<PAGE> 1
As filed with the Securities and Exchange Commission on March 2, 1998
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. 3 [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 4
Cadre Institutional Investors Trust
(Exact Name of Registrant as Specified in Charter)
905 Marconi Avenue
Ronkonkoma, New York, 11779
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (516) 467-0200
Name and Address of Agent for Service:
William M. Sullivan
905 Marconi Avenue
Ronkonkoma, New York 11779
Copies to:
Kenneth S. Gerstein, Esq.
Schulte Roth & Zabel LLP
New York, NY 10022
Approximate Date of Proposed Public Offering:
March 2, 1998
It is proposed that the filing will become effective:
[X] immediately upon filing pursuant to paragraph (b)
[ ] on __________ 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.
<PAGE> 2
CADRE INSTITUTIONAL INVESTORS 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 Financial Highlights
Information
4. General Description of Cover Page; Investment Objective and
Registrant Policies; General Information
5. Management of the Fund Management of the Fund
5A. Management's Discussion Not Applicable
of Fund Performance
6. Capital Stock and Purchase of Shares; Dividends and
Other Securities Distributions; Taxes; General Information
7. Purchase of Securities Purchase of Shares; Shareholder Accounts;
Being Offered 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 General Information
History
13. Investment Objectives and Investment Policies and Practices;
<PAGE> 3
Policies Investment Restrictions
14. Management of the Fund Investment Advisory Arrangements; Trustees
and Officers
15. Control Persons and General Information
Principal Holders of
Securities
16. Investment Advisory and Investment Advisory Arrangements;
Other Services Purchasing Shares; Expenses; General
Information
17. Brokerage Allocation and Portfolio Transactions and Brokerage
Other Practices
18. Capital Stock and Other General Information
Securities
19. Purchase, Redemption and Purchase of Shares; Shareholder Accounts;
Pricing of Securities Being Redeeming Shares; Exchange Privilege;
Offered Determination of Net Asset Value
20. Tax Status Taxes
21. Underwriters Purchasing Shares
22. Calculation of Performance Performance Information
Data
23. Financial Statements Financial Statements
<PAGE> 4
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
................................................................................
<TABLE>
<S> <C>
SUMMARY OF EXPENSES 2
......................................................................................................................
FINANCIAL HIGHLIGHTS 3
......................................................................................................................
SUITABLE INVESTORS 3
......................................................................................................................
INVESTMENT OBJECTIVE AND POLICIES 4
......................................................................................................................
PURCHASING SHARES 6
......................................................................................................................
SHAREHOLDER ACCOUNTS 7
......................................................................................................................
REDEEMING SHARES 7
......................................................................................................................
NET ASSET VALUE 9
......................................................................................................................
FUND EXPENSES 10
......................................................................................................................
DIVIDENDS AND DISTRIBUTIONS 10
......................................................................................................................
TAXES 10
......................................................................................................................
MANAGEMENT OF THE FUND 12
......................................................................................................................
PERFORMANCE INFORMATION 12
......................................................................................................................
GENERAL INFORMATION 13
......................................................................................................................
</TABLE>
-----------------------------------------
PROSPECTUS
MARCH 2, 1998
-----------------------------------------
LIQUID ASSET FUND
A SERIES OF CADRE
INSTITUTIONAL INVESTORS TRUST
<PAGE> 5
LIQUID ASSET FUND
A SERIES OF CADRE INSTITUTIONAL
INVESTORS TRUST
905 Marconi Avenue
Ronkonkoma, New York 11779
................................................................................
Liquid Asset Fund (the "Fund") is a series of Cadre
Institutional Investors 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. (the "Investment Adviser") serves as the
investment adviser of the Fund.
................................................................................
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. No minimum initial or subsequent investment in the Fund
is required. See "Purchasing Shares." Shares of the Fund are not
insured by Ambac Assurance 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
2, 1998, which is incorporated herein by reference and is
available without charge by writing to the transfer agent or by
calling 1-800-221-4524.
................................................................................
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 2, 1998
<PAGE> 6
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.
