checks and cashiers checks), payment of redemption proceeds will
be delayed until the purchase check has cleared (the time varies
from state to state) which may take up to 15 days. Shareholders
who anticipate the need for immediate access to their investment
should purchase shares with federal funds.
A completed account application must be on file with the
Transfer Agent in order to redeem shares. See "Purchasing Shares."
Shareholders will be asked to designate a primary recipient bank
account on their account application. The primary recipient
account may be changed at any time, and any number of secondary
recipient bank accounts can be added, provided proper written
instructions are on file. Please call the Transfer Agent to
receive additional information and appropriate forms.
In order to permit the Investment Adviser to manage the Fund
most effectively, investors should place telephone redemption
requests as early in the day as possible by calling the Transfer
Agent toll-free at 1-800-311-AMBAC (2622) as described below.
Investors who anticipate making redemptions in excess of
$5,000,000 are encouraged to make an advisory call to the Transfer
Agent at least one day in advance. This advisory call does not
replace the need to place the redemption request in writing or by
telephone.
Telephone Redemption Procedures. A request to redeem shares
may be placed by calling the Transfer Agent at 1-800-311-AMBAC
(2622). The shareholder will be asked to provide the account name
and number, and the amount of the redemption. Proceeds of the
redemption will be sent to the primary recipient bank account
designated by the shareholder unless the shareholder requests that
payment be made to a predesignated secondary recipient bank
account. Proceeds will be sent by Federal Reserve wire, normally
on the day the redemption request is received. Redemption requests
that are not received prior to 2:00 p.m. (Eastern time), or as of
the closing time of the U.S. government securities markets on days
when the PSA recommends an early closing of such markets, will be
processed the following Business Day.
The Transfer Agent employs reasonable procedures to confirm
that telephone redemption instructions are genuine such as
recording telephone calls, providing written confirmation of
transactions, or requiring a form of personal identification or
other information prior to effecting a telephone redemption. To
the extent such procedures are used, neither the Trust or the
Fund, nor the Investment Adviser, Administrator, Distributor or
Transfer Agent, will be liable for a loss due to fraudulent or
unauthorized telephone instructions. A redemption by telephone
may be made only if the telephone redemption privilege has been
selected on the account application, or written instructions have
been filed with the Transfer Agent.
During periods of severe market or economic conditions, it
may be difficult to contact the Transfer Agent by telephone. In
such an event a shareholder should send a written redemption
request by overnight delivery to the Transfer Agent and follow the
procedures for written redemption requests described below.
Written Redemption Requests. Shares of the Fund may be
redeemed by written redemption request. A written redemption
request must be signed by each of the persons who the shareholder
has specified as required to sign such requests. The request must
include the complete account name and address, the amount of the
redemption, and the predesignated primary or secondary recipient
bank account to which the proceeds of the redemption are to be
sent. The signature of each person signing the request must be
guaranteed by an eligible guarantor institution. Organizations
that may qualify as eligible guarantor institutions include banks,
brokers, dealers, national securities exchanges, clearing
agencies, credit unions, and savings associations. The Transfer
Agent reserves the right to request additional information from,
and to make reasonable inquiries of, any eligible guarantor
institution.
Written redemption requests sent by regular mail should be sent
to:
AMBAC Funds
P.O. Box 5138
Westborough, Massachusetts 01581-5138
Written redemption requests sent by overnight delivery should be
sent to:
AMBAC Funds
c/o First Data Investor Services Group, Inc.
4400 Computer Drive - 2CW65
Westborough, Massachusetts 01581-5120
In certain circumstances, shares of the Fund may also be
redeemed through the Remote Trade Entry System described below.
REMOTE TRADE ENTRY
The Fund offers to certain eligible institutional clients
trade order entry capabilities through the Remote Trade Entry
("RTE") system. RTE is Windows-based and the necessary software
can be installed on standard IBM-compatible personal computer
systems. RTE allows a shareholder access to account information
and provides transaction capabilities for purchases and sales of
Fund shares. Through RTE, shareholders have the opportunity to
invest as well as to track short-term cash flows.
Orders to purchase placed by 2:00 p.m. (Eastern time) or as
of the closing time of the U.S. government securities markets on
days when the PSA recommends an early closing of such markets,
will be processed the same day and will begin accruing dividends
that day provided that federal funds have been received.
Purchases and redemptions can be placed individually and
transactions can be tracked and printed in a summary report.
Safeguards are in place to protect against unauthorized trading
and account overdrafts. Confirmations acknowledging receipt of
trades on the Transfer Agents system are available immediately
following a trade entry and wire instructions are included with
each confirmation. For redemptions, federal fund wires are
generated automatically and sent to the shareholders designated
recipient bank account. Month-to-date accruals, principal value
and total balances are displayed for an account when a transaction
is in process, and full account histories are available through
reporting menus. Current, 7-day and 30-day yield quotations are
updated daily.
Please call the Transfer Agent toll-free at 1-800-311-
AMBAC(2622) if you have questions about the RTE system and its
availability.
EXCHANGE PRIVILEGE
Shareholders may exchange shares of the Fund for shares of
any other fund advised by the Investment Adviser based upon the
relative net asset values per share of the funds at the time the
exchange is effected. Currently, shares of the Fund may be
exchanged for shares of: AMBAC U.S. Treasury Money Market Fund and
AMBAC Short-Term U.S. Government Income Fund. No sales charge or
other fee is imposed in connection with exchanges. Before
requesting an exchange, shareholders should obtain and read the
prospectus of the fund whose shares will be acquired in the
exchange. Prospectuses can be obtained by calling the Transfer
Agent at 1-800-311-AMBAC (2622) or writing to the Transfer Agent
at P.O. Box 5138, Westborough, Massachusetts 01581-5138.
All exchanges are subject to applicable minimum initial and
subsequent investment requirements of the fund whose shares will
be acquired. In addition, an exchange is permitted only between
accounts that have identical registrations. The Fund does not
impose limitations on the frequency of exchanges. Shares of a fund
may be acquired in an exchange only if the shares are currently
being offered and are legally available for sale in the state of
the shareholders residence.
An exchange involves the redemption of shares of the Fund
and the purchase of shares of another fund. Shares of the Fund
will be redeemed at the net asset value per share of the Fund next
computed after receipt of an exchange request in proper form. See
"Net Asset Value." Shares of the fund being acquired in the
exchange will be purchased when the proceeds of the redemption
become available (normally, on the day the exchange request is
received) at the net asset value of those shares then in effect.
See "Redeeming Shares." The acquired shares will be entitled to
receive dividends in accordance with the policies of the
applicable fund. Shareholders that are not exempt from taxation
may realize a taxable gain or loss on an exchange transaction. See
"Taxes."
The exchange privilege may be modified or terminated at any
time. However, 60 days prior notification of any modification or
termination will be given to shareholders.
Telephone Exchange Procedures. A request to exchange shares
may be placed by calling the Transfer Agent at 1-800-311-AMBAC
(2622). The shareholder will be asked to provide the account name
and number, the amount of shares being exchanged and the name of
the fund whose shares are being acquired. Telephone exchange
requests that are not received prior to 2:00 p.m. (Eastern time),
or as of the closing time of the U.S. government securities
markets on days when the PSA recommends an early closing of such
markets, will be processed the following Business Day. A written
confirmation of the exchange transaction will be sent to the
shareholder. As in the case of telephone redemption requests, the
Transfer Agent employs reasonable procedures to confirm that
telephone exchange instructions are genuine. To the extent such
procedures are used, neither the Trust or the Fund, nor the
Investment Adviser, Administrator, Distributor or Transfer Agent,
will be liable for any loss due to fraudulent or unauthorized
telephone exchange instructions. An exchange by telephone may be
made only if the telephone exchange privilege has been selected on
the account application, or written instructions have been filed
with the Transfer Agent.
During periods of severe market or economic conditions, it
may be difficult to contact the Transfer Agent by telephone. In
such event, a shareholder should send a written exchange request
by overnight delivery to the Transfer Agent and follow the
procedures for written exchange requests described below.
Written Exchange Procedures. Requests to exchange shares may
be submitted in writing. Each written exchange request should
specify the complete account name and number of the shareholders
account with the Fund, the amount to be exchanged, and the name of
the fund whose shares are to be acquired in the exchange. The
request must be signed by each of the persons who the shareholder
has specified as required to sign redemption requests. The
signature of each person signing the exchange request must be
guaranteed by an eligible guarantor institution. Written exchange
requests should be sent to the Transfer Agent at the address
indicated above under "Redeeming Shares-Written Redemption
Requests."
NET ASSET VALUE
The Funds share price, or net asset value per share, is
calculated as of 4:00 p.m. (Eastern time) each Business Day,
except on days for which the PSA recommends an early closing of
the U.S. government securities markets when the net asset value
will be computed as of such earlier closing time. Net asset value
per share is determined by subtracting the Funds liabilities
(including accrued expenses and dividends payable) from the total
value of the Funds investments and other assets and dividing the
result by the total number of outstanding shares of the Fund.
For purposes of calculating net asset value per share, the
Funds portfolio securities are valued using the "amortized cost"
method of valuation. This method involves valuing each investment
at 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 investment.
Amortized cost valuation provides certainty in valuation, but may
result in periods during which the value of an investment, as
determined by amortized cost, is higher or lower than the price
the Fund would receive if it sold the investment. Use of this
valuation method permits the maintenance of the Funds net asset
value at $1.00 per share. There can be no assurance, however, that
the Fund will be able to maintain a stable net asset value of
$1.00 per share.
In using this method, the Trust has adopted certain
procedures and adheres to various investment limitations as
required by Rule 2a-7 under the Investment Company Act. These
procedures, among other things, require the Investment Adviser to
monitor the deviation between the Funds net asset value determined
by using available market quotations or market equivalents and its
net asset value determined by using amortized cost.
FUND EXPENSES
The Funds expenses are deducted from total income before
dividends are paid. The Fund bears all expenses of its operations
other than those expressly assumed by the Investment Adviser,
including the Funds proportionate share of the Trusts expenses.
Expenses borne by the Fund include but are not limited to: the
fees of the Investment Adviser, the Administrator and Transfer
Agent; the fees and expenses of the Trusts independent auditors,
legal counsel, accounting services agent and custodian; taxes;
brokerage fees and commissions; interest; costs incident to
meetings of Trustees and shareholders, printing and mailing
prospectuses and reports to shareholders, and the filing of
reports with regulatory bodies and the maintenance of the Trusts
legal existence; federal and state registration fees; the fees and
expenses of non-interested Trustees of the Trust; and any
extraordinary expenses of a non-recurring nature.
As discussed under "Summary of Expenses," the Investment
Adviser has voluntarily undertaken to waive its fee or to absorb
expenses of the Fund as may be necessary to limit total ordinary
operating expenses of the Fund to a specified percentage of the
Funds average daily net assets. The Investment Adviser may modify
or terminate this undertaking at any time.
DIVIDENDS AND DISTRIBUTIONS
Dividends are declared and accrued daily on each Business
Day based upon the Funds net investment income (i.e., income other
than net realized capital gains), and are paid monthly.
Distributions of net realized capital gains, if any, are declared
and paid annually at the end of the Funds fiscal year in which
they have been earned. All dividends and other distributions are
automatically reinvested in full and fractional shares of the Fund
at net asset value unless otherwise requested by the shareholder.
A shareholder can request that dividends and other distributions
be paid by wire transfer to a predesignated bank account by
sending a written request to the Transfer Agent. Any such request
must be received by the Transfer Agent at least five Business Days
prior to a payment date in order to be effective on such date.
Dividends are payable to all shareholders of record as of
the time of declaration. Shareholders will begin receiving
dividends on shares the day the shares are purchased, but will not
be entitled to receive dividends declared on shares the day the
shares are redeemed. Shares purchased through dividend
reinvestment will begin earning dividends the day after they are
credited to the shareholders account.
The Fund does not expect to realize any long-term capital
gains. Should any such gains be realized, they will be distributed
annually. In addition, in order to satisfy certain distribution
requirements of the Tax Reform Act of 1986, the Fund may declare
special or regular year-end dividend and capital gains
distributions during December. Such distributions, if received by
shareholders by January 31, are deemed to have been paid by the
Fund and received by shareholders on December 31 of the prior
year.
TAXES
Taxation of the Fund. The Fund has elected and intends to
qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code (the "Code"). If so
qualified, the Fund will not be subject to federal income tax to
the extent it distributes its net income to shareholders. Certain
federal income and excise taxes would be imposed on the Fund if it
failed to make certain required distributions of income to
shareholders. The Fund intends to make distributions in a manner
which will avoid the imposition of such tax. If the Fund should
fail to qualify as a "regulated investment company," it would be
subject to regular federal income tax on its taxable income, and
its distributions generally would be taxable. The Fund intends to
carry on its operations so that it will continue to qualify as a
regulated investment company.
Federal Taxation of Shareholders. Dividend distributions,
whether received in cash or reinvested in additional shares, will
be taxable as ordinary income. Although the Fund does not expect
to distribute any long-term capital gains, investors will also be
subject to tax on any capital gains distributions they receive.
Since the Fund does not expect to earn dividend income, dividends
and other distributions from the Fund will generally not qualify
for the dividends-received deduction available to corporate
investors. In January of each year, the Fund sends each
shareholder a statement showing the tax status of distributions
for the past calendar year.
Section 115(1) of the Code provides, in part, that gross
income does not include income derived from the exercise of any
essential government function accruing to a state or any political
subdivision thereof. Shareholders are urged to consult their own
tax advisors to determine any limitations on the applicability of
Section 115(1) to earnings from their investment in the Fund. A
portion of the earnings derived from funds which are subject to
the arbitrage limitations or rebate requirements of the Code may
be required to be paid to the U.S. Treasury as computed in
accordance with such requirements.
A sale of shares of the Fund, either by redemption or
exchange, is a taxable event, and may result in a capital gain or
loss. However, because the Fund seeks to maintain a stable net
asset value of $1.00 per share for both purchases and redemptions,
it is generally expected that shareholders will not ordinarily
realize any capital gain or loss upon redemptions of shares.
The Fund is required to withhold 31% of all taxable
distributions and redemption proceeds paid to shareholders who
either have not complied with IRS taxpayer identification
regulations or are otherwise subject to backup withholding.
Shareholders are asked to certify on their account applications
that their taxpayer identification numbers are correct and that
they are not subject to backup withholding. Failure to so certify
will result in backup withholding.
State and Local Taxes. Investors may be subject to state and
local taxes on their investment. For example, dividends and other
distributions made by the Fund and received by an investor may be
subject to state and local taxes. Although shareholders of the
Fund do not directly receive interest on Government Securities
held by the Fund, certain states may allow the character of the
Funds income to pass through to shareholders. If so, the portion
of dividends paid by the Fund that is derived from interest on
Treasury securities may be exempt from state and local taxes.
Applicable rules vary from state to state, and interest on certain
Agency Securities may not qualify for exemption from income tax in
some states. The United States Supreme Court has ruled that income
from certain types of repurchase agreements involving Government
Securities does not constitute interest on Government Securities
for this purpose. However, it is not clear whether the Courts
holding extends to all types of repurchase agreements involving
Government Securities in which the Fund may invest. Any exemption
from state and local income taxes does not preclude states from
assessing other taxes (such as intangible property taxes) on the
ownership of Government Securities.
The tax discussion set forth above regarding federal and
state income taxation is included for general information only.
Prospective investors should consult their own tax advisors
concerning the federal and state tax consequences of an investment
in the Fund.
MANAGEMENT OF THE FUND
The Board of Trustees of the Trust is responsible for
supervising the operations and affairs of the Trust and the Fund.
The Trusts officers, who are all officers or employees of the
Investment Adviser or the Administrator, are responsible for the
daily management and administration of the Funds operations.
Investment Adviser. The Investment Adviser, Cadre Financial
Services, Inc., 905 Marconi Avenue, Ronkonkoma, New York 11779, is
a wholly-owned subsidiary of AMBAC Capital Corporation which, in
turn, is a wholly-owned subsidiary of AMBAC Inc. ("AMBAC").
Through its subsidiaries, AMBAC is a leading insurer of municipal
and structured finance obligations and a provider of investment
contracts, and investment advisory and administration services to
state municipalities and municipal authorities. AMBAC is a
publicly held company whose shares are traded on the New York
Stock Exchange.
As of January 31, 1997, the Investment Adviser provided
investment management services to 19 investment funds and had
aggregate assets under management in excess of $2 billion. In
addition, through its subsidiaries, AMBAC manages its own
investment portfolios of approximately $5 billion.
Subject to overall supervision of the Board of Trustees, the
Investment Adviser is responsible for managing the investment
operations of the Fund in accordance with the Funds investment
objective and policies. The Investment Adviser formulates a
continuing investment program for the Fund and makes all decisions
regarding securities to be purchased or sold for the Fund. The
Investment Adviser is required to provide certain administrative
services to the Trust to the extent those services are not
provided by other organizations retained by the Fund, and
furnishes, without expense to the Fund, the services of its
personnel to serve as officers and Trustees of the Trust. The Fund
pays the Investment Adviser a monthly fee computed at the annual
rate of 0.15% of the Funds average daily net assets during the
month.
Evelyn R. Robertson, a Vice President of the Investment
Adviser, is the person primarily responsible for managing the
Funds investments. Ms. Robertson has over 13 years of experience
managing money market funds. Prior to joining the Investment
Adviser in June, 1995, Ms. Robertson was a Vice President of Smith
Barney, Inc., where she served as portfolio manager of various
money market funds.
Administrator. The Trust has entered into an Administration
Agreement with the Administrator, First Data Investor Services
Group, Inc., One Exchange Place, Boston, Massachusetts, 02109, a
wholly-owned subsidiary of First Data Corporation. The
Administrator provides various services required in connection
with the operations of the Trust and the Fund, including, but not
limited to: overseeing the preparation and maintenance of all
documents and records required to be maintained by the Trust;
preparing and updating required regulatory filings, prospectuses
and shareholder reports; providing, at its own expense, the
services of its personnel to serve as officers of the Trust; and
preparing and disseminating material for meetings of the Board of
Trustees. For these services, the Fund pays the Administrator a
monthly fee calculated at an annual rate of 0.05% of the Trusts
average daily net assets on the first $500 million of net assets
of the Trust, 0.04% on the next $500 million of net assets of the
Trust and 0.03% on net assets of the Trust in excess of $1
billion, subject to a minimum monthly fee paid by the Trust to the
Administrator of $10,000. The Administrator also provides the
Trust with fund accounting services for which it is paid a monthly
fee by the Fund of $3,000 if the monthly average net assets of the
Fund are $50 million or less, $4,000 if the Funds monthly average
net assets are between $50-$200 million, or $5,000 if the Funds
monthly average net assets exceed $200 million.
PERFORMANCE INFORMATION
The Fund may publish its "current yield" and "effective
yield" in advertisements, sales materials and shareholder reports.
Current yield refers to the income generated by an investment in
the Fund over a seven-day period; the income is then annualized.
In annualizing income, the amount of income generated by the
investment during the period 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 in the same manner,
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 current yield because of the compounding
effect of the assumed reinvestment. All quotations of investment
performance are based upon historical investment results and are
not intended to predict future performance.
In addition, comparative performance information may be used
from time to time in advertisements, sales literature and
shareholder reports. This information may include data, ratings
and rankings from Lipper Analytical Services, Inc., IBC Financial
Data Money Fund Report, The Bank Rate Monitor, Morningstar and
other industry publications, business periodicals and services.
Comparisons to recognized market indices and to the returns on
specific money market securities or types of securities or
investments may also be used. The Fund may disseminate yields for
periods longer than seven days, and may report its total return.
The "total return" of the Fund refers to the average annual
compounded rate of return over a specified period (as stated in
the advertisement) that would equate an initial amount invested at
the beginning of the period to the end of period redeemable value
of the investment, assuming the reinvestment of all dividends and
distributions.
GENERAL INFORMATION
Description of Shares. The Trust is a Delaware business
trust organized pursuant to a Certificate of Trust dated June 27,
1995 and is authorized to issue an unlimited number of shares of
beneficial interest, $.001 par value. As of the date of this
Prospectus, the Trust has established three series of its shares,
each representing interests in a separate portfolio of
investments. One series of shares represents interests in the
Fund. The other series represent interests in AMBAC U.S. Treasury
Money Market Fund and AMBAC Short-Term U.S. Government Income
Fund. The Board of Trustees has the power to establish additional
series of shares and, subject to applicable laws and regulations,
to issue two or more classes of shares of each series. Shares are
fully paid and non-assessable, and have no preemptive or
conversion rights.
Shareholders of the Fund, together with shareholders of each
other series of the Trust, are entitled to vote on the election of
Trustees and the ratification of the Trusts independent auditors
when those matters are voted upon at a meeting of shareholders. On
other matters affecting the Fund on which shareholders of the Fund
are entitled to vote, shares of the Fund will generally be voted
as a separate class. Each share (and fractional share) is entitled
to that number of votes which equals the net asset value of such
share (or fraction thereof). All shares of the Trust have non-
cumulative voting rights, meaning that shareholders entitled to
cast more than 50% of the votes for the election of Trustees can
elect all of the Trustees standing for election if they choose to
do so.
Under Delaware law, shareholders of the Fund could, under
certain circumstances, be held personally liable for the
obligations of the Trust but only to the extent of the
shareholders investment. However, the Declaration of Trust
disclaims liability of the shareholders, Trustees or officers of
the Trust for acts or obligations of the Trust, which are binding
only on the assets and property of the Trust and requires that
notice of the disclaimer be given in each contract or obligation
entered into or executed by the Trust or the Trustees. 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 and should be considered
remote.
Annual meetings of shareholders will not be held except as
required by the Investment Company Act or other applicable law. A
meeting will be held on the removal of a Trustee or Trustees of
the Trust if requested in writing by holders of not less than 10%
of the outstanding shares of the Trust.
Control Persons. As of January 31, 1997, AMBAC Indemnity
Corporation, an affiliate of the Investment Adviser owned more
than 25% of the outstanding shares of the Fund and of the Trust.
So long as such ownership of shares of the Fund (or of the Trust)
continues to exceed 25% of the outstanding shares of the Fund (or
of the outstanding shares of the Trust), AMBAC Indemnity
Corporation and its parent, AMBAC Inc., will be deemed to control
the Fund (and the Trust) by virtue of such ownership.
Transfer Agent. The Transfer Agent, First Data Investor
Services Group, Inc., P.O. Box 5138, Westborough, Massachusetts
01581-5138, serves as the Trusts shareholder servicing agent and
dividend disbursing agent. Shareholders of the Fund should contact
the Transfer Agent with their questions regarding transactions in
shares of the Fund and share account balances.
Custodian. Bankers Trust Company, 130 Liberty Street, New
York, New York 10006, serves as custodian of the Trust, and in
that capacity maintains custody of all securities and cash assets
of the Fund. The custodian is authorized to hold the Funds
investments in securities depositories and to use subcustodians
approved by the Trust.
Distributor. First Data Distributors, Inc., 4400 Computer
Drive, Westborough, Massachusetts 01581-5120, serves as
Distributor of the Funds shares. The Distributor may, from time to
time, enter into selling agreements with dealers or other
financial institutions, and in accordance therewith, pay to such
dealers or institutions, in connection with sales or the
distribution of shares of the Fund, material compensation or
promotional incentives, in the form of cash or other compensation.
Such compensation and incentives are not paid by the Fund and will
not be a Fund expense.
Additional Information. This Prospectus, including the
Statement of Additional Information which has been incorporated by
reference herein, does not contain all the information set forth
in the Registration Statement filed by the Trust with the SEC
under the Securities Act of 1933. Copies of the Registration
Statement may be obtained at a reasonable charge from the SEC or
may be examined, without charge, at the office of the SEC in
Washington, D.C.
Shareholder Reports. The Trust sends shareholders annual and
semi-annual reports without charge. These reports include further
information regarding the Funds performance. The financial
statements of the Fund appearing in the Trusts annual reports are
audited by KPMG Peat Marwick LLP, the Trusts independent auditors.
Shareholder Inquiries. For questions concerning shareholder
accounts, dividends and share purchase and redemption procedures,
contact the Transfer Agent toll free at 1-800-311-AMBAC (2662) or
at P.O. Box 5138, Westborough, Massachusetts 01581-5138.
INVESTMENT ADVISER
Cadre Financial Services, Inc.
905 Marconi Avenue,
Ronkonkoma, New York 11779
</R.
ADMINISTRATOR
First Data Investor Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
TRANSFER AGENT
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581-5120
DISTRIBUTOR
First Data Distributors, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581-5120
CUSTODIAN
Bankers Trust Company
130 Liberty Street
New York, New York 10006
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
99 High Street
Boston, Massachusetts 02110
LEGAL COUNSEL
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Investors are advised to read this Prospectus and retain it for
future reference.
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS.
IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY
THE TRUST OR BY THE DISTRIBUTOR TO SELL OR A SOLICITATION OR AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH JURISDICTION.
U.S. Government Money
Market Fund
TABLE OF CONTENTS A SERIES OF AMBAC TREASURERS
TRUST
SUMMARY OF EXPENSES 2
FINANCIAL HIGHLIGHTS 3
SUITABLE INVESTORS 4
INVESTMENT OBJECTIVE AND POLICIES 4
PURCHASING SHARES 6
SHAREHOLDER ACCOUNTS 8
REDEEMING SHARES 8
REMOTE TRADE ENTRY 10
EXCHANGE PRIVILEGE 11
NET ASSET VALUE 12
FUND EXPENSES 12
DIVIDENDS AND DISTRIBUTIONS 13
TAXES 13
MANAGEMENT OF THE FUND 15
PERFORMANCE INFORMATION 16
GENERAL INFORMATION 16
AMBAC TREASURERS TRUST
Short-Term U.S. Government Income Fund
A SERIES OF AMBAC TREASURERS TRUST
905 Marconi Avenue
Ronkonkoma, New York 11779
AMBAC Short-Term U.S. Government Income Fund (the "Fund")
is a series of AMBAC Treasurers Trust (the "Trust"), a
diversified, open-end management investment company. The
investment objective of the Fund is to seek high current income
consistent with preservation of capital. It pursues this
objective by investing its assets primarily in debt securities
issued or guaranteed by the U.S. government or an agency or
instrumentality of the U.S. government ("Government
Securities"). The Fund maintains a dollar-weighted average
portfolio maturity of three years or less. See "Investment
Objective and Policies." Cadre Financial Services, Inc.
(formerly known as AMBAC Investment Management, Inc.) (the
"Investment Adviser") serves as the investment adviser of the
Fund. First Data Investor Services Group, Inc. serves as the
administrator of the Fund (the "Administrator").
Shares of the Fund are offered for sale on a no-load
basis to states and municipalities, and their subdivisions and
agencies, as well as to other institutional investors. No
sales commissions or other charges are imposed upon the
purchase or redemption of shares. The minimum initial
investment in the Fund is $1,000,000. See "Purchasing Shares."
Shares of the Fund are not insured by AMBAC Indemnity
Corporation.
This Prospectus sets forth concisely the information
about the Fund and the Trust that a prospective investor should
know before investing. Additional information about the Fund
and the Trust has been filed with the Securities and Exchange
Commission (the "SEC") in a Statement of Additional Information
dated March 1, 1997, which is incorporated herein by reference
and is available without charge by writing to the transfer
agent or by calling 1-800-311-AMBAC (2622).
Investors are advised to read this Prospectus and retain it for
future reference.
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.
The date of this Prospectus is March 1, 1997
SUMMARY OF EXPENSES
The following table is designed to assist prospective
investors in understanding the various direct and indirect
costs and expenses that a shareholder in the Fund will bear.
The amounts set forth below under "Other Expenses," as well as
the amounts in the example below, are based upon estimates of
expenses for the current fiscal year.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends
None
Deferred Sales
Load.......................................................
None
Redemption
Fee............................................................
None
Exchange
Fee............................................................
.. None
Annual Fund Operating Expenses Net
of Expense
(as a percentage of average net assets)
Reimbursement
Management Fees (after
waiver)............................................ .12%
12b-1
Fees...........................................................
..... None
Other Expenses
(estimated)................................................
.33%
Total Fund Operating
Expenses............................................. .45%
The Investment Adviser has voluntarily agreed to waive
its fees or absorb Fund expenses to the extent necessary to
assure that the ordinary operating expenses do not exceed .45%
of the Fund's average daily net assets. Absent this agreement,
management fees and estimated total operating expenses of the
Fund would be .35% and .68%, respectively, of the Fund's
average daily net assets. The Investment Adviser reserves the
right to modify or terminate at any time its agreement to waive
fees and absorb expenses.
Example 1 Year
3 Years
You 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: $5
$14
The example is based upon estimated Total Fund Operating
Expenses, as set forth in the table above, after giving effect
to the fee waiver and absorption of expenses. Actual expenses
and annual return may be greater or less than the amounts shown
above. The example should not be considered a representation
of past or future expenses.
As of March 1, 1997, the Fund has not commenced operations.
For a more complete description of fees and expenses, see
"Management of the Fund."
SUITABLE INVESTORS
The Fund is specifically designed as a prudently managed,
low-cost, professionally managed investment vehicle for states,
municipalities, and their subdivisions and agencies, including
school and special purpose districts, and for other
institutional investors. It offers investment diversification,
administrative convenience and operating economics of scale to
investors whose investment policies and guidelines are
consistent with those of the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek high
current income consistent with preservation of capital. The
Fund pursues this objective by investing its assets in debt
securities issued or guaranteed by the U.S. government or an
agency or instrumentality of the U.S. government ("Government
Securities") and repurchase agreements collateralized by
Government Securities. In pursuing its objective, the Fund may
also purchase and sell interest rate futures contracts. The
Fund maintains a dollar-weighted average portfolio maturity of
three years or less. In determining a security's maturity for
purposes of calculating the Fund's average portfolio maturity,
an estimate of the expected time for the principal amount to be
repaid may be used. This estimate can be substantially shorter
than the stated maturity of the security. There is no
limitation on the maximum maturity of any particular security
that may be purchased by the Fund.
Government Securities include obligations that are issued
by the U.S. Treasury. These obligations, which include
Treasury bills, notes and bonds, are backed by the full faith
and credit of the U.S. government. Government Securities also
include obligations issued or guaranteed by federal agencies
and instrumentalities ("Agency Securities"). Certain Agency
Securities, such as the Export-Import Bank of the United
States, the General Services Administration, the Government
National Mortgage Association, and the Small Business
Administration, are backed by the full faith and credit of the
U.S. government. Other Agency Securities, such as obligations
of the Federal Farm Credit Banks, Federal Home Loan Banks,
Federal National Mortgage Association and Student Loan
Marketing Association, are backed by the right of the issuer to
borrow from the U.S. Treasury under certain circumstances or
are backed by the credit of the agency or instrumentality
issuing the obligation. These types of Agency Securities are
not deemed direct obligations of the United States, and
therefore involve more risk than obligations which are backed
by the full faith and credit of the U.S. government. At least
65% of the value of the Fund's total assets is invested in
Government Securities and repurchase agreements collateralized
by Government Securities.
The Fund's investment objective is fundamental and may
not be changed without the approval of the holders of a
majority of the outstanding voting securities of the Fund, as
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act").
No assurance can be given that the Fund will be able to achieve
its investment objective.
Repurchase Agreements. A repurchase agreement involves
the purchase of a security by the Fund with an agreement by the
seller of the security to repurchase it from the Fund at a
mutually agreed upon day and price, frequently the next
business day. The resale price is in excess of the purchase
price and reflects the rate of return earned by the Fund. The
maturities of
repurchase agreements entered into by the Fund normally do not
exceed seven days. However, the Fund may enter into a
repurchase agreement maturing in more than seven days provided
that not more than 15% of the Fund's net assets would, as a
result, be invested in repurchase agreements under which the
Fund does not have the right to repayment within seven days.
Repurchase agreements will at all times be fully collateralized
by their underlying securities ("collateral") in an amount at
least equal to the purchase price plus accrued interest, marked
to market daily. The collateral for repurchase agreements is
held by the Trust's custodian and is required to consist of
Government Securities (without regard to the maturity of such
obligations). If the seller defaults and the value of the
collateral securing a repurchase agreement declines, the Fund
may incur a loss. The Fund, however, enters into repurchase
agreements only with banks or primary dealers designated as
such by the Federal Reserve Bank of New York and which have
been determined by the Investment Adviser to present minimal
credit risk in accordance with guidelines established by the
Board of Trustees of the Trust.
Variable and Floating Rate Securities. Government
Securities purchased by the Fund may include variable and
floating rate securities. The interest rates payable on these
securities are adjusted either at predesignated intervals or
whenever there is a change in an established benchmark rate of
interest. These securities may also have a demand feature
under which the Fund can demand repayment of principal on
specified dates or after giving specified notice. In
determining the maturities of the Fund's portfolio securities
and calculating the Fund's average portfolio maturity, variable
rate Government Securities are deemed to have a maturity equal
to the period remaining until the next readjustment of the
interest rate. Floating rate Government Securities with demand
features are deemed to have a maturity equal to the period
remaining until the principal amount can be recovered through
demand.
Stripped Securities. The Fund may purchase component
parts of Government Securities (either principal or interest).
These instruments, known as "stripped securities" separate the
interest and principal payments on a security into two separate
securities and may take the form of: Government Securities from
which interest coupons have been stripped; interest coupons; or
book-entry ownership of interest or principal of a Government
Security. The prices of stripped securities may be more
volatile than those of other debt securities.
When-Issued and Delayed Delivery Securities. The Fund may
purchase or sell securities on a when-issued or delayed
delivery basis. In these transactions, securities are purchased
or sold by the Fund with payment and delivery taking place as
much as a month or more in the future. The Fund engages in
these transactions to secure an advantageous price and yield at
the time of entering into the transactions. However, the value
of securities purchased on a when-issued basis is subject to
market fluctuation and no interest accrues to the purchaser
during the period between purchase and settlement.
Mortgage-Backed Securities. The Fund may invest in fixed
rate and adjustable rate mortgage-backed securities that are
issued or guaranteed by the U.S. government or one of its
agencies and instrumentalities. All mortgage-backed securities
purchased by the Fund represent interests in and are payable
from pools of mortgage loans (i.e., pass-through certificates).
These securities include GNMA, FNMA, and FHLMC certificates,
which entitle the holder to receive a share of all interest and
principal payments from the mortgages underlying the
certificates, net of fees. The U.S. government or the issuing
agency guarantee of the payment of interest and principal on
mortgage-backed securities does not protect against changes in
the yields or values of the securities.
Tax or regulatory changes may adversely affect the
mortgage securities market and the prices of mortgage-backed
securities. In addition, because underlying mortgages are
subject to prepayment at any time, the values of mortgage-
backed securities may be adversely affected if prepayments
differ from those anticipated at the time of issuance. When
prepayments are received, they may have to be reinvested by the
Fund in other securities at a current market rate which can be
expected to be lower than the interest rate payable on the
original mortgage-backed security. Prepayments are influenced
by a variety of factors. However, prepayments will increase
during a period of falling interest rates and decrease during a
period of rising interest rates. Thus, the amounts required to
be reinvested by the Fund are likely to be greater during a
period of declining interest rates than during a period of
rising interest rates. Prepayments of mortgages can also
result in a capital loss to the Fund when a mortgage-backed
security was purchased by the Fund at a premium. In addition,
because of the nature of mortgage-backed securities, the
holders of these securities normally do not benefit from
appreciation in market value to the same extent as holders of
other types of debt securities. The Investment Adviser
determines the effective life of mortgage-backed securities
based on industry practice and current market conditions. If
the Investment Adviser's determination is not borne out in
practice, it could positively or negatively affect the value of
the Fund's holdings of mortgage-backed securities when market
interest rates change. Increasing market interest rates
generally extend the effective maturities of mortgage-backed
securities.
The Fund does not invest in stripped mortgage-backed
securities or collateralized mortgage obligations.
Interest Rate Futures. The Fund may seek to reduce the
risk of changes in the value of its portfolio securities (i.e.,
hedge) or to manage its portfolio maturity by purchasing and
selling interest-rate futures contracts traded on U.S. futures
exchanges, subject to the limitations imposed by regulations of
the Commodity Futures Trading Commission. The use of futures
contracts involves certain risks, including increased price
volatility and a high degree of leverage. If the Investment
Adviser judges market conditions incorrectly or employs a
strategy that does not correlate well with the Fund's
investments, the use of futures could result in a loss to the
Fund. In addition, it is possible that the use of futures may
increase the volatility of the Fund because futures involve a
small investment of cash relative to the magnitude of the
investment position taken and risk assumed. Because the Fund
will only enter into transactions in exchange traded futures,
the futures in which the Fund invests can be expected to have
greater liquidity and decreased risk of counterparty default.
Transactions in futures contracts are used to adjust the risk
and return characteristics of the Fund's portfolio.
Borrowings. The Fund does not borrow money for purposes
of making investments. However, it may borrow money from banks
in an amount not exceeding one-third of the value of its total
assets (calculated at the time of the borrowing), for temporary
extraordinary or emergency purposes. The Fund may pledge its
assets to secure these borrowings. Additional investments will
not be made by the Fund while any borrowings are outstanding.
Investment Restrictions. The Fund is subject to various
restrictions on its investments in addition to those described
in this Prospectus. See "Investment Restrictions" in the
Statement of Additional Information. Certain of these
restrictions are deemed fundamental policies and cannot be
changed without the approval of the holders of a majority of
the Fund's outstanding voting securities, as defined in the
Investment Company Act.
Investment Characteristics. The Fund invests its assets
primarily in Government Securities and repurchase agreements
collateralized by these securities. Although Government
Securities, including those which are not backed by the full
faith and credit of the U.S. government, are of very high
credit quality, the market values of these securities
fluctuate. The Fund's yield and share price are not insured or
guaranteed by the U.S. government or any government agency.
The values of the Fund's investments and investment return will
change daily based upon changes in the level of prevailing
interest rates, market conditions, economic and political news
and other factors. As a result, shares of the Fund may at the
time of their redemption be worth more or less than their
purchase price. In general, the prices of debt securities will
rise when interest rates fall, and will decrease when interest
rates rise. The impact of interest rate changes on the market
values of debt securities is generally greater for securities
having longer maturities. By maintaining a dollar-weighted
average portfolio maturity of three years or less, the Fund
seeks to limit the probable impact of changing interest rates
on the Fund's net asset value per share.
The Investment Adviser manages the Fund's investment
portfolio by altering the composition of the Fund's investments
and adjusting the Fund's average portfolio maturity based upon
its professional judgment regarding anticipated changes in
interest rates and market conditions. There can be no
assurance, however, that the Investment Adviser's judgment will
be correct.
There are no fixed limitations on portfolio turnover.
Although the Fund will not purchase securities with the
intention of profiting from short-term trading, the Fund may
sell portfolio securities prior to maturity when the Investment
Adviser believes that such action is advisable. It
is anticipated that the Fund's portfolio turnover rate will not
exceed 100% annually. Turnover rates in excess of 100% may
result in higher costs and a possible increase in realized
short-term capital gains (or losses). The Fund does not
generally expect to incur commissions on its securities
transactions because virtually all portfolio transactions will
be effected on a principal basis with issuers, underwriters and
dealers serving as primary market makers. However, the Fund
will incur transaction costs and the price paid by the Fund on
the purchase or sale of a security from or to a dealer will
include a profit to the dealer in the form of a "spread."
PURCHASING SHARES
Shares of the Fund are offered for sale, without sales
charge, at the net asset value per share next determined after
receipt and acceptance of a purchase order by First Data
Distributors, Inc. (formerly known as 440 Financial
Distributors, Inc.), as distributor of the Fund's shares (the
"Distributor"). Net asset value is computed as of 4:00 p.m.
(Eastern time) on each day on which both the New York Stock
Exchange is open for trading and the Federal Reserve Bank of
New York is open (each, a "Business Day"), except on days for
which the Public Securities Association (the "PSA") recommends
an early closing of the U.S. government securities markets when
the net asset value will be computed as of such earlier closing
time. See "Net Asset Value." Payment for shares purchased must
be made by federal funds wire no later than 4:00 p.m. on the
Business Day following the day shares are purchased. A minimum
initial investment of $1,000,000 is required (except in special
circumstances as described in the Statement of Additional
Information). Subsequent investments may be made in any amount,
subject to a $100,000 minimum. Shares may be purchased only by
federal funds wire.
Shares become entitled to receive dividends beginning on
the Business Day following the date of purchase. Shares will
be issued at the net asset value determined as of 4:00 p.m.,
and will be entitled to the dividend declared on the following
Business Day, if a purchase order is received and accepted by
the Distributor prior to 4:00 p.m. (Eastern time), or as of the
closing time of the U.S. government securities markets on days
when the PSA recommends an early closing of such markets. If a
purchase order is not received and accepted prior to 4:00 p.m.,
the purchase order will not be effected until the following
Business Day. A purchase order cannot be canceled after it has
been placed. If federal funds in the amount of the purchase
price are not received by the Trust's custodian by 4:00 p.m. on
the Business Day following the day shares are purchased, the
Distributor will redeem the shares and, if the shares have
declined in value, the investor will be held responsible by the
Fund to pay the full amount of any loss resulting from the
redemption. The Fund reserves the right to reject any purchase
order and to modify or suspend the continuous offering of its
shares.
In order to permit the Investment Adviser to manage the
Fund most effectively, investors should place purchase orders
as early in the day as possible by calling the Fund's transfer
agent, First Data Investor Services Group, Inc. (the "Transfer
Agent"), toll-free at 1-800-311-AMBAC (2622), as described
below. Investors who anticipate making purchase transactions
in excess of $5,000,000 are encouraged to make an advisory call
to the Transfer Agent on the day prior to investment. This
advisory call does not replace the need to call the Transfer
Agent to place a purchase order.
Share Purchase Procedures. Shares may be purchased only
by wiring federal funds directly to the Fund in accordance with
the instructions below. The Fund does not impose any
transaction charges; however, wire charges may be imposed by
the shareholder's transmitting bank.
Prior to making an initial investment by wire, an account
number must be obtained by calling the Transfer Agent toll-free
at 1-800-311-AMBAC (2622), or by mailing a completed account
application to:
AMBAC Funds
P.O. Box 5138
Westborough, Massachusetts 01581-5138
In order to receive an account number by telephone, an
investor must provide the name, address, and tax identification
number of the account owner, the amount being wired as the
initial investment, and the name of the wiring bank. Promptly
after opening accounts by telephone, investors should mail an
original completed account application for each account opened
to the Transfer Agent. Although share purchases can be made
before an account application is submitted, shares may not be
redeemed until a completed account application has been
submitted.
Additional purchases of shares can be made by calling the
Transfer Agent toll-free at 1-800-311-AMBAC (2622), to place a
purchase order and then wiring federal funds in the amount of
the purchase.
With respect to both initial and subsequent purchases of
shares, the wiring bank should be instructed to wire federal
funds to:
AMBAC Short-Term U.S. Government Income Fund
C/o BSD&T Co.
ABA # 011001234
CR DDA # 05-338-4
CR FDISG A/C #
[insert your account number]
In certain circumstances, shares of the Fund may also be
purchased through the Remote Trade Entry System. See "Remote
Trade Entry."
SHAREHOLDER ACCOUNTS
The Transfer Agent maintains one or more accounts for
each shareholder reflecting full and fractional shares of the
Fund the shareholder owns. Shareholders are sent confirmations
of each account transaction, and monthly statements showing
account balances. The Trust does not issue certificates for
shares of the Fund.
Sub-Account Services. Special sub-accounting procedures
are available for investors wishing to open multiple accounts
to meet requirements regarding the commingling of funds or for
accounting convenience. Sub-accounts can be established at any
time by calling the Transfer Agent. Please call toll-free at
1-800-311-AMBAC (2622) for further information and appropriate
forms. Investors who have established sub-accounts will
receive periodic confirmations and statements of holdings and
transactions for the master account and each sub-account.
Minimum Account Balance. In order to avoid costs to the
Fund that are associated with maintaining small accounts,
shareholders should maintain account balances of not less than
$100,000. If an account balance falls below $100,000 as a
result of share redemptions, the Fund has the right to redeem
all shares held in the account. In such event, the proceeds
will be wired to the primary bank account of record. However,
a shareholder will first be sent written notice of the Fund's
intention to close the account, and given 60 days to purchase
additional shares to increase the account balance to $100,000.
REDEEMING SHARES
Shareholders may redeem all or any portion of the shares
in their accounts at any time at the net asset value next
computed after the receipt of a redemption request in proper
form. Redemption proceeds will be paid by federal funds wire
to one or more of the bank accounts that have been
predesignated by the shareholder, normally not later than the
Business Day following the day of the redemption. If a
redemption request is not received prior to 4:00 p.m. (Eastern
time), or as of the closing time of the U.S. government
securities markets on days when the PSA recommends an early
closing of such markets, it will be processed on the following
Business Day. Shares are entitled to receive dividends
declared on the day the shares are redeemed. See "Dividends
and Distributions." In the case of complete redemption of all
shares in an account, the redemption payment will include the
amount of all dividends declared for the month-to-date on
shares held in the account. Except in unusual circumstances
described in the Statement of Additional Information, the Fund
will not suspend the right of redemption or postpone the
payment of redemption proceeds for more than seven days, except
that when shares are acquired by means of an exchange of shares
purchased by check (including, in each case, certified checks
and cashiers checks), payment of redemption proceeds will be
delayed until the purchase check has cleared (the time varies
from state to state) which may take up to 15 days.
A completed account application must be on file with the
Transfer Agent in order to redeem shares. See "Purchasing
Shares--Share Purchase Procedures." Shareholders will be asked
to designate a primary recipient bank account on their account
application. The primary recipient account may be changed at
any time, and any number of secondary recipient bank accounts
can be added, provided proper written instructions are on file.
Please call the Transfer Agent to receive additional
information and appropriate forms.
In order to permit the Investment Adviser to manage the
Fund most effectively, investors should place telephone
redemption requests as early in the day as possible by calling
the Transfer Agent toll-free at 1-800-311-AMBAC (2622) as
described below. Investors who anticipate making redemptions
in excess of $5,000,000 are encouraged to make an advisory call
to the Transfer Agent at least one day in advance. This
advisory call does not replace the need to place the redemption
request in writing or by telephone.
Telephone Redemption Procedures. A request to redeem
shares may be placed by calling the Transfer Agent at 1-800-
311-AMBAC (2622). The shareholder will be asked to provide the
account name and number, and the amount of the redemption.
Proceeds of the redemption will be sent to the primary
recipient bank account designated by the shareholder unless the
shareholder requests that payment be made to a predesignated
secondary recipient bank account. Proceeds will be sent by
Federal Reserve wire, normally no later than the Business Day
following the day of the redemption. Redemption requests that
are not received prior to 4:00 p.m. (Eastern time), or as of
the closing time of the U.S. government securities markets on
days when the PSA recommends an early closing of such markets,
will be processed the following Business Day.