<TABLE>
<S> <C>
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)........................................... .03%
12b-1 Fees............................................................... None
Other Expenses (estimated)............................................... .23%
Total Fund Operating Expenses............................................ .26%
</TABLE>
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 annually .45% of the Fund's average daily net assets.
Absent this agreement, management fees, other estimated expenses and estimated
total operating expenses of the Fund annually would be .15%, .34% and .49%,
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 upon prior written notice to the Fund.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
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: 2.67 8.41 14.74 33.53
</TABLE>
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."
2
<PAGE> 7
LIQUID ASSET FUND
FINANCIAL HIGHLIGHTS
The following Information has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report thereon appears in the Fund's annual report
dated October 31, 1997. This information should be read in conjunction with the
financial statements, the notes thereto and the independent auditors report
which is incorporated by reference in the Statement of Additional Information.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
Net Asset Value, beginning of period............... $ 1.000 $ 1.000
-------- -------
Income from Investment Operations:
Net investment income (2)..................... 0.053 0.027
-------- -------
Less Distributions from:
Net investment income......................... (0.053) (0.027)
-------- -------
Net Realized Gain............................. (0.000)*** --
-------- -------
Total Distributions........................... (0.053) (0.027)
Net increase in net asset value.................... -- --
-------- -------
Net Asset Value, End of period..................... $ 1.000 $ 1.000
======== =======
Total Return....................................... 5.39% 2.72%*
Ratios/Supplemental Data:
Net Assets, End of period (000s)................... $138,661 $ 70,881
-------- -------
Ratios to average net assets:
Net investment income including
reimbursement/waiver........................ 5.38% 5.18%**
Operating expenses including
reimbursement/waiver........................ .26% 0.20%**
Operating expenses excluding
reimbursement/waiver........................ .49% 0.75%**
</TABLE>
- ---------------
* Not Annualized
** Annualized
*** Amount is less than 0.000 per share
(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 year ended October 31, 1997 and
period ended October 31, 1996 was $0.0514 and $0.024, respectively.
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.
3
<PAGE> 8
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 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 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
4
<PAGE> 9
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
Fund's portfolio securities and calculating the Fund's 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 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 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 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.
5
<PAGE> 10
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 Cadre Securities, 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." There are no minimum
initial or subsequent investment requirements.
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 Cadre Financial Services, Inc., in its capacity as the
Fund's transfer agent (the "Transfer Agent"), toll-free at 1-800-221-4524.
Prior to making an initial investment by wire or check, an account number
must be obtained by calling the Transfer Agent toll-free at 1-800-221-4524, or
by mailing a completed registration form to:
Cadre Liquid Asset Fund
905 Marconi Avenue
Ronkonkoma, New York 11779
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 registration form for each account opened to the Transfer
Agent. Although share purchases can be made before a registration form is
submitted, shares may not be redeemed until a completed registration form 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), 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 the purchase order or of federal funds by
the Trust's custodian.
6
<PAGE> 11
Additional purchases of shares can be made by calling the Transfer Agent
toll-free at 1-800-221-4524, 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:
Cadre Liquid Asset Fund
C/o BSD&T Co. ABA # 011001234
CR DDA # 05-338-4
CR CIIT 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 Liquid Asset Fund and sent by
mail to the Transfer Agent at:
Cadre Liquid Asset Fund
905 Marconi Avenue
Ronkonkoma, New York 11779
SHAREHOLDER ACCOUNTS
The Trust does not issue certificates for shares of the Fund. Instead, one
or more accounts are maintained 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.
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
1-800-221-4524 for further information and appropriate forms. Investors who have
established sub-accounts will receive periodic confirmations and statements of
holdings and transactions.
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 may 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 additional 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. Redemptions may be made by telephone, mail,
or check, as described below. 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
7
<PAGE> 12
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; however, if shares have recently been
purchased by check (including, in each case, certified checks and cashiers
checks), the 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. For this reason, shareholders who anticipate the need for immediate access
to their investment should purchase shares with federal funds.
A completed registration form 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 registration form. 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 1-800-221-4524.