The Transfer Agent employs reasonable procedures to
confirm that telephone redemption instructions are genuine such
as recording telephone calls, providing written confirmation of
transactions, or requiring a form of personal identification or
other information prior to effecting a telephone redemption.
To the extent such procedures are used, neither the Trust or
the Fund, nor the Investment Adviser, Administrator,
Distributor or Transfer Agent, will be liable for any loss due
to fraudulent or unauthorized telephone instructions. A
redemption by telephone may be made only if the telephone
redemption privilege has been selected on the account
application, or written instructions have been filed with the
Transfer Agent.
During periods of severe market or economic conditions,
it may be difficult to contact the Transfer Agent by telephone.
In such an event a shareholder should send a written redemption
request by overnight delivery to the Transfer Agent and follow
the procedures for written redemption requests described below.
Written Redemption Requests. Shares of the Fund may be
redeemed by written redemption request. A written redemption
request must be signed by each of the persons who the
shareholder has specified as required to sign such requests.
The request must include the complete account name and address,
the amount of the redemption, and the predesignated primary or
secondary recipient bank account to which the proceeds of the
redemption are to be sent. The signature of each person
signing the request must be guaranteed by an eligible guarantor
institution. Organizations that may qualify as eligible
guarantor institutions include banks, brokers, dealers,
national securities exchanges, clearing agencies, credit
unions, and savings associations. The Transfer Agent reserves
the right to request additional information from, and to make
reasonable inquiries of, any eligible guarantor institution.
Written redemption requests sent by regular mail should
be sent to:
AMBAC Funds
P.O. Box 5138
Westborough, Massachusetts 01581-5138
Written redemption requests sent by overnight delivery
should be sent to:
AMBAC Funds
c/o First Data Investor Services Group, Inc.
4400 Computer Drive - 2CW65
Westborough, Massachusetts 01581-5120
In certain circumstances, shares of the Fund may also be
redeemed through the Remote Trade Entry System described below.
REMOTE TRADE ENTRY
The Fund offers certain eligible institutional clients
trade order entry capabilities through the Remote Trade Entry
("RTE") system. RTE is Windows-based and the necessary
software can be installed on standard IBM-compatible personal
computer systems. RTE allows a shareholder access to account
information and provides transaction capabilities for purchases
and sales of Fund shares. Through RTE, shareholders have the
opportunity to invest as well as to track short-term cash
flows.
Orders to purchase placed by 2:00 p.m. (Eastern time) or
as of the closing time of the U.S. government securities
markets on days when the PSA recommends an early closing of
such markets, will be processed the same day and will begin
accruing dividends that day provided that federal funds have
been received. Purchases and redemptions can be placed
individually and transactions can be tracked and printed in a
summary report. Safeguards are in place to protect against
unauthorized trading and account overdrafts. Confirmations
acknowledging receipt of trades on the Transfer Agent's system
are available immediately following a trade entry and wire
instructions are included with each confirmation. For
redemptions, federal fund wires are generated automatically and
sent to the shareholder's designated recipient bank account.
Month-to-date accruals, principal value and total balances are
displayed for an account when a transaction is in process, and
full account histories are available through reporting menus.
Current, 7-day and 30-day yield quotations are updated daily.
Please call the Transfer Agent toll-free at 1-800-311-
AMBAC(2622) if you have questions about the RTE system and its
availability.
EXCHANGE PRIVILEGE
Shareholders may exchange shares of the Fund for shares
of any other fund advised by the Investment Adviser based upon
the relative net asset values per share of the funds at the
time the exchange is effected. Currently, shares of the Fund
may be exchanged for shares of: AMBAC U.S. Treasury Money
Market Fund and AMBAC U.S. Government Money Market Fund. No
sales charge or other fee is imposed in connection with
exchanges. Before requesting an exchange, shareholders should
obtain and read the prospectus of the fund whose shares will be
acquired in the exchange. Prospectuses can be obtained by
calling the Transfer Agent at 1-800-311-AMBAC (2622) or writing
to the Transfer Agent at P.O. Box 5138, Westborough,
Massachusetts 01581-5138.
All exchanges are subject to applicable minimum initial
and subsequent investment requirements of the fund whose shares
will be acquired. In addition, an exchange is permitted only
between accounts that have identical registrations. The Fund
does not impose limitations on the frequency of exchanges.
Shares of a fund may be acquired in an exchange only if the
shares are currently being offered and are legally available
for sale in the state of the shareholder's residence.
An exchange involves the redemption of shares of the Fund
and the purchase of shares of another fund. Shares of the Fund
will be redeemed at the net asset value per share of the Fund
next computed after receipt of an exchange request in proper
form. See "Net Asset Value." Shares of the fund being
acquired in the exchange will be purchased when the proceeds of
the redemption become available (normally, on the day the
exchange request is received) at the net asset value of those
shares then in effect. See "Redeeming Shares." The acquired
shares will be entitled to receive dividends in accordance with
the policies of the applicable fund. Shareholders that are not
exempt from taxation may realize a taxable gain or loss on an
exchange transaction. See "Taxes."
The exchange privilege may be modified or terminated at
any time. However, 60 days' prior notification of any
modification or termination will be given to shareholders.
Telephone Exchange Procedures. A request to exchange
shares may be placed by calling the Transfer Agent at 1-800-
311-AMBAC (2622). The shareholder will be asked to provide the
account name and number, the amount of shares being exchanged
and the name of the fund whose shares are being acquired.
Telephone exchange requests that are not received prior to 4:00
p.m. (Eastern time), or as of the closing time of the U.S.
government securities markets on days when the PSA recommends
an early closing of such markets, will be processed the
following Business Day. A written confirmation of the exchange
transaction will be sent to the shareholder. As in the case of
telephone redemption requests, the Transfer Agent employs
reasonable procedures to confirm that telephone exchange
instructions are genuine. To the extent these procedures are
used, neither the Trust or the Fund, nor the Investment
Adviser, Administrator, Distributor or Transfer Agent, will be
liable for any loss due to fraudulent or unauthorized telephone
exchange instructions. An exchange by telephone may be made
only if the telephone exchange privilege has been selected on
the account application, or written instructions have been
filed with the Transfer Agent.
During periods of severe market or economic conditions,
it may be difficult to contact the Transfer Agent by telephone.
In such event, a shareholder should send a written exchange
request by overnight delivery to the Transfer Agent and follow
the procedures for written exchange requests described below.
Written Exchange Procedures. Requests to exchange shares
may be submitted in writing. Each written exchange request
should specify the complete account name and number of the
shareholder's account with the Fund, the amount to be
exchanged, and the name of the fund whose shares are to be
acquired in the exchange. The request must be signed by each
of the persons who the shareholder has specified as required to
sign redemption requests. The signature of each person signing
the exchange request must be guaranteed by an eligible
guarantor institution. Written exchange requests should be
sent to the Transfer Agent at the address indicated above under
"Redeeming Shares--Written Redemption Requests."
NET ASSET VALUE
The Fund's share price, or net asset value per share, is
calculated as of 4:00 p.m. (Eastern time) each Business Day,
except on days for which the PSA recommends an early closing of
the U.S. government securities markets when the net asset value
will be computed as of such early closing time. Net asset
value per share is determined by subtracting the Fund's
liabilities (including accrued expenses and dividends payable)
from the total value of its investments and other assets and
dividing the result by the total number of outstanding shares
of the Fund.
In computing net asset value, the Fund's portfolio
securities are generally valued on the basis of bid quotations
obtained from principal market makers. If market quotations
are not readily available, portfolio securities are valued at
their fair value as determined under procedures adopted by the
Board of Trustees of the Trust. A pricing service may be used
to value the Fund's portfolio securities. Valuations provided
by any pricing service will be monitored on a periodic basis by
the Board of Trustees. Securities with remaining maturities of
less than 60 days are valued at amortized cost unless the use
of such valuation is determined not to reflect fair value.
FUND EXPENSES
The Fund's expenses are deducted from total income before
dividends are paid. The Fund bears all expenses of its
operations other than those expressly assumed by the Investment
Adviser, including the Fund's proportionate share of the
Trust's expenses. Expenses borne by the Fund include but are
not limited to: the fees of the Investment Adviser, the
Administrator and Transfer Agent; the fees and expenses of the
Trust's independent auditors, legal counsel, accounting
services agent and custodian; taxes; brokerage fees and
commissions; interest; costs incident to meetings of Trustees
and shareholders, printing and mailing prospectuses and reports
to shareholders, and the filing of reports with regulatory
bodies and the maintenance of the Trust's legal existence;
federal and state registration fees; the fees and expenses of
non-interested Trustees of the Trust; and any extraordinary
expenses of a non-recurring nature.
As discussed under "Summary of Expenses," the Investment
Adviser has voluntarily undertaken to waive its fees or to
absorb expenses of the Fund as may be necessary to limit total
ordinary operating expenses of the Fund to a specified
percentage of the Fund's average daily net assets. The
Investment Adviser may modify or terminate this undertaking at
any time.
DIVIDENDS AND DISTRIBUTIONS
Dividends are declared and accrued daily based upon the
Fund's net investment income (including net realized short-term
gains, if any), and are paid on the first Business Day of each
month. All dividends and other distributions are automatically
reinvested in full and fractional shares of the Fund at net
asset value unless otherwise requested by the shareholder. A
shareholder can request that dividends and other distributions
be paid monthly by wire transfer to a predesignated bank
account by sending a written request to the Transfer Agent.
Any such request must be received by the Transfer Agent at
least five Business Days prior to a payment date in order to be
effective on such date.
Dividends are computed and declared on each Business Day
and are payable to all shareholders of record as of the time of
declaration. Shareholders will begin receiving dividends on
the Business Day following the day shares are purchased and
will be entitled to receive dividends declared on the day
shares are redeemed. Any long-term capital gains realized by
the Fund will be distributed annually. Shares purchased
through dividend reinvestment will begin earning dividends the
day after they are credited to the shareholder's account.
In order to satisfy certain distribution requirements of
the Tax Reform Act of 1986, the Fund may declare special or
regular year-end dividend and capital gains distributions
during December. Such distributions, if received by
shareholders by January 31, are deemed to have been paid by the
Fund and received by shareholders on December 31 of the prior
year.
TAXES
Taxation of the Fund. The Fund intends to qualify each
year as a "regulated investment company" under Subchapter M of
the Internal Revenue Code (the "Code"). If so qualified, the
Fund will not be subject to federal income tax to the extent it
distributes its net income to shareholders. Certain federal
income and excise taxes would be imposed on the Fund if it
failed to make certain required distributions of its income to
shareholders. The Fund intends to make distributions in a
manner which will avoid the imposition of any such tax. If the
Fund should fail to qualify as a "regulated investment
company," it would be subject to regular federal income tax on
its taxable income, and its distributions generally would be
taxable. The Fund intends to carry on its operations so that
it will continue to qualify as a regulated investment company.
Federal Taxation of Shareholders. Dividend distributions,
whether received in cash or reinvested in additional shares,
will be taxable as ordinary income. Distributions of net
capital gains (i.e., the excess of net long-term capital gains
over net short-term capital losses) that are designated by the
Fund as capital gain dividends, regardless of whether such
capital gain dividends are received in cash or reinvested in
additional shares, are taxable to the Fund's shareholders as
long-term capital gains, regardless of how long they have held
shares in the Fund. Since the Fund does not expect to earn
dividend income, dividends and other distributions from the
Fund will generally not qualify for the dividends-received
deduction available to corporate investors. In January of each
year, the Fund sends each shareholder a statement showing the
tax status of distributions for the past calendar year. The
redemption or exchange of Fund shares by an investor is a
taxable event and may result in a capital gain or loss.
Section 115(1) of the Code provides, in part, that gross
income does not include income derived from the exercise of any
essential government function accruing to a state or any
political subdivision thereof. Shareholders are urged to
consult their own tax advisors to determine any limitations on
the applicability of Section 115(1) to earnings from their
investment in the Fund. A portion of the earnings derived from
funds which are subject to the arbitrage limitations or rebate
requirements of the Code may be required to be paid to the U.S.
Treasury as computed in accordance with such requirements.
The Fund is required to withhold 31% of all taxable
distributions and redemption proceeds paid to shareholders who
either have not complied with IRS taxpayer identification
regulations or are otherwise subject to backup withholding.
Shareholders are asked to certify on their account applications
that their taxpayer identification numbers are correct and that
they are not subject to backup withholding. Failure to so
certify will result in backup withholding.
State and Local Taxes. Investors may be subject to state
and local taxes on their investment. For example, dividends
and other distributions made by the Fund and received by an
investor may be subject to state and local taxes. Although
shareholders of the Fund do not directly receive interest on
Government Securities held by the Fund, certain states may
allow the character of the Fund's income to pass through to
shareholders. If so, the portion of dividends paid by the Fund
that is derived from interest on Treasury securities may be
exempt from state and local taxes. Applicable rules vary from
state to state, and interest on certain Agency Securities may
not qualify for exemption from income tax in some states. The
United States Supreme Court has ruled that income from certain
types of repurchase agreements involving Government Securities
does not constitute interest on Government Securities for this
purpose. However, it is not clear whether the Court's holding
extends to all types of repurchase agreements involving
Government Securities in which the Fund may invest. Any
exemption from state and local income taxes does not preclude
states from assessing other taxes (such as intangible property
taxes) on the ownership of Government Securities.
The tax discussion set forth above regarding federal and
state income taxation is included for general information only.
Prospective investors should consult their own tax advisors
concerning the federal and state tax consequences of an
investment in the Fund.
MANAGEMENT OF THE FUND
The Board of Trustees of the Trust is responsible for
supervising the operations and affairs of the Trust and the
Fund. The Trust's officers, who are all officers or employees
of the Investment Adviser or the Administrator, are responsible
for the daily management and administration of the Fund's
operations.
Investment Adviser. The Investment Adviser, Cadre
Financial Services, Inc., 905 Marconi Avenue, Ronkonkoma, New
York 11779, is a wholly-owned subsidiary of AMBAC Capital
Corporation which, in turn, is a wholly-owned subsidiary of
AMBAC Inc. ("AMBAC"). Through its subsidiaries, AMBAC is a
leading insurer of municipal and structured finance obligations
and a provider of investment contracts, and investment advisory
and administration services to state municipalities and
municipal authorities. AMBAC is a publicly held company whose
shares are traded on the New York Stock Exchange.
As of January 31, 1997, the Investment Adviser provided
investment management services to 19 investment funds and had
aggregate assets under management in excess of $2 billion. In
addition, through its subsidiaries, AMBAC manages its own
investment portfolios of approximately $5 billion.
Subject to overall supervision of the Board of Trustees,
the Investment Adviser is responsible for managing the
investment operations of the Fund in accordance with the Fund's
investment objective and policies. The Investment Adviser
formulates a continuing investment program for the Fund and
makes all decisions regarding securities to be purchased or
sold for the Fund. The Investment Adviser is required to
provide certain administrative services to the Trust to the
extent those services are not provided by other organizations
retained by the Fund, and furnishes, without expense to the
Fund, the services of its personnel to serve as officers and
Trustees of the Trust. The Fund pays the Investment Adviser a
monthly fee computed at the annual rate of 0.35% of the Fund's
average daily net assets during the month.
Dolores O. Miller, CFA, a Managing Director of the
Investment Adviser, is the person primarily responsible for
managing the Fund's investments. Ms. Miller has 13 years of
experience managing fixed income portfolios. She is also the
Managing Director and head of asset management for AMBAC
Capital Management, Inc. ("ACMI"), an affiliate of the
Investment Adviser, where she is responsible for managing
ACMI's investments which total approximately $2.8 billion.
Prior to joining ACMI in April 1993, Ms. Miller was Senior
Portfolio Manager and head of taxable fixed income at American
Express Company.
Administrator. The Trust has entered into an
Administration Agreement with the Administrator, First Data
Investor Services Group, Inc., One Exchange Place, Boston,
Massachusetts 02109, a wholly-owned subsidiary of First Data
Corporation. The Administrator provides various services
required in connection with the operations of the Trust and the
Fund, including, but not limited to: overseeing the preparation
and maintenance of all documents and records required to be
maintained by the Trust; preparing and updating required
regulatory filings, prospectuses and shareholder reports;
providing, at its own expense, the services of its personnel to
serve as officers of the Trust; and preparing and disseminating
material for meetings of the Board of Trustees. For these
services, the Fund pays the Administrator a monthly fee
calculated at an annual rate of 0.05% of the Trust's average
daily net assets on the first $500 million of net assets of the
Trust, 0.04% on the next $500 million of net assets of the
Trust and 0.03% on net assets of the Trust in excess of $1
billion, subject to a minimum monthly fee paid by the Trust to
the Administrator of $10,000. The Administrator also provides
the Trust with fund accounting services for which it is paid a
monthly fee by the Fund of $3,000 if monthly average net assets
of the Fund are $50 million or less, $4,000 if the Fund's
monthly average net assets are between $50-$200 million, or
$5,000 if the Fund's monthly average net assets exceed $200
million.
PERFORMANCE INFORMATION
The Fund may publish its "yield" and "total return" in
advertisements, sales materials and shareholder reports. Yield
refers to the income generated by an investment in the Fund
over a 30 day period; the income is then annualized. In
annualizing income, the amount of income generated by the
investment during the period is assumed to be generated each
period over a one year period and is shown as a percentage of
the investment. The income earned on the investment is assumed
to be earned and reinvested at a constant rate and compounded
semi-annually. Total return refers to the change in the value
of an investment in the Fund over a specified period of time,
assuming reinvestment of all dividends and other distributions
paid by the Fund. The Fund's quotations of total return are
quotations of "average annual total return," which is the rate
of return that would have been earned assuming that the
investment performance of the Fund over the entire period was
earned ratably throughout the period. Average annual total
returns will be shown for one, five and ten year periods, at
such time as the Fund has operated for such periods, and for
the period since inception of the Fund. The Fund may also
publish quotations of its "aggregate total return," which
reflects the actual performance of the Fund over the entire
period for which the quotation is given. All quotations of
investment performance are based upon historical investment
results and are not intended to predict future performance.
In addition, comparative performance information may be
used from time to time in advertisements, sales literature and
shareholder reports. This information may include data,
ratings and rankings from Lipper Analytical Services, Inc.,
IBC, Donoghue's Money Fund Report, The Bank Rate Monitor,
Morningstar and other industry publications, business
periodicals and services. Comparisons to recognized market
indices and to the returns on specific money market securities
or types of such securities or investments may also be used.
GENERAL INFORMATION
Description of Shares. The Trust is a Delaware business
trust organized pursuant to a Certificate of Trust dated June
27, 1995 and is authorized to issue an unlimited number of
shares of beneficial interest, $.001 par value. As of the date
of this Prospectus, the Trust has established three series of
its shares, each representing interests in a separate portfolio
of investments. One series of shares represents interests in
the Fund. The other series represent interests in AMBAC U.S.
Treasury Money Market Fund and AMBAC U.S. Government Money
Market Fund. The Board of Trustees has the power to establish
additional series of shares and, subject to applicable laws and
regulations, to issue two or more classes of shares of each
series. Shares are fully paid and non-assessable, and have no
preemptive or conversion rights.
Shareholders of the Fund, together with shareholders of
each other series of the Trust, are entitled to vote on the
election of Trustees and the ratification of the Trust's
independent auditors when those matters are voted upon at a
meeting of shareholders. On other matters affecting the Fund
on which shareholders of the Fund are entitled to vote, shares
of the Fund will generally be voted as a separate class. Each
share (and fractional share) is entitled to that number of
votes which equals the net asset value of such share (or
fraction thereof). All shares of the Trust have non-cumulative
voting rights, meaning that shareholders entitled to cast more
than 50% of the votes for the election of Trustees can elect
all of the Trustees standing for election if they choose to do
so.
Under Delaware law, shareholders of the Fund could, under
certain circumstances, be held personally liable for the
obligations of the Trust but only to the extent of the
shareholder's investment. However, the Declaration of Trust
disclaims liability of the shareholders, Trustees or officers
of the Trust for acts or obligations of the Trust, which are
binding only on the assets and property of the Trust and
requires that notice of the disclaimer be given in each
contract or obligation entered into or executed by the Trust or
the Trustees. 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 and should be considered remote.
Annual meetings of shareholders will not be held except
as required by the Investment Company Act or other applicable
law. A meeting will be held on the removal of a Trustee or
Trustees of the Trust if requested in writing by holders of not
less than 10% of the outstanding shares of the Trust.
Control Persons. As of the date of this Prospectus, the
Investment Adviser was the sole shareholder of the Fund. As a
result of such ownership, the Fund may be deemed to be
controlled by the Investment Adviser and its parents, AMBAC
Capital Corporation and AMBAC Inc. So long as ownership of
shares of the Fund (or of the Trust) by such companies
continues to exceed 25% of the outstanding shares of the Fund
(or of the outstanding shares of the Trust) such companies will
be deemed to control the Fund (and the Trust) by virtue of such
ownership. In addition, as a result of AMBAC Indemnity
Corporation's ownership of shares of AMBAC U.S. Treasury Money
Market Fund and AMBAC U.S. Government Money Market Fund, AMBAC
Indemnity Corporation and AMBAC Inc. may be deemed to control
the Trust.
Transfer Agent. The Transfer Agent, First Data Investor
Services Group, Inc., P.O. Box 5138, Westborough, Massachusetts
01581-5138, serves as the Trust's shareholder servicing agent
and dividend disbursing agent. Shareholders of the Fund should
contact the Transfer Agent with their questions regarding
transactions in shares of the Fund and share account balances.
Custodian. Bankers Trust Company, 130 Liberty Street, New
York, New York 10006, serves as custodian of the Trust, and in
that capacity maintains custody of all securities and cash
assets of the Fund. The custodian is authorized to hold the
Fund's investments in securities depositories and to use
subcustodians approved by the Trust.
Distributor. First Data Distributors, Inc., 4400 Computer
Drive, Westborough, Massachusetts 01581-5120, serves as
Distributor of the Fund's shares. The Distributor may, from
time to time, enter into selling agreements with dealers or
other financial institutions, and in accordance therewith, pay
to such dealers or institutions, in connection with sales or
the distribution of shares of the Fund, material compensation
or promotional incentives, in the form of cash or other
compensation. Such compensation and incentives are not paid by
the Fund and will not be a Fund expense.
Additional Information. This Prospectus, including the
Statement of Additional Information which has been incorporated
by reference herein, does not contain all the information set
forth in the Registration Statement filed by the Trust with the
SEC under the Securities Act of 1933. Copies of the
Registration Statement may be obtained at a reasonable charge
from the SEC or may be examined, without charge, at the office
of the SEC in Washington, D.C.
Shareholder Reports. The Trust sends shareholders annual
and semi-annual reports without charge. These reports include
further information regarding the Fund's investment
performance. The financial statements of the Fund appearing in
the Trust's annual reports are audited by KPMG Peat Marwick
LLP, the Trust's independent auditors.
Shareholder Inquiries. For questions concerning
shareholder accounts, dividends and share purchase and
redemption procedures, contact the Transfer Agent toll free at
1-800-311-AMBAC (2622) or at P.O. Box 5138, Westborough,
Massachusetts 01581-5138.
INVESTMENT ADVISER
Cadre Financial Services, Inc.
905 Marconi Avenue,
Ronkonkoma, New York 11779
ADMINISTRATOR
First Data Investor Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
TRANSFER AGENT
First Data Investor Services Group, Inc.
4400 Computer Drive
Westbourgh, MA 01581-5120
DISTRIBUTOR
First Data Distributors, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581-5120
CUSTODIAN
Bankers Trust Company
130 Liberty Street
New York, New York 10006
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
99 High Street
Boston, Massachusetts 02110
LEGAL COUNSEL
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Investors are advised to read this Prospectus and retain it for
future reference.
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS.
IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY
THE TRUST OR BY THE DISTRIBUTOR TO SELL OR A SOLICITATION OR AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH JURISDICTION.
TABLE OF CONTENTS Short-Term U.S. Government Income Fund
A SERIES OF AMBAC TREASURERS
TRUST
SUMMARY OF EXPENSES 2
SUITABLE INVESTORS 3
INVESTMENT OBJECTIVE AND POLICIES 3
PURCHASING SHARES 6
SHAREHOLDER ACCOUNTS 8
REDEEMING SHARES 8
REMOTE TRADE ENTRY 10
EXCHANGE PRIVILEGE 11
NET ASSET VALUE 12
FUND EXPENSES 12
DIVIDENDS AND DISTRIBUTIONS 13
TAXES 13
MANAGEMENT OF THE FUND 14
PERFORMANCE INFORMATION 15
GENERAL INFORMATION 16
AMBAC U.S. Treasury Money Market Fund
AMBAC U.S. Government Money Market Fund
AMBAC Short-Term U.S. Government Income
Fund
(Series of AMBAC Treasurers Trust)
905 Marconi Avenue
Ronkonkoma, New York 11779
Statement of Additional Information dated March 1, 1997
AMBAC Treasurers Trust (the "Trust") is a diversified,
open-end, management investment company. AMBAC U.S. Treasury
Money Market Fund (the "Treasury Money Fund"), AMBAC U.S.
Government Money Market Fund (the "Government Money Fund"), and
AMBAC Short-Term U.S. Government Income Fund (the "Government
Income Fund") (each a "Fund" and, collectively, the "Funds")
are the three initial series of the Trust. Treasury Money Fund
and Government Money Fund are money market funds which seek to
maintain stable net asset values of $1.00 per share. Each of
these Funds seeks high current income, consistent with
preservation of capital and maintenance of liquidity. The
investment objective of Government Income Fund is to seek high
current income, consistent with preservation of capital.
Government Income Fund maintains a dollar-weighted average
portfolio maturity of three years or less. See "Investment
Policies and Practices." Cadre Financial Services, Inc.
(formerly known as AMBAC Investment Management, Inc.) (the
"Investment Adviser") serves as the investment adviser of the
Funds. See "Investment Advisory Arrangements." First Data
Investor Services Group, Inc. serves as the administrator of
the Funds (the "Administrator"). As of the date of this
Statement of Additional Information, the Government Income Fund
has not yet commenced investment operations.
Shares of the Trust are offered for sale on a no-load
basis to states and municipalities, and their sub-divisions and
agencies, as well as to other institutional investors. No
sales commissions or other charges are imposed upon the
purchase or redemption of shares. The minimum initial
investment is $2,000,000 in Government Money Fund, $1,000,000
in Government Income Fund and $100,000 in Treasury Money Fund.
See "Purchasing Shares." Shares of the Funds are not insured
by AMBAC Indemnity Corporation.
Investments in the Funds are not insured or guaranteed by
the U.S. government and there can be no assurance that either
Treasury Money Fund or Government Money Fund will be able to
maintain a stable net asset value of $1.00 per share. See
"Determination of Net Asset Value."
Information about the Funds is set forth in separate
Prospectuses each dated March 1, 1997 for the Funds, which
provide the basic information you should know before investing.
The Prospectuses may be obtained without charge by writing to
the Transfer Agent or by calling 1-800-311-AMBAC (2622). This
Statement of Additional Information is not a prospectus, but
contains information in addition to and more detailed than that
set forth in each Prospectus. It is intended to provide you
with additional information regarding the activities and
operations of the Funds and the Trust, and should be read in
conjunction with each Funds Prospectus.
TABLE OF CONTENTS
Page
INVESTMENT POLICIES AND PRACTICES 3
INVESTMENT RESTRICTIONS 6
PORTFOLIO TRANSACTIONS AND BROKERAGE 8
PURCHASING SHARES 9
SHAREHOLDER ACCOUNTS 10
REDEEMING SHARES 11
EXCHANGE PRIVILEGE 12
DETERMINATION OF NET ASSET VALUE 12
TAXES 13
INVESTMENT ADVISORY ARRANGEMENTS 15
TRUSTEES AND OFFICERS 16
EXPENSES 19
PERFORMANCE INFORMATION 20
GENERAL INFORMATION 21
INVESTMENT POLICIES AND PRACTICES
The sections below provide additional information
regarding the types of investments that may be made by the
Funds and the investment practices in which the Funds may
engage. The investment objective and general investment
policies of each Fund are described in the Funds Prospectuses.
Treasury, Government and Agency Securities. Treasury
Money Fund invests exclusively in short-term debt securities
that are direct obligations of the U.S. Treasury ("Treasury
Securities") and repurchase agreements collateralized by debt
obligations backed by the "full faith and credit" of the United
States. Government Money Fund invests exclusively in short-term
debt securities (including Treasury Securities) issued or
guaranteed by the U.S. government or an agency or
instrumentality of the U.S. government ("Government
Securities"), and repurchase agreements collateralized by
Government Securities. Government Income Fund invests
primarily in Government Securities and repurchase agreements
collateralized by Government Securities.
Treasury Securities consist of obligations issued by the
U.S. Treasury, including Treasury bills, notes and bonds.
These are direct obligations of the U.S. government and differ
primarily in their rates of interest and the length of their
original maturities. Treasury Securities are backed by the
full faith and credit of the U.S. government. Government
Securities include Treasury Securities as well as securities
issued or guaranteed by the U.S. government or its agencies and
instrumentalities ("Agency Securities"). As described in the
Prospectuses of Government Money Fund and Government Income
Fund, Agency Securities are in some cases backed by the full
faith and credit of the U.S. government. In other cases,
Agency Securities are backed solely by the credit of the
governmental issuer. Certain issuers of Agency Securities have
the right to borrow from the U.S. Treasury, subject to certain
conditions. Government Securities purchased by the Funds may
include variable and floating rate securities, which are
described in the Prospectuses. Government Income Fund may also
purchase stripped Government Securities and certain mortgage-
backed Government Securities.
Stripped Government Securities. (Government Income Fund
only.) Government Income Fund may invest in component parts of
Government Securities, which represent either the principal
(corpus) of a particular obligation or the right to interest
payments on the obligation (coupon). Investments of this type
may include: obligations from which the interest coupons have
been stripped; interest coupons that have been stripped;
stripped obligations maintained in Federal Reserve book-entry
form; and receipts evidencing the component parts of
obligations (corpus or coupons) that have not actually been
stripped. Receipts of this type evidence ownership of the
component parts of particular Government Securities that are
held in physical or book-entry form by a major commercial bank
or trust company pursuant to the terms of a custody agreement.
Under these arrangements, the interests in Government
Securities held by a Fund continue to be backed by the issuers
of those securities.
Repurchase Agreements. As discussed in the Prospectuses,
the Funds may each enter into repurchase agreements. A
repurchase agreement, which may be viewed as a type of secured
lending by a Fund, involves the acquisition by a Fund of a
security from a selling financial institution such as a bank or
broker-dealer. The agreement provides that the Fund will sell
back to the institution, and that the institution will
repurchase, the underlying security ("collateral") at a
specified price and at a fixed time in the future. The Fund
will receive interest from the institution until the time when
the repurchase is to occur. Although such date is deemed to be
the maturity date of a repurchase agreement, the maturities of
securities that are purchased by the Funds through repurchase
agreements are not subject to any limitation as to maturity.
The Funds may enter into repurchase agreements maturing in more
than seven days. However, a Fund may not enter into such a
repurchase agreement if, as a result, more than 10% of the
value of its net assets (15% of net assets in the case of
Government Income Fund) would be invested in repurchase
agreements under which the Fund does not have the right to
obtain repayment in seven days or less.
Because repurchase agreements involve certain risks not
associated with direct investment in securities, the Trust
follows procedures designed to minimize these risks. These
procedures include requirements that the Investment Adviser
effect repurchase transactions only with banks or primary
dealers designated as such by the Federal Reserve Bank of New
York, and that the bank or dealer has been determined by the
Investment Adviser to present minimal credit risk in accordance
with guidelines established and monitored by the Board of
Trustees of the Trust. In addition, the collateral underlying
a repurchase agreement is required to be held by the Trusts
custodian (or a subcustodian) in a segregated account on behalf
of the Fund which entered into the transaction. The collateral
is marked to market daily and required to be maintained in an
amount at least equal to the repurchase price plus accrued
interest. In the event of a default or bankruptcy by a selling
financial institution, the Trust will seek to liquidate the
collateral. However, the exercise of the Trusts right to
liquidate collateral could involve certain costs or delays and,
to the extent that proceeds from any sale upon a default of the
obligation to repurchase are less than the repurchase price,
the Fund which entered into the transaction will suffer a loss.
When-Issued and Delayed Delivery Securities. As noted in
each Funds Prospectus, the Funds may purchase and sell
securities on a when-issued or delayed delivery basis. These
transactions arise when a Fund purchases or sells a security,
with payment and delivery taking place in the future beyond the
normal settlement period. A transaction of this type will be
effected in order to secure for a Fund an attractive price or
yield at the time of entering into the transaction. When
purchasing securities on a when-issued or delayed delivery
basis, a Fund assumes the rights and risks of ownership,
including the risk of price and yield fluctuations. Because a
Fund is not required to pay for securities until the delivery
date, these risks are in addition to the risks associated with
the Funds other investments. If a Fund remains fully invested
at a time during which when-issued or delayed delivery
purchases are outstanding, such purchases will result in a form
of leverage. When a Fund enters into purchase transactions of
this type, the Trusts custodian maintains, in a segregated
account for the Fund, cash and debt obligations held by the
Fund and having a value equal to or greater than the Funds
purchase commitments. When a Fund has sold a security on a
when-issued or delayed delivery basis, the Fund does not
participate in further gains or losses with respect to the
security. If the counterparty fails to deliver or pay for the
securities, the Fund could miss a favorable price or yield
opportunity, or could suffer a loss. When a Fund enters into a
sales transaction of this type, the Trusts custodian
segregates the securities sold on a delayed delivery basis to
cover the Funds settlement obligations.
Interest Rate Futures Contracts. (Government Income Fund
only.) Government Income Fund may purchase and sell U.S.
exchange-traded interest rate futures contracts. Currently,
there are futures contracts based on U.S. Treasury bonds, U.S.
Treasury notes, three-month U.S. Treasury bills and GNMA
certificates. A clearing corporation associated with the
commodities exchange on which a futures contract trades assumes
responsibility for the completion of transactions and
guarantees that futures contracts will be performed. Although
futures contracts call for actual delivery or acceptance of
debt securities, in most cases the contracts are closed out
before the settlement date without the making or taking of
delivery.
Government Income Fund does not pay or receive money upon
the purchase or sale of a futures contract. Instead, when the
Fund enters into a futures contract, it is initially required
to deposit with its custodian for the benefit of the broker
(the futures commission merchant) an amount of initial margin
in cash or U.S. Treasury bills, currently equal to
approximately 1 to 2% of the contract amount for futures on
Treasury bonds and notes and approximately 1/10 of 1% of the
contract amount for futures on Treasury bills. Initial margin
in futures transactions is different from margin in securities
transactions in that futures contract initial margin does not
involve the borrowing of funds by the customer to finance the
transactions. Rather, initial margin is in the nature of a
good faith deposit on the contract which is returned to the
Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Subsequent
payments, called variation margin, to and from the futures
commission merchant are made on a daily basis as the market
price of the futures contract fluctuates. This process is
known as "marking to market." At any time prior to expiration
of the futures contract, the Fund may elect to close the
position by taking an offsetting position which will operate to
terminate the Funds position in the futures contract. While
interest rate futures contracts provide for the delivery and
acceptance of securities, most futures contracts are terminated
by entering into offsetting transactions.
Certain of the considerations associated with the use of
futures contracts are discussed in the Prospectus of Government
Income Fund. Successful use of futures contracts by the Fund
is also subject to the ability of the Investment Adviser to
predict correctly movements in the direction of interest rates
and other factors affecting markets for securities. For
example, if the Fund has hedged against the possibility of an
increase in interest rates which would adversely affect the
price of securities in its portfolio and the price of such
securities increases instead, the Fund will lose part or all of
the benefit of the increased value of its securities because it
will have offsetting losses in its futures positions. In
addition, in such situations, if the Fund has insufficient cash
to meet daily variation margin requirements, it may have to
sell securities to meet such requirements. Such sales of
securities may be, but will not necessarily be, at increased
prices which reflect the rising market, and the Fund may have
to sell securities at a time when it is disadvantageous to do
so.
The hours of trading futures contracts on U.S. government
securities may not conform to the hours during which Government
Income Fund may trade such securities. To the extent that the
futures markets close before or after the Government Securities
markets, significant variations can occur in one market that
cannot be reflected in the other market.
The skills needed to trade futures contracts are
different than those needed to invest in securities. However,
personnel of the Investment Adviser have experience in managing
securities portfolios which use futures strategies similar to
those used by Government Income Fund.
The Government Income Fund will maintain in a segregated
account with the Trusts custodian cash and Government
Securities to cover the Government Income Funds obligations on
futures contracts.
Investment Characteristics. In managing the Funds, the
Investment Adviser attempts to balance the Funds goals of
seeking high income with their goals of seeking to preserve
capital. For this reason, the Funds do not necessarily invest
in securities offering the highest available yields. The
maturities of the securities purchased by the Funds and the
Funds average portfolio maturities will vary from time to time
as the Investment Adviser deems consistent with the Funds
investment objectives and the Investment Advisers assessment
of risks, subject to applicable limitations on the maturities
of investments and dollar-weighted average portfolio maturity.
When market rates of interest increase, the market value
of debt obligations held by the Funds will decline.
Conversely, when market rates of interest decrease, the market
value of obligations held by the Funds will increase. Debt
obligations having longer maturities generally pay higher rates
of interest, but the market values of longer term obligations
can be expected to be subject to greater fluctuations from
general changes in interest rates than shorter term
obligations. These changes will cause fluctuations in the
amount of daily dividends of the Funds and changes in the net
asset value per share of Government Income Fund. In extreme
cases, changes in interest rates could cause the net asset
values per share of Treasury Money Fund and Government Money
Fund to decline. See "Determination of Net Asset Value." In
the event of unusually large redemption demands, securities may
have to be sold at a loss prior to maturity or the Funds may
have to borrow money and incur interest expense. The
Investment Adviser seeks to manage investment risk by
purchasing and selling investments for the Funds consistent
with its best judgment and expectations regarding anticipated
changes in interest rates. However, there can be no assurance
that the Funds will achieve their investment objectives.
INVESTMENT RESTRICTIONS
Each of the Funds is subject to a variety of investment
restrictions. Certain of these restrictions are deemed
fundamental, and may not be changed without the approval of the
holders of a majority of a Funds outstanding voting securities.
A "majority of the outstanding voting securities" of a Fund for
this purpose means the lesser of (i) 67% of the shares of the
Fund represented at a meeting at which holders of more than 50%
of the outstanding shares are present in person or represented
by proxy or (ii) more than 50% of the outstanding shares of the
Fund. As fundamental investment restrictions, a Fund may not:
(1) Purchase a security, other than a Government Security, if as a result
of such purchase more than 5% of the value of the Funds assets would be
invested in the securities of any one issuer, or the Fund would own more
than 10% of the voting securities, or of any class of securities, of any
one issuer. (For purposes of this restriction, all outstanding indebtedness
of an issuer is deemed to be a single class.)(2) Purchase a security, other
than a Government Security, if as a result of such purchase 25% or more of
the value of the Funds total assets would be invested in the
securities of issuers engaged in any one industry.
(3) Issue senior securities as defined by the Investment Company Act of
1940 (the "1940 Act") or borrow money, except that each Fund may borrow
from banks for temporary extraordinary or emergency purposes (but not for
investment) in an amount up to one-third of the value of its total assets
(calculated at the time of the borrowing). A Fund may not make additional
investments while it has any borrowings outstanding. This restriction shall
not be deemed to prohibit a Fund from purchasing or selling securities on a
when-issued or delayed delivery basis, or entering into repurchase agreements.
(4) Purchase or sell commodities or commodity contracts, or real estate or
interests in real estate (including limited partnership interests), except
that each Fund, to the extent not prohibited by other investment policies,
may purchase and sell securities of issuers engaged in real estate
activities and may purchase and sell securities secured by real estate or
interests therein, and in the case of Government Income Fund, may
purchase and sell interest rate futures contracts.
(5) Underwrite the securities of other issuers, except to the extent that, in
connection with the disposition of securities, the Fund may be deemed to be an
underwriter under the Securities Act of 1933.
(6) Make loans of money or securities, except through the purchase of permitted
investments, including repurchase agreements.
(7) Make short sales of securities or purchase securities on margin, except
for such short-term credits as may be necessary for the clearance of
transactions.
(8) Pledge, hypothecate, mortgage or otherwise encumber the Funds assets,
except as may be necessary to secure permitted borrowings. (Collateral and
other arrangements incident to permissible investment practices are not
deemed to be subject to this restriction.)
The Funds have the following additional investment
restrictions which are not fundamental and may be changed by
the Board of Trustees, without a vote of shareholders. Under
these restrictions, a Fund may not:
(1) Make investments for the purpose of exercising control or management of
another company.
(2) Participate on a joint or joint and several basis in any trading account in
securities.
(3) Purchase any illiquid securities, except that each Fund may invest in
repurchase agreements maturing in more than seven days provided that a Fund may
not enter into such a repurchase agreement if more than 10% of the value of
the Funds net assets (15% in the case of Government Income Fund) would, as a
result, be invested in repurchase agreements under which the Fund does not
have the right to obtain repayment in seven days or less. The Funds are
authorized to invest in restricted securities which can be sold in
transactions pursuant to Rule 144A under the Securities Act of 1933 and
which have been determined to be liquid under procedures adopted by
the Board of Trustees. However, the Funds do not intend to invest in any such
restricted securities during the coming year.
(4) Invest in oil, gas or other mineral leases, rights, royalty contracts, or
exploration or development programs.
(5) Invest in warrants or rights.
(6) Purchase the securities of another investment company, except in connection
with a merger, consolidation, reorganization or acquisition of assets.
All percentage and other restrictions, requirements and
limitations on investments set forth in this Statement of
Additional Information, and those set forth in each Funds
Prospectus, apply immediately after purchase of an investment,
and subsequent changes and events do not constitute a violation
or require the sale of any investment by a Fund unless
otherwise specified.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the general supervision of the Board of
Trustees of the Trust, the Investment Adviser is responsible
for decisions to buy and sell securities for the Funds and for
the selection of dealers to effect those transactions.
Purchases of securities for each Fund will be made from
issuers, underwriters and dealers. Sales of securities will be
made to dealers and issuers. The Funds do not normally incur
brokerage commissions on transactions in the types of
securities in which they invest. These transactions are
generally traded on a "net" basis, with dealers acting as
principal in such transactions. However, the price at which
securities are purchased from and sold to dealers will usually
include a spread which represents a profit to the dealer.
Securities purchased in underwritten offerings include a fixed
amount of compensation to the underwriter (an underwriting
concession). Government Income Fund will incur commissions in
connection with its transactions in futures contracts.
In placing orders for the purchase and sale of
investments for the Funds, the Investment Adviser gives primary
consideration to the ability of dealers to provide the most
favorable prices and efficient executions on transactions. If
such price and execution are obtainable from more than one
dealer, transactions may be placed with dealers who also
furnish research services to the Trust or the Investment
Adviser. Such services may include, but are not limited to,
any one or more of the following: information as to the
availability of securities for purchase or sale; statistical or
factual information or opinions pertaining to investments; wire
services; and appraisals or evaluations of securities. These
research services may be of benefit to the Investment Adviser
or its affiliates in the management of accounts of other
clients, or the accounts of the Investment Adviser and its
affiliated companies, and may not in all cases benefit a
particular Fund. While such services are useful and important
in supplementing the Investment Advisers own research and
facilities, the Investment Adviser believes the value of such
services is not determinable and does not significantly reduce
its expenses.
The Investment Adviser may serve as the investment adviser to
other clients, including other investment companies, and will
follow a policy of allocating investment opportunities and
purchase and sale transactions equitably among its clients. In
making such allocations, the primary factors considered are the
respective investment objectives, the relative size of
portfolio holdings of the same or comparable securities, and
the availability of cash for investment. This procedure may
have an adverse effect on a client, including one or more of
the Funds, in a particular transaction, but is expected to
benefit all clients on a general basis.
PURCHASING SHARES
As described under "Purchasing Shares" in each Funds
Prospectus, shares of each Fund are offered for sale, without a
sales charge, at their respective net asset values per share
next computed after receipt of a purchase order by First Data
Distributors, Inc. (formerly known as 440 Financial
Distributors, Inc.), as distributor of each Funds shares (the
"Distributor"). Net asset value is computed once daily for
each Fund, on each day on which both the New York Stock
Exchange is open for trading and the Federal Reserve Bank of
New York is open (each, a "Business Day"). See "Determination
of Net Asset Value." The following shows the calculation of
the offering prices of shares of the Funds as of January 31,
1997:
Net Assets Shares Outstanding
Offering Price
Treasury Money Fund $26,204,134 26,203,572 $1.00
Government Money Fund $70,880,667 70,879,960 $1.00
Government Income Fund $33,330 3,333 $10.00
Distribution Arrangements. The Distributor has the
exclusive right, pursuant to a distribution agreement with the
Trust dated as of November 1, 1995, as amended (the
"Distribution Agreement"), to purchase shares of the Funds for
distribution and to enter into selling agreements with dealers
and other financial institutions for the distribution of
shares. Shares of the Funds are available for purchase from
the Distributor and from organizations which have entered into
selling agreements. The Distributor may, from time to time,
pay to such dealers and institutions, in connection with sales
or the distribution of shares of a Fund, material compensation
or promotional incentives, in the form of cash or other
compensation. Such compensation and incentives are not paid by
any of the Funds and will not be an expense of any of the
Funds.
The Board of Trustees, including a majority of the Trustees who are not
parties to the Distribution Agreement or "interested persons" of the
Investment Adviser or the Distributor, as defined by the 1940 Act (the
"Independent Trustees"), approved the Distribution Agreement at a meeting
held in person on October 9, 1995, and similarly approved an amendment to
such agreement on September 17, 1996. The Distribution Agreement will
remain in effect until October 31, 1997, and may be continued in
effect from year to year thereafter if approved annually by the
Board of Trustees, including a majority of the Independent
Trustees, by vote cast in person at a meeting called for such
purpose. The Distribution Agreement may be terminated at any
time, without penalty, by either party upon 60 days written
notice and terminates automatically in the event of an
"assignment" as defined by the 1940 Act and the rules
thereunder. Under the Distribution Agreement, the Distributor
is required to bear all of the costs associated with
distribution of shares of the Funds, including the incremental
cost of printing prospectuses, annual reports and other
periodic reports for distribution to prospective investors and
the costs of preparing, distributing and publishing sales
literature and advertising materials. Unlike many other mutual
funds, the Funds do not bear expenses relating to the
distribution of shares, and thus, do not make any payments
pursuant to a Rule 12b-1 plan or a services plan. In the
Distribution Agreement, the Trust has agreed to indemnify the
Distributor to the extent permitted by applicable law against
certain liabilities under the Securities Act of 1933, as
amended.
The Distributor is a wholly-owned subsidiary of First Data Investor Services
Group, Inc., which serves as the Trusts administrator. The Distributors
address is 4400 Computer Drive, Westborough, Massachusetts 01581.
SHAREHOLDER ACCOUNTS
First Data Investor Services Group, Inc., as transfer
agent (the "Transfer Agent"), maintains one or more accounts
for each shareholder reflecting the amount of full and
fractional shares of each Fund the shareholder owns.
Shareholders are sent confirmations of each account
transaction, and monthly statements showing account balances.
The Trust does not issue certificates for shares of the Funds.
Sub-Account Services. Special procedures have been
designed for investors wishing to open multiple accounts. A
single master account may be opened by filing an application
form with the Distributor, signed by personnel authorized to
act for the institution. Individual sub-accounts may be opened
at the time the master account is opened by listing them, or
they may be added at a later date by written advice or by
filing forms supplied by the Transfer Agent. Procedures are
available to identify sub-accounts by name and number within
the master account name. The investment minimums applicable to
initial and subsequent purchases of shares of the Funds, and
the minimum account balance requirement discussed below, apply
to the aggregate amounts invested by a shareholder for the
master account (including all sub-accounts) and not to the
amount invested for individual sub-accounts.
When sub-accounts have been established, the Transfer
Agent provides written confirmations of transactions in sub-
accounts. The Transfer Agent also provides monthly statements
setting forth the share balance of and the dividends and other
distributions paid to the master account, and monthly
statements for each sub-account setting forth transactions in
the sub-account for the year-to-date, the total number of
shares owned and the dividends paid for the current month, as
well as for the year-to-date. Further information on this
service is available from the Transfer Agent.
Minimum Initial Investment Requirements. The Funds each
have a minimum initial investment requirement which is set
forth on the cover page of this Statement of Additional
Information. In its discretion, however, the Distributor may
waive a Funds minimum initial investment in special
circumstances, such as when a prospective investor anticipates
receipt of investable funds so as to enable it to meet the
minimum investment requirement within a reasonable period of
time.
Minimum Account Balance. In order to avoid costs that
are associated with maintaining small accounts, shareholders
should maintain account balances of not less than $100,000 in
any Fund. If an account balance in Government Money Fund or
Government Income Fund falls below $100,000 as a result of
share redemptions, the Trust has the right to redeem all shares
held in the account. There is no minimum account balance for
Treasury Money Fund; however, an in-active account with no
balance for a period of six months may be closed at the
discretion of the Trust. The applicable procedures are
described in the Funds Prospectuses. The Trust is under no
obligation to compel the redemption of any account.
REDEEMING SHARES
Redemption proceeds are normally paid as described in the
Prospectuses. However, the payment of redemption proceeds may
be postponed for more than seven days or the right of
redemption suspended at times (a) when the New York Stock
Exchange is closed for other than customary weekends and
holidays, (b) when trading on the New York Stock Exchange is
restricted, (c) when an emergency exists as a result of which
disposal by a Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for a Fund to
determine fairly the value of its net assets, or (d) during any
other period when the Securities and Exchange Commission (the
"SEC"), by order, so permits for the protection of
shareholders. Applicable rules and regulations of the SEC will
govern as to whether the conditions described in (b) or (c)
exist. In addition, in the event that the Board of Trustees of
the Trust determines that it would be detrimental to the best
interests of remaining shareholders of a Fund to pay any
redemption or redemptions in cash, a redemption payment may be
made in whole or in part by a distribution in kind of portfolio
securities held by the Fund, subject to applicable rules of the
SEC. Any securities distributed in kind will be readily
marketable and will be valued, for purposes of the redemption,
in the same manner as such securities are normally valued by
the Fund in computing net asset value per share. In the
unlikely event that shares are redeemed in kind, the redeeming
shareholder would incur transaction costs in converting the
distributed securities to cash. The Trust has elected to be
governed by Rule 18f-1 under the 1940 Act and is therefore
obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of a Fund during any 90
day period for any one shareholder.
EXCHANGE PRIVILEGE
As described under "Exchange Privilege" in each Funds
Prospectus, shareholders may exchange shares of one of the
Funds for shares of any of the other Funds based upon the
relative net asset values per share of the Funds at the time
the exchange is effected. None of the Funds currently imposes
any limitation on the frequency of exchanges, but may impose
such limitations upon notice to shareholders.
DETERMINATION OF NET ASSET VALUE
Each Funds Prospectus describes the days on which the
net asset value per share of the Fund is computed for purposes
of purchases and redemptions of shares by investors, and also
sets forth the times as of which such computations are made.
Net asset value is computed once daily as of 4:00 p.m. (Eastern
time) on each day on which both the New York Stock Exchange is
open for trading and the Federal Reserve Bank of New York is
open, except as described below. The New York Stock Exchange
currently observes the following holidays: New Years Day;
Presidents Day (third Monday in February); Good Friday (Friday
before Easter); Memorial Day (last Monday in May); Independence
Day; Labor Day (first Monday in September); Thanksgiving Day
(fourth Thursday in November); and Christmas Day. The Federal
Reserve Bank of New York currently observes all the holidays
listed above except Good Friday, in addition to Martin Luther
Kings Birthday (third Monday in January), Columbus Day (second
Monday in October) and Veterans Day.
Net asset value is computed as of the closing time of the
U.S. government securities markets on days when the Public
Securities Association recommends an early closing of such
markets. Early closings may occur the Fridays preceding the
following holidays: Martin Luther Kings Birthday, Presidents
Day, Memorial Day, Labor Day and Columbus Day, and the business
days preceding the following holidays: Independence Day,
Veterans Day, Thanksgiving Day, Christmas Day, and New Years
Day, and the Friday succeeding Thanksgiving Day.
Treasury Money Fund and Government Money Fund. In
accordance with rules adopted by the SEC, the amortized cost
method of valuation is used to determine the value of the
investments held by Treasury Money Fund and Government Money
Fund. This method of valuation is used by the Funds in seeking
to maintain stable net asset values of $1.00 per share.
However, no assurance can be given that the Funds will be able
to maintain stable share prices.
Amortized cost involves valuing a security at its cost
and amortizing any discount or premium over the period
remaining until the maturity of the security. This method of
valuation does not take into account unrealized capital gains
and losses resulting from changes in the market values of the
securities. The market values of debt securities purchased by
the Funds will generally fluctuate as a result of changes in
prevailing interest rate level and other factors.
In order to use the amortized cost method of valuation,
Treasury Money Fund and Government Money Fund are each required
to maintain a dollar-weighted average maturity of 90 days or
less, to purchase securities with remaining maturities of 397
days or less and to invest only in securities which have been
determined by the Investment Adviser, under procedures adopted
by the Board of Trustees, to present minimal credit risks and
to be of eligible credit quality under applicable regulations.
In addition, procedures have been adopted by the Board of
Trustees which are designed to stabilize, to the extent
reasonably possible, the prices of shares of the Funds as
computed for purposes of sales and redemptions at $1.00. These
procedures include review by the Board of Trustees, at such
intervals as it deems appropriate, to determine whether the net
asset value per share calculated by using available market
quotations deviates from the net asset value per share of $1.00
computed by using the amortized cost method. If such deviation
exceeds of 1%, the Board will promptly consider what action,
if any, should be taken. The Trustees will take such action as
they deem appropriate to eliminate or to reduce, to the extent
reasonably practicable, any material dilution or other unfair
results which might arise from differences between the two
valuation methods. Such action may include selling instruments
prior to maturity to realize capital gains or losses or to
shorten average maturity, redeeming shares in kind, withholding
dividends, paying distributions from capital gains, or
utilizing a net asset value per share based upon available
market quotations.
Government Income Fund. Portfolio securities held by
Government Income Fund are generally valued on the basis of bid
quotations obtained from principal market makers. If market
quotations are not readily available, portfolio securities are
valued at their fair value as determined under procedures
adopted by the Board of Trustees of the Trust. A pricing
service may be used to value the Funds portfolio securities.
Such a service may use prices based on yields or prices of
securities of comparable quality, coupon, maturity and type,
indications as to value from dealers and general market
conditions. Securities with remaining maturities of less than
60 days are valued at amortized cost unless the use of such
valuation is determined not to reflect fair value.
TAXES
It is the policy of the Trust to distribute each fiscal
year substantially all of the net investment income and net
realized capital gains, if any, of each Fund to shareholders.
The Trust intends that each Fund will qualify as a regulated
investment company under the provisions of the Internal Revenue
Code of 1986, as amended (the "Code"). If so qualified, a Fund
will not be subject to federal income tax on that part of its
net investment income and net realized capital gains which it
distributes to its shareholders. To qualify for such tax
treatment, a Fund must generally, among other things: (a)
derive at least 90% of its gross income from dividends,
interest, payments received with respect to loans of stock and
securities, and gains from the sale or other disposition of
stock or securities and certain related income; (b) derive less
than 30% of its gross income from the sale or other disposition
of stock or securities or options, forwards or futures thereon
held less than three months; and (c) diversify its holdings so
that at the end of each fiscal quarter (i) 50% of the market
value of the Funds assets is represented by cash, Government
Securities and other securities limited, in respect of any one
issuer, to an amount not greater than 5% of the Funds assets or
10% of the voting securities of any issuer, and (ii) not more
than 25% of the value of its assets is invested in the
securities of any one issuer (other than Government
Securities).
The Code requires regulated investment companies to pay a
nondeductible 4% excise tax to the extent they do not
distribute 98% of their ordinary income, determined on a
calendar year basis, and 98% of their capital gains, determined
on an October 31 year end. The Trust intends to distribute the
income and capital gains of each Fund, in the manner necessary,
to avoid imposition of the 4% excise tax by the end of each
calendar year.
Fund dividends declared in October, November or December
and paid the following January will be taxable to shareholders
as if received on December 31 of the year in which they are
declared.
In general, any gain or loss realized on a taxable
disposition of shares of a Fund by a shareholder that holds
such shares as a capital asset will be treated as long-term
capital gain or loss if the shares have been held for more than
twelve months and otherwise as a short-term capital gain or
loss. However, any loss realized upon a redemption of shares
in a Fund held for six months or less will be treated as a
long-term capital loss to the extent of any distributions of
net capital gain made with respect to those shares. Any loss
realized upon a redemption of shares may also be disallowed
under the rules of Section 1091 of the Code relating to "wash
sales" (i.e., purchase of substantially identical securities
within a 61-day period beginning 30 days before such
disposition).
Futures Contracts. (Government Income Fund only.)
Accounting for futures contracts will be in accordance with
generally accepted accounting principles. Initial margin
deposits made by Government Income Fund upon entering into
futures contracts will be recognized as assets. During the
period the futures contract is open, changes in the value of
the contract are recognized as unrealized gains or losses by
"marking to market" on a daily basis to reflect the market
value of the contract at the end of each days trading.
Maintenance margin payments are made or received, depending
upon whether gains or losses are incurred. Futures contracts
held by Government Income Fund at the end of each fiscal year
may be required to be "marked to market" for federal income tax
purposes; that is, treated as having been sold at market value.
The straddle rules of Section 1092 of the Code may require the
Fund to defer losses incurred in certain transactions involving
securities and futures and may affect the Funds holding period
in the asset offsetting the futures contract. The Funds
ability to engage in futures transactions may be limited by
these rules.
The Funds transactions in futures contracts will be
subject to special tax rules that may affect the amount, timing
and character of Fund income and distributions to shareholders.
For example, certain exchange-traded futures contracts held by
the Fund at the end of the Funds taxable year will be treated
as having been sold for their fair market value on the last day
of such taxable year, and gain or loss will be taken into
account for such year. Such gain or loss generally will be
treated as short-term capital gain or loss to the extent of 40%
of such gain or loss, and long-term capital gain or loss to the
extent of 60% of such gain or loss. Certain positions held by
the Fund that substantially diminish its risk of loss with
respect to other positions in its portfolio may constitute
"straddles," and may be subject to special tax rules that would
cause deferral of recognition of losses by the Fund and
adjustments to the holding periods of securities held by the
Fund. Certain tax elections exist for straddles that may alter
the effects of these rules. The Fund will monitor its
activities in futures contracts to ensure that they do not
affect its qualification as a regulated investment company.
INVESTMENT ADVISORY AND OTHER SERVICES
The Investment Adviser, a Delaware corporation, with
offices at 905 Marconi Avenue, Ronkonkoma, New York 11779, is a
wholly-owned subsidiary of AMBAC Capital Corporation which, in
turn, is a wholly-owned subsidiary of AMBAC Inc. ("AMBAC").
Through its subsidiaries, AMBAC is a leading insurer of
municipal and structured finance obligations and a provider of
investment contracts, and investment advisory and
administration services to state municipalities, and municipal
authorities. AMBAC is a publicly held company whose shares are
traded on the New York Stock Exchange.
Pursuant to an Investment Advisory Agreement with the
Trust dated November 1, 1995 (the "Agreement"), the Investment
Adviser manages the investment of each Funds assets and places
orders for the purchase and sale of investments for each Fund.
The Investment Adviser is also responsible under the Agreement
for monitoring services provided by the Administrator, the
Transfer Agent and the Trusts custodian. The Investment
Adviser provides such additional management and administrative
services as the Trust or the Fund may require beyond those
furnished by the Administrator and furnishes, at its own
expense, such office space, facilities, equipment, clerical
help, and other personnel and services as may reasonably be
necessary to render the services under the Agreement. In
addition, the Investment Adviser pays the salaries of officers
of the Trust and any fees and expenses of Trustees of the Trust
who are also officers, directors or employees of the Investment
Adviser, or, who are officers or employees of any company
affiliated with the Investment Adviser, and bears the cost of
telephone service, heat, light, power and other utilities
associated with the services it provides. As compensation for
services rendered and expenses assumed by the Investment
Adviser, the Agreement provides for the payment by each Fund of
a monthly fee to the Investment Adviser, which fee is
calculated daily and computed at the annual rate of 0.15% of
the net assets of each of Treasury Money Fund and Government
Money Fund, and 0.35% of the net assets of Government Income
Fund.
For the period April 24, 1996 through October 31, 1996,
fees payable to the Investment Adviser by Treasury Money Fund
and Government Money Fund were $20,088 and $48,338,
respectively, all of which fees were waived. In addition, the
Investment Adviser reimbursed expenses of Treasury Money Fund
and Government Money Fund in the amounts of $101,283 and
$129,216, respectively.
The Agreement provides that in the absence of willful
misfeasance, bad faith, negligence or reckless disregard of its
obligations thereunder, the Investment Adviser is not liable to
the Trust or any of its shareholders for any act or omission by
the Investment Adviser or for any losses sustained by the Trust
or its shareholders. The Agreement in no way restricts the
Investment Adviser from acting as investment adviser to others.
The Agreement was approved by the Board of Trustees of
the Trust, including a majority of the Trustees who are not
parties to the Agreement or interested persons of the
Investment Adviser, at a meeting held in person on October 9,
1995. The Agreement was also approved on that date by the
Investment Adviser, as the then sole shareholder of the Trust.
The Agreement will continue in effect until September 30, 1997,
and may be continued in effect from year to year thereafter
upon the approval of the Trusts shareholders or the Board of
Trustees. Each annual continuance also requires approval by a
vote of a majority of the Independent Trustees cast in person
at a meeting called for the purpose of voting on such
continuance. The Agreement may be terminated at any time, as
to any Fund, without penalty, on sixty days written notice by
the Board of Trustees of the Trust, by vote of the holders of a
majority (as defined in the 1940 Act) of the outstanding shares
of such Fund, or by the Investment Adviser. The Agreement will
automatically terminate in the event of its assignment (as
defined in the 1940 Act and the rules thereunder).
The Trust has acknowledged that the name "AMBAC" is a
property right of AMBAC Inc., and has agreed that AMBAC Inc.
and its affiliated companies may use and permit others to use
that name. The Trust has also agreed that, in the event the
Agreement is terminated, the Trust will eliminate the name
"AMBAC" from its name, unless otherwise consented to by AMBAC
Inc. or any successor to its interest in such name.
Administration services are provided to the Trust by the
Administrator, pursuant to an administration agreement with the
Trust dated November 1, 1995. For the period April 24, 1996
(commencement of operations) through October 31, 1996, Treasury
Money Fund and Government Money Fund paid the Administrator
$22,314 and $47,686, respectively.
TRUSTEES AND OFFICERS
The Board of Trustees of the Trust has the overall
responsibility for monitoring the operations of the Trust and
each Fund and supervising the services provided by the
Investment Adviser and other organizations. The officers of
the Trust are responsible for managing the day-to-day
operations of the Trust and each Fund.
Set forth below is information with respect to each of
the Trustees and officers of the Trust, including their
principal occupations during the past five years.
Name, Position with Trust, Age Principal Occupations
and Address During Last Five Years
*Stephen A. Attanasio Managing Director, Head of Investment
Trustee, Chairman and Advisory Services and Director, Cadre
President, 38 Financial Services, Inc.; Investment
Committee Member, FGIC Advisors, Inc. formerly, from
1993 to 1996; Vice President, FGIC Capital Market
Services, Inc. formerly, from 1993 to 1996; Marketing
Production Development, Financial Guaranty Insurance
Company (formerly, from 1991 to 1993)
Eugene J. McDonald President and Chief Executive Officer,
Duke Trustee, 64 Management Co. (investment management 2200
West Main Street, Suite 1000 affiliate of Duke University);
Director, Durham, North Carolina 27705 Central Carolina
Bank, Key Group of Mutual Funds and Flag Group of Mutual
Funds
Donald W. Green Chief Financial Officer, Managing Director
Trustee, 53 and Director, PlanEcon, Inc. (economic
305 Hartford Road consulting and publications); formerly, from
South Orange, New Jersey 07079 1988 to 1991, Executive
Vice President and Director, The Mercator Corporation
(financial advisory and merchant banking)
* C. Roderick ONeil Chairman, ONeil Associates (investment
Trustee, 66 and financial consulting firm); Director, 375
Park Avenue AMBAC Inc., AMBAC Indemnity Suite 2602
Corporation, Fort Dearborn Income New York, New
York 10152 Securities, Inc. and Beckman Instruments,
Inc.; Trustee, Memorial Drive Trust (finance)
Russell E. Galipo Vice President and Manager of Shawmut
Trustee, 64 Bank CT., N.A. from 1973 to 1994
4538 Alpine Drive
Lakeland, Florida 33801-0502
Roisin T. Kilgallen Treasurer and Controller, AMBAC
Treasurer, 30 Investment Management, Inc.; formerly,
from 1992 to 1994, Assistant Vice President of Sakura
Global Capital, Inc.; prior thereto, from 1988 to 1992,
Senior Associate, Arthur Andersen & Co.
Richard B. Gross Senior Vice President, General Counsel and
Secretary, 49 Secretary, AMBAC Inc.; Senior Vice One
State Street Plaza President, AMBAC Indemnity Corporation;
New York, New York 10004 Secretary, AMBAC Investment
Management, Inc.; formerly, from 1990 to 1991,
Senior Vice President and General Counsel of Citicorp
Insurance Group, Inc.
Anne G. Gill Vice President, Counsel and Assistant
Assistant Secretary, 33 Secretary, AMBAC Inc.; Vice President,
One State Street Plaza Assistant General Counsel and Assistant
New York, New York 10004 Secretary, AMBAC Indemnity
Corporation; Assistant Secretary, AMBAC Investment
Management, Inc.; formerly, from 1988 to 1993,
Associate, Hughes Hubbard & Reed
Gail A. Hanson Counsel, First Data Investor Services Group,
Assistant Secretary, 55 Inc.; formerly, from 1988 to 1994,
One Exchange Place Associate, Bingham, Dana & Gould
Boston, Massachusetts 02109
Therese M. Hogan Manager, State Regulation, First Data
Assistant Secretary, 34 Investor Services Group, Inc.;
formerly, One Exchange Place from 1992 to 1994, Senior Legal
Assistant, Boston, Massachusetts 02109 Palmer & Dodge; prior
thereto, from 1984 to 1992, Blue Sky Paralegal, Robinson &
Cole
Richard H. Rose Senior Vice President, First Data Investor
Assistant Treasurer, 41 Services Group, Inc. (since May 6,
1994). One Exchange Place Formerly, Senior Vice President,
The Boston Boston, Massachusetts 02109 Company Advisors,
Inc. since November 1989.
Except as otherwise indicated above, the address of each
Trustee and officer of the Trust is 905 Marconi Avenue,
Ronkonkoma, New York 11779. Mr. Nattress and Mr. ONeil are
Trustees who are "interested persons" of the Trust, as defined
in the 1940 Act, by virtue of their affiliations with the
Investment Adviser and/or companies affiliated with the
Investment Adviser.
Trustees who are not employees of the Investment Adviser,
or its affiliated companies, are each paid an annual retainer
of $5,000 and receive an attendance fee of $750 for each
meeting of the Board of Trustees they attend. Members of the
Audit Committee, of which each of the Independent Trustees is a
member, receive an attendance fee of $750 for each Audit
Committee meeting they attend. The Chairman of the Audit
Committee receives an additional $1,000 annual fee. Officers
of the Trust receive no compensation from the Trust. As of the
date of this Statement of Additional Information, the Trustees
and officers of the Trust, as a group, owned less than 1% of
the outstanding shares of the Trust and each Fund.
The following table summarizes the compensation paid by
the Trust to the Trustees of the Trust for the fiscal year
ended October 31, 1996.
Compensation Table*
Name of Person Aggregate Pension or Retirement
Total Compensation Compensation
Benefits Accrued from Trust Paid
from Trust as Part of Fund Expenses to
Trustees
W. Dayle Nattress $0 $0 $0
David E. A. Carson* $4,000 $0 $4,000
Donald W. Green $4,000 $0 $4,000
Eugene J. McDonald* $0 $0 $0
C. Roderick ONeil $4,000 $0 $4,000
*David E. A. Carson resigned as a Trustee, effective September
17,1996, and was replaced by Eugene J. McDonald, who was
appointed on such date by the Board of Trustees to fill the
vacancy created by Mr. Carsons resignation.
EXPENSES
All expenses of the Trust and the Fund not expressly
assumed by the Investment Adviser, the Administrator or the
Distributor are paid by the Trust. Expenses borne by the Trust
include, but are not limited to: fees paid to the Investment
Adviser and the Administrator; the fees and expenses of any
registrar, custodian, accounting agent, transfer agent or
dividend disbursing agent; brokerage commissions; taxes;
registration costs of the Trust and its shares under federal
and state securities laws; the cost and expense of printing,
including typesetting, and distributing prospectuses and
supplements thereto to shareholders; all expenses of
shareholders and Trustees meetings and of preparing, printing
and mailing of proxy statements and reports to shareholders;
fees and travel expenses of Trustees or members of any advisory
board or committee who are not employees of the Investment
Adviser or any affiliate of the Investment Adviser; all
expenses incident to any dividend, withdrawal or redemption
options; charges and expenses of any outside service used for
pricing shares of the Trust; fees and expenses of legal
counsel; fees and expenses of the Trusts independent auditors;
membership dues of industry associations; interest on Trust
borrowings; postage; insurance premiums on property or
personnel (including officers and Trustees) of the Trust which
inure to its benefit; and extraordinary expenses (including,
but not limited to, legal claims and liabilities and litigation
costs and any indemnification relating thereto). Certain of
the expenses of organizing the Trust and the Funds and of the
initial registration and qualification of shares of the Funds
under federal and state securities laws are being charged to
each Funds operations, as an expense, over a period not
exceeding five years from the date of commencement of the
Trusts operations.
PERFORMANCE INFORMATION
Calculation of Yield. Treasury Money Fund and Government
Money Fund may publish quotations of "current yield" and
"effective yield" in advertisements, sales materials and
shareholder reports. Current yield is the simple annualized
yield for an identified seven calendar day period. This yield
calculation is based on a hypothetical account having a
balance of exactly one share at the beginning of the seven-day
period. The base period return is the net change in the value
of the hypothetical account during the seven-day period,
including dividends declared on any shares purchased with
dividends on the shares but excluding any capital changes.
Yield will vary as interest rates and other conditions change.
The yield for the seven-day period ended October 31, 1996 for
Government Money Fund was 5.16%, which is equivalent to an
effective yield of 5.29%. The yield for the seven-day period
ended October 31, 1996 for Treasury Money Fund was 5.00%, which
is equivalent to an effective yield of 5.12%. Yields also
depend on the quality, length of maturity and type of
instruments held and operating expenses of the Funds. For the
fiscal year ended October 31, 1996, the Investment Adviser of
the Funds had voluntarily agreed to waive its fees and to
reimburse expenses of the Funds to the extent necessary to
assure that the ordinary operating expenses of the Funds do not
exceed 0.28% and 0.20% of the average daily net assets of the
Treasury Money Fund and Government Money Fund, respectively.
The yields of the Funds quoted above reflect the effect of this
fee waiver and reimbursement of expenses without which the
yields would have been lower. Effective yield is computed by
compounding the unannualized seven-day period return as
follows: by adding 1 to the unannualized seven-day base period
return, raising the sum to a power equal to 365 divided by 7,
and subtracting 1 from the result.
Effective yield = [(base period return + 1)365/7]-1
Government Income Fund may from time to time publish
quotations of its yield as calculated over a 30-day period in
advertisements, sales literature and shareholder reports. This
yield will be computed by dividing the Funds net investment
income per share earned during a specified 30-day period by the
maximum offering price per share on the last day of the period.
Yield is calculated according to the following formula:
YIELD = 2[( a-b + 1)6 - 1]
cd
Where: a = dividends and interest earned during the
period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = the maximum offering price per share on the last
day of the period.
Calculation of Total Return. Each Fund may also
disseminate quotations of its average annual total return and
other total return data from time to time. Average annual
total return quotations for the specified periods are computed
by finding the average annual compounded rates of return (based
on net investment income and any realized and unrealized
capital gains or losses on investments over such periods) that
would equate the initial amount invested to the redeemable
value of such investment at the end of each period. In making
these computations, all dividends and distributions are assumed
to be reinvested and all applicable recurring and non-recurring
expenses are taken into account. The Funds also may quote
annual, average annual and annualized total return and
aggregate total return performance data, both as a percentage
and as a dollar amount based on a hypothetical investment
amount, for various periods.
Total return quotations will be computed in accordance
with the following formula, except that as required by the
periods of the quotations, actual annual, annualized or
aggregate data, rather than average annual data, may be quoted:
P (1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000
payment made at the beginning of the period.
Actual annual or annualized total return data generally will be
lower than average annual total return data because the average
rates of return reflect compounding of return. Aggregate total
return data, which is calculated according to the following
formula, generally will be higher than average annual total
return data because the aggregate rates of return reflect
compounding over longer periods of time:
ERV - P
P
Where: P = a hypothetical initial payment of $1,000.
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period.
Yield and total return quotations are based upon each
Funds historical performance and are not intended to indicate
future performance. Each Funds yield and total return
fluctuate and will depend upon not only changes in prevailing
interest rates, but also upon any realized gains and losses and
changes in the Funds expenses.
GENERAL INFORMATION
Description Of Shares. Interests in the Funds
(presently, the only three series of the Trust) are represented
by shares of beneficial interest, $.001 par value. The Trust
is authorized to issue an unlimited number of shares.
Each share of each Fund represents an equal proportionate
interest in that Fund with each other share of such Fund,
without any priority or preference over other shares. All
consideration received for the sales of shares of a particular
Fund, all assets in which such consideration is invested, and
all income, earnings and profits derived therefrom are
allocated to and belong to that Fund. As such, the interest of
shareholders in each Fund are separate and distinct from the
interest of shareholders of the other Funds, and shares of a
Fund are entitled to dividends and distributions only out of
the net income and gains, if any, of that Fund as declared by
the Board of Trustees. The assets of each Fund are segregated
on the Trusts books and are charged with the expenses and
liabilities of that Fund and with a share of the general
expenses and liabilities of the Trust not attributable to any
one Fund. The Board of Trustees determines those expenses and
liabilities deemed to be general, and these items are allocated
among the Funds as deemed fair and equitable by the Board of
Trustees in its sole discretion.
Control Persons and Holders of Securities. As of January
31, 1997, AMBAC Inc. and its subsidiary, AMBAC Indemnity
Corporation, may be deemed to control the Trust, Treasury Money
Fund and Government Money Fund, and AMBAC Inc., AMBAC Capital
Corporation and the Investment Adviser may be deemed to control
Government Income Fund, through beneficial ownership of the
outstanding shares of the Funds, as follows:
Shares of Shares of
Shares of
Treasury Government
Government
Money Fund Money Fund
Income Fund
AMBAC Inc.
One State Street Plaza
New York, New York 99% 39% 100%
AMBAC Indemnity Corporation
One State Street Plaza
New York, New York 93% 34% ---
AMBAC Capital Corporation
300 Nyala Farms Road
Westport, Connecticut 06880 ---% ---% 100%
AMBAC Investment Management, Inc.
300 Nyala Farms Road
Westport, Connecticut 06880 ---% ---% 100%
The various control relationships over the Trust and the
Funds noted above will continue to exist until such time as the
above-described share ownership of the Trust or applicable Fund
represents 25% or less of the outstanding shares of the Trust
or of the Fund, as the case may be. Through the exercise of
voting rights with respect to shares of the Funds, the
controlling persons set forth above may be able to determine
the outcome of shareholder voting on matters as to which
approval of shareholders of the Trust or the Funds is required.
In addition to the controlling persons named above, the
following entities owned of record or are known by the Trust to
own beneficially 5% or more of the outstanding shares of the
Funds as of January 31, 1997:
Treasury Money Fund Shares Owned
AMBAC Financial Services Holdings, Inc.
300 Nyala Farms Road
Westport, Connecticut 06880 5%
Government Money Fund
City of New Britain
7 West Main Street
New Britain, Connecticut 06051 16%
City of Bridgeport
45 Lyons Terrace
Bridgeport, Connecticut 06604 14%
Town of Suffield - Treasurers Office
83 Mountain Road
Suffield, Connecticut 06078 9%
USA Services, Inc. (AMBAC affiliate)
9130 Jolleyville Road, Suite 335
Austin, Texas 78759 5%
Town of Cromwell
41 West Street
Cromwell, Connecticut 06416
5%
Town of Newtown
45 Main Street
Newtown, CT 06470 5%
Trustee and Officer Liability. Under the Trusts
Declaration of Trust and its By-Laws, and under Delaware law,
the Trustees, officers, employees and agents of the Trust are
entitled to indemnification under certain circumstances against
liabilities, claims and expenses arising from any threatened,
pending or completed action, suit or proceeding to which they
are made parties by reason of the fact that they are or were
such Trustees, officers, employees or agents of the Trust,
subject to the limitations of the 1940 Act which prohibit
indemnification which would protect such persons against
liabilities to the Trust or its shareholders to which they
would otherwise be subject by reason of their own bad faith,
willful misfeasance, gross negligence or reckless disregard of
duties.
Independent Auditors. KPMG Peat Marwick LLP, 99 High
Street, Boston, Massachusetts 02110, are the independent
auditors of the Trust. The independent auditors are
responsible for auditing the financial statements and prepare
the tax returns of the Funds. The selection of the independent
auditors is approved annually by the Board of Trustees.
Custodian. Bankers Trust Company, 130 Liberty Street,
New York, New York 10006, serves as custodian of the Trusts
assets and maintains custody of each Funds cash and
investments. Cash held by the custodian, which may at times be
substantial, is insured by the Federal Deposit Insurance
Corporation up to the amount of available insurance coverage
limits (presently, $100,000).
Shareholder Reports. Shareholders of the Trust will be
kept fully informed through annual and semi-annual reports
showing diversification of investments, securities owned and
other information regarding each Funds activities. The
financial statements of each Fund are audited each year by the
Trusts independent auditors.
Legal Counsel. Schulte, Roth & Zabel LLP, New York, New
York, serves as counsel to the Trust.
Registration Statement. This Statement of Additional
Information and the Prospectus do not contain all of the
information set forth in the Registration Statement the Trust
has filed with the SEC. The complete Registration Statement
may be obtained from the SEC upon payment of the fee prescribed
by the rules and regulations of the SEC.
Use of Joint Statement of Additional Information. Each
Fund acknowledges that it is solely responsible for all
information or lack of information about the Fund in this
Statement of Additional Information, and no other Fund is
responsible therefor. The Trustees of the Trust have
considered this factor in approving each Funds use of this
single combined Statement of Additional Information.
Financial Statements. The statements of assets and
liabilities of the Trust comprising, respectively, Treasury
Money Fund and Government Money Fund, and the portfolios of
investments, as of October 31, 1996, and the related statements
of operations and changes in net assets, together with the
notes to financial statements and the report of independent
auditors, all as set forth in the Trusts 1996 Annual Report to
Shareholders, are incorporated by reference into this Statement
of Additional Information. No other information or statement
contained in the Annual Report, other than those referred to
above, is incorporated by reference or is a part of this
Statement of Additional Information. As of the date of this
Statement of Additional Information, Government Income Fund has
not commenced operations.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Included in Part A:
Financial Highlights
Included in Part B:
The Financial Statements contained in the
Registrant's Annual Report for the fiscal year ended October
31, 1996 and the Report of Independent Auditors dated November
22, 1996, are incorporated by reference to the Definitive 30b-2
filed (Edgar Form N-30D) on December 19, 1996 as Accession
#0000927405-96-000481.
Included in Part C:
Consent of Independent Auditors is filed as Exhibit
11 to this Post-Effective Amendment No. 2.
(b) Exhibits:
Exhibit
Number Description
1(a) Certificate of Trust dated June 27, 1995 is filed
herewith.
(b) Declaration of Trust dated June 27, 1995 is filed
herewith.
2 By-Laws of Registrant are filed herewith.
3 Not Applicable.
4 Instruments defining rights of holders of the
securities being offered are filed herewith.
5 Investment Advisory Agreement between Registrant
and AMBAC Investment Management, Inc. (now known as Cadre
Financial Services, Inc.) is filed herewith.
6 Distribution Agreement between Registrant and 440
Financial Services, Inc. is filed herewith.
7 Not Applicable.
8 Custodian Agreement between Registrant and Bankers
Trust dated November 1, 1995 is filed herewith.
9(a) Administration Agreement between Registrant and
First Data Investor Services Group, Inc. dated November 1, 1995
is filed herewith.
(b) Transfer Agency and Services Agreement between
Registrant and First Data Investor Services Group, Inc. dated
November 1, 1995 is filed herewith.
10 Not Applicable.
11 Consent of Independent Auditors is filed herewith.
12 Not Applicable.
13 Agreement Regarding Initial Capital is filed
herewith.
14 Not applicable.
15 Not applicable.
16 Not applicable.
17 Financial Data Schedules for each series are filed
herewith.
18 Not applicable.
Item 25. Persons Controlled by or Under Common Control with
Registrant.
Registrant may be deemed to be controlled by AMBAC Inc.,
a Delaware corporation, and certain of its affiliates, as
discussed on page 22 of Part B. Cadre Financial Services, Inc.
(formerly, AMBAC Investment Management, Inc.) is a wholly-owned
subsidiary of AMBAC Capital Corporation, a Delaware
corporation, which is in turn a wholly-owned subsidiary of
AMBAC Inc., a Delaware corporation. Other persons under common
control with Registrant include AMBAC Indemnity Corporation, a
Wisconsin stock insurance company and the following (direct and
indirect) subsidiaries of AMBAC Inc., each of which is a
Delaware corporation: AMBAC Capital Management, Inc., AMBAC
Investments Inc., AMBAC Capital Funding, Inc., AMBAC Securities
Inc., AMBAC Connect Inc., AMBAC Financial Services Holdings,
Inc., AMBAC Municipal Bond Holding Company, AMBAC Indeminity UK
Limited, AMBAC Financial Services Limited Partnership and AMBAC
Financial Products, Inc.
Item 26. Number of Holders of Securities.
Number of
Record Holders
Name of Fund as of January
31, 1997
AMBAC U.S. Treasury Money Market Fund 5
AMBAC U.S. Government Money Market Fund 17
AMBAC Short-Term U.S. Government Income Fund 1
Item 27. Indemnification.
As permitted by Section 17(h) and (i) of the Investment
Company Act of 1940, as amended (the "Investment Company Act"),
and pursuant to Article VI of Registrant's By-Laws (Exhibit 2
filed herewith), officers, trustees, employees and agents of
Registrant may be indemnified against certain liabilities in
connection with Registrant, and pursuant to Section 1.10 of the
Distribution Agreement (Exhibit 6 filed herewith), 440
Financial Distributors, Inc. as principal underwriter of
Registrant, may be indemnified against certain liabilities
which it may incur. Such Article VI of the By-Laws and Section
1.10 of the Distribution Agreement are hereby incorporated by
reference in their entirety.
Registrant intends to maintain an insurance policy
insuring its officers and trustees against certain liabilities,
and certain costs of defending claims against such officers and
trustees, and to bear the costs of such policy except for such
costs as is determined to be attributable to coverage
protecting such persons against liabilities to which they may
become subject as a consequence of their own willful
misfeasance, bad faith, gross negligence or reckless disregard
in the performance of their duties. The insurance policy will
also insure Registrant against the cost of indemnification
payments to officers and trustees under certain circumstances.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933, as amended (the "1933 Act"), may be
permitted to trustees, officers and controlling persons of
Registrant and the principal underwriter pursuant to the
foregoing provisions or otherwise, Registrant has been advised
that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in
the 1933 Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or
paid by a trustee, officer, or controlling person of Registrant
and the principal underwriter in connection with the successful
defense of any action, suit or proceeding) is asserted against
Registrant by such trustee, officer or controlling person or
the principal underwriter in connection with the shares being
registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Registrant hereby undertakes that it will apply the
indemnification provisions of its By-Laws in a manner
consistent with Release No. 11330 of the Securities and
Exchange Commission under the Investment Company Act so long as
the interpretations of Sections 17(h) and 17(i) of the
Investment Company Act remain in effect and are consistently
applied.
Item 28. Business and Other Connections of Investment
Adviser.
See "Management of the Trust" in the Prospectuses
constituting Part A of this Registration Statement and
"Investment Advisory Arrangements" in the Statement of
Additional Information constituting Part B of this Registration
Statement.
The business and other connections of Cadre Financial
Services, Inc. (formerly known as AMBAC Investment Management,
Inc.) directors and principal executive officers are set forth
below. Except as otherwise indicated, the address of each
person is 905 Marconi Avenue, Ronkonkoma, New York 11779.
Position with
Name and Address AMBAC Investment Principal Occupations
Frank J. Bivona Director Chief Financial Officer and
One State Street Plaza Treasurer, AMBAC Inc.
New York, New York
10004
William T. Sullivan, Jr. Director and Chairman and
Chief Executive Officer of
Chief Executive Officer Cadre Financial Services, Inc.
Francis X. Sullivan Director, President and Chief
Operating Officer of
Chief Operating Officer of Cadre Financial Services, Inc.
Stephen A. Attanasio Director and Managing Senior Officer
of
Director and Head of Connecticut-based
Investment Advisory Financial Services for
Services AMBAC Inc. and its
affiliates
Richard A. Bauer Managing Director President of Cadre
Securities, Inc.
Michael J. Kelly Director Managing Director of AMBAC
Financial Services Swap and
Municipal Investment Contract
subsidiaries
Dolores O. Miller Managing Director Senior Portfolio Manager
for portfolios of AMBAC
Inc. and its affiliates
Matthew L. Schroeder First Vice President Chief Risk
Compliance
and Chief Risk Officer of AMBAC Inc.
Compliance Officer and its subsidiaries
Evelyn R. Robertson Vice President and Portfolio
Manager for
Portfolio Manager AMBAC U.S. Treasury
Money Market Fund and
AMBAC U.S.
Government Money
Market Fund (series of
Registrant)
Roisin Kilgallen Vice President and Treasurer of certain
Treasurer Financial Services,
subsidiaries of AMBAC
Inc.
Richard B. Gross Secretary General Counsel and
One State Street Plaza Secretary, AMBAC Inc.
New York, New York 10004
Item 29. Principal Underwriters.
(a) In addition to AMBAC Treasurers Trust, 440
Financial Distributors, Inc. (the "Distributor") currently acts
as distributor for The Galaxy Fund, The Galaxy VIP Fund, Galaxy
Fund II, Armada Funds (formerly known as NCC Funds), Panorama
Trust, Wilshire Target Funds, Inc. and BT Insurance Funds
Trust. The Distributor is registered with the Securities and
Exchange Commission as a broker-dealer and is a member of the
National Association of Securities Dealers. The Distributor is
a wholly-owned subsidiary of First Data Corporation and is
located at 4400 Computer Drive, Westboro, MA 01581.
(b) The information required by this Item 29 (b) with
respect to each director, officer, or partner of 440 Financial
Distributors, Inc. is incorporated by reference to Schedule A
of Form BD filed by 440 Financial Distributors, Inc. with the
Securities and Exchange Commission pursuant to the Securities
Act of 1934 (File No. 8-45467).
(c) The Distributor will not be paid any compensation
from the Registrant for its services as principal underwriter.
Item 30. Location of Accounts and Records.
All accounts books and other documents required to be
maintained by Registrant by Section 31(a) of the Investment
Company Act of 1940 and the Rules thereunder are maintained at
the offices of:
Cadre Financial Services, Inc.
905 Marconi Avenue
Ronkonkoma, New York 111779
(records relating to its functions as investment adviser)
Bankers Trust Company
130 Liberty Street
New York, New York 10006
(records relating to its functions as custodian)
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
(records relating to its functions as transfer agent)
First Data Investor Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
(records relating to its functions as administrator)
440 Financial Distributors, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
(records relating to its functions as distributor)
Item 31. Management Services.
Not Applicable.
Item 32. Undertakings.
(a) Registrant undertakes to file a post-effective
amendment with respect to the Short-Term U.S. Government Income
Fund, using financial statements which need not be certified,
within four to six months from the commencement of operations
date of such Fund.
(b) Not Applicable.
(c) The Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request, and without
charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, the Registrant,
AMBAC TREASURERS TRUST, certifies that it meets the
requirements for effectiveness of this Post-Effective Amendment
to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933, and the Registrant has duly caused this
Post-Effective Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereto duly
authorized, in the City of Westport and State of Connecticut,
on the 26th day of February, 1997.
AMBAC TREASURERS TRUST
By: /s/ Stephen A. Attanasio
Stephen A. Attanasio
Chairman
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment to the Registration
Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/ Stephen A. Attanasio Trustee, President
and February 26, 1997
Stephen A. Attanasio Chairman
/s/ Donald W. Green Trustee
February 26, 1997
Donald W. Green
/s/ C. Roderick O'Neil Trustee
February 26, 1997
C. Roderick O'Neil
/s/ Eugene J. McDonald Trustee
February 26, 1997
Eugene J. McDonald
/s/ Russell E. Galipo Trustee
February 26, 1997
Russell E. Galipo
/s/ Roisin Kilgallen Treasurer
February 26, 1997
Roisin Kilgallen (Principal Financial
Officer)
INDEX TO EXHIBITS
Exhibit Number Exhibit
1(a) Certificate of Trust dated June 27, 1995.
(b) Declaration of Trust dated June 27, 1995.
2 By-Laws of Registrant.
4 Instruments defining rights of holders of the securities
being offered.
5 Investment Advisory Agreement between Registrant and
AMBAC Investment Management Inc.
6 Distribution Agreement between Registrant and 440
Financial Services, Inc.
8 Custodian Agreement between Registrant and Bankers Trust
dated November 1, 1995.
9(a) Administration Agreement between Registrant and First
Data Investor Services Group, Inc. dated November 1, 1995.
9(b) Transfer Agency and Services Agreement between Registrant
and First Data Investor Services Group, Inc. dated November 1,
1995.
11 Consent of Independent Public Accountants.
13 Agreement regarding Initial Capital.
17 Financial Data Schedules for each series.
* Trustee who is an "interested person" of the Trust, as defined in the 1940
Act.
Ownership percentages include indirect beneficial ownership of the shares
of each Fund that are owned by subsidiaries of AMBAC Inc.
Ownership of shares is indirect and based upon direct beneficial ownership
by Cadre Financial Services, Inc., a subsidiary of AMBAC Capital
Corporation.
CERTIFICATE OF TRUST
OF
AMBAC TREASURERS TRUST
This Certificate of Trust of AMBAC TREASURERS TRUST, a
business trust registered under the Investment Company Act of
1940, as amended (the "Business Trust"), filed in accordance with
the provisions of the Delaware Business Trust Act (12 Del. C.
3801 et seq.), sets forth the following:
FIRST: The name of the Business Trust is AMBAC
TREASURERS TRUST.
SECOND: As required by 12 Del. Code 3807(b) and
3810(a)(1)(b), the name and business address of the Business
Trust's Registered Agent for Service of Process and the address of
the Business Trusts Registered Office are:
Address of
Business Trusts
Registered Office
and Business
Resident Agent Address of
Registered Agent
The Corporation Trust Company 1209 Orange Street
Wilmington,
Delaware 19801
The name and business address of the initial trustee of the
Business Trust is as follows:
Name Business Address
W. Dayle Nattress 300 Nyala Farms
Road
Westport,
Connecticut 06880
THIRD: The nature of the business or purpose or
purposes of the Business Trust as set forth in its governing
instrument is to conduct, operate and carry on the business of a
management investment company registered under the Investment
Company Act of 1940, as amended, through one or more series of
shares of beneficial interest, investing primarily in securities.
FOURTH: The trustee of the business trust, as set forth
in its governing instrument, reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of
Trust, in the manner now or hereafter prescribed by statute.
FIFTH: This Certificate of Trust shall become effective
immediately upon filing with the Office of the Secretary of State
of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the sole initial
trustee of AMBAC TREASURERS TRUST, has duly executed this
Certificate of Trust as of this 27th day of June, 1995.
/s/ W. Dayle Nattres
W. Dayle Nattress, as
Trustee and
not individually
DECLARATION OF TRUST
OF
AMBAC TREASURERS TRUST
WHEREAS, THIS DECLARATION OF TRUST (the "Declaration") is
made and entered into as of the date set forth below by the
trustee named hereunder (the "Initial Trustee") for the purpose of
forming a Delaware business trust in accordance with the
provisions hereinafter set forth,
NOW, THEREFORE, the Initial Trustee is filing a Certificate
of Trust with the Office of the Secretary of State of the State of
Delaware and hereby declares that all money and property
contributed to the trust established hereby shall be held and
managed in trust for the benefit of the holders from time to time
of beneficial interests issued hereunder and subject to the
provisions hereof, to wit:
ARTICLE I
Name and Definitions
Section 1. Name.