Telephone Redemption Procedures. A request to redeem shares may be placed by
calling the Transfer Agent at 1-800-221-4524. 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, or any of its affiliates, 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
REGISTRATION FORM, 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
8
<PAGE> 13
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 should be sent to:
Cadre Liquid Asset Fund
905 Marconi Avenue
Ronkonkoma, New York 11779
Check Redemption Privilege. Shareholders may make arrangements to redeem
shares of the Fund by check by filling out a checkwriting authorization form and
signing the subcustodian bank's certificate of authority form. Shareholders may
write checks in any dollar amount. Checks will be honored only if they are
properly signed by a person authorized on the certificate of authority. Checks
will be furnished without charge, and may be written in any amount (not
exceeding the balance of the shareholder's account) and made payable to any
person. Redemption checks will not be honored if there is an insufficient share
balance to pay the check or if the check requires the redemption of shares
recently purchased by check which has not cleared. There is a charge for
stop-payments or if the Fund cannot honor a redemption check due to insufficient
funds or other valid reasons. Checkwriting privileges may be modified or
terminated at any time by the Fund.
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. 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.
9
<PAGE> 14
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 Funds average daily net assets. The Investment
Adviser may modify or terminate this undertaking at any time upon prior written
notice to the Fund.
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 October, November or 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
10
<PAGE> 15
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.
The redemption of shares of the Fund 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 registration forms 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 certain Government 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.
11
<PAGE> 16
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, 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
Financial Group, 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 February 20, 1998, the Investment Adviser provided investment
management services to 20 investment accounts 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.
Administrator. The Investment Adviser also provides administration services
to the Trust pursuant to a separate Administration Agreement. The administrative
services provided include, but are 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 Investment Adviser a monthly fee calculated at an annual rate of 0.10%
of the Fund's average daily net assets on the first $500 million of net assets
of the Fund, 0.075% on the next $750 million of net assets of the Fund and 0.05%
on net assets of the Trust in excess of $1 billion. The Investment Adviser also
provides the Trust with fund accounting services for which it is not paid any
additional compensation.
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.
12
<PAGE> 17
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, as amended June 30,
1997, 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 one
series of its shares outstanding, representing interests in the Fund. The Board
of Trustees has the power to establish additional series of shares, representing
interests in separate investment portfolios 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 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, and will be entitled to vote, as a
separate class on certain other matters in the event that more than one series
of shares of the Trust are outstanding. 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 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.
Transfer Agent. The Investment Adviser serves as the Trust's transfer agent,
shareholder servicing agent and dividend disbursing agent. Shareholders of the
Fund should call 1-800-221-4524 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
13
<PAGE> 18
is authorized to hold the Fund's investments in securities depositories and to
use subcustodians approved by the Trust.
Distributor. Cadre Securities, Inc., 905 Marconi Avenue, Ronkonkoma, New
York, 11779, 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 1-800-221-4524 or at 905 Marconi Avenue, Ronkonkoma, New York
11779.
14
<PAGE> 19
INVESTMENT ADVISER, ADMINISTRATOR
AND TRANSFER AGENT
Cadre Financial Services, Inc.
905 Marconi Avenue,
Ronkonkoma, New York 11779
DISTRIBUTOR
Cadre Securities, Inc.
905 Marconi Avenue
Ronkonkoma, New York 11779
CUSTODIAN
Bankers Trust Company
130 Liberty Street
New York, New York 10006
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
345 Park Avenue
New York, New York 10154
LEGAL COUNSEL
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
<PAGE> 20
LIQUID ASSET FUND
(A SERIES OF CADRE INSTITUTIONAL INVESTORS TRUST)
905 Marconi Avenue
Ronkonkoma, New York 11779-7255
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 2, 1998
- --------------------------------------------------------------------------------
Cadre Institutional Investors Trust (the "Trust") is a diversified,
open-end, management investment company. Liquid Asset Fund (the "Fund") is a
series of the Trust. The Fund is a money market fund which seeks to maintain a
stable net asset value of $1.00 per share. The Fund seeks high current income,
consistent with preservation of capital and maintenance of liquidity. See
"Investment Policies and Practices." Cadre Financial Services, Inc. (the
"Investment Adviser") serves as the investment adviser of the Fund. See
"Investment Advisory Arrangements."