The name of the trust established hereby (the "Trust") is
AMBAC TREASURERS TRUST and, insofar as may be practicable, the
Trustees shall conduct the Trusts activities, execute all
documents and sue or be sued under that name, which name (and the
word "Trust" wherever herein used) shall refer to the Trustees as
trustees, and not as individuals, or personally, and shall not
refer to the officers, agents, employees or Shareholders of the
Trust. If the Trustees determine that the Trusts use of such
name is not advisable or if the Trust is required to discontinue
the use of such name pursuant to Article VIII, Section 9 hereof,
then subject to that section the Trustees may adopt such other
name for the Trust as they deem proper and the Trust may hold its
property and conduct its activities under such other name.
Section 2. Definitions.
Whenever used herein, unless otherwise required by the
context or specifically provided:
(a) The "Trust" refers to the Delaware business
trust established hereby, by whatever name it be known, inclusive
of each and every Series established hereunder;
(b) The "Trust Property" means any and all assets
and property, real or personal, tangible or intangible, which are
owned or held by or for the account of the Trust or the Trustees,
including without limitation the rights referenced in Article
VIII, Section 9 hereof;
(c) "Trustee" refers to the Initial Trustee who has
signed this Declaration, so long as such person continues in
office in accordance with the terms hereof, and all other
individuals who may from time to time be duly elected or appointed
to serve as Trustees hereunder in accordance with the provisions
hereof, so long as such persons continue in office in accordance
with the terms hereof, and all references herein to a Trustee or
the Trustees shall refer to such person or persons in their
capacity as trustees hereunder;
(d) "Shares" means the units of beneficial interest
into which the beneficial interest in the Trust and each Series of
the Trust shall be divided from time to time and includes
fractions of Shares as well as whole Shares;
(e) "Shareholder" means a record owner of
outstanding Shares;
(f)" "Person" means and includes individuals,
corporations, partnerships, trusts, associations, joint ventures,
estates and other entities, whether or not legal entities, and
governments and agencies and political subdivisions thereof,
whether domestic or foreign;
(g) The "1940 Act" refers to the Investment Company
Act of 1940 and the rules and regulations thereunder, all as
amended from time to time and any orders thereunder which may from
time to time be applicable to the Trust;
(h) The terms "Commission" and "Principal
Underwriter" shall have the meanings given them in the 1940 Act;
(i) "Declaration" shall mean this Agreement and
Declaration of Trust, as amended and in effect from time to time.
Reference in this Declaration of Trust to "Declaration," "hereof,"
"herein," "hereby," and "hereunder" shall be deemed to refer to
this Declaration rather than the article or section in which such
words appear;
(j) "By-Laws" shall mean the By-Laws of the Trust
referred to in Article IV, Section 3 hereof, as amended from time
to time and incorporated herein by reference;
(k) The term "Interested Person" has the meaning
given it in the 1940 Act;
(l) "Investment Manager" means a party furnishing
services to the Trust pursuant to any contract described in
Article IV, Section 7(a) hereof; and
(m) "Series" refers to each Series of the Trust
established and designated under or in accordance with the
provisions of Article III hereof.
(n) "Board of Trustees" means such individuals who
at any time from time to time constitute the Trustees.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on
the business of a management investment company registered under
the 1940 Act through one or more Series investing primarily in
securities.
ARTICLE III
Shares of Beneficial Interest
Section 1. Description of Shares.
The beneficial interest in the Trust shall at all times be
divided into transferable units to be called Shares of Beneficial
Interest, each with a par value of one tenth of one cent ($.001).
The Trustees may, from time to time, authorize the division of
Shares into separate Series and the division of any Series into
two or more separate classes of Shares, as they deem necessary and
desirable. The different Series shall be established and
designated, and the variations in the relative rights and
preferences as between the different Series shall be fixed and
determined, by the Trustees, without the requirement of
Shareholder approval. If only one or no Series (or classes) shall
be established, the Shares shall have the rights and preferences
provided for herein and in Article III, Section 6 hereof to the
extent relevant and not otherwise provided for herein, and all
references to Series (and classes) shall be construed (as the
context may require) to refer to the Trust.
Subject to the provisions of Section 6 of this Article III,
each Share shall have voting rights as provided in Article V
hereof and in the By-Laws, and holders of the Shares of any Series
shall be entitled to receive dividends, when, if and as declared
with respect thereto in the manner provided in Article VI, Section
1 hereof. No Shares shall have any priority or preference over
any other Share of the same Series (and class) with respect to
dividends or distributions upon termination of the Trust or of
such Series (or class) made pursuant to Article VIII, Section 2
hereof. All dividends and distributions shall be made ratably
among all Shareholders of a particular Series (or class thereof)
from the assets held with respect to such Series according to the
number of Shares of such Series (or class thereof) from the assets
held with respect to such Series according to the number of Shares
of such Series (or class) held of record by such Shareholder on
the record date for any dividend or distribution or on the date of
termination, as the case may be. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or
other securities issued by the Trust or any Series (or class).
The Trustees may from time to time divide or combine the Shares of
any particular Series (or class) without thereby materially
changing the proportionate beneficial interest of the Shares of
that Series (or class) in the assets held with respect to that
Series or materially affecting the rights of Shares of any other
Series (or class).
The number of authorized Shares and the number of Shares of
each Series (and class) that may be issued is unlimited. The
Trustees may classify or reclassify any unissued Shares or any
Shares previously issued and reacquired of any Series (or class)
into one or more Series (or classes) that are now or hereafter
established and designated from time to time. The Trustees may
hold as treasury Shares, reissue for such consideration and on
such terms as they may determine, or cancel, at their discretion
from time to time, any Shares of any Series (or class) reacquired
by the Trust.
Section 2. Ownership of Shares.
The ownership of Shares shall be recorded on the books of
the Trust or of a transfer or similar agent for the Trust, which
books shall be maintained separately for the Shares of each Series
(or class). No certificates certifying the ownership of Shares
shall be issued except as the Board of Trustees may otherwise
determine from time to time. The Trustees may make such rules as
they consider appropriate for the transfer of Shares of each
Series (or class) and similar matters. The record books of the
Trust as kept by the Trust or any transfer or similar agent, as
the case may be, shall be conclusive as to who are the
Shareholders of each Series (or class) and as to the number of
Shares of each Series (or class) held from time to time by each
Shareholder.
Section 3. Investments in the Trust; Consideration.
Shares of the Trust shall be offered for sale and sold in
such manner and at such times, and subject to such requirements
and for such consideration, as may be determined from time to time
by the Trustees, subject to applicable requirements of law,
including the 1940 Act. To the extent permitted by applicable
law, Shares may be sold subject to imposition of such sales
charges, deferred sales charges or redemption fees as may be
determined by the Trustees. All Shares when issued on the terms
determined by the Trustees shall be fully paid and non-assessable.
Section 4. 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
existence of the Trust shall not operate to terminate the Trust,
and shall not entitle the representative of any decreased
Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but entitles such
representative only to the rights of said deceased Shareholder
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 to any right to call for a partition or division
of the same or for an accounting, nor shall the ownership of
Shares constitute the Shareholders as partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind personally any Shareholders, nor,
except as specifically provided herein, to call upon any
Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time
personally agree to pay.
Section 5. Power of Board of Trustees to Change Provisions
Relating to
Shares.
Notwithstanding any other provisions of this Declaration and
without limiting the power of the Board of Trustees to amend the
Declaration as provided elsewhere herein, the Board of Trustees
shall have the power to amend this Declaration, at any time and
from time to time, in such manner as the Board of Trustees may
determine in its sole discretion, without the need for Shareholder
action, so as to add to, delete, replace or otherwise modify any
provisions relating to the Shares contained in this Declaration,
provided that before adopting any such amendment without
Shareholder approval the Board of Trustees shall determine that it
is consistent with the fair and equitable treatment of all
Shareholders or that Shareholder approval is not otherwise
required by the 1940 Act or other applicable law. If Shares have
been issued, Shareholder approval shall be required to adopt any
amendments to this Declaration which would adversely affect to a
material degree the rights and preferences of the Shares of any
Series (or class) or to increase or decrease the par value of the
Shares of any Series (or class).
Subject to this Section 5, the Board of Trustees may amend
the Declaration of Trust to amend any of the provisions set forth
in paragraphs (a) through (i) of Section 6 of this Article III.
Section 6. Establishment and Designation of Series.
The establishment and designation of any Series (or class)
shall be effective upon the execution by a majority of the
Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of the Shares
of such Series (or class), or as otherwise provided in such
instrument. Each instrument referred to in this paragraph shall
have the status of an amendment to this Declaration.
The three initial Series of Shares of the Trust, which
Series are hereby established and designated, are AMBAC U.S.
Treasury Money Market Fund, AMBAC U.S. Government Money Market
Fund, and AMBAC Short-Term U.S. Government Income Fund. All
Shares of each such Series shall be of a single class. Shares of
the initial three Series, and Shares of each additional Series (or
class) hereafter established pursuant to this Section 6, unless
otherwise provided in the instrument establishing such Series (or
class), shall have the following relative rights and preferences:
(a) Assets Held With Respect to a Particular Series.
All consideration received by the Trust for the issuance or sale
of Shares of a particular Series (or class), together with all
assets in which such consideration is invested or reinvested, all
income, earnings and profits thereon, and the proceeds thereof,
from whatever source derived, including, without limitation, any
proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, shall irrevocably
be held with respect to that Series (or class) for all purposes,
subject only to the rights of creditors of such Series, and shall
be so recorded upon the books of account of the Trust. All such
consideration, assets, income, earnings, profits and proceeds
thereof of a Series (or class), are herein referred to as "assets
held with respect to" that Series (or class). In the event that
there are any assets, income, earnings, profits and proceeds
thereof, funds or payments which are not readily identifiable as
assets held with respect to any particular Series (or class)
(collectively "General Assets"), the Trustees shall allocate such
General Assets to, between or among any one or more of the Series
(or classes) in such manner and on such basis as the Trustees, in
their sole discretion, deem fair and equitable, and any General
Assets so allocated to a particular Series (or class) shall be
assets held with respect to that Series (or class). Each such
allocation by the Trustees shall be conclusive and binding upon
the Shareholders of all Series (and classes) for all purposes.
(b) Liabilities Held With Respect to a Particular
Series. The assets of the Trust held with respect to each
particular Series (and class) shall be charged with all
liabilities, expenses, costs, charges and reserves attributable to
that Series (or class). All such liabilities, expenses, costs,
charges, and reserves so charged to a Series (or class) are herein
referred to as "liabilities held with respect to" that Series (or
class). Any liabilities of the Trust which are not readily
identifiable as being held with respect to any particular Series
(or class) ("General Liabilities") shall be allocated and charged
by the Trustees to, between or among any one or more of the Series
(or classes) in such manner and on such basis as the Trustees, in
their sole discretion, deem fair and equitable, and any General
Liabilities so allocated to a particular Series shall be
liabilities held with respect to that Series. Each such
allocation of liabilities, expenses, costs, charges and reserves
by the Trustees shall be conclusive and binding upon the holders
of all Series (and classes) for all purposes. All Persons who
have extended credit which has been allocated to a particular
Series, or who have a claim or contract which has been allocated
to any particular Series, shall look, and shall be required by
contract to look exclusively, to the assets of that particular
Series for payment of such credit, claim or contract. In the
absence of an express contractual agreement so limiting the claims
of such creditors, claimants and contract providers, each
creditor, claimant and contract provider will be deemed
nevertheless to have impliedly agreed to such limitation unless an
express provision to the contrary has been incorporated in the
written contract or other document establishing the claimant
relationship.
(c) Dividends, Distributions, Redemptions and
Repurchases. Notwithstanding any other provisions of this
Declaration, including, without limitation, Article VI, no
dividend or distribution including, without limitation, any
distribution paid upon termination of the Trust or of any Series
(or class) with respect to, nor any redemption or repurchase of,
the Shares of any Series (or class) shall be effected by the Trust
other than from the assets held with respect to such Series (or
class), nor, except as specifically provided in Section 7 of this
Article III, shall any Shareholder of any particular Series (or
class) otherwise have any right or claim against the assets held
with respect to any other Series (or class) except to the extent
that such Shareholder has such a right or claim hereunder as a
Shareholder of such other Series (or class). The Trustees shall
have full discretion, to the extent not inconsistent with the 1940
Act, to determine which items shall be treated as income or
capital gains and which items shall be treated as capital; and
each such determination and allocation shall be conclusive and
binding upon the Shareholders.
(d) Voting. All Shares of the Trust entitled to
vote on a matter shall vote separately by Series (and, if
applicable, by class): that is, the Shareholders of each Series
(or class) shall have the right to approve or disapprove matters
affecting the Trust and each respective Series (or class) as if
the Series (or class) were separate companies. There are,
however, two exceptions to voting by separate Series (or classes).
First, if as to any matter the 1940 Act requires or permits all
Shares of the Trust to be voted in the aggregate without
differentiation between the separate Series (or classes), then all
Shares entitled to vote on such matter shall vote as a single
class. Second, if any matter affects only the interests of some
but not all Series (or classes), then only the Shareholders of
such affected Series (or classes) shall be entitled to vote on the
matter.
(e) Equality. All the Shares of each particular
Series (or class) shall represent an equal proportionate interest
in the assets held with respect to that Series (or class) (subject
to the liabilities held with respect to that Series (or class) and
such rights and preferences as may have been established and
designated with respect to classes of Shares within such Series
(or class)), and each Share of any particular Series (or class)
shall be equal to each other Share of that Series (or class).
(f) Fractional Shares. Any fractional Share of a
Series (or class) shall carry proportionately all the rights and
obligations of a whole share of that Series (or class), including
rights with respect to voting, receipt of dividends and
distributions, redemption of Shares and termination of the Trust.
(g) Exchange Privilege. The Trustees shall have the
authority to provide that the holders of Shares of any Series (or
class) shall have the right to exchange said Shares for Shares of
one or more other Series (or classes) of Shares in accordance with
such requirements, limitations and procedures as may be
established by the Trustees.
Section 7. Indemnification of Shareholders.
If any Shareholder or former Shareholder shall be exposed to
liability by reason of a claim or demand relating to his or her
being or having been a Shareholder, and not because of his or her
acts or omissions, the Shareholder or former Shareholder (or his
or her 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 to be
held harmless from and indemnified out of the assets of the Trust
against all loss and expense arising from such claim or demand.
ARTICLE IV
The Board of Trustees
Section 1. Number, Election and Tenure.
The number of Trustees constituting the Board of Trustees
shall be fixed from time to time by a written instrument signed,
or by resolution approved at a duly constituted meeting, by a
majority of the Board of Trustees; provided, however, that the
number of Trustees shall in no event be less than one (1) nor more
than fifteen (15). Except as required by the 1940 Act, Trustees
need not be elected by Shareholders. The Board of Trustees, by
action of a majority of the then Trustees at a duly constituted
meeting, may fill vacancies in the Board of Trustees or remove
Trustees with or without cause; except that a vacancy shall be
filled only by a person elected by Shareholders if required by the
1940 Act. Each Trustee shall serve during the continued lifetime
of the Trust until he dies, resigns, is declared bankrupt or
incompetent by a court of appropriate jurisdiction, or is removed,
or, if sooner, until the next meeting of Shareholders called for
the purpose of electing Trustees and until the election and
qualification of his successor. Any Trustee may resign at any
time by written instrument signed by him and delivered to any
officer of the Trust or to a meeting of the Trustees. Such
resignation shall be effective upon receipt unless specified to be
effective at some other time. Except to the extent expressly
provided in a written agreement with the Trust, no Trustee
resigning and no Trustee removed shall have any right to any
compensation for any period following his resignation or removal,
or any right to damages on account of such removal. The
Shareholders may elect Trustees at any meeting of Shareholders
called by the Trustees for that purpose. Any Trustee may be
removed at any meeting of Shareholders by a vote of two-thirds of
the outstanding Shares of the Trust. A meeting of Shareholders
for the purpose of electing or removing one or more Trustees shall
be called (i) by the Trustees upon their own vote, or (ii) upon
the demand of a Shareholder or Shareholders owning Shares
representing 10% or more of all votes entitled to be cast by
outstanding Shares.
Section 2. Effect of Death, Resignation, etc. of a Trustee.
The death, declination, resignation, retirement, removal or
incapacity of one or more Trustees, or all of them, shall not
operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration. Whenever a
vacancy in the Board of Trustees shall occur, until such vacancy
is filled as provided in Article IV, Section 1, the Trustees in
office, regardless of their number, shall have all the powers
granted to the Trustees and shall discharge all the duties imposed
upon the Trustees by this Declaration. As conclusive evidence of
such vacancy, a written instrument certifying the existence of
such vacancy may be executed by an officer of the Trust or by
majority of the Board of Trustees. In the event of the death,
declination, resignation, retirement, removal or incapacity of all
the then Trustees within a short period of time and without the
opportunity for at least one Trustee being able to appoint
additional Trustees to fill vacancies, the Trusts Investment
Manager(s) are empowered to appoint new Trustees, subject to the
provisions of Section 16(a) of the 1940 Act.
Section 3. Powers.
Subject to the provisions of this Declaration, the business
of the Trust shall be managed by the Board of Trustees, and such
Board shall have all powers necessary or convenient to carry out
that responsibility. Without limiting the foregoing, the Trustees
may: (i) adopt By-Laws not inconsistent with this Declaration
providing for the regulation and management of the affairs of the
Trust and may amend and repeal them to the extent that such By-
Laws do not reserve that right to the Shareholders; (ii) elect
persons to serve as Trustees and fill vacancies in the Board of
Trustees, and remove Trustees from such Board, and may elect and
remove such officers and appoint and terminate such agents as they
consider appropriate; (iii) appoint from their own number and
establish and terminate one or more committees consisting of one
or more Trustees which may exercise the powers and authority of
the Board of Trustees to the extent that the Trustees determine;
(iv) 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 or with a Federal Reserve Bank,
retain a transfer agent or a shareholder servicing agent, or both,
and employ such other Persons as the Trustees may deem desirable
for the transaction of business of the Trust or any Series; (v)
provide for the issuance, sale and distribution of Shares by the
Trust directly or through one or more Principal Underwriters or
otherwise; (vi) redeem, repurchase, retire, cancel, acquire, hold,
resell, reissue, classify, reclassify, and transfer and otherwise
deal in Shares pursuant to applicable law; (vii) set record dates
for the determination of Shareholders with respect to various
matters; (viii) declare and pay dividends and distributions to
Shareholders of each Series (or class) from the assets of such
Series (or classes); (ix) collect all property due to the Trust,
pay all claims, including taxes, against the Trust Property,
prosecute, defend, compromise or abandon any claims relating to
the Trust Property, foreclose any security interest securing any
obligations by virtue of which any property is owned to the Trust,
enter into releases, agreements and other instruments; (x) incur
and pay any expenses which, in the opinion of the Trustees, are
necessary or incidental to carry out any of the purposes of this
Declaration, and pay reasonable compensation from the funds of the
Trust to themselves as trustees; (xi) engage in and prosecute,
defend, compromise, abandon, or adjust, by arbitration or
otherwise, any actions, suits, proceedings, disputes, claims and
demands relating to the Trust expenses incurred in connection
therewith, including those of litigation; (xii) indemnify any
Person with whom the Trust has dealings, including the
Shareholders, Trustees, officers, employees, agents, Investment
Managers, or Principal Underwriters of the Trust, to the extent
permitted by law and not inconsistent with any applicable
provisions of the By-Laws as the Trustees shall determine; (xiii)
determine and change the fiscal year of the Trust or any Series
and the method by which its accounts shall be kept; (xiv) adopt a
seal for the Trust or any Series; and (xv) in general, delegate
such authority as they consider desirable to any officer of the
Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian, transfer or
shareholder servicing agent, Investment Manager or Principal
Underwriter. Any determination as to what is in the interests of
the Trust made by the Trustees in good faith shall be conclusive.
In construing the provisions of this Declaration, the presumption
shall be in favor of a grant of power to the Trustees. Unless
otherwise specified or required by law, any action by the Board of
Trustees shall be deemed effective if approved or taken by a
majority of the Trustees then in office.
Without limiting the foregoing, the Trust shall have power and
authority:
(a) To invest and reinvest cash, to hold cash uninvested,
and to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, own, hold, pledge, sell, assign, transfer,
exchange, distribute, write options on, lend or otherwise deal in
or dispose of contracts for the future acquisition or delivery of
fixed income or other securities and securities of every nature
and kind, including, without limitation, all types of bonds,
debentures, stocks, negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, certificates of deposit or
indebtedness, commercial paper, repurchase agreements, bankers
acceptances and other securities of any kind, issued, created,
guaranteed, or sponsored by any and all Persons, including,
without limitation, states, territories, and possessions of the
United States and the District of Columbia and any political
subdivision, agency, or instrumentality thereof, any political
subdivision of the U.S. Government or any foreign government, or
any international instrumentality, or by any bank or saving
institution, or by any corporation or organization organized under
the laws of the United States or of any state, territory, or
possession thereof, or by any corporation or organization
organized under any foreign law, or in "when issued" contracts for
any such securities, to change the investments of the assets of
the Trust; 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, to exercise
any of said rights, powers, and privileges in respect of any of
said instruments;
(b) To sell, exchange, lend, pledge, mortgage,
hypothecate, lease, or write options with respect to or otherwise
deal in any property rights relating to any or all of the assets
of the Trust or any Series;
(c) 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;
(d) To exercise powers and right to subscription or
otherwise which in any manner arise out of ownership of
securities;
(e) To hold any security or property in a form not
indicating any trust, whether in bearer, unregistered or other
negotiable form, or in its own name or in the name of a custodian
or subcustodian or a nominee or nominees or otherwise;
(f) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
issuer of any security which is held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by
such corporation or issuer; and to pay calls or subscriptions with
respect to any security held in the Trust;
(g) 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;
(h) To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy,
including but not limited to a claim for taxes;
(i) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) To borrow funds or other property in the name of the
Trust exclusively for Trust purposes;
(k) To endorse or guarantee the payment of any notes or
other obligations of any Person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof;
(l) To purchase and pay for out of Trust Property such
insurance as the Trustees may deem necessary or appropriate for
the conduct of the business, including, without limitation,
insurance policies insuring the assets of the Trust or payment of
distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, Investment Managers, Principal Underwriters, or
independent contractors of the Trust, individually against all
claims and liabilities of every nature arising by reason of
holding Shares, 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 Trustee, officer, employee, agent,
Investment 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 liability,
subject to such limitations as may be imposed by law;
(m) 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; and
(n) To conduct, operate and carry on any other lawful
business and engage in any other lawful business activity which
the Trustees, in their sole and absolute discretion, consider to
be (i) incidental to the business of the Trust as an investment
company, (ii) conducive to or expedient for the benefit or
protection of the Trust or any Series or the Shareholders, or
(iii) calculated in any other manner to promote the interests of
the Trust or any Series or the Shareholders.
The Trust shall not be limited to investing in obligations
maturing before the possible termination of the Trust or one or
more of its Series. The Trust shall not in any way be bound or
limited by any present or future law or custom in regard to
investment by fiduciaries. The Trust shall not be required to
obtain any court order to deal with any assets of the Trust or
take any other action hereunder.
Section 4. Payment of Expenses by the Trust.
The Trustees are authorized to pay or cause to be paid out
of the principal or income of the Trust, or partly out of the
principal and partly out of income, as they deem fair, all
expenses, fees, charges, taxes and liabilities incurred or arising
in connection with the Trust, or in connection with the management
thereof, including, but not limited to, the Trustees compensation
and such expenses and charges for the services of the Trusts
officers, employees, Investment Managers, Principal Underwriters,
auditors, counsel, custodian, transfer agent, Shareholder
servicing agent, and such other agents or independent contractors
and such other expenses and charges as the Trustees may deem
necessary or proper to incur.
Section 5. Payment of Expenses by Shareholders.
The Trustees shall have the power, as frequently as they may
determine, to cause each Shareholder, or each Shareholder of any
particular Series, to pay directly, in advance or arrears, for
charges of the Trusts custodian or transfer, Shareholder
servicing or similar agent, an amount fixed from time to time by
the Trustees, by setting off such charges due from such
Shareholder from declared but unpaid dividends owed such
Shareholder and/or by reducing the number of Shares in the account
of such Shareholder by that number of full and/or fractional
Shares which represents the outstanding amount of such charges due
from such Shareholder.
Section 6. Ownership of Assets of the Trust.
Title to all of the assets of the Trust shall at all times
be considered as vested in the Trust, except that the Trustees
shall have power to cause legal title to any Trust Property to be
held by or in the name of one or more of the Trustees, or in the
name of the Trust, or in the name of any other Person as nominee,
on such terms as the Trustees may determine. The right, title and
interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee.
Upon the resignation, removal or death of a Trustee he shall
automatically cease to have any right, title or interest in any of
the Trust Property, and the right, title and interest of such
Trustee in the Trust Property shall vest automatically in the
remaining Trustees. Such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed
and delivered.
Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as
may be set forth in the By-Laws, the Trustees may, at any time and
from time to time, contract for exclusive or nonexclusive
investment advisory, management and administrative services for
the Trust or for any Series with any corporation, trust,
association or other organization; and any such contract may
contain such other terms as the Trustees may determine, including
without limitation, authority for one or more Investment Managers
to determine from time to time without prior consultation with the
Trustees 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 Trusts
investments, or such other activities as may specifically be
delegated to such party.
(b) The Trustees may also, at any time and from time
to time, contract with any corporation, trust, association or
other organization, appointing it exclusive or nonexclusive
distributor or Principal Underwriter for the Shares of one or more
of the Series (or classes) or other securities to be issued by the
Trust.
(c) The Trustees are also empowered, at any time and
from time to time, to contract with any corporation, trust,
association or other organization, appointing it the
administrator, custodian, transfer agent or shareholder servicing
agent for the Trust or one or more of its Series.
(d) The Trustees are further empowered, at any time
and from time to time, to contract with any entity to provide such
other services to the Trust or any Series, as the Trustees
determine to be in the best interests of the Trust or the Series.
(e) The fact that:
(i) any of the Shareholders, Trustees, or
officers of the Trust is a shareholder, director, officer,
partner, trustee, employee, Investment Manager, Principal
Underwriter, distributor, or affiliate or agent of or for any
corporation, trust, association, or other organization, or for any
parent or affiliate of any organization with which an advisory,
management or administration contract, or Principal Underwriters
or distributors contract, or transfer, shareholder servicing or
other type of service contract may have been or may hereafter be
made, or that any such organization, or any parent or affiliate
thereof, is a Shareholder or has an interest in the Trust, or that
(ii) any corporation, trust, association or
other organization with which an advisory, management or
administration contract or Principal Underwriters or
distributors contract, or transfer, shareholder servicing or
other type of service contract may have been or may hereafter be
made also has an advisory, management or administration contract,
or principal underwriters or distributors contract, or transfer,
shareholder servicing or other service contract with other
organizations, or has other business or interests, shall not
affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or
executing the same, or create any liability or accountability to
the Trust or its Shareholders, provided approval of each such
contract is made pursuant to the requirements of the 1940 Act.
ARTICLE V
Shareholders Voting Powers
Subject to the provisions of Article III, Section 6(d), the
Shareholders shall have power to vote only (i) for the election or
removal of Trustees as provided in Article IV, Section 1, and (ii)
with respect to such additional matters relating to the Trust as
may be required by this Declaration, the By-Laws, the 1940 Act or
any registration of the Trust with the Commission (or any
successor agency) or any state, or as the Trustees may consider
necessary or desirable. Each whole Share shall be entitled to one
vote as to any matter on which it is entitled to vote and each
fractional Share shall be entitled to a proportionate fractional
vote, except that (i) Shares held in the Treasury as of the record
date, as determined in accordance with the By-Laws, shall not be
voted, and (ii) when Shares of more than one Series (or class)
vote together on a matter as a single class, each Share (or
fraction thereof) shall be entitled to that number of votes which
is equal to the net asset value of such Share (or fractional
Share) determined as of the applicable record date. There shall
be no cumulative voting in the election of Trustees.
Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required by law,
this Declaration or the By-Laws to be taken by Shareholders votes
and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income,
Dividends and
Distributions.
Subject to Article III, Section 6 hereof, the Trustees, in
their absolute discretion, may prescribe such bases and times for
valuing the net assets of the Trust and determining the net asset
value of Shares, which net asset value shall be separately
determined for each Series (and class), for determining the net
income attributable to the Shares of any Series (or class), or for
declaring and paying dividends and other distributions on Shares
of any Series (or class), as they may deem necessary or desirable.
Section 2. Redemptions and Repurchases.
The Trust shall purchase such Shares as are offered by any
Shareholder for redemption, upon the presentation of a proper
instrument of transfer together with a request directed to the
Trust or a Person designated by the Trust that the Trust purchase
such Shares or in accordance with such other procedures for
redemption as the Trustees may from time to time authorize; and
the Trust will pay therefor the net asset value thereof by wire or
check, in accordance with applicable law, less the amount of any
deferred sales charge or redemption fee that is applicable.
Payment for said Shares shall be made by the Trust to the
Shareholder within seven days after the date on which the request
is made in proper form, except as may otherwise be permitted by
the 1940 Act.
The redemption price may in any case or cases be paid wholly
or partly in kind if the Trustees determine that it would be
detrimental to the best interests of remaining Shareholders of the
Series for which the Shares are being redeemed to pay any
redemption or redemptions in cash. Subject to the foregoing, the
fair value, selection and quantity of securities or other property
so paid or delivered as all or part of the redemption price may be
determined by or under authority of the Trustees. In no case
shall the Trust be liable for any delay of any corporation or
other Person in transferring securities selected for delivery as
all or part of any payment in kind.
Section 3. Redemptions at the Option of the Trust.
The Trust shall have the right at its option and at any time
to redeem Shares from any Shareholder at the net asset value
thereof as described in Section 1 of this Article VI if at such
time, and as a result of one or more redemptions of one or more
Shares by such Shareholder, the aggregate net asset value of the
Shares in such Shareholders account with the Trust or any Series
is less than $100,000 or such lesser amount no greater than the
minimum initial investment amount then applicable for investments
in the Trust or the applicable Series, as the Trustees may from
time to time determine
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 1. Compensation.
The Trustees as such shall be entitled to reasonable
compensation from the Trust, and they may fix the amount of such
compensation. Nothing herein shall in any way prevent the
employment of any Trustee for advisory, management, legal,
accounting, investment banking or other services and payment for
the same by the Trust.
Section 2. Indemnification and Limitation of Liability.
The Trustees shall not be responsible or liable in any event
for any neglect or wrong-doing of any officer, agent, employee,
Investment Manager or Principal Underwriter of the Trust, nor
shall any Trustee by responsible for the act or omission of any
other Trustee, and the Trust out of its assets shall indemnify and
hold harmless each and every Trustee from and against any and all
claims and demands whatsoever arising out of or related to each
Trustees performance of his duties as a Trustee of the Trust to
the fullest extent permitted by law; provided that nothing herein
contained shall indemnify, hold harmless or protect any Trustee
from or against any liability to the Trust or any Shareholder 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 or
undertaking and every other act or thing whatsoever issued,
executed or done by or on behalf of the Trust or the Trustees or
any of them in connection with the Trust shall be conclusively
deemed to have been issued, executed or done only in or with
respect to their or his capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
Section 3. Trustees Good Faith Action; Expert Advice; No Bond or
Surety.
The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee
shall be liable to the Trust and to any Shareholder solely for his
own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of
Trustee, 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, and shall be under no liability for any act or
omission in accordance with such advice nor 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 4. Insurance.
The Trustees shall be entitled and empowered to the fullest
extent permitted by law to purchase with Trust assets insurance
for liability and for all expenses reasonably incurred or paid or
expected to be paid by a Trustee or officer in connection with any
claim, action, suit or proceeding in which he becomes involved by
virtue of his capacity or former capacity with the Trust.
ARTICLE VIII
Miscellaneous
Section 1. 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 or to see to the application of any
payments made or property transferred to the Trust or upon its
order.
Section 2. Termination of Trust or Series.
Unless terminated as provided herein, the Trust shall
continue without limitation of time. The Trust may be terminated
at any time by vote of the holders of a majority of the
outstanding Shares of each Series entitled to vote, voting
separately by Series, or by the Trustees by written notice to the
Shareholders. Any Series (or class) may be terminated at any time
by vote of the holders of a majority of the outstanding Shares of
that Series (or class) or by the Trustees by written notice to the
Shareholders of that Series.
Upon termination of the Trust (or any Series or class, as
the case may be), after paying or otherwise providing for all
charges, taxes, expenses and liabilities held, severally, with
respect to each Series (or the applicable Series or class, as the
case may be), whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall, in accordance with
such procedures as the Trustees consider appropriate, reduce the
remaining assets held, severally, with respect to each Series (or
the applicable Series or class, as the case may be) to
distributable form in cash or shares or other securities, or any
combination thereof, and distribute the proceeds held with respect
to each Series (or the applicable Series or class, as the case may
be) to the Shareholders of that Series (or class), as a Series (or
class), ratable according to the number of Shares of that Series
(or class) held by the several Shareholders on the date of
termination.
Section 3. Merger and Consolidation.
The Trustees may cause (i) the Trust or one or more of its
Series to the extent consistent with applicable law to be merged
into or consolidated with another trust or company, (ii) Shares of
the Trust or any Series to be converted into beneficial interests
in another business trust (or series thereof) created pursuant to
this Section 3 of Article VIII, (iii) the sale of substantially
all of the assets of the Trust or one or more of its Series to
another trust or company in exchange for the assumption of the
liabilities of the Trust or the Series and the issuance of
beneficial interests in such trust or company, or (iv) Shares to
be exchanged under or pursuant to any state or federal statute to
the extent permitted by law. Such merger or consolidation, Share
conversion, sale of assets or Share exchange must be authorized by
vote of the holders of a majority of the outstanding Shares of the
affected Series; provided that in all respects not governed by
applicable law, the Trustees shall have the power to prescribe the
procedures necessary or appropriate to accomplish the transaction
including the power to create one or more separate business trusts
to which all or any part of the assets, liabilities, profits or
losses of the Trust may be transferred and to provide for the
conversion of Shares of the Trust or any Series into beneficial
interests in such separate business trust or trusts (or series
thereof). The Trustees may also cause substantially all of the
assets of any Series (the "Acquired Series") to be sold to another
Series if authorized by vote of the holders of a majority of the
outstanding Shares of the Acquired Series, and to the extent not
governed by applicable law, the Trustees shall have the power to
prescribe the procedures necessary or appropriate to accomplish
the transaction. Upon consummation of any transaction
contemplated by this Section 3, the Trust or applicable Series, as
the case may be, shall distribute its remaining assets to
Shareholders and terminate as provided by Section 2 of this
Article VIII.
Section 4. Amendments.
(a) This Declaration may be restated or amended at
any time by an instrument in writing signed by a majority of the
Trustees and, if required by applicable law or this Declaration or
the By-Laws, by approval of such amendment by Shareholders in
accordance with Article V hereof and the By-Laws. Any such
restatement or amendment hereto shall be effective immediately
upon execution and approval. The Certificate of Trust of the
Trust may be restated or amended by a similar procedure, and any
such restatement or amendment shall be effective immediately upon
filing with the Office of the Secretary of State of the State of
Delaware or upon such future date as may be stated therein.
(b) Nothing contained in this Declaration shall
permit the amendment of this Declaration to impair the exemption
from personal liability of this Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments on
Shareholders.
Section 5. Filing of Copies; References; Headings.
The original or a copy of this Declaration and of each
restatement and amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Shareholder. Anyone
dealing with the Trust may rely on a certificate by an officer of
the Trust as to whether or not any such restatements or amendments
have been made and as to any 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 Declaration or of any such restatement or amendment.
Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this Declaration. Whenever the
singular number is used herein, the same shall include the plural;
and the neuter, masculine and feminine genders shall include each
other, as applicable. This Declaration may be simultaneously
executed in any number of counterparts each of which shall be
deemed an original, and such counterparts together shall
constitute one and the same instrument, which shall be
sufficiently evidenced by any such original counterpart.
Section 6. Applicable Law.
This Declaration is created under and is to be governed by
and construed and administered according to the laws of the State
of Delaware and the Delaware Business Trust Act, as amended from
time to time (the "Act"). The Trust shall be a Delaware business
trust pursuant to such Act, and without limiting the provisions
hereof, the Trust may exercise all powers which are ordinarily
exercised by such a business trust.
Section 7. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration are
severable, and if the Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with the 1940
Act, the regulated investment company provisions of the Internal
Revenue Code of 1986, as amended, or with other applicable laws
and regulations, the conflicting provision shall be deemed never
to have constituted a part of the Declaration of Trust; provided,
however, that such determination shall not affect any of the
remaining provisions of the Declaration of Trust or render invalid
or improper any action taken or omitted prior to such
determination.
(b) If any provision of the Declaration shall be
held invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in
any other jurisdiction or any other provision of the Declaration
in any jurisdiction.
Section 8. Business Trust Only.
It is the intention of the Trustees to create a business
trust pursuant to the Act and thereby to create only the
relationship of trustee and beneficial owners within the meaning
of such Act between the Trustees and each Shareholder. It is not
the intention of the Trustees to create a general partnership,
limited partnership, joint stock association, corporation,
bailment, or any form of legal relationship other than a business
trust pursuant to the Act. Nothing in this Declaration shall be
construed to make the Shareholders, either by themselves or with
the Trustees, partners or members of a joint stock association.
Section 9. Use of the Name "AMBAC".
The name "AMBAC" and all rights to the use of the name
"AMBAC" belong to AMBAC Inc. ("AMBAC"), the sponsor of the Trust.
AMBAC has consented to the use by the Trust of the identifying
word AMBAC and has granted to the Trust a non-exclusive license to
use the name AMBAC as part of the name of the Trust and the name
of any Series of Shares. In the event an affiliate of AMBAC is
not appointed as Investment Manager or ceases to be the Investment
Manager of the Trust or of any Series, the non-exclusive license
granted herein may be revoked by AMBAC and the Trust shall cease
using the name AMBAC as part of its name or the name of any Series
of Shares, unless otherwise consented to by AMBAC or any successor
to its interest in such name.
IN WITNESS WHEREOF, the Trustee named below does hereby make
and enter into this Declaration of Trust as of the 27th day of
June, 1995.
/s/ W. Dayle Nattress
W. Dayle Nattress, as Trustee and
not
individually
300 Nyala Farms Road
Westport, Connecticut 06880
Effective as of
June 27, 1995
DECLARATION OF TRUST
OF
AMBAC TREASURERS TRUST
a Delaware Trust
Principal Place of Business:
300 Nyala Farms Road
Westport, Connecticut 06880
TABLE OF CONTENTS
ARTICLE I NAME AND DEFINITIONS 1
Section 1. Name. 1
Section 2. Definitions. 1
ARTICLE II PURPOSE OF TRUST 3
ARTICLE III SHARES OF BENEFICIAL INTEREST 3
Section 1. Description of Shares. 3
Section 2. Ownership of Shares. 4
Section 3. Investments in the Trust; Consideration. 4
Section 4. Status of Shares and Limitation of Personal Liability.
4
Section 5. Power of Board of Trustees to Change Provisions
Relating to Shares. 5
Section 6. Establishment and Designation of Series. 5
Section 7. Indemnification of Shareholders. 7
ARTICLE IV THE BOARD OF TRUSTEES 8
Section 1. Number, Election and Tenure. 8
Section 2. Effect of Death, Resignation, etc. of a Trustee.
8
Section 3. Powers. 9
Section 4. Payment of Expenses by the Trust. 12
Section 5. Payment of Expenses by Shareholders. 12
Section 6. Ownership of Assets of the Trust. 12
Section 7. Service Contracts. 13
ARTICLE V SHAREHOLDERS VOTING POWERS 14
ARTICLE VI NET ASSET VALUE, DISTRIBUTIONS
AND REDEMPTIONS 14
Section 1. Determination of Net Asset Value, Net Income,
Dividends
and Distributions. 14
Section 2. Redemptions and Repurchases. 15
Section 3. Redemptions at the Option of the Trust. 15
ARTICLE VII COMPENSATION AND LIMITATION
OF LIABILITY OF TRUSTEES 15
Section 1. Compensation. 15
Section 2. Indemnification and Limitation of Liability. 15
Section 3. Trustees Good Faith Action; Expert Advice; No Bond
or Surety. 16
Section 4. Insurance. 16
ARTICLE VIII MISCELLANEOUS 16
Section 1. Liability of Third Persons Dealing with Trustees.
16
Section 2. Termination of Trust or Series. 17
Section 3. Merger and Consolidation. 17
Section 4. Amendments. 18
Section 5. Filing of Copies; References; Headings. 18
Section 6. Applicable Law. 18
Section 7. Provisions in Conflict with Law or Regulations. 19
Section 8. Business Trust Only. 19
Section 9. Use of the Name "AMBAC". 19
21
BY-LAWS
OF
AMBAC TREASURERS TRUST
A Delaware Business Trust
These By-Laws are made and adopted pursuant to Article IV,
Section 3, of the Agreement and Declaration of Trust establishing
AMBAC Treasurers Trust (the "Trust"), dated June 27, 1995, as from
time to time amended (the "Declaration"). All words capitalized
in these By-Laws that are not otherwise defined herein shall have
the meaning or meanings set forth for such words or terms in the
Declaration.
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE.
The Board of Trustees shall fix and, from time to time, may
change the location of the principal executive office of the Trust
at any place within or without the State of Delaware.
SECTION 2. DELAWARE OFFICE.
The Board of Trustees shall establish a registered office in
the State of Delaware and shall appoint as the Trusts registered
agent for service of process in the State of Delaware an
individual resident in the State of Delaware or a Delaware
corporation or a foreign corporation authorized to transact
business in the State of Delaware; provided that, in each case,
the business office of such registered agent for service of
process shall be identical with the registered Delaware office of
the Trust.
SECTION 3. OTHER OFFICES.
The Board of Trustees may at any time establish an office or
offices in the City of Westport, State of Connecticut, and at such
other places within or without the State of Delaware as the
Trustees may from time to time designate or the business of the
Trust may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. TIME AND PLACE OF MEETINGS.
All meetings of Shareholders shall be held at such time and
place, whether within or without the State of Delaware, as shall
be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
SECTION 2. MEETINGS.
Meetings of Shareholders of the Trust or any Series (or
class) shall be held whenever a vote of such Shareholders is
required by the Declaration and at such other times as the
Trustees may determine to be necessary, appropriate or advisable.
Meetings of Shareholders to consider any matter as to which a vote
of Shareholders is required by the 1940 Act or is permitted to be
requested by Shareholders pursuant to the 1940 Act and as to which
the Trustees have not called a meeting of Shareholders shall be
called by the secretary upon the written request of the holders of
Shares entitled to cast not less than ten percent (10%) of all the
votes then entitled to be case on such matter at a meeting of
Shareholders. Such request shall state the purpose or purposes of
such meeting and the matters proposed to be acted on thereat. The
secretary shall inform such Shareholders of the estimated
reasonable cost of preparing and mailing such notice of the
meeting. Upon payment to the Trust of such costs, the secretary
shall give notice stating the purpose or purposes of the meeting
to each Shareholder entitled to vote at such meeting. Unless
requested by Shareholders entitled to cast a majority of all votes
entitled to be cast on such matter, a meeting need not be called
to consider any matter which is substantially the same as a matter
voted on at any meeting of Shareholders held during the preceding
twelve (12) months.
SECTION 3. NOTICE OF MEETINGS.
Written notice of each meeting of Shareholders stating the
place, date and hour thereof, and in the case of a special
meeting, specifying the purpose or purposes thereof, shall be
given, to each Shareholder entitled to vote thereat, not less than
ten (10) nor more than ninety (90) days prior to the meeting
either by mail or by presenting it to such Shareholder personally
or by leaving it at his residence or usual place of business. If
mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, addressed to the
Shareholder at his post office address as it appears on the
records of the Trust.
If action is proposed to be taken at any meeting for
approval of (i) a contract or transaction in which a Trustee has a
direct or indirect financial interest, (ii) an amendment of the
Declaration, (iii) a reorganization of the Trust, or (iv) a
voluntary dissolution of the Trust, the notice shall state the
general nature of that proposal.
SECTION 4. QUORUM; ADJOURNMENTS.
Except as otherwise provided by law, by the Declaration or
by these By-Laws, at all meetings of Shareholders the holders of
Shares representing forty percent (40%) of the Shares entitled to
vote on a matter, present in person or represented by proxy, shall
be requisite and shall constitute a quorum for the transaction of
business as to such matter. This section shall not affect any
applicable requirement of law or the Declaration for the vote
necessary for the adoption of any measure. In the absence of a
quorum, the Shareholders present in person or represented by proxy
and entitled to vote on a matter shall have power to adjourn the
meeting with respect to such matter from time to time without
notice other than announcement at the meeting until such quorum
shall be present. The holders of Shares entitled to cast not less
than a majority of all the votes entitled to be cast at such
meeting on a matter shall also have the power to adjourn the
meeting. Written notice shall be given as required by Article
III, Section 3, if a meeting is adjourned to a date more than one
hundred twenty (120) days after the record date originally
scheduled with respect to the meeting. At any such adjourned
meeting at which a quorum shall be present, any business may be
transacted which might have been transacted had a quorum been
present at the time originally fixed for the meeting.
SECTION 5. VOTED REQUIRED.
Except as otherwise provided by applicable law, by the
Declaration or by these By-Laws and subject to the provisions of
Article III, Section 6(d) of the Declaration, when a quorum is
present at any meeting, a majority of the Shares voted shall
decide all questions and a plurality shall elect a Trustee.
SECTION 6. VOTING.
At any meeting of Shareholders, each Shareholder having the
right to vote shall be entitled to vote in person or by proxy, and
each Shareholder of record shall be entitled to cast such number
of votes as specified by Article V of the Declaration for each
Share (and fractional share) entitled to vote so registered in his
name on the records of the Trust on the date fixed as the record
date for the determination of Shareholders entitled to vote at
such meeting. Shares held by two or more persons (whether as
joint tenants, co-fiduciaries or otherwise) will be voted as
follows, unless written instrument or court order providing to the
contrary has been filed with the secretary of the Trust: (1) if
only one votes, his vote will bind all; (2) if more than one
votes, the vote of the majority will bind all; and (3) if more
than one votes and the vote is evenly divided, the Shares will be
voted in accordance with the determination of a majority of such
persons and any person appointed to act by a court of competent
jurisdiction, or, in the absence of such appointment, the vote
will be cast proportionately.
SECTION 7. PROXIES.
Each proxy shall be in writing executed by the Shareholder
giving the proxy or by his duly authorized attorney. No proxy
shall be valid after the expiration of eleven (11) months from its
date, unless a longer period is provided for in the proxy.
SECTION 8. PROCEDURES AT MEETINGS.
At all meetings of Shareholders, all questions relating to
the qualification of voters, the validity of proxies, the
acceptance or rejection of votes, the order and manner in which
matters are submitted to a vote, and all other matters relating to
questions of procedure shall be decided by the chairman of the
meeting, in a manner consistent with these By-Laws.
SECTION 9. INFORMAL ACTION BY SHAREHOLDERS.
Any action required or permitted to be taken at a meeting of
Shareholders may be taken without a meeting if (i) a consent in
writing, setting forth such action, is signed by the holders of
outstanding Shares having not less than the minimum number of
votes that would be necessary to authorize such action at a
meeting of Shareholders at which all Shares issued and outstanding
and entitled to vote thereat were present in person or by proxy,
and (ii) such consents are filed with the records of the Trust.
ARTICLE III
TRUSTEES
SECTION 1. POWERS.
Subject to the applicable provisions of the Declaration and
these By-Laws relating to action required to be approved by the
Shareholders or by the outstanding Shares, the business and
affairs of the Trust shall be managed and all powers shall be
exercised by or under the direction of the Board of Trustees.
SECTION 2. NUMBER OF TRUSTEES.
The exact number of Trustees within the limits specified in
the Declaration shall be fixed from time to time by a written
instrument signed, or by resolution approved at a duly constituted
meeting, by a majority of the Board of Trustees.
SECTION 3. VACANCIES.
Vacancies in the Board of Trustees may be filled by a
majority of the then remaining Trustees at a duly constituted
meeting; except that a vacancy shall be filled only by a person
elected by Shareholders if required by the 1940 Act.
SECTION 4. ANNUAL MEETINGS OF THE TRUSTEES.
The Trustees shall hold an annual meeting for the election
of officers and the transaction of other business which may come
before the meeting.
SECTION 5. REGULAR AND SPECIAL MEETINGS OF THE TRUSTEES.
The Trustees may in their discretion provide for regular or
special meetings of the Trustees. Regular meetings of the
Trustees may be held without further notice, except as otherwise
required by the 1940 Act in which case notice shall be given as
prescribed in Section 6 of this Article III, and may be held at
such time and place as shall be fixed in advance by the Trustees.
Special meetings of the Trustees may be called at any time by the
president and shall be called by the president, vice president or
the secretary upon the request of any two (2) Trustees or, if
there shall be only one (1) Trustee, upon the request of such sole
Trustee.
SECTION 6. NOTICE OF SPECIAL MEETING.
Notice of any special meeting of the Trustees shall be given
by oral or written notice delivered personally, telephoned,
telegraphed, mailed or electronically transmitted to each Trustee
at his business or residence address. Personally delivered,
telegram or electronically transmitted notice shall be given at
least twenty-four (24) hours prior to the meeting. Notice by mail
shall be given at least five (5) days prior to the meeting. If
mailed, such notice will be deemed to be given when deposited in
the United States mail properly addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be
deemed given when the telegram is delivered to the telegraph
company. Neither the business to be transacted at, nor the
purpose of, any special meeting of the Trustees need be stated in
the notice, unless specifically required by the 1940 Act.
SECTION 7. QUORUM; ADJOURNMENT.
A majority of the authorized number of Trustees shall
constitute a quorum for the transaction of business; provided,
that if less than a majority of such number of Trustees is present
at any such meeting, a majority of the Trustees present or the
sole Trustee present may adjourn the meeting from time to time
without further notice until a quorum is present.
SECTION 8. VOTING.
The action of a majority of the Trustees present at a
meeting at which a quorum is present shall be the action of the
Trustees, unless the concurrence of a greater proportion or of any
specified group of Trustees is required for such action by law,
the Declaration or these By-Laws.
SECTION 9. EXECUTIVE AND OTHER COMMITTEES.
The Trustees may designate one or more committees, each
committee to consist of one (1) or more Trustees and to have such
title as the Trustees may consider to be properly descriptive of
its function, except that not more than one committee shall be
designated as the Executive Committee and that the Executive
Committee shall consist of two (2) or more Trustees. Each such
committee shall serve at the pleasure of the Trustees.
In the absence of any member of such committee, the members
thereof present at any meeting, whether or not they constitute a
quorum, may appoint a Trustee to act in the place of such absent
member.
The Trustees may delegate to any of the committees appointed
under this Article III, Section 9, any of the powers of the
Trustees, except the power to: (1) amend the Declaration; (2)
authorize the merger or consolidation of the Trust or the sale,
lease or exchange of all or substantially all of the Trust
Property belonging to the Trust or any Series (or class);
(3) approve the incorporation of the Trust; (4) approve the
termination of the Trust; (5) declare dividends or distributions
on Shares; (6) issue Shares except pursuant to a general formula
or method specified by the Trustees by resolution; (7) amend these
By-Laws; or (8) elect, appoint or remove Trustees.
Each committee, as and when requested by the Trustees, shall
keep minutes or other appropriate written evidence of its meetings
or proceedings and shall report the same to the Trustees and shall
observe such other procedures with respect to its meetings as may
be prescribed by the Trustees in the resolution appointing such
committee, or, if and to the extent not so prescribed, as are
prescribed in these By-Laws with respect to meetings of the
Trustees.
SECTION 10. PARTICIPATION IN MEETINGS BY TELEPHONE.
Any Trustee may participate in a meeting of the Trustees or
of any committee of the Trustees by means of conference telephone
or similar communications equipment if all persons participating
in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute
presence in person at the meeting except where the 1940 Act
requires Trustee action at a meeting held in person.
SECTION 11. INFORMAL ACTION BY TRUSTEES.
Unless an in person meeting is required by the 1940 Act, any
action required or permitted to be taken at any meeting of the
Trustees or of any committee of the Trustees may be taken without
a meeting, if a consent in writing to such action is signed by
each Trustee in the case of a meeting of Trustees, or each Trustee
who is a member of the committee, in the case of a meeting of a
committee, and such written consent is filed with the minutes of
proceedings of the Trustees or of the committee. Any such consent
may be executed in counterparts.
SECTION 12. COMPENSATION.
The Trustees shall determine and from time to time fix by
resolution the compensation payable to Trustees for their services
to the Trust in that capacity. Such compensation may, but need
not, consist of an annual fee or a fee for attendance at meetings
of the Trustees or of any committee of the Trustees of which the
Trustees receiving such fees are members, or a combination of an
annual fee and a fee for attendance. The chairman of the Board of
Trustees, if any, and the chairman, if any, of each committee of
Trustees, may be paid additional amounts for services rendered in
such capacities. In addition, the Trustees may authorize the
reimbursement of Trustees for their expenses for attendance at
meetings of the Trustees and at meetings of any committee of the
Trustees of which they are members. Nothing herein contained
shall be construed to preclude any Trustee from serving the Trust
in any other capacity and receiving compensation therefor.
ARTICLE IV
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to law,
the Declaration or these By-Laws, a waiver thereof in writing,
signed by the person or persons entitled to such notice, or, in
the case of any waiver of notice of any meeting of Shareholders,
signed by the proxy for a person entitled to notice thereof,
whether before or after the time stated therein, shall be deemed
equivalent of the giving of such notice. Neither the business to
be transacted at nor the purpose of any meeting need be set forth
in the waiver of notice, unless specifically required by law, the
Declaration or these By-Laws. The attendance by any person at any
meeting in person, or in the case of a meeting of Shareholders, by
proxy, shall constitute a waiver of notice of such meeting, except
where such person attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that
the meeting is not lawfully called or convened.
ARTICLE V
OFFICERS
SECTION 1. EXECUTIVE OFFICERS.
The executive officers of the Trust shall be a president, a
secretary and a treasurer. If the Trustees shall elect a chairman
pursuant to Section 7 of this Article V, then the chairman shall
also be an executive officer of the Trust. If the Trustees shall
elect one or more vice-presidents, each such vice-president shall
be an executive officer. The chairman, if there be one, shall be
elected from among the Trustees, but no other executive officer
need be a Trustee. Any two or more executive offices, except
those of president and vice-president, may be held by the same
person. A person holding more than one office may not act in more
than one capacity to execute, acknowledge or verify on behalf of
the Trust an instrument required by law to be executed,
acknowledged and verified by more than one officer. The executive
officers of the Trust shall be elected annually at a meeting of
Trustees.
SECTION 2. OTHER OFFICERS AND AGENTS.
The Trustees may also elect or may delegate to the
president, authority to appoint, remove, or fix the duties,
compensation or terms of office of one or more assistant vice-
presidents, assistant secretaries and assistant treasurers, and
such other officers and agents as the Trustees shall at any time
and from time to time deem to be advisable.
SECTION 3. TENURE, RESIGNATION AND REMOVAL.
Each officer of the Trust shall hold office until his
successor is elected or appointed or until his earlier
displacement from office by resignation, removal or otherwise;
provided, that if the term of office of any officer elected or
appointed pursuant to Section 2 of this Article shall have been
fixed by the Trustees or by the president acting under authority
delegated by the Trustees, such officer shall cease to hold such
office no later than the date of expiration of such term,
regardless of whether any other person shall have been elected or
appointed to succeed him. Any officer of the Trust may resign at
any time by written notice to the Trust. Any officer or agent of
the Trust may be removed at any time by the Trustees or by the
president acting under authority delegated by the Trustees
pursuant to Section 2 of this Article if in their or his judgment
the best interest of the Trust would be served thereby, but such
removal shall be without prejudice to the contract rights, if any,
of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights between the
Trust and such officer or agent.
SECTION 4. VACANCIES.
If the office of any officer becomes vacant for any reason,
the vacancy may be filled by the Trustees or by the president
acting under authority delegated by the Trustees pursuant to
Section 2 of this Article. Each officer elected or appointed to
fill a vacancy shall hold office for the balance of the term for
which his predecessor was elected or appointed.
SECTION 5. COMPENSATION.
The compensation, if any, of all officers of the Trust shall
be fixed by the Trustees or by the president acting under
authority delegated by the Trustees pursuant to Section 2 of this
Article.
SECTION 6. AUTHORITY AND DUTIES.
All officers as between themselves and the Trust shall have
such powers, perform such duties and be subject to such
restrictions, if any, in the management of the Trust as may be
provided in these By-Laws, or, to the extent not so provided, as
may be prescribed by the Trustees or by the president acting under
authority delegated by the Trustees pursuant to Section 2 of this
Article.
SECTION 7. CHAIRMAN.
When and if the Trustees deem such action to be necessary or
appropriate, they may elect a chairman from among the Trustees.
The chairman shall preside at meetings of the Shareholders and of
the Trustees; and he shall have such other powers and duties as
may be prescribed by the Trustees. The chairman shall in the
absence or disability of the president exercise the powers and
perform the duties of the president.
SECTION 8. PRESIDENT.
The president shall be the chief executive officer of the
Trust. He shall have responsibility for the general and active
management of the business of the Trust, shall see to it that all
orders, policies and resolutions of the Trustees are carried into
effect, and, in connection therewith, shall be authorized to
delegate to any vice-president of the Trust such of his powers and
duties as president and at such times and in such manner as he
shall deem advisable. In the absence or disability of the
chairman, or if there be no chairman, the president shall preside
at all meetings of the Shareholders and of the Trustees; and he
shall have such other powers and perform such other duties as are
incident to the office of a corporate president and as the
Trustees may from time to time prescribe.
SECTION 9. VICE-PRESIDENTS.
The vice-president, if any, or, if there be more than one,
the vice-presidents, shall assist the president in the management
of the business of the Trust and the implementation of orders,
policies and resolutions of the Trustees at such times and in such
manner as the president may deem to be advisable. If there be
more than one vice-president, the Trustees may designate one as
the executive vice-president, in which case he shall be first in
order of seniority, and the Trustees may also grant to other vice-
presidents such titles as shall be descriptive of their respective
functions or indicative of their relative seniority. In the
absence or disability of both the president and the chairman, or
in the absence or disability of the president if there be no
chairman, the vice-president, or, if there be more than one, the
vice-presidents in the order of their relative seniority, shall
exercise the powers and perform the duties of those officers; and
the vice-president or vice-presidents shall have such other powers
and perform such other duties as from time to time may be
prescribed by the president or by the Trustees.
SECTION 10. ASSISTANT VICE-PRESIDENT.
The assistant vice-president, if any, or if there be more
than one, the assistant vice-presidents, shall perform such duties
as may from time to time be prescribed by the Trustees or by the
president acting under authority delegated by the Trustees
pursuant to Section 2 of this Article.
SECTION 11. SECRETARY.
The secretary shall (a) keep the minutes of the meetings and
proceedings and any written consents evidencing actions of the
Shareholders, the Trustees and any committees of the Trustees in
one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these
By-Laws or as required by law; (c) be custodian of the corporate
records and of the seal of the Trust, and, when authorized by the
Trustees, cause the seal of the Trust to be affixed to any
document requiring it, and when so affixed, attested by his
signature as secretary or by the signature of an assistant
secretary; and (d) in general, perform such other duties as from
time to time may be assigned to him by the president or by the
Trustees.
SECTION 12. ASSISTANT SECRETARIES.
The assistant secretary, if any, or, if there be more than
one, the assistant secretaries in the order determined by the
Trustees or by the president, shall in the absence or disability
of the secretary exercise the powers and perform the duties of the
secretary, and he or they shall perform such other duties as the
Trustees, the president or the secretary may from time to time
prescribe.
SECTION 13. TREASURER.
The treasurer shall be the chief financial officer of the
Trust. The treasurer shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Trust, shall
deposit all moneys and other valuable effects in the name and to
the credit of the Trust in such depositories as may be designated
by the Trustees, and shall render to the Trustees and the
president, at regular meetings of the Trustees or whenever they or
the president may require it, an account of all his transactions
as treasurer and of the financial condition of the Trust.
If required by the Trustees, the treasurer shall give the
Trust a bond in such sum and with such surety or sureties as shall
be satisfactory to the Trustees for the faithful performance of
the duties of his office and for the restoration to the Trust, in
case of his death, resignation, retirement or removal from office,
all books, papers, vouchers, money and other property or whatever
kind in his possession or under his control belonging to the
Trust.
SECTION 14. ASSISTANT TREASURERS.
The assistant treasurer, if any, or, if there be more than
one, the assistant treasurers in the order determined by the
Trustees or by the president, shall in the absence or disability
of the treasurer exercise the powers and perform the duties of the
treasurer, and he or they shall perform such other duties as the
Trustees, the president or the treasurer may from time to time
prescribe.
ARTICLE VI
INDEMNIFICATION OF TRUSTEES, OFFICERS,
EMPLOYEES AND OTHER AGENTS
SECTION 1. AGENTS, PROCEEDINGS AND EXPENSES.
For purposes of this Article, "agent" means any person who
is or was a Trustee, officer, employee or other agent of this
Trust or is or was serving at the request of this Trust as a
Trustee, director, officer, employee or agent of another foreign
or domestic corporation, partnership, joint venture, trust or
other enterprise or was a Trustee, director, officer, employee or
agent of a foreign or domestic corporation which was a predecessor
of another enterprise at the request of such predecessor entity;
"proceeding" means any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or
investigative; and "expenses" includes without limitation
attorneys fees and any expenses of establishing a right to
indemnification under this Article.
SECTION 2. ACTIONS OTHER THAN BY TRUST.
This Trust shall indemnify any person who was or is a party
or is threatened to be made a party to any proceeding (other than
an action by or in the right of this Trust) by reason of the fact
that such person is or was an agent of this Trust, against
expenses, judgments, fines, settlements and other amounts actually
and reasonably incurred in connection with such proceedings, if it
is determined that such person acted in good faith and reasonably
believed: (a) in the case of conduct in his official capacity as a
Trustee of the Trust, that his conduct was in the Trusts best
interests and (b) in all other cases, that his conduct was at
least not opposed to the Trusts best interests and (c) in the
case of a criminal proceeding, that he had no reasonable cause to
believe the conduct was unlawful. The termination of any
proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent shall not of itself
create a presumption that the person did not act in good faith and
in a manner which the person reasonably believed to be in the best
interests of this Trust or that the person had reasonable cause to
believe that the persons conduct was unlawful.
SECTION 3. ACTIONS BY THE TRUST.
This Trust shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action by or in the right of this Trust to procure a
judgment in its favor by reason of the fact that such person is or
was an agent of this Trust, against expenses actually and
reasonably incurred by that person in connection with the defense
or settlement of that action if that person acted in good faith,
in a manner that such person believed to be in the best interests
of this Trust and with such care, including reasonable inquiry, as
an ordinarily prudent person in a like position would use under
similar circumstances.
SECTION 4. EXCLUSION OF INDEMNIFICATION.
Notwithstanding any provision to the contrary contained
herein, there shall be no right to indemnification for any
liability arising by reason of willful misfeasance, bad faith,
gross negligence, or the reckless disregard of the duties involved
in the conduct of the agents office with this Trust.
No indemnification shall be made under Sections 2 or 3 of
this Article:
(a) In respect of any claim, issue, or matter as to which that
person shall have been adjudged to be liable on the basis that
personal benefit was improperly received by him, whether or not
the benefit resulted from an action taken in the persons official
capacity; or
(b) In respect of any claim, issue or matter as to which that
person shall have been adjudged to be liable in the performance of
that persons duty to this Trust, unless and only to the extent
that the court in which that action was brought shall determine
upon application that in view of all the circumstances of the
case, that person was not liable by reason of the disabling
conduct set forth in the preceding paragraph and is fairly and
reasonably entitled to indemnity for the expenses which the court
shall determine; or
(c) Of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court approval, or
of expenses incurred in defending a threatened or pending action
which is settled or otherwise disposed of with or without court
approval, unless the required approval set forth in Section 6 of
this Article is obtained.
SECTION 5. SUCCESSFUL DEFENSE BY AGENT.
To the extent that an agent of this Trust has been
successful on the merits in defense of any proceeding referred to
in Sections 2 or 3 of this Article or in defense of any claim,
issue or matter therein, before the court or other body before
whom the proceeding was brought, the agent shall be indemnified
against expenses actually and reasonably incurred by the agent in
connection therewith, provided that the Board of Trustees,
including a majority who are disinterested, non-party Trustees,
also determines that based upon a review of the facts, the agent
was not liable by reason of the disabling conduct referred to in
Section 4 of this Article.
SECTION 6. REQUIRED APPROVAL.
Except as provided in Section 5 of this Article, any
indemnification under this Article shall be made by this Trust
only if authorized in the specific case on a determination that
indemnification of the agent is proper in the circumstances
because the agent has met the applicable standard of conduct set
forth in Sections 2 or 3 of this Article and is not prohibited
from indemnification because of the disabling conduct set forth in
Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of Trustees who are
not parties to the proceeding and are not interested persons of
the Trust (as defined in the 1940 Act); or
(b) A written opinion by an independent legal counsel.
SECTION 7. ADVANCE OF EXPENSES.
Expenses incurred in defending any proceeding may be
advanced by this Trust before the final disposition of the
proceeding upon a written undertaking by or on behalf of the
agent, to repay the amount of the advance if it is ultimately
determined that he or she is not entitled to indemnification,
together with at least one of the following as a condition to the
advance: (i) security for the undertaking; or (ii) the existence
of insurance protecting the Trust against losses arising by reason
of any lawful advances; or (iii) a determination by a majority of
a quorum of Trustees who are not parties to the proceeding and are
not interested persons of the Trust (as defined in the 1940 Act),
or by an independent legal counsel in a written opinion, based on
a review of readily available facts that there is reason to
believe that the agent ultimately will be found entitled to
indemnification. Determinations and authorizations of payments
under this Section must be made in the manner specified in Section
6 of this Article for determining that the indemnification is
permissible.
SECTION 8. OTHER CONTRACTUAL RIGHTS.
Nothing contained in this Article shall affect any right to
indemnification to which persons other than Trustees and officers
of this Trust or any subsidiary hereof may be entitled by contract
or otherwise.
SECTION 9. LIMITATIONS.
No indemnification or advance shall be made under this
Article, except as provided in Sections 5 or 6 in any
circumstances where it appears:
(a) That it would be inconsistent with a provision of the
Declaration, a resolution of the Shareholders, or an agreement in
effect at the time of accrual or the alleged cause of action
asserted in the proceeding in which the expenses were incurred or
other amounts were paid which prohibits or otherwise limits
indemnification; or
(b) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
SECTION 10. INSURANCE.
Upon the approval of the Board of Trustees, the Trust may
purchase and maintain insurance protecting any agent of the Trust
against any liability asserted against or incurred by the agent in
such capacity or arising out of the agents status as such, but
the portion of the cost of such insurance protecting the agent
against liabilities as to which the Trust would not have the power
to indemnify the agent under the provisions of this Article and
the Declaration shall not be borne by the Trust.
SECTION 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN.
This Article does not apply to any proceeding against any
Trustee, Investment Manager or other fiduciary of an employee
benefit plan in that persons capacity as such, even though that
person may also be an agent of this Trust as defined in Section 1
of this Article. Nothing contained in this Article shall limit
any right to indemnification to which such a Trustee, Investment
Manager, or other fiduciary may be entitled by contract or
otherwise which shall be enforceable to the extent permitted by
applicable law other than this Article.
ARTICLE VII
RECORDS AND REPORTS
SECTION 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
This Trust shall keep at its principal executive office or
at the office of its transfer agent, a record of its Shareholders,
giving the names and addresses of all Shareholders and the number
and Series (and class) of Shares held by each Shareholder.
SECTION 2. MAINTENANCE AND INSPECTION OF BY-LAWS.
The Trust shall keep at its principal executive office the
original or a copy of these By-Laws as amended to date, which
shall be open to inspection by the Shareholders at all reasonable
times during office hours.
SECTION 3. MAINTENANCE AND INSPECTION OF OTHER RECORDS.
The accounting books and records of the Trust and minutes of
proceedings of the Shareholders and the Board of Trustees and any
committee or committees of the Board of Trustees shall be kept at
such place or places designated by the Board of Trustees or in the
absence of such designation, at the principal executive office of
the Trust. The minutes shall be kept in written form and the
accounting books and records shall be kept either in written form
or in any other form capable of being converted into written form.
The minutes and accounting books and records shall be open to
inspection upon the written demand of any Shareholder at any
reasonable time during usual business hours for a purpose
reasonably related to the holders interests as a Shareholder.
The inspection may be made in person or by an agent or attorney
and shall include the right to copy and make extracts. Inspection
by any Shareholder of the Shareholder list and books and records
of the Trust shall be at the discretion of the Trustees.
SECTION 4. INSPECTION BY TRUSTEES.
Every Trustee shall have the absolute right at any
reasonable time to inspect all books, records and documents of
every kind and the physical properties of the Trust. This
inspection by a Trustee may be made in person or by an agent or
attorney and the right of inspection includes the right to copy
and make extracts of documents.
SECTION 5. FINANCIAL STATEMENTS.
The Trustees shall submit to the Shareholders such written
financial reports as are required by the 1940 Act.
ARTICLE VIII
CONTRACTS, CHECKS AND DRAFTS
SECTION 1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS.
All checks, drafts, or other orders for payment of money,
notes or other evidences of indebtedness issued in the name of or
payable to the Trust shall be signed or endorsed in such manner
and by such person or persons as shall be designated from time to
time in accordance with the resolution of the Board of Trustees.
SECTION 2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
The Board of Trustees, except as otherwise provided in these
By-Laws, may authorize any officer or officers, agent or agents,
to enter into any contract or execute any instrument in the name
of and on behalf of the Trust and this authority may be general or
confined to specific instances; and unless so authorized or
ratified by the Board of Trustees or within the agency power of an
officer, no officer, agent, or employee shall have any power or
authority to bind the Trust by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for
any amount.
ARTICLE IX
SHARES OF BENEFICIAL INTEREST
SECTION 1. CERTIFICATES OF SHARES.
The Trust shall not be obligated to issue certificates
representing Shares of the Trust or any Series (or class), except
that the Trustees may determine to authorize the issuance of
certificates for Shares of any Series (or class), and in such
case, certificates shall be issued in accordance with such
procedures as the Trustees may establish. If certificates for
Shares are issued, each such certificate shall be signed by the
chairman, if there be one, or by the president or a vice-president
and countersigned by the secretary or an assistant secretary or
the treasurer or an assistant treasurer. Certificates may be
sealed with the seal of the Trust. The signatures and seal, if
any, on a certificate may be either manual or facsimile. A
certificate is valid and may be issued whether or not an officer
who signed it is still an officer when it is issued. A full
record of the issuance of each certificate and the identifying
number assigned thereto shall be made on the books and records of
the Trust usually kept for the purpose or required by statute.
SECTION 2. TRANSFERS OF SHARES.
Upon surrender to the Trust or its transfer agent of a
certificate duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, the Trust shall
issue a new certificate to the person entitled thereto, cancel the
old certificate and record the transaction upon its books. Shares
of the Trust or any Series (or class) not represented by
certificates shall be transferred by recording the transaction on
the books of the Trust upon presentation of proper evidence of
succession, assignment or authority to transfer.
The Trust shall be entitled to treat the holder of record of
any Share or Shares as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Shares on the part of any other
person, whether or not it shall have express or other notice
thereof, except as otherwise provided by applicable law.
SECTION 3. LOST CERTIFICATE.
The Trustees may by resolution establish procedures pursuant
to which a new certificate or certificates may be issued in place
of any certificate or certificates theretofore issued by the Trust
which have been mutilated or which are alleged to have been lost,
stolen or destroyed, upon presentation of each such mutilated
certificate, or the making of an affidavit by the person claiming
any such certificate to have been lost, stolen or destroyed as to
the fact and circumstances of the loss, theft or destruction
thereof. The Trustees, in their discretion and as a condition
precedent to the issuance of any new certificate, may include
among such procedures a requirement that the owner of any
certificate alleged to have been lost, stolen or destroyed, or the
owners legal representative, furnish the Trust with a bond, in
such sum and with such surety or sureties as the Trustees may
direct, as indemnity against any claim that may be made against
the Trust in respect of such lost, stolen or destroyed
certificate.
SECTION 4. FIXING OF RECORD DATE.
For purposes of determining the Shareholders entitled to
notice of, or to vote at, any meeting of Shareholders or at any
adjournment thereof in respect of which a new record date is not
fixed, or entitled to express written consent to or dissent from
the taking of action by Shareholders without a meeting, or for the
purpose of determining the Shareholders entitled to receive
payment of any dividend or other distribution or allotment of any
rights, or to exercise any rights in respect of any change,
conversion or exchange of Shares, or for the purpose of any other
lawful action, the Trustees may fix, in advance, a date as the
record date for any such determination of Shareholders. Such date
shall not be more than ninety (90) days, and in case of a meeting
of Shareholders not less than ten (10) days, before the date on
which the meeting or particular action requiring such
determination of Shareholders is to be held or taken. If no
record date is fixed, (a) the record date for the determination of
Shareholders entitled to notice of or to vote at a meeting of
Shareholders shall be the later of: (i) the close of business on
the day on which the notice of meeting is first mailed to any
Shareholder; or (ii) the thirtieth (30th) day before the meeting;
(b) the record date for determining the Shareholders entitled to
express written consent to the taking of any action without a
meeting, when no prior action by the Trustees is necessary, shall
be the day on which the first written consent is expressed; and
(c) the record date for the determination of Shareholders entitled
to receive payment of a dividend or other distribution or an
allotment of any other rights shall be at the close of business on
the day on which the resolution of the Trustees, declaring the
dividend, distribution or allotment of rights, is adopted.
ARTICLE X
FISCAL YEAR
The fiscal year of the Trust or any Series shall be fixed
and may from time to time be changed by resolution of the
Trustees.
ARTICLE XI
SEAL
The Trustees shall adopt a seal, which shall be in such form
and shall have such inscription thereon as the Trustees may from
time to time provide. The seal of the Trust may be affixed to any
document, and the seal and its attestation may be lithographed,
engraved or otherwise printed on any document.
ARTICLE XII
FEDERAL SUPREMACY
If at any time when the Trust is registered as an investment
company under the 1940 Act, any of the foregoing provisions of
these By-Laws or the law of the State of Delaware relating to
business trusts shall conflict or be inconsistent with any
applicable provision of the 1940 Act, the applicable provision of
the 1940 Act shall be controlling and the Trust shall not take any
action which is in conflict or inconsistent therewith.
ARTICLE XIII
DECLARATION OF TRUST
The Agreement and Declaration of Trust establishing the
Trust, dated June 27, 1995, and all amendments thereto, provides
that the name "AMBAC Treasurers Trust" refers to the Trustees
under the Declaration collectively as Trustees, but not as
individuals or personally; and that no Trustee, Shareholder,
officer, employee or agent of the Trust shall be held personally
liable, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise, in
connection the affairs of the Trust, but the Trust Property only
shall be liable.
ARTICLE XIV
AMENDMENTS
These By-Laws may be amended, altered or repealed, or new
By-Laws may be adopted by the Trustees. The Trustees shall in no
event adopt By-Laws which are in conflict with the Declaration,
and, subject to Article XII, Section 2, of these By-Laws, any
apparent inconsistency shall be construed in favor of the related
provisions in the Declaration.
TABLE OF CONTENTS
ARTICLE I OFFICES 1
SECTION 1. PRINCIPAL OFFICE 1
SECTION 2. DELAWARE OFFICE 1
SECTION 3. OTHER OFFICES 1
ARTICLE II MEETINGS OF SHAREHOLDERS 2
SECTION 1. TIME AND PLACE OF MEETINGS. 2
SECTION 2. MEETINGS 2
SECTION 3. NOTICE OF MEETINGS. 2
SECTION 4. QUORUM; ADJOURNMENTS 3
SECTION 5. VOTED REQUIRED 3
SECTION 6. VOTING 3
SECTION 7. PROXIES 3
SECTION 8. PROCEDURES AT MEETINGS 4
SECTION 9. INFORMAL ACTION BY SHAREHOLDERS 4
ARTICLE III TRUSTEES 4
SECTION 1. POWERS 4
SECTION 2. NUMBER OF TRUSTEES 4
SECTION 3. VACANCIES 4
SECTION 4. ANNUAL MEETINGS OF THE TRUSTEES 4
SECTION 5. REGULAR AND SPECIAL MEETINGS OF THE
TRUSTEES 5
SECTION 6. NOTICE OF SPECIAL MEETING 5
SECTION 7. QUORUM; ADJOURNMENT 5
SECTION 8. VOTING 5
SECTION 9. EXECUTIVE AND OTHER COMMITTEES 5
SECTION 10. PARTICIPATION IN MEETINGS BY TELEPHONE 6
SECTION 11. INFORMAL ACTION BY TRUSTEES 6
SECTION 12. COMPENSATION 6
ARTICLE IV WAIVER OF NOTICE 7
ARTICLE V OFFICERS 7
SECTION 1. EXECUTIVE OFFICERS 7
SECTION 2. OTHER OFFICERS AND AGENTS 7
SECTION 3. TENURE, RESIGNATION AND REMOVAL 8
SECTION 4. VACANCIES 8
SECTION 5. COMPENSATION 8
SECTION 6. AUTHORITY AND DUTIES 8
SECTION 7. CHAIRMAN 8
SECTION 8. PRESIDENT 9
SECTION 9. VICE-PRESIDENTS 9
SECTION 10. ASSISTANT VICE-PRESIDENT 9
SECTION 11. SECRETARY 9
SECTION 12. ASSISTANT SECRETARIES 10
SECTION 13. TREASURER 10
SECTION 14. ASSISTANT TREASURERS 10
ARTICLE VI INDEMNIFICATION OF TRUSTEES, OFFICERS,
EMPLOYEES AND OTHER AGENTS 10
SECTION 1. AGENTS, PROCEEDINGS AND EXPENSES 10
SECTION 2. ACTIONS OTHER THAN BY TRUST 11
SECTION 3. ACTIONS BY THE TRUST 11
SECTION 4. EXCLUSION OF INDEMNIFICATION 11
SECTION 5. SUCCESSFUL DEFENSE BY AGENT 12
SECTION 6. REQUIRED APPROVAL 12
SECTION 7. ADVANCE OF EXPENSES 12
SECTION 8. OTHER CONTRACTUAL RIGHTS 13
SECTION 9. LIMITATIONS 13
SECTION 10. INSURANCE 13
SECTION 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN 13
ARTICLE VII RECORDS AND REPORTS 14
SECTION 1. MAINTENANCE AND INSPECTION OF SHARE
REGISTER 14
SECTION 2. MAINTENANCE AND INSPECTION OF
BY-LAWS 14
SECTION 3. MAINTENANCE AND INSPECTION OF OTHER
RECORDS 14
SECTION 4. INSPECTION BY TRUSTEES 14
SECTION 5. FINANCIAL STATEMENTS 14
ARTICLE VIII CONTRACTS, CHECKS AND DRAFTS 15
SECTION 1. CHECKS, DRAFTS, EVIDENCE OF
INDEBTEDNESS 15
SECTION 2. CONTRACTS AND INSTRUMENTS; HOW
EXECUTED 15
ARTICLE IX SHARES OF BENEFICIAL INTEREST 15
SECTION 1. CERTIFICATES OF SHARES 15
SECTION 2. TRANSFERS OF SHARES 15
SECTION 3. LOST CERTIFICATE 16
SECTION 4. FIXING OF RECORD DATE 16
ARTICLE X FISCAL YEAR 17
ARTICLE XI SEAL 17
ARTICLE XII FEDERAL SUPREMACY 17
ARTICLE XIII DECLARATION OF TRUST 17
ARTICLE XIV AMENDMENTS 17
BY-LAWS
OF
AMBAC TREASURERS TRUST
a Delaware Business Trust
As adopted June 27, 1995
- -19-
INSTRUMENTS DEFINING RIGHTS
OF SHAREHOLDERS
Copies of instruments defining the rights of
shareholders, including the relevant portions of the Declaration
of Trust and the By-Laws of AMBAC Treasurers Trust:
Excerpts from:
DECLARATION OF TRUST OF AMBAC TREASURERS TRUST
ARTICLE III
Shares of Beneficial Interest
Section 1. Description of Shares.
The beneficial interest in the Trust shall at all
times be divided into transferable units to be called Shares of
Beneficial Interest, each with a par value of one tenth of one
cent ($.001). The Trustees may, from time to time, authorize the
division of Shares into separate Series and the division of any
Series into two or more separate classes of Shares, as they deem
necessary and desirable. The different Series shall be
established and designated, and the variations in the relative
rights and preferences as between the different Series shall be
fixed and determined, by the Trustees, without the requirement of
Shareholder approval. If only one or no Series (or classes) shall
be established, the Shares shall have the rights and preferences
provided for herein and in Article III, Section 6 hereof to the
extent relevant and not otherwise provided for herein, and all
references to Series (and classes) shall be construed (as the
context may require) to refer to the Trust.
Subject to the provisions of Section 6 of this Article
III, each Share shall have voting rights as provided in Article V
hereof and in the By-Laws, and holders of the Shares of any Series
shall be entitled to receive dividends, when, if and as declared
with respect thereto in the manner provided in Article VI, Section
1 hereof. No Shares shall have any priority or preference over
any other Share of the same Series (and class) with respect to
dividends or distributions upon termination of the Trust or of
such Series (or class) made pursuant to Article VIII, Section 2
hereof. All dividends and distributions shall be made ratably
among all Shareholders of a particular Series (or class thereof)
from the assets held with respect to such Series according to the
number of Shares of such Series (or class thereof) from the assets
held with respect to such Series according to the number of Shares
of such Series (or class) held of record by such Shareholder on
the record date for any dividend or distribution or on the date of
termination, as the case may be. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or
other securities issued by the Trust or any Series (or class).
The Trustees may from time to time divide or combine the Shares of
any particular Series (or class) without thereby materially
changing the proportionate beneficial interest of the Shares of
that Series (or class) in the assets held with respect to that
Series or materially affecting the rights of Shares of any other
Series (or class).
The number of authorized Shares and the number of
Shares of each Series (and class) that may be issued is unlimited.
The Trustees may classify or reclassify any unissued Shares or any
Shares previously issued and reacquired of any Series (or class)
into one or more Series (or classes) that are now or hereafter
established and designated from time to time. The Trustees may
hold as treasury Shares, reissue for such consideration and on
such terms as they may determine, or cancel, at their discretion
from time to time, any Shares of any Series (or class) reacquired
by the Trust.
Section 2. Ownership of Shares.
The ownership of Shares shall be recorded on the books
of the Trust or of a transfer or similar agent for the Trust,
which books shall be maintained separately for the Shares of each
Series (or class). No certificates certifying the ownership of
Shares shall be issued except as the Board of Trustees may
otherwise determine from time to time. The Trustees may make such
rules as they consider appropriate for the transfer of Shares of
each Series (or class) and similar matters. The record books of
the Trust as kept by the Trust or any transfer or similar agent,
as the case may be, shall be conclusive as to who are the
Shareholders of each Series (or class) and as to the number of
Shares of each Series (or class) held from time to time by each
Shareholder.
Section 4. 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
existence of the Trust shall not operate to terminate the Trust,
and shall not entitle the representative of any decreased
Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but entitles such
representative only to the rights of said deceased Shareholder
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 to any right to call for a partition or division
of the same or for an accounting, nor shall the ownership of
Shares constitute the Shareholders as partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind personally any Shareholders, nor,
except as specifically provided herein, to call upon any
Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time
personally agree to pay.
Section 5. Power of Board of Trustees to Change Provisions
Relating to Shares.
Notwithstanding any other provisions of this
Declaration and without limiting the power of the Board of
Trustees to amend the Declaration as provided elsewhere herein,
the Board of Trustees shall have the power to amend this
Declaration, at any time and from time to time, in such manner as
the Board of Trustees may determine in its sole discretion,
without the need for Shareholder action, so as to add to, delete,
replace or otherwise modify any provisions relating to the Shares
contained in this Declaration, provided that before adopting any
such amendment without Shareholder approval the Board of Trustees
shall determine that it is consistent with the fair and equitable
treatment of all Shareholders or that Shareholder approval is not
otherwise required by the 1940 Act or other applicable law. If
Shares have been issued, Shareholder approval shall be required to
adopt any amendments to this Declaration which would adversely
affect to a material degree the rights and preferences of the
Shares of any Series (or class) or to increase or decrease the par
value of the Shares of any Series (or class).
Subject to this Section 5, the Board of Trustees may
amend the Declaration of Trust to amend any of the provisions set
forth in paragraphs (a) through (i) of Section 6 of this Article
III.
Section 6. Establishment and Designation of Series.
The establishment and designation of any Series (or
class) shall be effective upon the execution by a majority of the
Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of the Shares
of such Series (or class), or as otherwise provided in such
instrument. Each instrument referred to in this paragraph shall
have the status of an amendment to this Declaration.
The three initial Series of Shares of the Trust, which
Series are hereby established and designated, are AMBAC U.S.
Treasury Money Market Fund, AMBAC U.S. Government Money Market
Fund, and AMBAC Short-Term U.S. Government Income Fund. All
Shares of each such Series shall be of a single class. Shares of
the initial three Series, and Shares of each additional Series (or
class) hereafter established pursuant to this Section 6, unless
otherwise provided in the instrument establishing such Series (or
class), shall have the following relative rights and preferences:
(a) Assets Held With Respect to a Particular Series. All
consideration received by the Trust for the issuance or sale of
Shares of a particular Series (or class), together with all assets
in which such consideration is invested or reinvested, all income,
earnings and profits thereon, and the proceeds thereof, from
whatever source derived, including, without limitation, any
proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, shall irrevocably
be held with respect to that Series (or class) for all purposes,
subject only to the rights of creditors of such Series, and shall
be so recorded upon the books of account of the Trust. All such
consideration, assets, income, earnings, profits and proceeds
thereof of a Series (or class), are herein referred to as "assets
held with respect to" that Series (or class). In the event that
there are any assets, income, earnings, profits and proceeds
thereof, funds or payments which are not readily identifiable as
assets held with respect to any particular Series (or class)
(collectively "General Assets"), the Trustees shall allocate such
General Assets to, between or among any one or more of the Series
(or classes) in such manner and on such basis as the Trustees, in
their sole discretion, deem fair and equitable, and any General
Assets so allocated to a particular Series (or class) shall be
assets held with respect to that Series (or class). Each such
allocation by the Trustees shall be conclusive and binding upon
the Shareholders of all Series (and classes) for all purposes.
(b) Liabilities Held With Respect to a Particular Series. The
assets of the Trust held with respect to each particular Series
(and class) shall be charged with all liabilities, expenses,
costs, charges and reserves attributable to that Series (or
class). All such liabilities, expenses, costs, charges, and
reserves so charged to a Series (or class) are herein referred to
as "liabilities held with respect to" that Series (or class). Any
liabilities of the Trust which are not readily identifiable as
being held with respect to any particular Series (or class)
("General Liabilities") shall be allocated and charged by the
Trustees to, between or among any one or more of the Series (or
classes) in such manner and on such basis as the Trustees, in
their sole discretion, deem fair and equitable, and any General
Liabilities so allocated to a particular Series shall be
liabilities held with respect to that Series. Each such
allocation of liabilities, expenses, costs, charges and reserves
by the Trustees shall be conclusive and binding upon the holders
of all Series (and classes) for all purposes. All Persons who
have extended credit which has been allocated to a particular
Series, or who have a claim or contract which has been allocated
to any particular Series, shall look, and shall be required by
contract to look exclusively, to the assets of that particular
Series for payment of such credit, claim or contract. In the
absence of an express contractual agreement so limiting the claims
of such creditors, claimants and contract providers, each
creditor, claimant and contract provider will be deemed
nevertheless to have impliedly agreed to such limitation unless an
express provision to the contrary has been incorporated in the
written contract or other document establishing the claimant
relationship.
(c) Dividends, Distributions, Redemptions and Repurchases.
Notwithstanding any other provisions of this Declaration,
including, without limitation, Article VI, no dividend or
distribution including, without limitation, any distribution paid
upon termination of the Trust or of any Series (or class) with
respect to, nor any redemption or repurchase of, the Shares of any
Series (or class) shall be effected by the Trust other than from
the assets held with respect to such Series (or class), nor,
except as specifically provided in Section 7 of this Article III,
shall any Shareholder of any particular Series (or class)
otherwise have any right or claim against the assets held with
respect to any other Series (or class) except to the extent that
such Shareholder has such a right or claim hereunder as a
Shareholder of such other Series (or class). The Trustees shall
have full discretion, to the extent not inconsistent with the 1940
Act, to determine which items shall be treated as income or
capital gains and which items shall be treated as capital; and
each such determination and allocation shall be conclusive and
binding upon the Shareholders.
(d) Voting. All Shares of the Trust entitled to vote on a
matter shall vote separately by Series (and, if applicable, by
class): that is, the Shareholders of each Series (or class) shall
have the right to approve or disapprove matters affecting the
Trust and each respective Series (or class) as if the Series (or
class) were separate companies. There are, however, two
exceptions to voting by separate Series (or classes). First, if
as to any matter the 1940 Act requires or permits all Shares of
the Trust to be voted in the aggregate without differentiation
between the separate Series (or classes), then all Shares entitled
to vote on such matter shall vote as a single class. Second, if
any matter affects only the interests of some but not all Series
(or classes), then only the Shareholders of such affected Series
(or classes) shall be entitled to vote on the matter.
(e) Equality. All the Shares of each particular Series (or
class) shall present an equal proportionate interest in the assets
held with respect to that Series (or class) (subject to the
liabilities held with respect to that Series (or class) and such
rights and preferences as may have been established and designated
with respect to classes of Shares within such Series (or class)),
and each Share of any particular Series (or class) shall be equal
to each other Share of that Series (or class).
(f) Fractional Shares. Any fractional Share of a Series (or
class) shall carry proportionately all the rights and obligations
of a whole share of that Series (or class), including rights with
respect to voting, receipt of dividends and distributions,
redemption of Shares and termination of the Trust.
(g) Exchange Privilege. The Trustees shall have the authority
to provide that the holders of Shares of any Series (or class)
shall have the right to exchange said Shares for Shares of one or
more other Series (or classes) of Shares in accordance with such
requirements, limitations and procedures as may be established by
the Trustees.
Section 7. Indemnification of Shareholders.
If any Shareholder or former Shareholder shall be exposed to
liability by reason of a claim or demand relating to his or her
being or having been a Shareholder, and not because of his or her
acts or omissions, the Shareholder or former Shareholder (or his
or her 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 to be
held harmless from and indemnified out of the assets of the Trust
against all loss and expense arising from such claim or demand.
ARTICLE IV
The Board of Trustees
Section 1. Number, Election and Tenure.
The number of Trustees constituting the Board of
Trustees shall be fixed from time to time by a written instrument
signed, or by resolution approved at a duly constituted meeting,
by a majority of the Board of Trustees; provided, however, that
the number of Trustees shall in no event be less than one (1) nor
more than fifteen (15). Except as required by the 1940 Act,
Trustees need not be elected by Shareholders. The Board of
Trustees, by action of a majority of the then Trustees at a duly
constituted meeting, may fill vacancies in the Board of Trustees
or remove Trustees with or without cause; except that a vacancy
shall be filled only by a person elected by Shareholders if
required by the 1940 Act. Each Trustee shall serve during the
continued lifetime of the Trust until he dies, resigns, is
declared bankrupt or incompetent by a court of appropriate
jurisdiction, or is removed, or, if sooner, until the next meeting
of Shareholders called for the purpose of electing Trustees and
until the election and qualification of his successor. Any
Trustee may resign at any time by written instrument signed by him
and delivered to any officer of the Trust or to a meeting of the
Trustees. Such resignation shall be effective upon receipt unless
specified to be effective at some other time. Except to the
extent expressly provided in a written agreement with the Trust,
no Trustee resigning and no Trustee removed shall have any right
to any compensation for any period following his resignation or
removal, or any right to damages on account of such removal. The
Shareholders may elect Trustees at any meeting of Shareholders
called by the Trustees for that purpose. Any Trustee may be
removed at any meeting of Shareholders by a vote of two-thirds of
the outstanding Shares of the Trust. A meeting of Shareholders
for the purpose of electing or removing one or more Trustees shall
be called (i) by the Trustees upon their own vote, or (ii) upon
the demand of a Shareholder or Shareholders owning Shares
representing 10% or more of all votes entitled to be cast by
outstanding Shares.
Section 3. Powers.