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. No minimum initial investment in
the Fund is required. See "Purchasing Shares." Shares of the Fund are not
insured by Ambac Assurance Corporation.
AN INVESTMENT IN THE FUND IS NOT INSURED OR 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 "DETERMINATION OF NET ASSET VALUE."
- --------------------------------------------------------------------------------
Information about the Fund is set forth in the Prospectus dated March 2, 1998,
for the Fund, which provides the basic information you should know before
investing. The Prospectus may be obtained without charge by writing to the
Transfer Agent or by calling 1-800-221-4524. This Statement of Additional
Information is not a prospectus, but contains information in addition to and
more detailed than that set forth in the Prospectus. It is intended to provide
you with additional information regarding the activities and operations of the
Fund and the Trust, and should be read in conjunction with the Fund's
Prospectus.
<PAGE> 21
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INVESTMENT POLICIES AND PRACTICES . . . . . . . . . . . . . . . . . 3
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . 5
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . 6
PURCHASING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 7
SHAREHOLDER ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . 9
REDEEMING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 9
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . 10
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . 12
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . 13
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . 16
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
2
<PAGE> 22
INVESTMENT POLICIES AND PRACTICES
The sections below provide additional information regarding the types
of investments that may be made by the Fund and the investment practices in
which the Fund may engage. The investment objective and general investment
policies of the Fund are described in the Fund's Prospectus.
Treasury, Government and Agency Securities. The Fund invests 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.
These securities include obligations issued by the U.S. Treasury
("Treasury Securities"), 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 Prospectus, 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 Prospectus.
Repurchase Agreements. As discussed in the Prospectus, the Fund may
enter into repurchase agreements. A repurchase agreement, which may be viewed
as a type of secured lending by the Fund, involves the acquisition by the 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 Fund through repurchase agreements are not subject to any limitation as to
maturity. The Fund may enter into repurchase agreements maturing in more than
seven days. However, the Fund may not enter into such a repurchase agreement
if, as a result, more than 10% of the value of its net assets 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 Trust's custodian (or a
subcustodian) in a segregated account on behalf of the Fund. 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
3
<PAGE> 23
financial institution, the Trust will seek to liquidate the collateral.
However, the exercise of the Trust's 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 will suffer a loss.
When-Issued and Delayed Delivery Securities. As noted in the
Prospectus, the Fund may purchase and sell securities on a when-issued or
delayed delivery basis. These transactions arise when the 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 the 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, the Fund assumes the rights and risks of ownership,
including the risk of price and yield fluctuations. Because the Fund is not
required to pay for securities until the delivery date, these risks are in
addition to the risks associated with the Fund's other investments. If the
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 the Fund enters into purchase transactions of this type, the
Trust's 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 Fund's purchase commitments. When the 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 the Fund enters into a sales
transaction of this type, the Trust's custodian segregates the securities sold
on a delayed delivery basis to cover the Fund's settlement obligations.
Investment Characteristics. In managing the Fund, the Investment
Adviser attempts to balance the Fund's goal of seeking high income with its
goal of seeking to preserve capital. For this reason, the Fund does not
necessarily invest in securities offering the highest available yields. The
maturities of the securities purchased by the Fund and the Fund's average
portfolio maturity will vary from time to time as the Investment Adviser deems
consistent with the Fund's investment objective and the Investment Adviser's
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 Fund will decline. Conversely, when market rates of
interest decrease, the market value of obligations held by the Fund 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 Fund and in extreme cases, changes in interest
rates could cause the net asset value per share of the 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 Fund
may have to borrow money and incur interest expense. The Investment Adviser
seeks to manage investment risk by purchasing and selling investments for the
Fund consistent with its best judgment and expectations regarding anticipated
changes in interest rates. However, there can be no assurance that the Fund
will achieve its investment objective.
4
<PAGE> 24
INVESTMENT RESTRICTIONS
The Fund 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 the Fund's outstanding voting
securities. A "majority of the outstanding voting securities" of the 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, the
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
Fund's 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 Fund's
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 the
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). The Fund may not make additional
investments while it has any borrowings outstanding. This
restriction shall not be deemed to prohibit the 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 the 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.