Subject to the provisions of this Declaration, the
business of the Trust shall be managed by the Board of Trustees,
and such Board shall have all powers necessary or convenient to
carry out that responsibility. Without limiting the foregoing,
the Trustees may:... (v) provide for the issuance, sale and
distribution of Shares by the Trust directly or through one or
more Principal Underwriters or otherwise; (vi) redeem, repurchase,
retire, cancel, acquire, hold, resell, reissue, classify,
reclassify, and transfer and otherwise deal in Shares pursuant to
applicable law; (vii) set record dates for the determination of
Shareholders with respect to various matters; (viii) declare and
pay dividends and distributions to Shareholders of each Series (or
class) from the assets of such Series (or classes);... (xii)
indemnify any Person with whom the Trust has dealings, including
the Shareholders, Trustees, officers, employees, agents,
Investment Managers, or Principal Underwriters of the Trust, to
the extent permitted by law and not inconsistent with any
applicable provisions of the By-Laws as the Trustees shall
determine; . . .
Section 5. Payment of Expenses by Shareholders.
The Trustees shall have the power, as frequently as they may
determine, to cause each Shareholder, or each Shareholder of any
particular Series, to pay directly, in advance or arrears, for
charges of the Trusts custodian or transfer, Shareholder
servicing or similar agent, an amount fixed from time to time by
the Trustees, by setting off such charges due from such
Shareholder from declared but unpaid dividends owed such
Shareholder and/or by reducing the number of Shares in the account
of such Shareholder by that number of full and/or fractional
Shares which represents the outstanding amount of such charges due
from such Shareholder.
Section 7. Service Contracts.
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the
Trust is a shareholder, director, officer, partner, trustee,
employee, Investment Manager, Principal Underwriter, distributor,
or affiliate or agent of or for any corporation, trust,
association, or other organization, or for any parent or affiliate
of any organization with which an advisory, management or
administration contract, or Principal Underwriters or
distributors contract, or transfer, shareholder servicing or
other type of service contract may have been or may hereafter be
made, or that any such organization, or any parent or affiliate
thereof, is a Shareholder or has an interest in the Trust, or that
(ii) any corporation, trust, association or other
organization with which an advisory, management or administration
contract or Principal Underwriters or distributors contract, or
transfer, shareholder servicing or other type of service contract
may have been or may hereafter be made also has an advisory,
management or administration contract, or principal underwriters
or distributors contract, or transfer, shareholder servicing or
other service contract with other organizations, or has other
business or interests, shall not affect the validity of any such
contract or disqualify any Shareholder, Trustee or officer of the
Trust from voting upon or executing the same, or create any
liability or accountability to the Trust or its Shareholders,
provided approval of each such contract is made pursuant to the
requirements of the 1940 Act.
ARTICLE V
Shareholders Voting Powers
Subject to the provisions of Article III, Section
6(d), the Shareholders shall have power to vote only (i) for the
election or removal of Trustees as provided in Article IV, Section
1, and (ii) with respect to such additional matters relating to
the Trust as may be required by this Declaration, the By-Laws, the
1940 Act or any registration of the Trust with the Commission (or
any successor agency) or any state, or as the Trustees may
consider necessary or desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to
vote and each fractional Share shall be entitled to a
proportionate fractional vote, except that (i) Shares held in the
Treasury as of the record date, as determined in accordance with
the By-Laws, shall not be voted, and (ii) when Shares of more than
one Series (or class) vote together on a matter as a single class,
each Share (or fraction thereof) shall be entitled to that number
of votes which is equal to the net asset value of such Share (or
fractional Share) determined as of the applicable record date.
There shall be no cumulative voting in the election of Trustees.
Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required by law,
this Declaration or the By-Laws to be taken by Shareholders votes
and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income,
Dividends and Distributions.
Subject to Article III, Section 6 hereof, the
Trustees, in their absolute discretion, may prescribe such bases
and times for valuing the net assets of the Trust and determining
the net asset value of Shares, which net asset value shall be
separately determined for each Series (and class), for determining
the net income attributable to the Shares of any Series (or
class), or for declaring and paying dividends and other
distributions on Shares of any Series (or class), as they may deem
necessary or desirable.
Section 2. Redemptions and Repurchases.
The Trust shall purchase such Shares as are offered by
any Shareholder for redemption, upon the presentation of a proper
instrument of transfer together with a request directed to the
Trust or a Person designated by the Trust that the Trust purchase
such Shares or in accordance with such other procedures for
redemption as the Trustees may from time to time authorize; and
the Trust will pay therefor the net asset value thereof by wire or
check, in accordance with applicable law, less the amount of any
deferred sales charge or redemption fee that is applicable.
Payment for said Shares shall be made by the Trust to the
Shareholder within seven days after the date on which the request
is made in proper form, except as may otherwise be permitted by
the 1940 Act.
The redemption price may in any case or cases be paid
wholly or partly in kind if the Trustees determine that it would
be detrimental to the best interests of remaining Shareholders of
the Series for which the Shares are being redeemed to pay any
redemption or redemptions in cash. Subject to the foregoing, the
fair value, selection and quantity of securities or other property
so paid or delivered as all or part of the redemption price may be
determined by or under authority of the Trustees. In no case
shall the Trust be liable for any delay of any corporation or
other Person in transferring securities selected for delivery as
all or part of any payment in kind.
Section 3. Redemptions at the Option of the Trust.
The Trust shall have the right at its option and at
any time to redeem Shares from any Shareholder at the net asset
value thereof as described in Section 1 of this Article VI if at
such time, and as a result of one or more redemptions of one or
more Shares by such Shareholder, the aggregate net asset value of
the Shares in such Shareholders account with the Trust or any
Series is less than $100,000 or such lesser amount no greater than
the minimum initial investment amount then applicable for
investments in the Trust or the applicable Series, as the Trustees
may from time to time determine.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Section 2. Indemnification and Limitation of Liability.
The Trustees shall not be responsible or liable in any
event for any neglect or wrong-doing of any officer, agent,
employee, Investment Manager or Principal Underwriter of the
Trust, nor shall any Trustee by responsible for the act or
omission of any other Trustee, and the Trust out of its assets
shall indemnify and hold harmless each and every Trustee from and
against any and all claims and demands whatsoever arising out of
or related to each Trustees performance of his duties as a
Trustee of the Trust to the fullest extent permitted by law;
provided that nothing herein contained shall indemnify, hold
harmless or protect any Trustee from or against any liability to
the Trust or any Shareholder 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.
Section 3. Trustees Good Faith Action; Expert Advice; No Bond or
Surety.
The exercise by the Trustees of their powers and
discretions hereunder shall be binding upon everyone interested.
A Trustee shall be liable to the Trust and to any Shareholder
solely for his own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, 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, and shall be under no
liability for any act or omission in accordance with such advice
nor 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.
ARTICLE VIII
Miscellaneous
Section 2. Termination of Trust or Series.
Unless terminated as provided herein, the Trust shall
continue without limitation of time. The Trust may be terminated
at any time by vote of the holders of a majority of the
outstanding Shares of each Series entitled to vote, voting
separately by Series, or by the Trustees by written notice to the
Shareholders. Any Series (or class) may be terminated at any time
by vote of the holders of a majority of the outstanding Shares of
that Series (or class) or by the Trustees by written notice to the
Shareholders of that Series.
Upon termination of the Trust (or any Series or class,
as the case may be), after paying or otherwise providing for all
charges, taxes, expenses and liabilities held, severally, with
respect to each Series (or the applicable Series or class, as the
case may be), whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall, in accordance with
such procedures as the Trustees consider appropriate, reduce the
remaining assets held, severally, with respect to each Series (or
the applicable Series or class, as the case may be) to
distributable form in cash or shares or other securities, or any
combination thereof, and distribute the proceeds held with respect
to each Series (or the applicable Series or class, as the case may
be) to the Shareholders of that Series (or class), as a Series (or
class), ratable according to the number of Shares of that Series
(or class) held by the several Shareholders on the date of
termination.
Section 3. Merger and Consolidation.
The Trustees may cause (i) the Trust or one or more of
its Series to the extent consistent with applicable law to be
merged into or consolidated with another trust or company, (ii)
Shares of the Trust or any Series to be converted into beneficial
interests in another business trust (or series thereof) created
pursuant to this Section 3 of Article VIII, (iii) the sale of
substantially all of the assets of the Trust or one or more of its
Series to another trust or company in exchange for the assumption
of the liabilities of the Trust or the Series and the issuance of
beneficial interests in such trust or company, or (iv) Shares to
be exchanged under or pursuant to any state or federal statute to
the extent permitted by law. Such merger or consolidation, Share
conversion, sale of assets or Share exchange must be authorized by
vote of the holders of a majority of the outstanding Shares of the
affected Series; provided that in all respects not governed by
applicable law, the Trustees shall have the power to prescribe the
procedures necessary or appropriate to accomplish the transaction
including the power to create one or more separate business trusts
to which all or any part of the assets, liabilities, profits or
losses of the Trust may be transferred and to provide for the
conversion of Shares of the Trust or any Series into beneficial
interests in such separate business trust or trusts (or series
thereof). The Trustees may also cause substantially all of the
assets of any Series (the "Acquired Series") to be sold to another
Series if authorized by vote of the holders of a majority of the
outstanding Shares of the Acquired Series, and to the extent not
governed by applicable law, the Trustees shall have the power to
prescribe the procedures necessary or appropriate to accomplish
the transaction. Upon consummation of any transaction
contemplated by this Section 3, the Trust or applicable Series, as
the case may be, shall distribute its remaining assets to
Shareholders and terminate as provided by Section 2 of this
Article VIII.
Section 4. Amendments.
(a) This Declaration may be restated or amended at any time by
an instrument in writing signed by a majority of the Trustees and,
if required by applicable law or this Declaration or the By-Laws,
by approval of such amendment by Shareholders in accordance with
Article V hereof and the By-Laws. Any such restatement or
amendment hereto shall be effective immediately upon execution and
approval. The Certificate of Trust of the Trust may be restated
or amended by a similar procedure, and any such restatement or
amendment shall be effective immediately upon filing with the
Office of the Secretary of State of the State of Delaware or upon
such future date as may be stated therein.
(b) Nothing contained in this Declaration shall permit the
amendment of this Declaration to impair the exemption from
personal liability of this Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments on
Shareholders.
Section 5. Filing of Copies; References; Headings.
The original or a copy of this Declaration and of each
restatement and amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Shareholder.
Section 8. Business Trust Only.
It is the intention of the Trustees to create a
business trust pursuant to the Act and thereby to create only the
relationship of trustee and beneficial owners within the meaning
of such Act between the Trustees and each Shareholder. It is not
the intention of the Trustees to create a general partnership,
limited partnership, joint stock association, corporation,
bailment, or any form of legal relationship other than a business
trust pursuant to the Act. Nothing in this Declaration shall be
construed to make the Shareholders, either by themselves or with
the Trustees, partners or members of a joint stock association.
Excerpts from:
BY-LAWS OF AMBAC TREASURERS TRUST
ARTICLE II
Meetings of Shareholders
Section 1. Time and Place of Meetings.
All meetings of Shareholders shall be held at such
time and place, whether within or without the State of Delaware,
as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Meetings.
Meetings of Shareholders of the Trust or any Series
(or class) shall be held whenever a vote of such Shareholders is
required by the Declaration and at such other times as the
Trustees may determine to be necessary, appropriate or advisable.
Meetings of Shareholders to consider any matter as to which a vote
of Shareholders is required by the 1940 Act or is permitted to be
requested by Shareholders pursuant to the 1940 Act and as to which
the Trustees have not called a meeting of Shareholders shall be
called by the secretary upon the written request of the holders of
Shares entitled to cast not less than ten percent (10%) of all the
votes then entitled to be case on such matter at a meeting of
Shareholders. Such request shall state the purpose or purposes of
such meeting and the matters proposed to be acted on thereat. The
secretary shall inform such Shareholders of the estimated
reasonable cost of preparing and mailing such notice of the
meeting. Upon payment to the Trust of such costs, the secretary
shall give notice stating the purpose or purposes of the meeting
to each Shareholder entitled to vote at such meeting. Unless
requested by Shareholders entitled to cast a majority of all votes
entitled to be cast on such matter, a meeting need not be called
to consider any matter which is substantially the same as a matter
voted on at any meeting of Shareholders held during the preceding
twelve (12) months.
Section 3. Notice of Meetings.
Written notice of each meeting of Shareholders stating
the place, date and hour thereof, and in the case of a special
meeting, specifying the purpose or purposes thereof, shall be
given, to each Shareholder entitled to vote thereat, not less than
ten (10) nor more than ninety (90) days prior to the meeting
either by mail or by presenting it to such Shareholder personally
or by leaving it at his residence or usual place of business. If
mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, addressed to the
Shareholder at his post office address as it appears on the
records of the Trust.
If action is proposed to be taken at any meeting for
approval of (i) a contract or transaction in which a Trustee has a
direct or indirect financial interest, (ii) an amendment of the
Declaration, (iii) a reorganization of the Trust, or (iv) a
voluntary dissolution of the Trust, the notice shall state the
general nature of that proposal.
Section 4. Quorum; Adjournments.
Except as otherwise provided by law, by the
Declaration or by these By-Laws, at all meetings of Shareholders
the holders of Shares representing forty percent (40%) of the
Shares entitled to vote on a matter, present in person or
represented by proxy, shall be requisite and shall constitute a
quorum for the transaction of business as to such matter. This
section shall not affect any applicable requirement of law or the
Declaration for the vote necessary for the adoption of any
measure. In the absence of a quorum, the Shareholders present in
person or represented by proxy and entitled to vote on a matter
shall have power to adjourn the meeting with respect to such
matter from time to time without notice other than announcement at
the meeting until such quorum shall be present. The holders of
Shares entitled to cast not less than a majority of all the votes
entitled to be cast at such meeting on a matter shall also have
the power to adjourn the meeting. Written notice shall be given
as required by Article III, Section 3, if a meeting is adjourned
to a date more than one hundred twenty (120) days after the record
date originally scheduled with respect to the meeting. At any
such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted had a
quorum been present at the time originally fixed for the meeting.
Section 5. Voted Required.
Except as otherwise provided by applicable law, by the
Declaration or by these By-Laws and subject to the provisions of
Article III, Section 6(d) of the Declaration, when a quorum is
present at any meeting, a majority of the Shares voted shall
decide all questions and a plurality shall elect a Trustee.
Section 6. Voting.
At any meeting of Shareholders, each Shareholder
having the right to vote shall be entitled to vote in person or by
proxy, and each Shareholder of record shall be entitled to cast
such number of votes as specified by Article V of the Declaration
for each Share (and fractional share) entitled to vote so
registered in his name on the records of the Trust on the date
fixed as the record date for the determination of Shareholders
entitled to vote at such meeting. Shares held by two or more
persons (whether as joint tenants, co-fiduciaries or otherwise)
will be voted as follows, unless written instrument or court order
providing to the contrary has been filed with the secretary of the
Trust: (1) if only one votes, his vote will bind all; (2) if more
than one votes, the vote of the majority will bind all; and (3) if
more than one votes and the vote is evenly divided, the Shares
will be voted in accordance with the determination of a majority
of such persons and any person appointed to act by a court of
competent jurisdiction, or, in the absence of such appointment,
the vote will be cast proportionately.
Section 7. Proxies.
Each proxy shall be in writing executed by the
Shareholder giving the proxy or by his duly authorized attorney.
No proxy shall be valid after the expiration of eleven (11) months
from its date, unless a longer period is provided for in the
proxy.
Section 9. Informal Action by Shareholders.
Any action required or permitted to be taken at a
meeting of Shareholders may be taken without a meeting if (i) a
consent in writing, setting forth such action, is signed by the
holders of outstanding Shares having not less than the minimum
number of votes that would be necessary to authorize such action
at a meeting of Shareholders at which all Shares issued and
outstanding and entitled to vote thereat were present in person or
by proxy, and (ii) such consents are filed with the records of the
Trust.
ARTICLE III
Trustees
Section 3. Vacancies.
Vacancies in the Board of Trustees may be filled by a majority of
the then remaining Trustees at a duly constituted meeting; except
that a vacancy shall be filled only by a person elected by
Shareholders if required by the 1940 Act.
ARTICLE IV
Waiver of Notice
Whenever any notice is required to be given pursuant
to law, the Declaration or these By-Laws, a waiver thereof in
writing, signed by the person or persons entitled to such notice,
or, in the case of any waiver of notice of any meeting of
Shareholders, signed by the proxy for a person entitled to notice
thereof, whether before or after the time stated therein, shall be
deemed equivalent of the giving of such notice. Neither the
business to be transacted at nor the purpose of any meeting need
be set forth in the waiver of notice, unless specifically required
by law, the Declaration or these By-Laws. The attendance by any
person at any meeting in person, or in the case of a meeting of
Shareholders, by proxy, shall constitute a waiver of notice of
such meeting, except where such person attends a meeting for the
express purpose of objecting to the transaction of any business on
the ground that the meeting is not lawfully called or convened.
ARTICLE VII
Records and Reports
Section 1. Maintenance and Inspection of Share Register.
This Trust shall keep at its principal executive
office or at the office of its transfer agent, a record of its
Shareholders, giving the names and addresses of all Shareholders
and the number and Series (and class) of Shares held by each
Shareholder.
Section 2. Maintenance and Inspection of By-Laws.
The Trust shall keep at its principal executive office
the original or a copy of these By-Laws as amended to date, which
shall be open to inspection by the Shareholders at all reasonable
times during office hours.
Section 3. Maintenance and Inspection of Other Records.
The accounting books and records of the Trust and
minutes of proceedings of the Shareholders and the Board of
Trustees and any committee or committees of the Board of Trustees
shall be kept at such place or places designated by the Board of
Trustees or in the absence of such designation, at the principal
executive office of the Trust. The minutes shall be kept in
written form and the accounting books and records shall be kept
either in written form or in any other form capable of being
converted into written form. The minutes and accounting books and
records shall be open to inspection upon the written demand of any
Shareholder at any reasonable time during usual business hours for
a purpose reasonably related to the holders interests as a
Shareholder. The inspection may be made in person or by an agent
or attorney and shall include the right to copy and make extracts.
Inspection by any Shareholder of the Shareholder list and books
and records of the Trust shall be at the discretion of the
Trustees.
Section 5. Financial Statements.
The Trustees shall submit to the Shareholders such
written financial reports as are required by the 1940 Act.
ARTICLE IX
Shares of Beneficial Interest
Section 1. Certificates of Shares.
The Trust shall not be obligated to issue certificates
representing Shares of the Trust or any Series (or class), except
that the Trustees may determine to authorize the issuance of
certificates for Shares of any Series (or class), and in such
case, certificates shall be issued in accordance with such
procedures as the Trustees may establish. If certificates for
Shares are issued, each such certificate shall be signed by the
chairman, if there be one, or by the president or a vice-president
and countersigned by the secretary or an assistant secretary or
the treasurer or an assistant treasurer. Certificates may be
sealed with the seal of the Trust. The signatures and seal, if
any, on a certificate may be either manual or facsimile. A
certificate is valid and may be issued whether or not an officer
who signed it is still an officer when it is issued. A full
record of the issuance of each certificate and the identifying
number assigned thereto shall be made on the books and records of
the Trust usually kept for the purpose or required by statute.
Section 2. Transfers of Shares.
Upon surrender to the Trust or its transfer agent of a
certificate duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, the Trust shall
issue a new certificate to the person entitled thereto, cancel the
old certificate and record the transaction upon its books. Shares
of the Trust or any Series (or class) not represented by
certificates shall be transferred by recording the transaction on
the books of the Trust upon presentation of proper evidence of
succession, assignment or authority to transfer.
The Trust shall be entitled to treat the holder of
record of any Share or Shares as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Shares on the part of any other
person, whether or not it shall have express or other notice
thereof, except as otherwise provided by applicable law.
Section 3. Lost Certificate.
The Trustees may by resolution establish procedures
pursuant to which a new certificate or certificates may be issued
in place of any certificate or certificates theretofore issued by
the Trust which have been mutilated or which are alleged to have
been lost, stolen or destroyed, upon presentation of each such
mutilated certificate, or the making of an affidavit by the person
claiming any such certificate to have been lost, stolen or
destroyed as to the fact and circumstances of the loss, theft or
destruction thereof. The Trustees, in their discretion and as a
condition precedent to the issuance of any new certificate, may
include among such procedures a requirement that the owner of any
certificate alleged to have been lost, stolen or destroyed, or the
owners legal representative, furnish the Trust with a bond, in
such sum and with such surety or sureties as the Trustees may
direct, as indemnity against any claim that may be made against
the Trust in respect of such lost, stolen or destroyed
certificate.
Section 4. Fixing of Record Date.
For purposes of determining the Shareholders entitled
to notice of, or to vote at, any meeting of Shareholders or at any
adjournment thereof in respect of which a new record date is not
fixed, or entitled to express written consent to or dissent from
the taking of action by Shareholders without a meeting, or for the
purpose of determining the Shareholders entitled to receive
payment of any dividend or other distribution or allotment of any
rights, or to exercise any rights in respect of any change,
conversion or exchange of Shares, or for the purpose of any other
lawful action, the Trustees may fix, in advance, a date as the
record date for any such determination of Shareholders. Such date
shall not be more than ninety (90) days, and in case of a meeting
of Shareholders not less than ten (10) days, before the date on
which the meeting or particular action requiring such
determination of Shareholders is to be held or taken. If no
record date is fixed, (a) the record date for the determination of
Shareholders entitled to notice of or to vote at a meeting of
Shareholders shall be the later of: (i) the close of business on
the day on which the notice of meeting is first mailed to any
Shareholder; or (ii) the thirtieth (30th) day before the meeting;
(b) the record date for determining the Shareholders entitled to
express written consent to the taking of any action without a
meeting, when no prior action by the Trustees is necessary, shall
be the day on which the first written consent is expressed; and
(c) the record date for the determination of Shareholders entitled
to receive payment of a dividend or other distribution or an
allotment of any other rights shall be at the close of business on
the day on which the resolution of the Trustees, declaring the
dividend, distribution or allotment of rights, is adopted.
ARTICLE XIII
Declaration of Trust
The Agreement and Declaration of Trust establishing
the Trust, dated June 27, 1995, and all amendments thereto,
provides that the name "AMBAC Treasurers Trust" refers to the
Trustees under the Declaration collectively as Trustees, but not
as individuals or personally; and that no Trustee, Shareholder,
officer, employee or agent of the Trust shall be held personally
liable, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise, in
connection the affairs of the Trust, but the Trust Property only
shall be liable.
- -19-
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 1st day of November, 1995 by and
between AMBAC Treasurers Trust, a Delaware business trust
(hereinafter called the "Trust"), and AMBAC Investment Management,
Inc., a Delaware corporation (hereinafter called the "Adviser"):
WHEREAS, the Trust intends to engage in business as an
open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "Act");
and
WHEREAS, the Adviser is registered as an investment
adviser under the Investment Advisers Act of 1940, and will engage
in the business of acting as investment adviser; and
WHEREAS, the Trust desires to retain the Adviser to
render investment advisory and certain other services in the
manner and on the terms and conditions hereinafter set forth; and
WHEREAS, the Adviser desires to be retained to perform
such services on said terms and conditions:
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants
hereinafter contained, the Trust and the Adviser agree as follows:
1. The Trust hereby retains the Adviser to act as
investment adviser of each of the series of the Trust (the
"Funds") and, subject to the supervision of the Board of Trustees
of the Trust, to manage the investment activities of the Funds and
to provide certain other services as hereinafter set forth.
Without limiting the generality of the foregoing, the Adviser
shall: obtain and evaluate such information and advice relating to
the economy, securities and commodities markets, and securities
and commodities as it deems necessary or useful to discharge its
duties hereunder; continuously manage the assets of the Funds in a
manner consistent with the investment objectives, policies and
restrictions of each Fund and applicable laws and regulations;
determine the securities and commodities to be purchased, sold or
otherwise disposed of by the Funds and the timing of such
purchases, sales and dispositions; and take such further action,
including the placing of purchase and sale orders and the voting
of securities on behalf of the Funds, as the Adviser shall deem
necessary or appropriate. The Adviser shall furnish to or place
at the disposal of the Trust such of the information, evaluations,
analyses and opinions formulated or obtained by the Adviser in the
discharge of its duties as the Trust may, from time to time,
reasonably request.
2. The Adviser shall assist in the selection of and
the negotiation of agreements with, and monitor the quality of
services provided by, the Trusts administrator, custodian,
transfer agent, and other organizations which may provide services
to the Trust (but the Trust shall pay the fees and expenses of the
administrator, custodian and transfer agent and such other
organizations and the Adviser shall not be responsible for the
acts or omissions of such service providers). The Adviser shall
also provide such additional management and administrative
services as may be required in connection with the business
affairs and operations of the Trust beyond those furnished by the
Trusts administrator.
3. The Adviser shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with
such other persons as may be necessary to render the services
required to be provided by the Adviser or furnished to the Trust
under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Adviser shall be deemed
to include persons employed or otherwise retained by the Adviser
to furnish statistical and other factual data, advice regarding
economic factors and trends, information with respect to technical
and scientific developments, and such other information, advice
and assistance as the Adviser may desire.
4. The Trust will, from time to time, furnish or
otherwise make available to the Adviser such financial reports,
proxy statements, policies and procedures and other information
relating to the business and affairs of the Trust as the Adviser
may reasonably require in order to discharge its duties and
obligations hereunder.
5. The Adviser shall bear the cost of rendering the
services to be performed by it under this Agreement, and shall
provide the Trust with such office space, facilities, equipment,
clerical help, and other personnel and services as the Trust shall
reasonably require in the conduct of its business. The Adviser
shall also bear the cost of telephone service, heat, light, power
and other utilities provided to the Trust. The salaries of
officers of the Trust, and the fees and expenses of Trustees of
the Trust, who are also directors, officers or employees of the
Adviser, or who are officers or employees of any company
affiliated with the Adviser, shall be paid and borne by the
Adviser or such affiliated company.
6. The Trust assumes and shall pay or cause to be
paid all expenses of the Trust not expressly assumed by the
Adviser under this Agreement, including without limitation: any
payments pursuant to any plan of distribution adopted by the
Trust; the fees, charges and expenses of any registrar, custodian,
accounting agent, administrator, stock transfer and dividend
disbursing agent; brokerage commissions; taxes; registration costs
of the Trust and its shares under federal and state securities
laws; the costs and expenses of engraving and printing stock
certificates; the costs and expenses of preparing, printing,
including typesetting, and distributing prospectuses and
statements of additional information of the Trust and the Funds
and supplements thereto to the Trusts shareholders; all expenses
of shareholders and Trustees meetings and of preparing, printing
and mailing proxy statements and reports to shareholders; fees and
travel expenses of Trustees and members of any advisory board or
committee who are not also officers, directors or employees of the
Adviser or who are not officers or employees of any company
affiliated with the Adviser; all expenses incident to any
dividend, withdrawal or redemption options; charges and expenses
of any outside service used for pricing of the Trusts shares;
fees and expenses of legal counsel to the Trust and its Trustees;
fees and expenses of the Trusts independent accountants;
membership dues of industry associations; interest payable on
Trust borrowings; postage; insurance premiums on property or
personnel (including officers and Trustees) of the Trust which
inure to its benefit; and extraordinary expenses (including but
not limited to, legal claims and liabilities and litigation costs
and any indemnification related thereto).
7. As full compensation for the services and
facilities furnished to the Trust and the expenses assumed by the
Adviser under this Agreement, each Fund shall pay to the Adviser a
fee with respect to each Fund, as calculated in accordance with
Schedule A hereto. This fee shall be paid monthly. Subject to the
provisions of paragraph 8 hereof, payment of the Advisers
compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by
paragraph 8 hereof.
8. In the event the operating expenses of a Fund
including amounts payable to the Adviser pursuant to paragraph 7
hereof, for any fiscal year ending on a date on which this
Agreement is in effect, exceed the expense limitation applicable
to the Fund under any state securities laws or regulations (as
such limitations may be raised or lowered or waived upon
application of the Trust or the Adviser from time to time), the
Adviser shall reduce its fee to the extent of such excess and, if
required pursuant to any such laws or regulations, will reimburse
the Fund for annual operating expenses in excess of such expense
limitation; provided, however, that there shall be excluded from
expenses the amount of any interest, taxes, brokerage commissions,
distribution fees and extraordinary expenses (including but not
limited to legal claims and liabilities and litigation costs and
any indemnification relating thereto) paid or payable by the Fund
to the extent permissible under applicable laws and regulations.
The amount of any such reduction in fee or reimbursement of
expenses shall be calculated and accrued daily and settled on a
monthly basis, based upon the expense limitation applicable to the
Fund as at the end of the last business day of the month. Should
two or more such expense limitations be applicable as at the end
of the last business day of the month, that expense limitation
which results in the largest reduction in the Advisers fee shall
be applicable.
For purposes of this provision, should any applicable
expense limitation be based upon the gross income of a Fund, such
gross income shall include, but not be limited to, interest on
debt securities held by the Fund accrued to and including the last
day of the Funds fiscal year, and dividends declared on equity
securities held by the Fund, the record dates for which fall on or
prior to the last day of such fiscal year, but shall not include
gains from the sale of securities.
9. The Adviser will use its best efforts in the
supervision and management of the investment activities of the
Trust and in providing services hereunder, but shall not be liable
to the Trust or its Shareholders for any error in investment
judgment, or in the absence of willful misfeasance, bad faith,
negligence or reckless disregard of its obligations hereunder, for
any mistake of law or for any act or omission by the Adviser.
10. Nothing contained in this Agreement shall
prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm
or corporation and shall not in any way bind or restrict the
Adviser or any such affiliated person from buying, selling or
trading any securities or commodities for their own accounts or
for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director,
officer or employee of the Adviser to engage in any other business
or to devote his time and attention in part to the management or
other aspects of any other business whether of a similar or
dissimilar nature.
11. The Trust acknowledges and agrees, in accordance
with the provisions of Article VIII, Section 9 of the Trusts
Declaration of Trust dated June 27, 1995, and the License
Agreement, dated _______, 1995, that the name "AMBAC" and the
AMBAC logo and all rights to the use of such name or logo as part
of the name of the Trust and the Funds belong to AMBAC Inc.
12. This Agreement shall remain in effect as to each
Fund until September 30, 1997 and shall continue in effect for
each Fund from year to year thereafter provided such continuance
as to such Fund is approved at least annually by the vote of a
majority of the outstanding voting securities of the Trust, as
defined by the Act and the rules thereunder, or by the Board of
Trustees of the Trust; provided that in either event such
continuance is also approved by a majority of the Trustees of the
Trust who are not parties to this Agreement or "interested
persons" (as defined in the Act) of any such party (the
"Independent Trustees"), by vote cast in person at a meeting
called for the purpose of voting on such approval; and provided,
however, that (a) the Trust may at any time, without payment of
any penalty, terminate this Agreement as to the Trust (or any
Fund) upon sixty days written notice to the Adviser, either by
majority vote of the Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Trust (or
such Fund) (as defined in the Act and the rules thereunder); (b)
this Agreement shall immediately terminate in the event of its
assignment (to the extent required by the Act and the rules
thereunder) unless such automatic termination shall be prevented
by an exemptive order of the Securities and Exchange Commission;
and (c) the Adviser may terminate this Agreement as to the Trust
or any of the Funds without payment of penalty on sixty days
written notice to the Trust. The failure to approve a continuance
of this Agreement as to any Fund, or any termination of this
Agreement as to any Fund, shall not affect the continuation of the
Agreement as to the Trust or any other Funds which have approved a
continuance and not terminated this Agreement.
13. Any notice under this Agreement shall be given
in writing, addressed and delivered, or mailed post-paid, to the
other party at the principal office of such party.
14. This Agreement may be amended only by the
written agreement of the parties. Any amendment shall be required
to be approved by the Trustees of the Trust and by a majority of
the Independent Trustees in accordance with the provisions of
Section 15(c) of the Act and the rules thereunder. Any amendment
shall also be required to be approved by a vote of shareholders
as, and to the extent, required by the Act and the rules
thereunder, except that an amendment may be effected without the
vote of shareholders: to reduce the fees payable hereunder by any
Fund; to amend Schedule A to specify initially the fee payable
hereunder by any Fund which is formed after the date of this
Agreement; to supply any omission; to cure, correct or supplement
any ambiguous, defective of inconsistent provision hereof; or if
necessary, to conform this Agreement to the requirements of
applicable laws or regulations, but neither the Trust nor the
Adviser shall be liable for failing to do so.
15. This Agreement shall be construed in accordance
with the laws of the state of Connecticut and the applicable
provisions of the Act. To the extent the applicable law of the
State of Connecticut, or any of the provisions herein, conflict
with the applicable provisions of the Act, the latter shall
control.
16. The Trust represents that this Agreement has
been duly approved by the Trustees, including a majority of the
Independent Trustees, and shareholders of the Trust in accordance
with the requirements of the Act and the rules thereunder.
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Agreement on the day and year first above
written.
AMBAC TREASURERS TRUST
By: /s/ Illeligible
Illeligible
Attest:
/s/ Illeligible
Illeligible
AMBAC INVESTMENT MANAGEMENT,
INC.
By: /s/ Illeligible
Illeligible
Attest:
/s/ Illeligible
Illeligible
SCHEDULE A
As full compensation for the services and facilities
furnished to the Trust and the expenses assumed by the Adviser
under this Agreement, each of AMBAC U.S. Treasury Money Market
Fund and AMBAC U.S. Government Money Market Fund shall pay to the
Adviser monthly compensation calculated daily at the annual rate
of .15% of each such Funds net assets, and AMBAC Short-Term U.S.
Government Income Fund shall pay to the Adviser monthly
compensation calculated daily at the annual rate of .35% of its
net assets. Such calculations shall be made by applying 1/365th
of the annual rate to the Funds net assets each day determined as
of the close of business on that day or the last previous business
day. If this Agreement becomes effective subsequent to the first
day of a month or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is in
effect shall be prorated in a manner consistent with the
calculation of the fees as set forth above.
- -7-
g:\shared\3rdparty\ambac\agreemen\advagree.doc
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 1st day of November, 1995
by and between AMBAC Treasurers Trust (the "Trust") and 440
Financial Distributors, Inc. (the "Distributor"), a corporation
organized under the laws of the Commonwealth of Massachusetts,
having its principal place of business at 290 Donald Lynch
Boulevard, Marlboro, Massachusetts 01752.
WHEREAS, the Trust is registered as an open-end, diversified
management investment company under the Investment Company Act of
1940, as amended, (the "1940 Act"); and is currently offering
units of beneficial interest (such units of all series are
hereinafter called the "Shares"), representing interests in
investment portfolios of the Trust identified on Schedule A hereto
(the "Funds") which are registered with the Securities and
Exchange Commission ("SEC") pursuant to the Trust's Registration
Statement on Form N-1A (the "Registration Statement"); and
WHEREAS, the Trust desires to retain the Distributor as
distributor for the Fund to provide for the sale and distribution
of the Shares of the Funds identified on Schedule A, and for such
additional classes or series as the Trust may issue, and the
Distributor is prepared to provide such services commencing on
November 1, 1995.
NOW THEREFORE, in consideration of the premises and mutual
covenants set forth herein and intending to be legally bound
hereby the parties hereto agree as follows:
1. Service as Distributor
1.1 The Distributor will act on behalf of the Trust for the
distribution of the Shares covered by the Registration Statement
under the Securities Act of 1933, as amended (the "1933 Act").
The Distributor will have no liability for payment for the
purchase of Shares sold pursuant to this Agreement or with respect
to redemptions or repurchases of Shares.
1.2 The Distributor agrees to use efforts deemed appropriate by
the Distributor to solicit orders for the sale of the Shares and
will undertake such advertising and promotion as it believes
reasonable in connection with such solicitation. The Trust
understands that the Distributor is now, and may in the future be,
the distributor of the shares of several investment companies or
series (collectively, the "Companies") including Companies having
investment objectives similar to those of the Trust. The Trust
further understands that investors and potential investors in the
Trust may invest in shares of such other Companies. The Trust
agrees that the Distributor's duties to such Companies shall not
be deemed in conflict with its duties to the Trust under this
paragraph 1.2.
1.3 The Distributor shall, at its own expense, finance
appropriate activities which it deems reasonable which are
primarily intended to result in the sale of the Shares, including,
but not limited to, the printing and mailing of prospectuses to
other than current shareholders.
1.4 All activities by the Distributor and its employees, as
distributor of the Shares, shall comply with all applicable laws,
rules and regulations, including, without limitation, all rules
and regulations made or adopted by the SEC or the National
Association of Securities Dealers.
1.5 The Distributor will transmit any orders received by it for
purchase or redemption of the Shares to the transfer agent for the
Trust.
1.6 Whenever in its judgment such action is warranted by unusual
market, economic or political conditions, the Trust may decline to
accept any orders for, or make any sales of, the Shares until such
time as the Trust deems it advisable to accept such orders and to
make such sales.
1.7 The Trust agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to
take all actions that may be reasonably necessary in connection
with the qualification of the Shares for sale in such states as
the Distributor may designate.
1.8 The Trust shall furnish from time to time, for use in
connection with the sale of the Shares, such information with
respect to the Trust and the Shares as the Distributor may
reasonably request; and the Trust warrants that the statements
contained in any such information shall fairly show or represent
what they purport to show or represent. The Trust shall also
furnish the Distributor upon request with: (a) audited annual
statements and unaudited semi-annual statements of a Fund's books
and accounts prepared by the Trust, (b) quarterly earnings
statements prepared by the Trust, (c) a monthly itemized list of
the securities in the Funds, (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 financial condition of
the Trust as the Distributor may reasonably request.
1.9 The Trust represents to the Distributor that all
Registration Statements and prospectuses filed by the Trust with
the SEC under the 1933 Act with respect to the Shares have been
prepared in conformity with the requirements of said Act and the
rules and regulations of the SEC thereunder. As used in this
Agreement, the term "Registration Statement" shall mean any
Registration Statement and any prospectus and any statement of
additional information relating to the Trust filed with the SEC
and any amendments or supplements thereto at any time filed with
said Commission. Except as to information included in the
Registration Statement in reliance upon information provided to
the Trust by the Distributor or any affiliate of the Distributor,
the Trust represents and warrants to the Distributor that any
Registration Statement, when such Registration Statement becomes
effective, will contain statements required to be stated therein
in conformity with the 1933 Act and the rules and regulations of
the SEC; that all statements of fact contained in any such
Registration Statement will be true and correct when such
Registration Statement becomes effective; and that no Registration
Statement 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 to a purchaser of the
Shares. The Trust 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
Trust's counsel, be necessary or advisable. The Trust shall
promptly notify the Distributor of any advice given to it by its
counsel regarding the necessity or advisability of amending or
supplementing such Registration Statement. If the Trust shall not
propose such amendment or amendments and/or supplement or
supplements within fifteen days after receipt by the Trust of a
written request from the Distributor to do so, the Distributor
may, at its option, terminate this Agreement. The Trust shall not
file any amendment to any Registration Statement or supplement to
any prospectus without giving the Distributor reasonable notice
thereof in advance; provided, however, that nothing contained in
this Agreement shall in any way limit the Trust's right to file at
any time such amendments to any Registration Statements and/or
supplements to any prospectus, of whatever character, as the Trust
may deem advisable, such right being in all respects absolute and
unconditional.
1.10 The Trust authorizes the Distributor to use any prospectus
or statement of additional information in the form furnished from
time to time in connection with the sale of the Shares. The Trust
agrees to indemnify and hold harmless the Distributor, its
officers, directors, and employees, and any person who controls
the Distributor within the meaning of Section 15 of the 1933 Act,
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 legal fees
incurred in connection therewith) which the Distributor, its
officers, directors, employees or any such controlling person may
incur under the 1933 Act, under any other statute, at common law
or otherwise, arising out of or based upon:
(a) any untrue statement, or alleged untrue statement, of a
material fact contained in the Trust's Registration Statement,
prospectus, statement of additional information, or sales
literature (including amendments and supplements thereto), or
(b) any omission, or alleged omission, to state a material fact
required to be stated in the Trust's Registration Statement,
prospectus, statement of additional information or sales
literature (including amendments or supplements thereto),
necessary to make the statements therein not misleading, provided,
however, that insofar as losses, claims, damages, liabilities or
expenses arise out of or are based upon any such untrue statement
or omission or alleged untrue statement or omission made in
reliance on and in conformity with information furnished to the
Trust by the Distributor or its affiliated persons for use in the
Trust's Registration Statement, prospectus, or statement of
additional information or sales literature (including amendments
or supplements thereto), such indemnification is not applicable.
The Distributor, its officers, directors, and employees, and
any such controlling person, as aforesaid, shall notify the Trust
of any action brought against the Distributor, its officers,
directors or employees, or any such controlling person, such
notification to be given by letter or by telegram addressed to the
Trust and sent to the Trust by the person against whom such action
is brought, within 10 days after the summons or other first legal
process shall have been served. The failure to notify the Trust
of any such action shall not relieve the Trust from any liability
which the Trust may have to the person against whom such action is
brought by reason of any such untrue, or allegedly untrue,
statement or omission, or alleged omission, otherwise than on
account of the Trust's indemnity agreement contained in this
paragraph 1.10. The Trust 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 Trust and approved by the
Distributor, which approval shall not unreasonably be withheld.
In the event the Trust elects to assume the defense of any such
suit and retain counsel of good standing approved by the
Distributor, 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 Trust does not elect to assume the defense
of any such suit, or in case the Distributor reasonably does not
approve of counsel chosen by the Trust, or in case there is a
conflict of interest between the Trust or the Distributor, the
Trust will reimburse the Distributor, its officers, directors and
employees, or the controlling person or persons named as defendant
or defendants in such suit, for the fees and expenses of any
counsel retained by the Distributor or them. The Trust's
indemnification agreement contained in this paragraph 1.10 and the
Trust'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 the Distributor, its
officers, directors and employees, or any controlling person, and
shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to the Distributor's benefit, to
the benefit of its several officers, directors and employees, and
their respective estates, and to the benefit of the controlling
persons and their successors. The Trust agrees promptly to notify
the Distributor of the commencement of any litigation or
proceedings against the Trust or any of its officers or trustees
in connection with the issue and sale of any Shares.
1.11 The Distributor agrees to indemnify and hold harmless the
Trust, its several officers and trustees and each person, if any,
who controls a Fund within the meaning of Section 15 of the 1933
Act against any loss, claims, damages, liabilities and expenses
(including the cost of any reasonable legal fees incurred in
connection therewith) which the Trust, its officers, trustees or
any such controlling person may incur under the 1933 Act, under
any other statute, at common law or otherwise, but only to the
extent that such liability or expense incurred by the Trust, its
officers or trustees, or any controlling person resulting from
such claims or demands arose out of the acquisition of any Shares
by any person which may be based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Trust's Registration Statement, prospectus or statement of
additional information (including amendments and supplements
thereto), or any omission, or alleged omission, to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, if such statement or
omission was made in reliance upon information furnished or
confirmed in writing to the Trust by the Distributor or its
affiliated persons (as defined in the 1940 Act).
The agreement of the Distributor to indemnify the Trust, its
officers and trustees, and any such controlling person, as
aforesaid, is expressly conditioned upon the Distributor being
notified of any action brought against the Trust, its officers or
trustees, or any such controlling person, such notification to be
given by letter or telegram addressed to the Distributor at its
principal office in Marlboro, Massachusetts, and sent to the
Distributor by the person against whom such action is brought,
within 10 days after the summons or other first legal process
shall have been served. The Distributor shall have the right of
first control of the defense of such action, with counsel of its
own choosing, satisfactory to the Trust, if such action is based
solely upon such alleged misstatement or omission on the
Distributor's part, and in any other event the Trust, it officers
or trustees 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 the Distributor of any such
action shall not relieve the Distributor from any liability that
the Distributor may have to the Trust, its officers or trustees,
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 the Distributor's indemnity agreement
contained in this paragraph 1.11.
1.12 No Shares shall be offered by either the Distributor or the
Trust under any of the provisions of this Agreement and no orders
for the purchase or sale of Shares hereunder shall be accepted by
the Trust if and so long as effectiveness of the Registration
Statement then in effect or any necessary amendments thereto shall
be suspended under any of the provisions of the 1933 Act, or if
and so long as a current prospectus as required by Section 5(b)(2)
of said Act is not on file with the SEC; provided, however, that
nothing contained in this paragraph 1.12 shall in any way restrict
or have any application to or bearing upon the Trust's obligation
to redeem Shares tendered for redemption by any shareholder in
accordance with the provisions of the Trust's Registration
Statement, Declaration of Trust, or bylaws.
1.13 The Trust agrees to advise the Distributor as soon as
reasonably practical by a notice in writing delivered to the
Distributor:
(a) of any request by the SEC for amendments to the Registration
Statement, prospectus or statement of additional information then
in effect or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement,
prospectus or statement of additional information then in effect
or the initiation by service of process on the Trust of any
proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the Registration Statement,
prospectus or statement of additional information then in effect
or that requires the making of a change in such Registration
Statement, prospectus or statement of additional information in
order to make the statements therein not misleading; and
(d) of all actions of the SEC with respect to any amendments to
any Registration Statement, prospectus or statement of additional
information which may from time to time be filed with the SEC.
For purposes of this section, informal requests by or acts
of the Staff of the SEC shall not be deemed actions of or requests
by the SEC.
1.14 The Distributor agrees on behalf of itself and its
directors, officers and employees to treat confidentially and as
proprietary information of the Trust all records and other
information relative to the Trust and its prior, present or
potential shareholders, and not to use such records and
information for any purpose other than performance of its
responsibilities and duties hereunder, except as specifically
authorized by the Trust or as may be required by law.
2. Term
This Agreement shall become effective on November 1, 1995
and, unless sooner terminated as provided herein, shall continue
for an initial two-year term and thereafter shall be renewed for
successive one-year terms, provided such continuance is
specifically approved at least annually by (i) the Trust's Board
of Trustees or (ii) by a vote of a majority (as defined in the
1940 Act and Rule 18f-2 thereunder) of the outstanding voting
securities of the Trust, provided that in either event the
continuance is also approved by a majority of the Trustees who are
not parties to this Agreement and who are not interested persons
(as defined in the 1940 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 at least sixty days' written notice, by the Trust's Board of
Trustees, by vote of a majority (as defined in the 1940 Act and
Rule 18f-2 thereunder) of the outstanding voting securities of the
Trust, or by the Distributor. This Agreement will also terminate
automatically in the event of its assignment (as defined in the
1940 Act and the rules thereunder).
3. Limitation of Liability
(a) The Distributor shall not be liable to the Trust for any
error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the performance of its obligations
and duties under this Agreement, except a loss resulting from the
Distributor's willful misfeasance, bad faith or gross negligence
in the performance of such obligations and duties, or by reason of
its reckless disregard thereof. The Trust will indemnify the
Distributor against and hold it harmless from any and all losses,
claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand,
action or suit not resulting from the willful misfeasance, bad
faith or gross negligence of the Distributor in the performance of
such obligations and duties or by reason of its reckless disregard
thereof.
(b) In no event and under no circumstances shall either party to
this Agreement be liable to the other party for consequential or
indirect loss of profits, reputation or business or any other
special damages under any provision of this Agreement or for any
act or failure to act hereunder.
4. Notices
All notices and other communications (collectively referred
to as a "Notice" or "Notices" in this paragraph) hereunder shall
be in writing or by telegram, cable, telex or facsimile sending
device. Notices shall be addressed (a) if to the Distributor at
its address, 290 Donald Lynch Boulevard, Marlboro, Massachusetts
01752; (b) if to the Trust, at its principal place of business,
300 Nyala Farms Road, Westport, Connecticut 06880 or (c) if to
neither of the foregoing, at such other address as to which the
sender shall have been notified by any such Notice or other
communication. The Notice may be sent by first-class mail, in
which case it shall be deemed to have been given three days after
it is sent, or if sent by telegram, cable, telex or facsimile
sending device, it shall be deemed to have been given immediately.
5. Further Actions
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes
hereof.
6. Amendments
This Agreement or any part hereof may be changed or waived
only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
7. Governing State Law
This Agreement shall be governed by and its provisions shall
be construed in accordance with the laws of the Commonwealth of
Massachusetts and the applicable provisions of the 1940 Act. To
the extent the provisions of Massachusetts law or the provisions
hereof conflict with the 1940 Act, the latter shall control.
8. Matters Relating to the Trust as a Delaware Business Trust
The names "AMBAC Treasurers Trust" and "Trustees of AMBAC
Treasurers Trust" refer respectively to the Trust created and the
Trustees, as trustees but not individually or personally, acting
from time to time under a Declaration of Trust dated as of June
27, 1995 to which reference is hereby made and the Trust's
Certificate of Trust, a copy of which is on file at the office of
the Secretary of the State of Delaware, and to any and all
amendments to such documents. The obligations of "AMBAC
Treasurers Trust" entered into in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any
of the Trustees, Shareholders or representatives of the Trust
personally, but bind only the assets of the Trust, and all persons
dealing with the Trust must look solely to the assets of the Trust
for the enforcement of any claims against the Trust.
9. Miscellaneous
This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to the subject matter
thereof. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or
effect. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding and shall inure to the benefit of the
parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed all as of the day and year first
above written.
AMBAC TREASURERS TRUST
By: /s/ W. Dayle Nattress
W. Dayle Nattress
Title:President
440 FINANCIAL DISTRIBUTORS, INC.
By: /s/ Tammy Hall
Tammy Hall
Title:President
SCHEDULE A
to the Distribution Agreement
between AMBAC Treasurers Trust and
440 Financial Distributors, Inc.
Name of Series
* AMBAC U.S. Treasury Money Market Fund
* AMBAC U.S. Government Money Market Fund
* AMBAC Short-Term U.S. Government Income Fund
AMBAC TREASURERS TRUST 440 FINANCIAL DISTRIBUTORS, INC.
By: /s/ W. Dayle Nattress By: /s/ Tammy Hall
W. Dayle Nattress Tammy Hall
Title: President Title: President
9
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A-1
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CUSTODIAN AGREEMENT
AGREEMENT dated as of November 1, 1995 between BANKERS TRUST
COMPANY (the "Custodian") and AMBAC Treasurers Trust (the
"Customer").
WHEREAS, the Customer may be organized with one or more
series of shares, each of which shall represent an interest in a
separate portfolio of Securities and Cash (each as hereinafter
defined) (all such existing and additional series now or hereafter
listed on Exhibit A being hereafter referred to individually as a
"Portfolio" and collectively, as the "Portfolios"); and
WHEREAS, the Customer desires to appoint the Custodian as
custodian on behalf of the Portfolios under the terms and
conditions set forth in this Agreement, and the Custodian has
agreed to so act as custodian.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. Employment of Custodian. The Customer hereby employs
the Custodian as custodian of all assets of each Portfolio which
are delivered to and accepted by the Custodian or any Subcustodian
(as that term is defined in Section 3) (the "Property") pursuant
to the terms and conditions set forth herein. Without limitation,
such Property shall include stocks and other equity interests of
every type, evidences of indebtedness, other instruments
representing same or rights or obligations to receive, purchase,
deliver or sell same and other non-cash investment property of a
Portfolio custody of which is maintained in the United States and
which is acceptable for deposit ("Securities") and U.S. Dollars
from any source ("Cash"). The Custodian shall not be responsible
for any property of a Portfolio held or received by the Customer
or others and not delivered to the Custodian or any Subcustodian.
2. Custody Account. The Custodian agrees to establish
and maintain one or more custody accounts on its books each in the
name of a Portfolio (each, an "Account") for any and all Property
from time to time received and accepted by the Custodian or any
Subcustodian for the account of such Portfolio. Upon delivery by
the Customer to the Custodian of any Property belonging to a
Portfolio, the Customer shall, by Instructions (as hereinafter
defined in Section 13), specifically indicate which Portfolio such
Property belongs or if such Property belongs to more than one
Portfolio shall allocate such Property to the appropriate
Portfolios. The Custodian shall allocate such Property to the
Accounts in accordance with the Instructions; provided that the
Custodian shall have the right, in its sole discretion, to refuse
to accept any Property that is not in proper form for deposit for
any reason. The Customer on behalf of each Portfolio,
acknowledges the responsibility of each Portfolio as a principal
for all of such Portfolios obligations to the Custodian arising
under or in connection with this Agreement, warrants its authority
to deposit in the appropriate Account any Property received
therefor by the Custodian or a Subcustodian and to give, and
authorize others to give, instructions relative thereto. For
Securities delivered in physical form, the Custodian may deliver
securities of the same class in place of those deposited in the
Account.
The Custodian shall hold, keep safe and protect as custodian
for each Account, on behalf of the Customer, all Property in such
Account. All transactions, including, but not limited to, foreign
exchange transactions, involving the Property shall be executed or
settled solely in accordance with Instructions (which shall
specifically reference the Account for which such transaction is
being settled), except that until the Custodian receives
Instructions to the contrary, the Custodian will:
(a) collect all interest and dividends and all other
income and payments, whether paid in cash or in kind, on the
Property, as the same become payable and credit the same to the
appropriate Account;
(b) present for payment all Securities held in an Account
which are called, redeemed or retired or otherwise become payable
and all coupons and other income items which call for payment upon
presentation to the extent that the Custodian or Subcustodian is
actually aware of such opportunities and hold the cash received in
such Account pursuant to this Agreement;
(c) (i) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the exchange
of warrants, or other documents of entitlement to securities, for
the Securities themselves) and (ii) when notification of a tender
or exchange offer (other than ministerial exchanges described in
(i) above) is received for an Account, promptly transmit such
notification to the Customer and act upon the Customer's
Instructions with respect thereto, provided that if such
Instructions are not received in time for the Custodian to take
timely action, no action shall be taken with respect thereto;
(d) whenever notification of a rights entitlement or a
fractional interest resulting from a rights issue, stock dividend
or stock split is received for an Account and such rights
entitlement or fractional interest bears an expiration date, if
after endeavoring to obtain Instructions such Instructions are not
received in time for the Custodian to take timely action or if
actual notice of such actions was received too late to seek
Instructions, sell in the discretion of the Custodian (which sale
the Customer hereby authorizes the Custodian to make) such rights
entitlement or fractional interest and credit the Account with the
net proceeds of such sale;
(e) execute in the Customer's name for an Account,
whenever the Custodian deems it appropriate, such ownership and
other certificates as may be required to obtain the payment of
income from the Property in such Account;
(f) pay for each Account, any and all taxes and levies in
the nature of taxes imposed on interest, dividends or other
similar income on the Property in such Account by any governmental
authority. In the event there is insufficient Cash available in
such Account to pay such taxes and levies, the Custodian shall
notify the Customer of the amount of the shortfall and the
Customer, at its option, may deposit additional Cash in such
Account or take steps to have sufficient Cash available. The
Customer agrees, when and if requested by the Custodian and
required in connection with the payment of any such taxes to
cooperate with the Custodian in furnishing information, executing
documents or otherwise; and
(g) appoint brokers and agents for any of the ministerial
transactions involving the Securities described in (a) - (f),
including, without limitation, affiliates of the Custodian or any
Subcustodian.
3. Subcustodians and Securities Systems. The
Custodian may hold the Property in each Account in custody
accounts which have been established by the Custodian with one of
its U.S. branches or another U.S. bank or trust company or branch
thereof located in the U.S. which is itself qualified under the
Investment Company Act of 1940, as amended ("1940 Act"), to act as
custodian (individually, a "Subcustodian"), or a U.S. securities
depository or clearing agency or system in which the Custodian or
a Subcustodian participates (individually, a "Securities System"),
provided that in each case in which a Subcustodian or Securities
System is employed, each such Subcustodian or Securities System
shall have been approved by Instructions.
Upon receipt of Instructions, the Custodian agrees to cease
the employment of any Subcustodian or Securities System with
respect to the Customer. In addition, the Custodian may, at any
time in its discretion, upon written notification to the Customer,
terminate the employment of any Subcustodian or Securities System.
4. Use of Subcustodian. With respect to Property in an
Account which is maintained by the Custodian in the custody of a
Subcustodian employed pursuant to Section 3:
(a) The Custodian will identify on its books as belonging
to the Customer on behalf of a Portfolio, any Property held by
such Subcustodian.
(b) Any Property in the Account held by a Subcustodian
will be subject only to the instructions of the Custodian or its
agents.
(c) Property deposited with a Subcustodian will be
maintained in an account holding only assets for customers of the
Custodian.
5. Use of Securities System. With respect to Property in
the Account(s) which are maintained by the Custodian or any
Subcustodian in the custody of a Securities System employed
pursuant to Section 3:
(a) The Custodian shall, and the Subcustodian will be
required by its agreement with the Custodian to, identify on its
books such Property as being held for the account of the Custodian
or Subcustodian for its customers.
(b) Any Property held in a Securities System for the
account of the Custodian or a Subcustodian will be subject only to
the instructions of the Custodian or such Subcustodian, as the
case may be.
(c) Property deposited with a Securities System will be
maintained in an account holding only assets for customers of the
Custodian or Subcustodian, as the case may be, unless precluded by
applicable law, rule, or regulation.
(d) The Custodian shall provide the Customer with any
report obtained by the Custodian on the Securities System's
accounting system, internal accounting controls and procedures for
safeguarding securities deposited in the Securities System.
6. Agents. The Custodian may at any time or times in its
sole discretion appoint (or remove) any other U.S. bank or trust
company which is itself qualified under the 1940 Act to act as
custodian, as its agent to carry out such of the provisions of
this Agreement as the Custodian may from time to time direct;
provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities
hereunder.
7. Records, Ownership of Property, Statements, Opinions
of Independent Certified Public Accountants.
(a) The ownership of the Property whether Securities, Cash
and/or other property, and whether held by the Custodian or a
Subcustodian or in a Securities System as authorized herein, shall
be clearly recorded on the Custodian's books as belonging to the
appropriate Account and not for the Custodian's own interest. The
Custodian shall keep accurate and detailed accounts of all
investments, receipts, disbursements and other transactions for
each Account. All accounts, books and records of the Custodian
relating thereto shall be open to inspection and audit at all
reasonable times during normal business hours by any person
designated by the Customer. All such accounts shall be maintained
and preserved in the form reasonably requested by the Customer.
The Custodian will supply to the Customer from time to time, as
mutually agreed upon, a statement in respect to any Property in an
Account held by the Custodian or by a Subcustodian.
(b) The Custodian shall take all reasonable action as the
Customer may request to obtain from year to year favorable
opinions from the Customer's independent certified public
accountants with respect to the Custodian's activities hereunder
in connection with the preparation of the Customer's Form N-1A and
the Customer's Form N-SAR or other periodic reports to the SEC and
with respect to any other requirements of the SEC.
(c) At the request of the Customer, the Custodian shall
deliver to the Customer a written report prepared by the
Custodian's independent certified public accountants with respect
to the services provided by the Custodian under this Agreement,
including, without limitation, the Custodian's accounting system,
internal accounting controls and procedures for safeguarding Cash
and Securities, including Cash and Securities deposited and/or
maintained in a Securities System or with a Subcustodian. Such
report shall be of sufficient scope and in sufficient detail as
may reasonably be required by the Customer and as may reasonably
be obtained by the Custodian.
(d) The Customer may elect to participate in any of the
electronic on-line service and communications systems offered by
the Custodian which can provide the Customer, on a daily basis,
with the ability to view on-line or to print on hard copy various
reports of Account activity and of Securities and/or Cash being
held in any Account. To the extent that such service shall
include market values of Securities in an Account, the Customer
hereby acknowledges that the Custodian now obtains and may in the
future obtain information on such values from outside sources that
the Custodian considers to be reliable and the Customer agrees
that the Custodian (i) does not verify nor represent or warrant
either the reliability of such service nor the accuracy or
completeness of any such information furnished or obtained by or
through such service and (ii) shall be without liability in
selecting and utilizing such service or furnishing any information
derived therefrom.
8. Holding of Securities, Nominees, etc. Securities in
an Account which are held by the Custodian or any Subcustodian may
be held by such entity in the name of the Customer, on behalf of a
Portfolio, in the Custodian's or Subcustodian's name, in the name
of the Custodian's or Subcustodian's nominee, or in bearer form.
Securities that are held by a Subcustodian or which are eligible
for deposit in a Securities System as provided above may be
maintained with the Subcustodian or the Securities System in an
account for the Custodian's or Subcustodian's customers, unless
prohibited by law, rule, or regulation. The Custodian or
Subcustodian, as the case may be, may combine certificates
representing Securities held in an Account with certificates of
the same issue held by it as fiduciary or as a custodian. In the
event that any Securities in the name of the Custodian or its
nominee or held by a Subcustodian and registered in the name of
such Subcustodian or its nominee are called for partial redemption
by the issuer of such Security, the Custodian may, subject to the
rules or regulations pertaining to allocation of any Securities
System in which such Securities have been deposited, allot, or
cause to be allotted, the called portion of the respective
beneficial holders of such class of security in any manner the
Custodian deems to be fair and equitable.
9. Proxies, etc. Proxy statements, shareholder meeting
agenda, proxy cards, annual reports and all other shareholder
meeting communications relative to any of the Securities in any
Account, which are received by the Custodian or its agent shall be
promptly forwarded to the Customer and upon timely receipt of
Instructions, the Custodian shall vote all Proxies and take such
other actions relating to such Securities in accordance with such
Instructions. Neither the Custodian nor its nominees or agents
shall vote upon or in respect of any of the Securities in an
Account, execute any form of proxy to vote thereon, or give any
consent or take any action (except as provided in Section 2) with
respect thereto except upon the receipt of Instructions relative
thereto.
10. Segregated Account. To assist the Customer in
complying with the requirements of the 1940 Act and the rules and
regulations thereunder, the Custodian shall, upon receipt of
Instructions, establish and maintain a segregated account or
accounts on its books for and on behalf of a Portfolio.
11. Settlement Procedures. Securities will be
transferred, exchanged or delivered by the Custodian or a
Subcustodian upon receipt by the Custodian of Instructions which
include all information required by the Custodian. Settlement and
payment for Securities received for an Account and delivery of
Securities out of such Account will be effected in accordance with
the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation,
delivering Securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a
receipt with the expectation of receiving later payment for such
Securities from such purchaser or dealer. The Custodian shall not
be liable for any loss which results from effecting transactions
in accordance with the customary or established securities trading
or securities processing practices and procedures in the
applicable jurisdiction or market.
Except as otherwise may be agreed upon by the parties
hereto, the Custodian shall not be required to comply with
Instructions to settle the purchase of any Securities for an
Account unless there is sufficient Cash in such Account at the
time or to settle the sale of any Securities in such Account
unless such Securities are in deliverable form. Notwithstanding
the foregoing, if the purchase price of such securities exceeds
the amount of Cash in an Account at the time of settlement of such
purchase, the Custodian may, in its sole discretion, but in no way
shall have any obligation to, permit an overdraft in such Account
in the amount of the difference solely for the purpose of
facilitating the settlement of such purchase of securities for
prompt delivery for such Account. The Customer agrees to
immediately repay the amount of any such overdraft in the ordinary
course of business and further agrees to indemnify and hold the
Custodian harmless from and against any and all losses, costs,
including, without limitation the cost of funds, and expenses
incurred in connection with such overdraft. The Customer agrees
that it will not use the Account to facilitate the purchase of
securities without sufficient funds in the Account (which funds
shall not include the proceeds of the sale of the purchased
securities).
12. Permitted Transactions. The Customer agrees that it
will cause transactions to be made pursuant to this Agreement only
upon Instructions in accordance with Section 13 and only for the
purposes listed below.
(a) In connection with the purchase or sale of Securities
at prices as confirmed by Instructions.
(b) In exchange for or upon conversion into other
securities alone or other securities and cash pursuant to any plan
or merger, consolidation, reorganization, recapitalization or
readjustment in cases where Section 2(c) requires that an
Instruction be given.
(c) Upon conversion of Securities pursuant to their terms
into other securities.
(d) Upon exercise of subscription, purchase or other
similar rights represented by Securities.
(e) For the payment of interest, taxes, management or
supervisory fees, distributions or operating expenses.
(f) In connection with any borrowings by the Customer
requiring a pledge of Securities, but only against receipt of
amounts borrowed.
(g) In connection with any loans, but only against receipt
of collateral as specified in Instructions which shall reflect any
restrictions applicable to the Customer.
(h) For the purpose of redeeming shares of the capital
stock of the Customer against delivery of the shares to be
redeemed to the Custodian, a Subcustodian or the Customer's
transfer agent.
(i) For the purpose of redeeming in kind shares of the
Customer against delivery of the shares to be redeemed to the
Custodian, a Subcustodian or the Customer's transfer agent.
(j) For delivery in accordance with the provisions of any
agreement among the Customer, on behalf of a Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc., or a futures commission merchant,
relating to compliance with the rules of The Options Clearing
Corporation, the Commodities Futures Trading Commission and of any
registered national securities exchange, or U.S. commodities
exchange or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Customer.
(k) For release of Securities to designated brokers under
covered call options, provided, however, that such Securities
shall be released only upon payment to the Custodian of monies for
the premium due and a receipt for the Securities which are to be
held in escrow. Upon exercise of the option, or at expiration,
the Custodian will receive the Securities previously deposited
from broker. The Custodian will act strictly in accordance with
Instructions in the delivery of Securities to be held in escrow
and will have no responsibility or liability for any such
Securities which are not returned promptly when due other than to
make proper request for such return.
(l) For spot or forward foreign exchange transactions to
facilitate security trading or receipt of income from Securities
related transactions.
(m) Upon the termination of this Agreement as set forth in
Section 17.
(n) For other proper purposes.
The Customer agrees that the Custodian shall have no
obligation to verify the purpose for which a transaction is being
effected.
13. Instructions. The term "Instructions" means
instructions from the Customer in respect of any of the
Custodian's duties hereunder which have been received by the
Custodian at its address set forth in Section 21 below (i) in
writing (including, without limitation, facsimile transmission) or
by tested telex signed or given by such one or more person or
persons as the Customer shall have from time to time authorized in
writing to give the particular class of Instructions in question
and whose name and (if applicable) signature and office address
have been filed with the Custodian, or (ii) which have been
transmitted electronically through an electronic on-line service
and communications system offered by the Custodian or other
electronic instruction system acceptable to the Custodian, or
(iii) a telephonic or oral communication by one or more persons as
the Customer shall have from time to time authorized to give the
particular class of Instructions in question and whose name has
been filed with the Custodian; or (iv) upon receipt of such other
form of instructions as the Customer may from time to time
authorize in writing and which the Custodian has agreed in writing
to accept. Instructions in the form of oral communications shall
be confirmed by the Customer by tested telex or writing in the
manner set forth in clause (i) above, but the lack of such
confirmation shall in no way affect any action taken by the
Custodian in reliance upon such oral instructions prior to the
Custodian's receipt of such confirmation. Instructions may relate
to specific transactions or to types or classes of transactions,
and may be in the form of standing instructions.
The Custodian shall have the right to assume in the absence
of notice to the contrary from the Customer that any person whose
name is on file with the Custodian pursuant to this Section has
been authorized by the Customer to give the Instructions in
question and that such authorization has not been revoked. The
Custodian may act upon and conclusively rely on, without any
liability to the Customer or any other person or entity for any
losses resulting therefrom, any Instructions reasonably believed
by it to be genuine and furnished by the proper person or persons
as provided above.
14. Standard of Care. The Custodian shall be responsible
for the performance of only such duties as are set forth herein.
The Custodian will use reasonable care with respect to the
safekeeping of Property in each Account and, except as otherwise
expressly provided herein, in carrying out its obligations under
this Agreement. So long as and to the extent that it has
exercised reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any Property or other
property or evidence of title thereto received by it or delivered
by it pursuant to this Agreement and shall be held harmless in
acting upon, and may conclusively rely on, without liability for
any loss resulting therefrom, any notice, request, consent,
certificate or other instrument reasonably believed by it to be
genuine and to be signed or furnished by the proper party or
parties, including, without limitation, Instructions, and shall be
indemnified by the Customer for any losses, damages, costs and
expenses (including, without limitation, the reasonable fees and
expenses of counsel) incurred by the Custodian and arising out of
action taken or omitted with reasonable care by the Custodian
hereunder. The Custodian shall be liable to the Customer for any
act or omission to act of any Subcustodian, to the same extent as
if the Custodian committed such act itself. With respect to a
Securities System, the Custodian shall only be responsible or
liable for losses arising from employment of such Securities
System caused by the Custodian's own failure to exercise
reasonable care. In the event of any loss to the Customer by
reason of the failure of the Custodian or a Subcustodian to
utilize reasonable care, the Custodian shall be liable to the
Customer to the extent of the Customer's actual damages at the
time such loss was discovered without reference to any special
conditions or circumstances. In no event shall the Custodian be
liable for any consequential or special damages. The Custodian
shall be entitled to rely, and may act, on advice of counsel (who
may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted
pursuant to such advice.
In the event the Customer subscribes to an electronic
on-line service and communications system offered by the
Custodian, the Customer shall be fully responsible for the
security of the Customer's connecting terminal, access thereto and
the proper and authorized use thereof and the initiation and
application of continuing effective safeguards with respect
thereto and agree to defend and indemnify the Custodian and hold
the Custodian harmless from and against any and all losses,
damages, costs and expenses (including the reasonable fees and
expenses of counsel) incurred by the Custodian as a result of any
improper or unauthorized use of such terminal by the Customer or
by any others.
All collections of funds or other property paid or
distributed in respect of Securities in an Account, including
funds involved in third-party foreign exchange transactions, shall
be made at the risk of the Customer.
Subject to the exercise of reasonable care, the Custodian
shall have no liability for any loss occasioned by delay in the
actual receipt of notice by the Custodian or by a Subcustodian of
any payment, redemption or other transaction regarding Securities
in each Account in respect of which the Custodian has agreed to
take action as provided in Section 3 hereof. The Custodian shall
not be liable for any loss resulting from, or caused by, or
resulting from acts of governmental authorities (whether de jure
or de facto), including, without limitation, nationalization,
expropriation, and the imposition of currency restrictions;
devaluations of or fluctuations in the value of currencies;
changes in laws and regulations applicable to the banking or
securities industry; market conditions that prevent the orderly
execution of securities transactions or affect the value of
Property; acts of war, terrorism, insurrection or revolution;
strikes or work stoppages; the inability of a local clearing and
settlement system to settle transactions for reasons beyond the
control of the Custodian; hurricane, cyclone, earthquake, volcanic
eruption, nuclear fusion, fission or radioactivity, or other acts
of God; provided, in each case the Custodian or the Subcustodian
has acted with reasonable care.
The Custodian shall have no liability in respect of any
loss, damage or expense suffered by the Customer, insofar as such
loss, damage or expense arises from the performance of the
Custodian's duties hereunder by reason of the Custodian's reliance
upon records that were maintained for the Customer by entities
other than the Custodian prior to the Custodian's employment under
this Agreement.
The provisions of this Section shall survive termination of
this Agreement.
15. Investment Limitations and Legal or Contractual
Restrictions or Regulations. The Custodian shall not be liable to
the Customer and the Customer agrees to indemnify the Custodian
and its nominees, for any loss, damage or expense suffered or
incurred by the Custodian or its nominees arising out of any
violation of any investment restriction or other restriction or
limitation applicable to the Customer or any Portfolio pursuant to
any contract or any law or regulation. The provisions of this
Section shall survive termination of this Agreement.
16. Fees and Expenses. The Customer agrees to pay to the
Custodian such compensation for its services pursuant to this
Agreement as may be mutually agreed upon in writing from time to
time and the Custodian's reasonable out-of-pocket or incidental
expenses in connection with the performance of this Agreement,
including (but without limitation) legal fees as described herein
and/or deemed necessary in the judgment of the Custodian to keep
safe or protect the Property in the Account. The fee schedule is
attached hereto as Exhibit B, as amended from time to time. The
Customer hereby agrees to hold the Custodian harmless from any
liability or loss resulting from any taxes or other governmental
charges, and any expense related thereto, which may be imposed, or
assessed with respect to any Property in an Account and also
agrees to hold the Custodian, its Subcustodians, and their
respective nominees harmless from any liability as a record holder
of Property in such Account. The Custodian is authorized to
charge the applicable Account for such items and the Custodian
shall have a lien on the Property in the applicable Account for
any amount payable to the Custodian under this Agreement,
including but not limited to amounts payable pursuant to the last
paragraph of Section 11 and pursuant to indemnities granted by the
Customer under this Agreement. The provisions of this Section
shall survive the termination of this Agreement.
17. Amendment, Modifications, etc. No provision of this
Agreement may be amended, modified or waived except in a writing
signed by the parties hereto. No waiver of any provision hereto
shall be deemed a continuing waiver unless it is so designated.
No failure or delay on the part of either party in exercising any
power or right under this Agreement operates as a waiver, nor does
any single or partial exercise of any power or right preclude any
other or further exercise thereof or the exercise of any other
power or right.
18. Termination. (a) Termination of Entire Agreement.
This Agreement may be terminated by the Customer of the Custodian
by one hundred and twenty (120) days' written notice to the other;
provided that notice by the Customer shall specify the names of
the persons to whom the Custodian shall deliver the Securities in
each Account and to whom the Cash in such Account shall be paid.
If notice of termination is given by the Custodian, the Customer
shall, within one hundred and twenty (120) days following the
giving of such notice, deliver to the Custodian a written notice
specifying the names of the persons to whom the Custodian shall
deliver the Securities in each Account and to whom the Cash in
such Account shall be paid. In either case, the Custodian will
deliver such Securities and Cash to the persons so specified,
after deducting therefrom any amounts which the Custodian
determines to be owed to it under Sections 11, 16, and 21. In
addition, the Custodian may in its discretion withhold from such
delivery such Cash and Securities as may be necessary to settle
transactions pending at the time of such delivery. The Customer
grants to the Custodian a lien and right of setoff against the
Account and all Property held therein from time to time in the
full amount of the foregoing obligations. If within one hundred
and twenty (120) days following the giving of a notice of
termination by the Custodian, the Custodian does not receive from
the Customer a written notice specifying the names of the persons
to whom the Custodian shall deliver the Securities in each Account
and to whom the Cash in such Account shall be paid, the Custodian,
at its election, may deliver such Securities and pay such Cash to
a bank or trust company doing business in the State of New York to
be held and disposed of pursuant to the provisions of this
Agreement, or may continue to hold such Securities and Cash until
a written notice as aforesaid is delivered to the Custodian,
provided that the Custodian's obligations shall be limited to
safekeeping.
(b) Termination as to One or More Portfolios. This
Agreement may be terminated by the Customer or the Custodian as to
one or more Portfolios (but less than all of the Portfolios) by
delivery of an amended Exhibit A deleting such Portfolios, in
which case termination as to such deleted Portfolios shall take
effect one hundred and twenty (120) days after the date of such
delivery, or such earlier time as mutually agreed. The execution
and delivery of an amended Exhibit A which deletes one or more
Portfolios shall constitute a termination of this Agreement only
with respect to such deleted Portfolios(s), shall be governed by
the preceding provisions of Section 18 as to the identification of
a successor custodian and the delivery of Cash and Securities of
the Portfolios(s) so deleted to such successor custodian, and
shall not affect the obligations of the Custodian and the Customer
hereunder with respect to the other Portfolios set forth in
Exhibit A, as amended from time to time.
19. Notices. Except as otherwise provided in this
Agreement, all requests, demands or other communications between
the parties or notices in connection herewith (a) shall be in
writing, hand delivered or sent by telex, telegram, cable, or
facsimile, if to the Customer, to:
AMBAC Treasurers Trust
300 Nyala Farms Road
Westport, CT 06880
Attention: Treasurer
if to the Custodian, to:
Bankers Trust Company
130 Liberty Streeet
One Bankers Trust Plaza
New York, NY 10006
Attention: Credit Department
Mail Stop 2211
or in either case to such other address as shall have been
furnished to the receiving party pursuant to the provisions hereof
and (b) shall be deemed effective when received, or, in the case
of a telex, when sent to the proper number and acknowledged by a
proper answerback.
20. Several Obligations of the Portfolios. With respect
to any obligations of the Customer on behalf of each Portfolio and
each of its related Accounts arising out of this Agreement, the
Custodian shall look for payment or satisfaction of any obligation
solely to the assets and property of the Portfolio and such
Accounts to which such obligation relates as though the Customer
had separately contracted with the Custodian by separate written
instrument with respect to each Portfolio and its related
Accounts.
21. Security for Payment. To secure payment of the
obligations of each Portfolio hereunder, the Customer hereby
grants to Custodian with respect to each Portfolio a continuing
security interest in and right of setoff against the Account of
such Portfolio and all Property held therein from time to time in
the full amount of such Portfolio's obligations. Should the
Customer fail to pay promptly any amounts owed hereunder with
respect to a Portfolio, Custodian shall be entitled to use
available Cash in the applicable Account, and to dispose of
Securities in the applicable Account as is necessary. In any such
case and without limiting the foregoing, Custodian shall be
entitled to take such other action(s) or exercise such other
options, powers and rights as Custodian now or hereafter has as a
secured creditor under the New York Uniform Commercial Code or any
other applicable law.
22. Representations and Warranties.
(a) The Customer hereby represents and warrants to the
Custodian that:
(i) the employment of the Custodian and the
allocation of fees, expenses and other charges to any Account as
herein provided, is not prohibited by law or any governing
documents or contracts to which the Customer is subject;
(ii) the terms of this Agreement do not violate any
obligation by which the Customer is bound, whether arising by
contract, operation of law or otherwise;
(iii) this Agreement has been duly authorized by
appropriate action and when executed and delivered will be binding
upon the Customer and each Portfolio in accordance with its terms;
and
(iv) the Customer will deliver to the Custodian such
evidence of such authorization as the Custodian may reasonably
require, whether by way of a certified resolution or otherwise.
(b) The Custodian hereby represents and warrants to the
Customer that:
(i) the terms of this Agreement do not violate any
obligation by which the Custodian is bound, whether arising by
contract, operation of law or otherwise;
(ii) this Agreement has been duly authorized by
appropriate action and when executed and delivered will be binding
upon the Custodian in accordance with its terms;
(iii) the Custodian will deliver to the Customer such
evidence of such authorization as the Customer may reasonably
require, whether by way of a certified resolution or otherwise;
and
(iv) Custodian is qualified as a custodian under
Section 26(a) of the 1940 Act and warrants that it will remain so
qualified or upon ceasing to be so qualified shall promptly notify
the Customer in writing.
23. Governing Law and Successors and Assigns. This
Agreement shall be governed by the law of the State of New York
and shall not be assignable by either party, but shall bind the
successors in interest of the Customer and the Custodian.
24. Publicity. Customer shall furnish to Custodian at its
office referred to in Section 19 above, prior to any distribution
thereof, copies of any material (other than those which solely
refer to the Custodian as the Portfolios' custodian) prepared for
distribution to any persons who are not parties hereto that refer
in any way to the Custodian. Customer shall not distribute or
permit the distribution of such materials if Custodian reasonably
objects in writing within ten (10) business days of receipt
thereof (or such other time as may be mutually agreed) after
receipt thereof. The provisions of this Section shall survive the
termination of this Agreement.
25. Representative Capacity and Binding Obligation. A
copy of the Certificate of Trust of the Customer is on file with
The Secretary of the State of Delaware, and notice is hereby given
that this Agreement is not executed on behalf of the Trustees of
the Customer as individuals, and the obligations of this Agreement
are not binding upon any of the Trustees, officers or shareholders
of the Customer individually but are binding only upon the assets
and property of the Portfolios.
The Custodian agrees that no shareholder, trustee or officer
of the Customer may be held personally liable or responsible for
any obligations of the Customer arising out of this Agreement.
26. Submission to Jurisdiction. Any suit, action or
proceeding arising out of this Agreement may be instituted in any
State or Federal court sitting in the City of New York, State of
New York, United States of America, and the Customer irrevocably
submits to the non-exclusive jurisdiction of any such court in any
such suit, action or proceeding and waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have
to the laying of venue of any such suit, action or proceeding
brought in such a court and any claim that such suit, action or
proceeding was brought in an inconvenient forum.
27. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
This Agreement shall become effective when one or more
counterparts have been signed and delivered by each of the parties
hereto.
28. Confidentiality. The parties hereto agree that each
shall treat confidentially the terms and conditions of this
Agreement and all information provided by each party to the other
regarding its business and operations. All confidential
information provided by a party hereto shall be used by any other
party hereto solely for the purpose of rendering services pursuant
to this Agreement and, except as may be required in carrying out
this Agreement, shall not be disclosed to any third party without
the prior consent of such providing party. The foregoing shall
not be applicable to any information that is publicly available
when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required or
requested to be disclosed by any bank or other regulatory examiner
of the Custodian, Customer, or any Subcustodian, any auditor of
the parties hereto, by judicial or administrative process or
otherwise by applicable law or regulation.
29. Severability. If any provision of this Agreement is
determined to be invalid or unenforceable, such determination
shall not affect the validity or enforceability of any other
provision of this Agreement.
30. Headings. The headings of the paragraphs hereof are
included for convenience of reference only and do not form a part
of this Agreement.
AMBAC TREASURERS TRUST
By: /s/ Illegible
Illegible
Title: Illegible
BANKERS TRUST COMPANY
By: /s/ Illegible
Illegible
Title: Illegible
EXHIBIT A
To Custodian Agreement dated as of November 1, 1995 between
Bankers Trust Company and AMBAC Treasurers Trust.
LIST OF PORTFOLIOS
The following is a list of Portfolios referred to in the
first WHEREAS clause of the above-referred to Custodian Agreement.
Terms used herein as defined terms unless otherwise defined shall
have the meanings ascribed to them in the above-referred to
Custodian Agreement.
AMBAC US Treasury Money Market Fund
AMBAC US Government Money Market Fund
AMBAC Short-Term US Government Income Fund
Dated as of: November 1, 1995 AMBAC TREASURERS TRUST
By: /s/ Illegible
Illegible
Title: Illegible
BANKERS TRUST COMPANY
By: /s/ Illegible
Illegible
Title: Illegible
EXHIBIT B
To Custodian Agreement dated as of November 1, 1995 between
Bankers Trust Company and AMBAC Treasurers Trust.
CUSTODY FEE SCHEDULE
AMBAC Treasurers Trust Fee Schedule
Activity Fee
Custody Acc. Maintenance $100.00/Account/Mo.
Purchases/Sales:
FBE $6.00/Trans.
DTC (Book Entry) $4.00/Trans.
PTC (Book Entry) $5.00/Trans.
Physicals $15.00/Trans.
Principal Collections N/C
Interest Collections N/C
Maturities $6.00/Maturity
Repo Set-Up N/C
Repo Maturity N/C
Tri-Party Repo Set-Up $25.00
Tri-Party Repos Maturity N/C
Fed Wires (Receives) $4.50
Fed Wires (Outgoing)
Input 0 - 999/Mo. $4.50
1000-2499/Mo. $3.00
2500-4999/Mo. $2.25
5000+/Mo. $1.75
Payment $2.00
Monthly Position Holdings
FBE $1.00
DTC (Book Entry) $1.00
PTC (Book Entry) $1.00
Physicals $2.00
DDA Account Fees
Maintenance $50.00
Postings $00.50
Balance Reporting $150.00
POL*ARIS Maintenance $200.00
Monthly Min. Custody Fee:** $1,500.00
Overdraft Charges Fed Funds +1%
Reserve Make-Up* ECR
Earnings Credit Rate (ECR) Avg. Mo. 3 Mo. T-Bill
Rate as published
in the WSJ.
* Reserve Make-Up only applies if net overdraft charges involve
accounts with different Legal Names and separate Taxpayer Ids.
**Bankers Trust has agreed to waive this fee for the first six
months from the date of contract.
This Exhibit B shall be amended upon delivery by the
Custodian of a new Exhibit B to the Customer and
acceptance thereof by the Customer and shall be effective
as of the date of acceptance by the Customer on a date
agreed upon between the Custodian and the Customer.
Dated as of: November 1, 1995
AMBAC TREASURERS TRUST
By: /s/ Illegible
Illegible
Title: Illegible
BANKERS TRUST COMPANY
By: /s/ Illegible
Illegible
Title: Illegible
- -17-
NY-38041.01
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT is made as of November 1, 1995
by and between FIRST DATA INVESTOR SERVICES GROUP, INC., a
Massachusetts corporation ("FDISG"), and AMBAC TREASURERS TRUST, a
Delaware business trust (the "Trust").
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain FDISG to render certain
administrative and fund accounting services to those series of the
Trust described in Schedule A hereto, as from time to time amended
(each a "Fund" and, collectively, the "Funds"), and FDISG is
willing to render such services;
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties
hereto as follows:
1. Appointment. The Trust hereby appoints FDISG to act
as Administrator of the Trust on the terms set forth in this
Agreement. FDISG accepts such appointment and agrees to render
the services herein set forth for the compensation provided for in
Schedule B, annexed hereto and incorporated herein.
In the event that the Trust establishes additional series
with respect to which the Trust decides to retain FDISG to act as
administrator and accounting services provider, the Trust shall so
notify FDISG in writing. If FDISG is willing to render such
services, FDISG shall notify the Trust in writing whereupon such
portfolio shall be deemed to be a Fund hereunder and shall be
subject to the provisions of this Agreement except to the extent
that said provisions (including those relating to the compensation
payable by the Funds to FDISG) are modified with respect to such
Fund in writing by the Trust and FDISG at the time. Without
limiting the foregoing, it is understood that the Trust will from
time to time issue separate series or classes of shares and may
classify and reclassify shares of any such series or class. FDISG
shall identify to each such series or class property belonging to
such series or class and in such reports, confirmations and
notices to the Trust called for under this Agreement shall
identify the series or class to which such report, confirmation or
notice pertains.
2. Delivery of Documents. The Trust has furnished FDISG
with copies properly certified or authenticated of each of the
following:
(a) Resolutions of the Trust's Board of Trustees
authorizing the appointment of FDISG to provide certain
administrative services to the Fund and approving this Agreement;
(b) The Trust's Certificate of Trust filed with the
Secretary of the State of Delaware on June 27, 1995, the Trust's
Declaration of Trust and all amendments thereto (the "Declaration
of Trust");
(c) The Trust's By-Laws and all amendments thereto
(the "By-Laws");
(d) The Investment Advisory Agreement between AMBAC
Investment Management, Inc. (the "Adviser") and the Trust dated
November 1, 1995;
(e) The Custody Agreement between Bankers Trust
Company (the "Custodian") and the Trust dated November 1, 1995;
(f) The Transfer Agency and Services Agreement
between First Data Investor Services Group, Inc. (the "Transfer
Agent") and the Trust dated November 1, 1995;
(g) The Trust's Registration Statement on Form N-1A
(the "Registration Statement") under the Securities Act of 1933
and under the 1940 Act (File Nos. 33-94206 and 811-9064), as filed
with the Securities and Exchange Commission ("SEC") on June 30,
1995, relating to the Trust's shares of beneficial ownership,
$.001 par value per share, and all amendments thereto; and
(h) The Trust's most recent prospectus and statement
of additional information (together, the "Prospectus").
The Trust will furnish FDISG from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements to the foregoing. Furthermore, the Trust will provide
FDISG with any other documents that FDISG may reasonably request
and will notify FDISG as soon as possible of any matter materially
affecting the performance by FDISG of its services under this
Agreement.
3. Duties as Administrator. Subject to the supervision
and direction of the Board of Trustees of the Trust, FDISG, as
Administrator, will assist in supervising various aspects of the
Trust's administrative operations and undertakes to perform the
following specific services:
(a) Maintaining such office facilities as necessary
to provide the services hereafter set forth (which may be in the
offices of FDISG or a corporate affiliate);
(b) Furnishing non-investment related statistical
and research data, data processing services, clerical services,
and internal legal, executive and administrative services and
stationery and office supplies in connection with its services
hereunder;
(c) Furnishing corporate secretarial services
including preparation and distribution of materials for Board of
Trustees meetings;
(d) Assisting in the preparation of the Trust's
Registration Statement and any Pre-Effective and Post-Effective
Amendments to the Trust's Registration Statement, Notices of
Annual or Special Meetings of Shareholders and Proxy materials
relating to such Meetings;
(e) Assisting in the determination of the
jurisdictions in which the Trust's shares will be registered or
qualified for sale and, in connection therewith, shall be
responsible for the initial registration or qualification and the
maintenance of such registration or qualification of such shares
for sale under the securities laws of each state in which it is
determined shares should be registered or qualified. Payment of
share registration fees and any fees for qualifying or continuing
the qualification of the Fund as a dealer or broker shall be made
by the Fund;
(f) Providing the services of certain persons who
may be appointed as officers of the Trust by the Trust's Board of
Trustees;
(g) Providing legal advice and counsel to the Trust
with respect to regulatory matters, including monitoring
regulatory and legislative developments which may affect the Trust
and assisting in the strategic response to such developments,
counseling and assisting the Trust in routine regulatory
examinations or investigations of the Trust, and working closely
with outside counsel to the Trust in response to any litigation or
non-routine regulatory matters;
(h) Accounting and bookkeeping services (including
the maintenance of such accounts, books and records of the Trust
as may be required by Section 31(a) of the 1940 Act and the rules
thereunder, transmitting to the Custodian instructions received
from the Adviser for the purchase and sale of Trust assets and
ensuring proper settlement related thereto);
(i) Internal auditing services;
(j) Valuing the Trust's assets and calculating the
net asset value of the shares of the Fund on each business day as
set forth in the Trust's Prospectus in accordance with such
procedures as may be adopted by the Board of Trustees of the
Trust;
(k) Accumulating information for and, subject to
approval by the Trust's Treasurer, preparing all required
financial statements for the Trust and preparing reports to the
Trust's shareholders of record and the SEC including, but not
necessarily limited to, Annual and Semi-Annual Reports to
shareholders, Semi-Annual Reports on Form N-SAR and Notices
pursuant to Rule 24f-2;
(l) Preparing and filing the Trust's tax returns;
(m) Monitoring compliance by the Trust with the
Fund's investment objective, policies, restrictions, tax matters
and applicable laws and regulations, including the 1940 Act, and
performing related daily and monthly compliance tests; and
(n) Preparing and furnishing the Trust (at the
Trust's request) with performance information (including yield,
capital gain (loss) and total return information) calculated in
accordance with applicable U.S. securities laws and reporting to
external databases and any Nationally Recognized Statistical
Rating organization (after first consulting with the Trust's
treasurer) such information as may reasonably be requested.
In performing its duties as Administrator of the Trust,
FDISG will act in accordance with the Declaration of Trust, By-
Laws, Prospectus and with the instructions and directions of the
Board of Trustees of the Trust and will conform to and comply with
the requirements of the 1940 Act and the rules thereunder and all
other applicable federal or state laws and regulations.
4. Allocation of Expenses. FDISG shall bear all expenses
in connection with the performance of its services under this
Agreement, except as noted below.
(a) FDISG will from time to time employ or associate
with itself such person or persons as FDISG may believe to be
particularly suited to assist it in performing services under this
Agreement. Such person or persons may be officers and employees
who are employed by both FDISG and the Trust. The compensation of
such person or persons shall be paid by FDISG and no obligation
shall be incurred on behalf of the Trust in such respect.
(b) FDISG shall not be required to pay any of the
following expenses incurred by the Trust: membership dues in the
Investment Company Institute or any similar organization;
investment advisory expenses; costs of printing and mailing stock
certificates, prospectuses, reports and notices; interest on
borrowed money; brokerage commissions; taxes and fees payable to
Federal, state and other governmental agencies; fees of Trustees
of the Trust who are not affiliated with FDISG; outside auditing
expenses; outside legal expenses; or other expenses not specified
in this Section 4 which may be properly payable by the Trust.
(c) For the services to be rendered, the facilities
to be furnished and the payments to be made to FDISG, as provided
for in this Agreement, the Trust shall compensate FDISG for its
services rendered pursuant to this Agreement in accordance with
the fees set forth in Schedule B, annexed hereto and incorporated
herein. Such fees do not include out-of-pocket disbursements of
FDISG for which FDISG will be entitled to bill separately. Out-
of-pocket disbursements shall include the items specified in
Schedule C, annexed hereto and incorporated herein.
(d) FDISG will bill the Trust as soon as practicable
after the end of each calendar month, and said billings will be
detailed in accordance with the out-of-pocket schedule. The Trust
will promptly pay to FDISG the amount of such billing.
5. Limitation of Liability.
(a) FDISG shall not be liable to the Trust for any
error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the performance of its obligations
and duties under this Agreement, except a loss resulting from
FDISG's willful misfeasance, bad faith or gross negligence in the
performance of such obligations and duties, or by reason of its
reckless disregard thereof. The Trust will indemnify FDISG
against and hold it harmless from any and all losses, claims,
damages, liabilities or expenses (including reasonable counsel
fees and expenses) resulting from any claim, demand, action or
suit not resulting from the willful misfeasance, bad faith or
gross negligence of FDISG in the performance of such obligations
and duties or by reason of its reckless disregard thereof. The
Trust and FDISG agree that the obligations of the Trust under this
Agreement shall not be binding upon any of the members of the
Trust's Board of Trustees, shareholders, nominees, officers,
employees or agents, whether past, present or future, of the
Trust, individually, but are binding only upon the assets and
property of the Trust, as provided in the Declaration of Trust.
The execution and delivery of this Agreement have been authorized
by the Board of Trustees and signed by an authorized officer of
the Trust, acting as such, and neither such authorization by such
members of the Board of Trustees nor such execution and delivery
by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally,
but shall bind only the assets and property of the Trust as
provided in the Declaration of Trust.