(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.
5
<PAGE> 25
(8) Pledge, hypothecate, mortgage or otherwise encumber the Fund's
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 Fund has 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, the 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 the Fund may
invest in repurchase agreements maturing in more than seven
days provided that the Fund may not enter into such a
repurchase agreement if more than 10% of the value 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 obtain repayment in seven days or less. The Fund is
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 Fund does 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 the 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 the 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 Fund and for the selection of dealers to effect those
transactions. Purchases of securities for the Fund will be made from issuers,
underwriters and dealers. Sales of securities will be made to dealers and
issuers. The Fund does not normally incur brokerage commissions on
transactions in the types of securities in
6
<PAGE> 26
which it invests. 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).
In placing orders for the purchase and sale of investments for the
Fund, 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 the Fund. While such
services are useful and important in supplementing the Investment Adviser's 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 serves as the investment adviser to other
clients, including other investment funds and companies, and follows 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 the Fund, in a particular transaction, but is expected to benefit all
clients on a general basis.
The Investment Adviser and its affiliates may invest in the same
securities that are purchased for its clients. However, in the case of
simultaneous orders to purchase or sell the same securities, client orders will
be given preference by the Investment Adviser so that client transactions will
not be adversely affect by transactions effected for the accounts of the
Investment Adviser or its affiliates. Investments made on behalf of the
Investment Adviser or its affiliates are effected in transactions which are
separate from any transactions for the accounts of clients in the same
securities.
PURCHASING SHARES
As described under "Purchasing Shares" in the Fund's Prospectus,
shares of the Fund are offered for sale, without a sales charge, at the net
asset value per share next computed after receipt of a purchase order by Cadre
Securities, Inc., as distributor of the Fund's shares (the "Distributor"). Net
asset value is computed once daily for the 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 price of shares of the Fund
as of October 31, 1997:
7
<PAGE> 27
<TABLE>
<CAPTION>
Net Assets Shares Outstanding Offering Price
---------- ------------------ --------------
<S> <C> <C> <C>
Liquid Asset Fund $138,660,616 138,660,822 $1.00
</TABLE>
Distribution Arrangements. The Distributor has the exclusive right,
pursuant to a distribution agreement with the Trust dated as of July 1, 1997
(the "Distribution Agreement"), to purchase shares of the Fund for distribution
and to enter into selling agreements with dealers and other financial
institutions for the distribution of shares. Shares of the Fund 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 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 an expense of the Fund.
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 February 26, 1997. The Distribution Agreement will remain in
effect until June 30, 1999, 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
Fund, 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 Fund does not bear
expenses relating to the distribution of shares, and thus, does 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 Ambac Capital
Corporation, which in turn is a wholly owned subsidiary of Ambac Financial
Group, Inc. The Distributor's address is 905 Marconi Avenue, Ronkonkoma, New
York 11779.
Purchases by Check. Shares of the Fund may be purchased by check as
described in the Fund's Prospectus. If a check to purchase shares does not
clear, the shares purchased may be redeemed by the Distributor and the investor
will be responsible for any loss or expenses incurred by the Fund or the
Distributor as a result of the redemption or non-clearance.
8
<PAGE> 28
SHAREHOLDER ACCOUNTS
Cadre Financial Services, Inc., in its capacity as the Fund's transfer
agent (the "Transfer Agent"), maintains one or more accounts for each
shareholder reflecting the amount of 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 procedures have been designed for
investors wishing to open multiple accounts to meet requirements regarding the
commingling of funds or for accounting convenience. Individual sub-accounts
may be opened at any time by written advice or by filing forms supplied by the
Transfer Agent. Procedures are available to identify sub-accounts by name and
number.
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 each sub-account for the current
month, as well as for the year-to-date. Further information on this service is
available from the Transfer Agent.
Minimum Account Balance. Under the Declaration of Trust, the Trust
has the right to redeem all shares of the Fund held by a shareholder if as a
result of one or more redemptions the aggregate value of shares held in the
shareholder's account is less than $100,000 or such lesser amount, as
determined by the Trustees, no greater than the then applicable minimum initial
investment amount. There is currently no minimum account balance for the Fund.