(b) In no event and under no circumstances shall
either party to this Agreement be liable to the other party for
consequential or indirect loss of profits, reputation or business
or any other special damages under any provision of this Agreement
or for any act or failure to act hereunder.
6. Term and Termination.
(a) This Agreement shall become effective on the
date hereof and shall continue for a period of three (3) years
(the "Initial Term") unless earlier terminated pursuant to the
terms of this Agreement. Thereafter this Agreement shall
automatically be renewed for successive terms of one (1) year
("Renewal Term") each.
(b) Either party may terminate this Agreement at the
end of the second year of the Initial Term, at the end of the
Initial Term or at the end of any subsequent Renewal Term upon not
than less than ninety (90) days' or more than one hundred-eighty
(180) days' prior written notice to the other party.
(c) In the event a termination notice is given by
the Trust, all reasonable out of pocket expenses associated with
movement of records and materials and conversion thereof will be
borne by the Trust.
(d) If a party hereto is guilty of a material
failure to perform its duties and obligations hereunder (a
"Defaulting Party"), the other party (the "Non-Defaulting Party")
may give written notice thereof to the Defaulting Party, and if
such material breach shall not have been remedied within thirty
(30) days after such written notice is given, then the Non-
Defaulting Party may terminate this Agreement by giving thirty
(30) days' written notice of such termination to the Defaulting
Party. In no event shall termination of this Agreement constitute
a waiver of any other rights or remedies of the parties hereto
under this Agreement.
(e) In addition to the other rights of termination
set forth in this Section 6, in the event that FDISG fails to
assume liability for, reimburse the Fund for or otherwise cure any
material loss, claim, damage, liability or expense suffered by the
Trust primarily by reason of the negligence of FDISG in the
performance of its obligations and duties under this Agreement
within thirty (30) days after written notice of such failure by
FDISG, the Trust shall have the unconditional right upon thirty
(30) days' written notice to FDISG to terminate this Agreement
without liability to FDISG on account of such termination. For
purposes of this Section 6(e) only, "material" shall mean an
amount in excess of $15,000. The right of termination set forth
in this Section 6(e) shall exist notwithstanding the limitations
of liability otherwise provided for in this Agreement.
(f) In the event of any termination of any agreement
between the Trust and FDISG (or any affiliated company of FDISG)
pursuant to which transfer agency services are provided to the
Trust, either party shall have the unconditional right to
terminate this Agreement, effective as of the date of termination
of such other agreement, or as soon as reasonably practical
thereafter, by giving thirty (30) days written notice of such
termination to the other party.
7. Amendment to this Agreement. No provision of this
Agreement may be changed, discharged or terminated orally, but
only by an instrument in writing signed by the party against which
enforcement of the change, discharge or termination is sought.
8. Miscellaneous.
(a) Any notice or other instrument authorized or
required by this Agreement to be given in writing to the Trust or
FDISG shall be sufficiently given if addressed to the party and
received by it at its office set forth below or at such other
place as it may from time to time designate in writing.
To the Trust:
AMBAC Treasurers Trust
300 Nyala Farms Road
Westport, Connecticut 06880
Attention: Treasurer
To FDISG:
First Data Investor Services Group, Inc.
53 State Street - BOS425
Boston, Massachusetts 02109
Attention: Patricia L. Bickimer, Esq.
(b) This Agreement shall extend to and shall be
binding upon the parties hereto and their respective successors
and assigns, provided that this Agreement shall not be assigned to
any person other than a person controllling, controlled by or
under common control with the assignor without the written consent
of the other party.
(c) This Agreement shall be construed in accordance
with the laws of the Commonwealth of Massachusetts.
(d) This Agreement may be executed in any number of
counterparts each of which shall be deemed to be an original and
which collectively shall be deemed to constitute only one
instrument.
(e) The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or
effect.
(f) This Agreement and the schedules hereto
constitute the entire agreement between the parties hereto with
respect to the matters described herein.
9. Confidentiality. In connection with the services
provided by the Administrator hereunder, certain confidential and
proprietary information regarding the Administrator and the Trust
may be disclosed to the other. In connection therewith, the
parties agree as follows:
(a) Confidential Information disclosed under this
Agreement shall mean:
(i) any data or information that is
competitively sensitive material, and not generally known to the
public, including, but not limited to, information about the names
of present, prior and potential shareholders and their
representatives, product plans, marketing strategies, finance,
operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results
relating to the past, present or future business activities of the
Administrator or the Trust, their respective parent corporation,
their respective subsidiaries and affiliated companies and the
customers, clients and suppliers or any of the foregoing;
(ii) any scientific or technical information,
design, process, procedure, formula, or improvement that is
commercially valuable and secret in the sense that its
confidentiality affords the Administrator or the Trust a
competitive advantage over its competitors; and
(iii) all confidential or proprietary concepts,
documentation, reports, data, specifications, computer software,
source code, object code, flow charts, databases, inventions,
know-how, show-how and trade secrets, whether or not patentable or
copyrightable.
(b) Confidential Information includes, without
limitation, all documents, inventions, substances, engineering and
laboratory notebooks, drawings, diagrams, specifications, bills of
material, equipment, prototypes and models, and any other tangible
manifestation of the foregoing which now exist or come into the
control or possession of the party.
(c) Except as expressly authorized by prior written
consent of the disclosing party ("Discloser"), the party receiving
Confidential Information ("Recipient") shall:
(i) limit access to Discloser's Confidential
Information to Recipient's employees who have a need-to-know in
connection with the subject matter thereof;
(ii) advise those employees who have access to
the Confidential Information of the proprietary nature thereof and
of the obligations set forth in this Confidentiality Agreement;
(iii) take appropriate action by instruction or
agreement with the employees having access to Discloser's
Confidential Information to fulfill Recipient's obligations under
this Confidentiality Agreement;
(iv) safeguard all of Discloser's Confidential
Information by using a reasonable degree of care, but not less
than that degree of care used by Recipient in safeguarding its own
similar information or material;
(v) use all of Discloser's Confidential
Information solely for purposes that it was intended;
(vi) not disclose any of Discloser's
Confidential Information to third parties; and
(vii) not disclose the existence of the
discussions to any third party.
(d) Upon Discloser's request, Recipient shall
surrender to Discloser all memoranda, notes, records, drawings,
manuals, records, and other documents or materials (and all copies
of same) relating to or containing Discloser's Confidential
Information. When Recipient returns the materials, Recipient
shall certify in writing that it has returned all materials
containing or relating to the Confidential Information.
(e) The obligations of confidentiality and
restriction on use in this Section 9 shall not apply to any
Confidential Information that Recipient proves:
(i) was in the public domain prior to the date
of this Agreement or subsequently came into the public domain
through no fault of Recipient; or
(ii) was lawfully received by Recipient from a
third party free of any obligation of confidence to the third
party; or
(iii) was already in Recipient's possession
prior to receipt from Discloser; or
(iv) is required to be disclosed in a judicial
or administrative proceeding after all reasonable legal remedies
for maintaining such information in confidence have been exhausted
including, but not limited to, giving Discloser as much advance
notice as practical of the possibility of disclosure to allow
Discloser to stop such disclosure or obtain a protective order
concerning such disclosure; or
(v) is subsequently and independently
developed by Recipient's employees, consultants or agents without
reference to Confidential Information.
(f) The Trust and the Administrator agree that money
damages would not be a sufficient remedy for breach of this
Section 9. Accordingly, in addition to all other remedies that
either party may have, a party shall be entitled to specific
performance and injunctive or other equitable relief as a remedy
for any breach of this Agreement. The parties agree to waive any
requirement for a bond in connection with any such injunctive or
other equitable relief.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed and delivered by their duly
authorized officers as of the date first written above.
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ William E. Small
William E. Small
Title: Executive Vice President
AMBAC TREASURERS TRUST
By: /s/ W. Dayle Nattress
W. Dayle Nattress
Title: President
SCHEDULE A
SERIES OF THE TRUST
* AMBAC U.S. Treasury Money Market
Fund
* AMBAC U.S. Government Money Market
Fund
* AMBAC Short-Term U.S. Government
Income Fund
SCHEDULE B
AMBAC FEE SCHEDULE FOR
FUND ADMINISTRATION AND
FUND ACCOUNTING SERVICES
1. Administration Charges*
First $500 million of Trust average net assets 5
basis points per annum
Next $500 million of Trust average net assets 4 basis
points per annum
Over $1 billion of Trust average net assets 3
basis points per annum
Trust monthly minimum $10,000
*Based on average daily net assets of the Trust
2. Fund Accounting Charges
Fund Assets (in millions)** Monthly Fee
(per Fund)
0 - $ 50 $3,000
$50 - $200 $4,000
Over $200 $5,000
**Based on monthly average net assets
Notes:
(1) There is an additional fee of $10,000 per Fund
annually for each additional
class of shares.
(2) Global fund accounting fees, defined as Funds
possessing more than 25% in
non-domestic assets, are charged at 150% of the above
fees.
SCHEDULE C
OUT-OF- POCKET EXPENSES
Out-of-pocket expenses are limited to the following
items:
- Postage (including overnight or other courier
services)
- Telephone
- Telecommunications charges (including FAX)
- Duplicating charges
- Pricing services
- Forms and supplies
- Travel expenses
- Vendor set-up charges for Blue Sky services
- Such other expenses as are agreed to by FDISG
and the Trust
9
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B-1
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TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this 1st day of November, 1995
between AMBAC TREASURERS TRUST (the "Fund"), a Delaware business
trust with principal place of business at 300 Nyala Farms Road,
Westport, Connecticut 06880 and FIRST DATA INVESTOR SERVICES
GROUP, INC. (the "Transfer Agent"), a Massachusetts corporation
with principal offices at One Exchange Place, 53 State Street,
Boston, Massachusetts 02109.
WITNESSETH
WHEREAS, the Fund is authorized to issue Shares in separate
series, with each such series representing interests in a separate
portfolio of securities and other assets;
WHEREAS, the Fund initially intends to offer shares in those
Portfolios identified in the attached Exhibit 1, each such
Portfolio, together with all other Portfolios subsequently
established by the Fund shall be subject to this Agreement in
accordance with Article 16;
WHEREAS, the Fund on behalf of the Portfolios, desires to
appoint the Transfer Agent as its transfer agent, dividend
disbursing agent and agent in connection with certain other
activities and the Transfer Agent desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants and
promises hereinafter set forth, the Fund and the Transfer Agent
agree as follows:
Article 1 Definitions.
1.1 Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have the
following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar
organizational document as the case may be, of the Fund as the
same may be amended from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
authorized officer of the Fund; or (ii) any person, whether or not
such person is an officer or employee of the Fund, duly authorized
to give Oral Instructions or Written Instructions on behalf of the
Fund as indicated in writing to the Transfer Agent from time to
time.
(c) "Board of Directors" shall mean the Board of Directors
or Board of Trustees of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time
deposit, or cause to be deposited or held under the name or
account of such a custodian pursuant to a Custodian Agreement.
(f) "1934 Act" shall mean the Securities Exchange
Act of 1934 and the rules and regulations promulgated
thereunder, all as amended from time to time.
(g) "1940 Act" shall mean the Investment Company Act of
1940 and the rules and regulations promulgated thereunder, all as
amended from time to time.
(h) "Oral Instructions" shall mean instructions, other
than Written Instructions, actually received by the Transfer Agent
from a person reasonably believed by the Transfer Agent to be an
Authorized Person;
(i) "Portfolio" shall mean each separate series of shares
offered by the Fund representing interest in a separate portfolio
of securities and other assets;
(j) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which has become effective under the
Securities Act of 1933 and the 1940 Act.
(k) "Shares" refers collectively to such shares of capital
stock or beneficial interest, as the case may be, or class
thereof, of each respective Portfolio of the Fund as may be issued
from time to time.
(l) "Shareholder" shall mean a record owner of Shares of
each respective Portfolio of the Fund.
(m) "Written Instructions" shall mean a written
communication signed by a person reasonably believed by the
Transfer Agent to be an Authorized Person and actually received by
the Transfer Agent. Written Instructions shall include manually
executed originals and authorized electronic transmissions,
including telefacsimile of a manually executed original or other
process.
Article 2 Appointment of the Transfer Agent. The Fund, on
behalf of the Portfolios, hereby appoints and constitutes the
Transfer Agent as transfer agent and dividend disbursing agent for
Shares of each respective Portfolio of the Fund and as shareholder
servicing agent for the Fund and the Transfer Agent hereby accepts
such appointments and agrees to perform the duties hereinafter set
forth.
Article 3 Duties of the Transfer Agent.
3.1 The Transfer Agent shall be responsible for:
(a) Administering and/or performing the customary services
of a transfer agent; acting as service agent in connection with
dividend and distribution functions; and for performing
shareholder account and administrative agent functions in
connection with the issuance, transfer and redemption or
repurchase (including coordination with the Custodian) of Shares
of each Portfolio, as more fully described in the written schedule
of Duties of the Transfer Agent annexed hereto as Schedule A and
incorporated herein, and in accordance with the terms of the
Prospectus of the Fund on behalf of the applicable Portfolio,
applicable law and the procedures established from time to time
between the Transfer Agent and the Fund.
(b) Recording the issuance of Shares and maintaining
pursuant to Rule 17Ad-10(e) of the 1934 Act a record of the total
number of Shares of each Portfolio which are authorized, based
upon data provided to it by the Fund, and issued and outstanding.
The Transfer Agent shall provide the Fund on a regular basis with
the total number of Shares of each Portfolio which are authorized
and issued and outstanding and shall have no obligation, when
recording the issuance of Shares, to monitor the issuance of such
Shares or to take cognizance of any laws relating to the issue or
sale of such Shares, which functions shall be the sole
responsibility of the Fund.
(c) Notwithstanding any of the foregoing provisions of
this Agreement, the Transfer Agent shall be under no duty or
obligation to inquire into, and shall not be liable for: (i) the
legality of the issuance or sale of any Shares or the sufficiency
of the amount to be received therefor; (ii) the legality of the
redemption of any Shares, or the propriety of the amount to be
paid therefor; (iii) the legality of the declaration of any
dividend by the Board of Directors, or the legality of the
issuance of any Shares in payment of any dividend; or (iv) the
legality of any recapitalization or readjustment of the Shares.
3.2 In addition, the Fund shall (i) identify to the
Transfer Agent in writing those transactions and assets to be
treated as exempt from blue sky reporting for each State and (ii)
verify the establishment of transactions for each State on the
system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of the Transfer Agent
for the Fund's blue sky State registration status is solely
limited to the initial establishment of transactions subject to
blue sky compliance by the Fund and the reporting of such
transactions to the Fund as provided above.
3.3 In addition to the duties set forth herein, the
Transfer Agent shall perform such other duties and functions, and
shall be paid such amounts therefor, as may from time to time be
agreed upon in writing between the Fund and the Transfer Agent.
3.4 The Transfer Agent shall perform the services
described in this Agreement in accordance with the performance
standards set forth in Schedule D attached hereto and incorporated
herein.
Article 4 Recordkeeping and Other Information.
4.1 The Transfer Agent shall create and maintain all
records required of it pursuant to its duties hereunder and as set
forth in Schedule A in accordance with all applicable laws, rules
and regulations, including records required by Section 31(a) of
the 1940 Act. All records shall be available during regular
business hours for inspection and use by the Fund and its agents.
Where applicable, such records shall be maintained by the Transfer
Agent for the periods and in the places required by Rule 31a-2
under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act,
the Transfer Agent agrees that all such records prepared or
maintained by the Transfer Agent relating to the services to be
performed by the Transfer Agent hereunder are the property of the
Fund and will be preserved, maintained and made available in
accordance with such section, and will be surrendered promptly to
the Fund on and in accordance with the Fund's request.
4.3 In case of any requests or demands for the inspection
of Shareholder records of the Fund, the Transfer Agent will
endeavor to notify the Fund of such request and secure Written
Instructions as to the handling of such request. The Transfer
Agent reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that
it may be held liable for the failure to comply with such request.
Article 5 Fund Instructions.
5.1 The Transfer Agent will have no liability for acting
upon Written or Oral Instructions believed to have been executed
or orally communicated by an Authorized Person and will not be
held to have any notice of any change of authority of any person
until receipt of a Written Instruction thereof from the Fund. The
Transfer Agent will also have no liability for processing Share
certificates which it reasonably believes to bear the proper
manual or facsimile signatures of the officers of the Fund and the
proper countersignature of the Transfer Agent.
5.2 At any time, the Transfer Agent may request Written
Instructions from the Fund and may seek advice from legal counsel
for the Fund, or its own legal counsel, with respect to any matter
arising in connection with this Agreement, and it shall not be
liable for any action taken or not taken or suffered by it in good
faith in accordance with such Written Instructions or in
accordance with the opinion of counsel for the Fund or for the
Transfer Agent. Written Instructions requested by the Transfer
Agent will be provided by the Fund within a reasonable period of
time.
5.3 The Transfer Agent, its officers, agents or employees,
shall accept Oral Instructions or Written Instructions given to
them by any person representing or acting on behalf of the Fund
only if said representative is an Authorized Person. The Fund
agrees that all Oral Instructions shall be followed within one
business day by confirming Written Instructions, and that the
Fund's failure to so confirm shall not impair in any respect the
Transfer Agent's right to rely on Oral Instructions.
Article 6 Compensation.
6.1 The Fund on behalf of each of the Portfolios will
compensate the Transfer Agent for the performance of its
obligations hereunder in accordance with the fees set forth in the
written Fee Schedule annexed hereto as Schedule B and incorporated
herein.
6.2 In addition to those fees set forth in Section 6.1
above, the Fund on behalf of each of the Portfolios agrees to pay,
and will be billed separately for, out-of-pocket expenses incurred
by the Transfer Agent in the performance of its duties hereunder.
Out-of-pocket expenses shall include the items specified in the
written schedule of out-of-pocket charges annexed hereto as
Schedule C and incorporated herein. Schedule C may be modified by
written agreement between the parties.
6.3 The Fund on behalf of each of the Portfolios agrees to
pay all fees and out-of-pocket expenses within fifteen (15) days
following the receipt of the respective invoice.
6.4 Any compensation agreed to hereunder may be adjusted
from time to time by attaching to Schedule B, a revised Fee
Schedule executed and dated by the parties hereto.
Article 7 Documents. In connection with the appointment of the
Transfer Agent, the Fund shall, on or before the date this
Agreement goes into effect, but in any case within a reasonable
period of time for the Transfer Agent to prepare to perform its
duties hereunder, deliver or caused to be delivered to the
Transfer Agent the documents set forth in the written schedule of
Fund Documents annexed hereto as Schedule E.
Article 8 Transfer Agent System.
8.1 The Transfer Agent shall retain title to and ownership
of any and all data bases, computer programs, screen formats,
report formats, interactive design techniques, derivative works,
inventions, discoveries, patentable or copyrightable matters,
concepts, expertise, patents, copyrights, trade secrets, and other
related legal rights utilized by the Transfer Agent in connection
with the services provided by the Transfer Agent to the Fund
herein (the "Transfer Agent System").
8.2 The Transfer Agent hereby grants to the Fund a limited
license to the Transfer Agent System for the sole and limited
purpose of having the Transfer Agent provide the services
contemplated hereunder and nothing contained in this Agreement
shall be construed or interpreted otherwise and such license shall
immediately terminate with the termination of this Agreement.
Article 9 Representations and Warranties of the Transfer Agent.
9.1 The Transfer Agent represents and warrants to the Fund
that:
(a) it is a corporation duly organized and existing and in
good standing under the laws of the Commonwealth of Massachusetts;
(b) it is empowered under applicable laws and by its
Articles of Incorporation and By-Laws to enter into and perform
this Agreement;
(c) all requisite corporate proceedings have been taken to
authorized it to enter into this Agreement;
(d) it is duly registered with its appropriate regulatory
agency as a transfer agent and such registration will remain in
effect for the duration of this Agreement; and
(e) it has and will continue to have access to the
necessary facilities, equipment and personnel to perform its
duties and obligations under this Agreement.
Article 10 Representations and Warranties of the Fund.
10.1 The Fund represents and warrants to the Transfer Agent
that:
(a) it is duly organized and existing and in good standing
under the laws of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its
Article of Incorporation and By-Laws to enter into this Agreement;
(c) all corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to
authorized it to enter into this Agreement;
(d) a registration statement under the Securities Act of
1933, as amended, and the 1940 Act on behalf of each of the
Portfolios is currently effective and will remain effective, and
all appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of the Fund
being offered for sale; and
(e) all outstanding Shares are validly issued, fully paid
and non-assessable. When Shares are hereafter issued in
accordance with the terms of the Fund's Articles of Incorporation
and its Prospectus with respect to each Portfolio, such Shares
shall be validly issued, fully paid and non-assessable.
Article 11 Indemnification.
11.1 The Transfer Agent shall not be responsible for, and
the Fund on behalf of each Portfolio shall indemnify and hold the
Transfer Agent harmless from and against, any and all claims,
costs, expenses (including reasonable attorneys' fees), losses,
damages, charges, payments and liabilities of any sort or kind
which may be asserted against the Transfer Agent by any third
party or for which the Transfer Agent may be held to be liable (a
"Claim") arising out of or attributable to any of the following:
(a) Any actions of the Transfer Agent required to be taken
pursuant to this Agreement unless such Claim resulted from a
grossly negligent act or omission to act or bad faith by the
Transfer Agent in the performance of its duties hereunder.
(b) The Transfer Agent's reasonable reliance on, or
reasonable use of information, data, records and documents
(including but not limited to magnetic tapes, computer printouts,
hard copies and microfilm copies) received by the Transfer Agent
from the Fund, or any authorized third party acting on behalf of
the Fund, including but not limited the prior transfer agent for
the Fund, in the performance of the Transfer Agent's duties and
obligations hereunder.
(c) The reliance on, or the implementation of, any Written
or Oral Instructions or any other instructions or requests of the
Fund on behalf of the applicable Portfolio.
(d) The offer or sales of shares in violation of any
requirement under the securities laws or regulations of any state
that such shares be registered in such state or in violation of
any stop order or other determination or ruling by any state with
respect to the offer or sale of such shares in such state.
(e) The Fund's refusal or failure to comply with the terms
of this Agreement, or any Claim which arises out of the Fund's
negligence or misconduct or the breach of any representation or
warranty of the Fund made herein.
11.2 In any case in which the Fund may be asked to
indemnify or hold the Transfer Agent harmless, the Transfer Agent
will notify the Fund promptly after identifying any situation
which it believes presents or appears likely to present a claim
for indemnification against the Fund although the failure to do so
shall not prevent recovery by the Transfer Agent and shall keep
the Fund advised with respect to all developments concerning such
situation. The Fund shall have the option to defend the Transfer
Agent against any Claim which may be the subject of this
indemnification, and, in the event that the Fund so elects, such
defense shall be conducted by counsel chosen by the Fund and
satisfactory to the Transfer Agent, and thereupon the Fund shall
take over complete defense of the Claim and the Transfer Agent
shall sustain no further legal or other expenses in respect of
such Claim. The Transfer Agent will not confess any Claim or make
any compromise in any case in which the Fund will be asked to
provide indemnification, except with the Fund's prior written
consent. The obligations of the parties hereto under this Article
14 shall survive the termination of this Agreement.
Article 12 Standard of Care. The Transfer Agent shall at all
times act in good faith and agrees to use its best efforts within
commercially reasonable limits to ensure the accuracy of all
services performed under this Agreement, but assumes no
responsibility for loss or damage to the Fund unless said errors
are caused by the Transfer Agent's own gross negligence, bad
faith or willful misconduct or that of its employees.
Article 13 Consequential Damages. In no event and under no
circumstances shall either party to this Agreement be liable to
the other party for consequential or indirect loss of profits,
reputation or business or any other special damages under any
provision of this Agreement or as a result of any act or failure
to act hereunder.
Article 14 Term and Termination.
14.1 This Agreement shall be effective on the date first
written above and shall continue for a period of three (3) years
(the "Initial Term"), unless earlier terminated pursuant to the
terms of this Agreement. Thereafter, this Agreement shall
automatically be renewed for successive terms of one (1) year
("Renewal Terms") each.
14.2 Either party may terminate this Agreement at the end
of the second year of the Initial Term, at the end of the Initial
Term, or any subsequent Renewal Term upon not less than ninety
(90) days or more than one-hundred eighty (180) days prior written
notice to the other party.
14.3 In the event a termination notice is given by the
Fund, all reasonable out-of-pocket expenses, including programming
costs, associated with movement of records and materials and
conversion thereof to a successor transfer agent will be borne by
the Fund.
14.4 If a party hereto is guilty of a material failure to
perform its duties and obligations hereunder (a "Defaulting
Party") the other party (the "Non-Defaulting Party") may give
written notice thereof to the Defaulting Party, and if such
material breach shall not have been remedied within thirty (30)
days after such written notice is given, then the Non-Defaulting
Party may terminate this Agreement by giving thirty (30) days
written notice of such termination to the Defaulting Party. In no
event shall termination of this Agreement constitute a waiver of
any other rights or remedies of the parties hereto under this
Agreement.
14.5 The Fund may terminate this Agreement as provided for
in Schedule D.
14.6 In addition to the other rights of termination set
forth in this Article 14, in the event that the Transfer Agent
fails to assume liability for, reimburse the Fund for or otherwise
cure any material loss, claim, damage, liability or expense
suffered by the Fund primarily by reason of the negligence of the
Transfer Agent in the performance of its obligations and duties
under this Agreement within thirty (30) days after written notice
of such failure, the Fund shall have the unconditional right upon
thirty (30) days written notice to the Transfer Agent to terminate
this Agreement without liability to the Transfer Agent on account
of such termination. For purposes of this Article 14.6 only,
"material" shall mean an amount in excess of $15,000. The right
of termination set forth in this Article 14.6 shall exist
notwithstanding the limitations of liability otherwise provided
for in this Agreement.
14.7 In the event of any termination of any agreement
between the Fund and the Transfer Agent (or any affiliated company
of the Transfer Agent) pursuant to which administrative services
are provided to the Fund, either party shall have the
unconditional right to terminate this Agreement, effective as of
the date of termination of such other agreement, or as soon as
reasonably practical thereafter, by giving thirty (30) days'
written notice of such termination to the other party.
Article 15 Additional Portfolios. In the event that the Fund
establishes one or more Portfolios in addition to those identified
in Exhibit 1, with respect to which the Fund desires to have the
Transfer Agent render services as transfer agent under the terms
hereof, the Fund shall so notify the Transfer Agent in writing,
and if the Transfer Agent agrees in writing to provide such
services, Exhibit 1 shall be amended to include such additional
Portfolios.
Article 16 Confidentiality.
16.1 In connection with the services provided by the
Transfer Agent hereunder, certain confidential and proprietary
information regarding the Transfer Agent and the Fund may be
disclosed to the other. In connection therewith, the parties agree
as follows:
(a) Confidential Information disclosed under this
Agreement shall mean:
(i) any data or information that is competitively sensitive
material, and not generally known to the public, including, but
not limited to, information about the names of present, prior and
potential shareholders and their representatives, product plans,
marketing strategies, finance, operations, customer relationships,
customer profiles, sales estimates, business plans, and internal
performance results relating to the past, present or future
business activities of the Transfer Agent or the Fund, their
respective parent corporation, their respective subsidiaries and
affiliated companies and the customers, clients and suppliers of
any of the foregoing;
(ii) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable
and secret in the sense that its confidentiality affords the
Transfer Agent or the Fund a competitive advantage over its com-
petitors; and
(iii) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code,
object code, flow charts, databases, inventions, know-how,
show-how and trade secrets, whether or not patentable or
copyrightable.
(b) Confidential Information includes, without limitation,
all documents, inventions, substances, engineering and laboratory
notebooks, drawings, diagrams, specifications, bills of material,
equipment, prototypes and models, and any other tangible
manifestation of the foregoing which now exist or come into the
control or possession of the party.
16.2 Except as expressly authorized by prior written
consent of the disclosing party ("Discloser"), the party receiving
Confidential Information ("Recipient") shall:
(a) limit access to Discloser's Confidential Information
to Recipient's employees who have a need-to-know in connection
with the subject matter thereof;
(b) advise those employees who have access to the Con-
fidential Information of the proprietary nature thereof and of the
obligations set forth in this Confidentiality Agreement;
(c) take appropriate action by instruction or agreement
with the employees having access to Discloser's Confidential
Information to fulfill Recipient's obligations under this
Confidentiality Agreement;
(d) safeguard all of Discloser's Confidential Information
by using a reasonable degree of care, but not less than that
degree of care used by Recipient in safeguarding its own similar
information or material;
(e) use all of Discloser's Confidential Information solely
for purposes that it was intended;
(f) not disclose any of Discloser's Confidential
Information to third parties; and
(g) not disclose the existence of the discussions to any
third party.
16.3 Upon Discloser's request, Recipient shall surrender to
Discloser all memoranda, notes, records, drawings, manuals,
records, and other documents or materials (and all copies of same)
relating to or containing Discloser's Confidential Information.
When Recipient returns the materials, Recipient shall certify in
writing that it has returned all materials containing or relating
to the Confidential Information.
16.4 The obligations of confidentiality and restriction on
use in this Article 16 shall not apply to any Confidential
Information that Recipient proves:
(a) was in the public domain prior to the date of this
Agreement or subsequently came into the public domain through no
fault of Recipient; or
(b) was lawfully received by Recipient from a third party
free of any obligation of confidence to the third party; or
(c) was already in Recipient's possession prior to receipt
from Discloser; or
(d) is required to be disclosed in a judicial or
administrative proceeding after all reasonable legal remedies for
maintaining such information in confidence have been exhausted
including, but not limited to, giving Discloser as much advance
notice as practical of the possibility of disclosure to allow
Discloser to stop such disclosure or obtain a protective order
concerning such disclosure; or
(e) is subsequently and independently developed by
Recipient's employees, consultants or agents without reference to
Confidential Information.
16.5 The Fund and the Transfer Agent agree that money
damages would not be a sufficient remedy for breach of this
Article 16. Accordingly, in addition to all other remedies that
either party may have, a party shall be entitled to specific
performance and injunctive or other equitable relief as a remedy
for any breach of this Agreement. The parties agree to waive any
requirement for a bond in connection with any such injunctive or
other equitable relief.
Article 17 Force Majeure. In the event either party is unable to
perform its obligations under the terms of this Agreement because
of acts of God, strikes, labor difficulties, mechanical
breakdowns, equipment or transmission failure or damage reasonably
beyond its control, or other causes reasonably beyond its control,
such party shall not be liable for damages to the other for any
damages resulting from such failure to perform or otherwise from
such causes.
Article 18 Amendments. This Agreement may only be amended or
modified by a written instrument executed by both parties.
Article 19 Assignment and Subcontracting. This Agreement, its
benefits and obligations shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned or
otherwise transferred by either party hereto, without the prior
written consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that the Transfer Agent
may, in its sole discretion, assign all its right, title and
interest in this Agreement to an affiliate, parent or subsidiary,
or to the purchaser of substantially all of its business. The
Transfer Agent may, in its sole discretion, engage subcontractors
to perform any of the obligations contained in this Agreement to
be performed by the Transfer Agent.
Article 20 Arbitration.
20.1 Any claim or controversy arising out of or relating to
this Agreement, or breach hereof, shall be settled by arbitration
administered by the American Arbitration Association in Boston,
Massachusetts in accordance with its applicable rules, except that
the Federal Rules of Evidence and the Federal Rules of Civil
Procedure with respect to the discovery process shall apply.
20.2 The parties hereby agree that judgment upon the award
rendered by the arbitrator may be entered in any court having
jurisdiction.
20.3 The parties acknowledge and agree that the performance
of the obligations under this Agreement necessitates the use of
instrumentalities of interstate commerce and, notwithstanding
other general choice of law provisions in this Agreement, the
parties agree that the Federal Arbitration Act shall govern and
control with respect to the provisions of this Article 20.
Article 21 Notice. Any notice or other instrument authorized or
required by this Agreement to be given in writing to the Fund or
the Transfer Agent, shall be sufficiently given if addressed to
that party and received by it at its office set forth below or at
such other place as it may from time to time designate in writing.
To the Fund: AMBAC Treasurers Trust
300 Nyala Farms Road
Westport, Connecticut 06880
Attention: Treasurer
To the Transfer Agent: First Data Investor Services Group,
Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: President
with a copy to the Transfer Agent's General Counsel
Article 22 Successors. 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 assigned to any person other than a person
controlling, controlled by or under common control with the
assignor without the written consent of the other party, which
consent shall not be unreasonably withheld.
Article 23 Governing Law. This Agreement shall be governed
exclusively by the laws of the Commonwealth of Massachusetts
without reference to the choice of law provisions thereof. Each
party hereto hereby (i) consents to the personal jurisdiction of
the Commonwealth of Massachusetts courts over the parties hereto,
hereby waiving any defense of lack of personal jurisdiction; and
(iii) appoints the person to whom notices hereunder are to be sent
as agent for service of process.
Article 24 Counterparts. 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.
Article 25 Captions. The captions of this Agreement are included
for convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their
construction or effect.
Article 26 Use of Transfer Agent/Fund Name.
26.1 The Fund shall not use the name of the Transfer Agent
in any Prospectus, Statement of Additional Information,
Shareholders' report, sales literature or other material relating
to the Fund in a manner not approved prior thereto in writing;
provided, that the Transfer Agent need only receive notice of all
reasonable uses of its name which merely refer in accurate terms
to its appointment hereunder or which are required by any
government agency or applicable law or rule.
26.2 The Transfer Agent shall not use the name of the Fund
or material relating to the Fund on any documents or forms for
other than internal use in a manner not approved prior thereto in
writing; provided, that the Fund need only receive notice of all
reasonable uses of its name which merely refer in accurate terms
to the appointment of the Transfer Agent or which are required by
any government agency or applicable law or rule.
Article 27 Relationship of Parties. The parties agree that they
are independent contractors and not partners or co-venturers and
nothing contained herein shall be interpreted or construed
otherwise.
Article 28 Entire Agreement; Severability. This Agreement and
the Exhibits and Schedules attached hereto constitute the entire
agreement of the parties hereto relating to the matters covered
hereby and supersede any previous agreements. If any provision is
held to be illegal, unenforceable or invalid for any reason, the
remaining provisions shall not be affected or impaired thereby.
Article 29. Personal Liability of Trustees or Shareholders. This
Agreement is made by the Fund pursuant to authority granted by the
Trustees, and the obligations created hereby are not binding on
any of the Trustees or shareholders of the Fund individually.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers, as of
the day and year first above written.
AMBAC TREASURERS TRUST
By: /s/ Illegible
Illegible
Title: Illegible
FIRST DATA INVESTOR SERVICES
GROUP, INC.
By: /s/ Illegible
Illegible
Title: Illegible
EXHIBIT 1
LIST OF FUND PORTFOLIOS
AMBAC U.S. Treasury Money Market Fund
AMBAC U.S. Government Money Market Fund
AMBAC Short-Term U.S. Government Income Fun
Schedule A
DUTIES OF THE TRANSFER AGENT
1. Shareholder Information. The Transfer Agent
shall maintain a record of the number of Shares held by each
Shareholder of record which shall include name, address, taxpayer
identification and which shall indicate whether such Shares are
held in certificates or uncertificated form.
2. Shareholder Services. The Transfer Agent shall
respond as appropriate to all inquiries and communications from
Shareholders relating to Shareholder accounts with respect to its
duties hereunder and as may be from time to time mutually agreed
upon between the Transfer Agent and the Fund.
3. Share Certificates.
(a) At the expense of the Fund, the Fund shall
supply the Transfer Agent with an adequate supply of blank share
certificates to meet the Transfer Agent requirements therefor.
Such Share certificates shall be properly signed by facsimile.
The Fund agrees that, notwithstanding the death, resignation, or
removal of any officer of the Fund whose signature appears on such
certificates, the Transfer Agent or its agent may continue to
countersign certificates which bear such signatures until
otherwise directed by Written Instructions.
(b) The Transfer Agent shall issue replacement Share
certificates in lieu of certificates which have been lost, stolen
or destroyed, upon receipt by the Transfer Agent of properly
executed affidavits and lost certificate bonds, in form
satisfactory to the Transfer Agent, with the Fund and the Transfer
Agent as obligees under the bond.
(c) The Transfer Agent shall also maintain a record
of each certificate issued, the number of Shares represented
thereby and the Shareholder of record. With respect to Shares
held in open accounts or uncertificated form (i.e., no certificate
being issued with respect thereto) the Transfer Agent shall
maintain comparable records of the Shareholders thereof, including
their names, addresses and taxpayer identification. The Transfer
Agent shall further maintain a stop transfer record on lost and/or
replaced certificates.
4. Mailing Communications to Shareholders; Proxy
Materials. The Transfer Agent will address and mail to
Shareholders of the Fund, all reports to Shareholders, dividend
and distribution notices and proxy material for the Fund's
meetings of Shareholders. In connection with meetings of
Shareholders, the Transfer Agent will prepare Shareholder lists,
mail and certify as to the mailing of proxy materials, process and
tabulate returned proxy cards, report on proxies voted prior to
meetings, act as inspector of election at meetings and certify
Shares voted at meetings.
5. Sales of Shares
(a) The Transfer Agent shall not be required to issue
any Shares of the Fund where it has received a Written Instruction
from the Fund or official notice from any appropriate authority
that the sale of the Shares of the Fund has been suspended or
discontinued. The existence of such Written Instructions or such
official notice shall be conclusive evidence of the right of the
Transfer Agent to rely on such Written Instructions or official
notice.
(b) In the event that any check or other order for
the payment of money is returned unpaid for any reason, the
Transfer Agent will endeavor to: (i) give prompt notice of such
return to the Fund or its designee; (ii) place a stop transfer
order against all Shares issued as a result of such check or
order; and (iii) take such actions as the Transfer Agent may from
time to time deem appropriate.
6. Transfer and Repurchase
(a) The Transfer Agent shall process all requests to
transfer, exchange and redeem Shares in accordance with the
transfer or repurchase procedures set forth in the Fund's
Prospectus.
(b) The Transfer Agent will transfer or repurchase
Shares upon receipt of Oral or Written Instructions or otherwise
pursuant to the Prospectus and Share certificates, if any,
properly endorsed for transfer or redemption, accompanied by such
documents as the Transfer Agent reasonably may deem necessary.
(c) The Transfer Agent reserves the right to refuse
to transfer or repurchase Shares until it is satisfied that the
endorsement on the instructions is valid and genuine. The
Transfer Agent also reserves the right to refuse to transfer or
repurchase Shares until it is satisfied that the requested
transfer or repurchase is legally authorized, and it shall incur
no liability for the refusal, in good faith, to make transfers or
repurchases which the Transfer Agent, in its good judgement, deems
improper or unauthorized, or until it is reasonably satisfied that
there is no basis to any claims adverse to such transfer or
repurchase.
(d) When Shares are redeemed, the Transfer Agent
shall, upon receipt of the instructions and documents in proper
form, deliver to the Custodian and the Fund or its designee a
notification setting forth the number of Shares to be repurchased.
Such repurchased shares shall be reflected on appropriate accounts
maintained by the Transfer Agent reflecting outstanding Shares of
the Fund and Shares attributed to individual accounts.
(e) The Transfer Agent, upon receipt of the monies
paid to it by the Custodian for the repurchase of Shares, pay such
monies as are received from the Custodian, all in accordance with
the procedures described in the written instruction received by
the Transfer Agent from the Fund.
(f) The Transfer Agent shall not process or effect
any repurchase with respect to Shares of the Fund after receipt by
the Transfer Agent or its agent of notification of the suspension
of the determination of the net asset value of the Fund.
7. Dividends
(a) Upon the declaration of each dividend and each
capital gains distribution by the Board of Directors of the Fund
with respect to Shares of the Fund, the Fund shall furnish or
cause to be furnished to the Transfer Agent Written Instructions
setting forth the date of the declaration of such dividend or
distribution, the ex-dividend date, 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, the total amount payable to the Transfer
Agent on the payment date and whether such dividend or
distribution is to be paid in Shares at net asset value.
(b) On or before the payment date specified in such
resolution of the Board of Directors, the Fund will pay to the
Transfer Agent sufficient cash to make payment to the Shareholders
of record as of such payment date.
(c) If the Transfer Agent does not receive
sufficient cash from the Fund to make total dividend and/or
distribution payments to all Shareholders of the Fund as of the
record date, the Transfer Agent will, upon notifying the Fund,
withhold payment to all Shareholders of record as of the record
date until sufficient cash is provided to the Transfer Agent.
8. In addition to and neither in lieu nor in
contravention of the services set forth above, the Transfer Agent
shall: (i) perform all the customary services of a transfer
agent, registrar, dividend disbursing agent and agent of the
dividend reinvestment and cash purchase plan as described herein
consistent with those requirements in effect as at the date of
this Agreement. The detailed definition, frequency, limitations
and associated costs (if any) set out in the attached fee
schedule, include but are not limited to: maintaining all
Shareholder accounts, preparing Shareholder meeting lists, mailing
proxies, tabulating proxies, mailing Shareholder reports to
current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts where applicable, preparing and filing
U.S. Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by federal
authorities for all Shareholders
Schedule B
Fee Schedule
Institutional Transfer Agent Services Charges:
(Institutional Shareholders Only)
Monthly Fee $2,500 per Portfolio
Schedule C
OUT-OF-POCKET EXPENSES
Out-of-pocket expenses are limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes,
checks and stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first
class) direct pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all
lease, maintenance and line costs
- Ad hoc reports
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other
equipment and any expenses incurred in connection with such
terminals and lines
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Overtime, as approved by the Fund
- Temporary staff, as approved by the Fund
- Travel and entertainment, as approved by the Fund
- Record retention, retrieval and destruction costs,
including, but not limited to exit fees charged by third party
record keeping vendors
- Third party audit reviews
- All Systems enhancements at the rate of $95.00 per
hour pursuant to written agreement with the Fund
- Such other miscellaneous expenses reasonably incurred
by the Transfer Agent in performing its duties and
responsibilities under this Agreement as agreed to by the Fund and
the Transfer Agent.
The Fund agrees that postage and mailing expenses will be
paid on the day of or prior to mailing as agreed with the Transfer
Agent. In addition, the Fund will promptly reimburse the Transfer
Agent for any other unscheduled expenses incurred by the Transfer
Agent whenever the Fund and the Transfer Agent mutually agree that
such expenses are not otherwise properly borne by the Transfer
Agent as part of its duties and obligations under the Agreement.
Schedule E
Fund Documents
- Certified copy of the Articles of Incorporation of the
Fund, as amended
- Certified copy of the By-laws of the Fund, as amended,
- Copy of the resolution of the Board of Directors
authorizing the execution and delivery of this Agreement
- Specimens of the certificates for Shares of the Fund,
if applicable, in the form approved by the Board of Directors of
the Fund, with a certificate of the Secretary of the Fund as to
such approval
- All account application forms and other documents
relating to Shareholder accounts or to any plan, program or
service offered by the Fund
- Certified list of Shareholders of the Fund with the
name, address and taxpayer identification number of each
Shareholder, and the number of Shares of the Fund held by each,
certificate numbers and denominations (if any certificates have
been issued), lists of any accounts against which stop transfer
orders have been placed, together with the reasons therefore, and
the number of Shares redeemed by the Fund
- All notices issued by the Fund with respect to the
Shares in accordance with and pursuant to the Articles of
Incorporation or By-laws of the Fund or as required by law and
shall perform such other specific duties as are set forth in the
Articles of Incorporation including the giving of notice of any
special or annual meetings of shareholders and any other notices
required thereby.
contract\ta\openend\ambac3
9/95
Consent of Independent Auditors
The Board of Trustees
AMBAC Treasurers Trust
We consent to the use of our report incorporated herein by
reference and to the references to our firm under the captions
"Financial Highlights" in the prospectuses and "Independent
Auditors" in the statement of additional information.
/s/ KPMG Peat Marwick
LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
February , 1997
g:\shared\3rdparty\ambac\consents\022897.doc
September 18, 1995
The Board of Trustees
AMBAC Treasurers Trust
300 Nyala Farms Road
Westport, CT 06880
Gentlemen:
In order to provide AMBAC Treasurers Trust (the "Trust")
with its initial capital, AMBAC Investment Management, Inc.
("Purchaser") is hereby purchasing from the Trust 70,003 shares
(the "Shares") of beneficial interest, $.001 par value, of the
Trust, as follows: 33,335 Shares of each of AMBAC U.S. Treasury
Money Market Fund and AMBAC U.S. Government Money Market Fund, at
a purchase price of $1.00 per Share, and 3,333 Shares of AMBAC
Short-Term U.S. Government Income Fund, the third series of the
Trust, at a purchase price of $10.00 per share.
The Purchaser represents and warrants to the Trust that the
Shares are being acquired for investment purposes and not with a
view to the distribution thereof and that the Purchaser has no
present intention to dispose of the Shares.
The Purchaser hereby agrees that if any of the Shares of any
of the above-referenced series of the Trust (each a "Fund")
purchased by Purchaser herewith are redeemed by the Purchaser
during the sixty (60) month period following the date of
commencement of such Funds operations, the Purchaser will
reimburse that Fund for any unamortized organization and start-up
expenses in the same proportion as the number of Fund Shares being
redeemed bears to the number of such Shares of such Fund
outstanding at the time of redemption.
Very truly yours,
AMBAC INVESTMENT MANAGEMENT, INC.
By: /s/ W. Dayle Nattress
W. Dayle Nattress
Title: Presiden
November 6, 1995
The Board of Trustees
AMBAC Treasurers Trust
300 Nyala Farms Road
Westport, CT 06880
Gentelmen:
Our letter to you dated September 18, 1995 in which we
agreed to provide AMBAC Treasurers Trust (the "Trust") with its
initial capital by purchasing from the Trust, 70,003 shares of
beneficial interest of the Trust, is hereby amended by replacing
the last paragraph of such letter with the following:
The Purchaser hereby agrees that if any of the Shares of any of
the above-referenced series of the Trust (each a "Fund") purchased
by Purchaser herewith are redeemed by the Purchaser (or any
subsequent holder of such Shares) during the sixty (60) month
period following the date of commencement of such Funds
operations, the purchaser will reimburse that Fund for any
unamortized organization and start-up expenses in the same
proportion as the number of Fund Shares being redeemed bears to
the number of such Shares of such Fund outstanding at the time of
redemption.
Very truly yours,
AMBAC INVESTMENT MANAGEMENT, INC.
By: /s/ W. Dayle Nattress
W. Dayle Nattress
Title: President
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<NAME>AMBAC US TREASURY MONEY MKT
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<SERIES>
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<NAME> AMBAC US GOVERNMENT MONEY MKT
<S> <C>
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