For this reason, accounts having a value less than $100,000 are not presently
subject to this redemption procedure. However, an inactive 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 Prospectus. The Trust
is under no obligation to compel the redemption of any account.
REDEEMING SHARES
Redemption proceeds are normally paid as described in the Prospectus.
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 the Fund of securities owned
by it is not reasonably practicable or it is not reasonably practicable for the
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
the 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
9
<PAGE> 29
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 the Fund during any 90 day period for any one shareholder.
DETERMINATION OF NET ASSET VALUE
The Fund's 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 Year's Day; Martin Luther King's Birthday (third Monday in
January); 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, and also observes 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 King's 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 Year's Day, and the Friday succeeding
Thanksgiving Day.
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 the
Fund. This method of valuation is used by the Fund in seeking to maintain a
stable net asset value of $1.00 per share. However, no assurance can be given
that the Fund will be able to maintain a stable share price.
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 Fund 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, the Fund is
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 price of shares
of the Fund as computed for purposes of sales and
10
<PAGE> 30
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 1/2 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.
TAXES
It is the policy of the Trust to distribute each fiscal year
substantially all of the Fund's net investment income and net realized capital
gains, if any, to shareholders. The Trust intends that the 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, the 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, the 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; and (b) diversify
its holdings so that at the end of each fiscal quarter (i) 50% of the market
value of the Fund's 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 Fund's 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 the 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.
11
<PAGE> 31
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
Financial Group, 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 the Fund's assets and places orders for the purchase and sale of
investments for the Fund. The Investment Adviser is also responsible under the
Agreement for monitoring services provided by the Administrator, the Transfer
Agent and the Trust's 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 the 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 the Fund.
For the period April 24, 1996 (commencement of operations) through
October 31, 1996, fees payable to the Investment Adviser by the Fund were
$48,338, all of which were waived. In addition, the Investment Adviser
reimbursed expenses of the Fund in the amount of $129,216 during such period.
For the year ended October 31, 1997, fees payable to the Investment Adviser were
$157,391, a portion of which was waived. During such year, the Investment
Adviser reimbursed expenses of the Fund of $70,147.
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 Independent Trustees, who are not parties to the
Agreement or interested persons of the Investment Adviser, for an initial Term
expiring September 30, 1997 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 may be continued in effect from
year to year thereafter upon the approval of the Trust's shareholders or the
Board of Trustees. Each annual continuance also requires approval by a vote of
a majority of the Independent
12
<PAGE> 32
Trustees cast in person at a meeting called for the purpose of voting on such
continuance. The Agreement has been continued in effect pursuant to action of
the Board, including a majority of the Independent Trustees, the most recent
continuance having been approved on September 18, 1997. The Agreement may be
terminated at any time, 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 the 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 "Cadre" is a property right of
the Investment Adviser and other affiliates of Ambac Financial Group, Inc., and
has agreed that the Investment Adviser 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 cease using the name Cadre as part
of its name or the name of any series of the Trust unless otherwise consented to
by Ambac Financial Group, 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 August 1, 1997.
Prior to that date, an organization which is not affiliated with the Investment
Adviser served as the Trust's Administrator. The Fund paid that organization
$47,686 for the period April 24, 1996 (commencement of operations) through
October 31, 1996 and $44,753 for the period November 1, 1996 through July 31,
1997. For the period August 1, 1997 through October 31, 1997, fees payable to
Cadre Financial Services as Administrator were $36,303, a portion of which were
waived. In addition, during the period August 1, 1997 through October 31, 1997,
fees payable by the Fund to the Investment Adviser for transfer agent
services were $18,152, a portion of which was waived.
TRUSTEES AND OFFICERS
The Board of Trustees of the Trust has the overall responsibility for
monitoring the operations of the Trust and the 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 the 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.
<TABLE>
<CAPTION>
Name, Position with Trust, Age Principal Occupations
and Address During Last Five Years
- ---------------------------------- ----------------------
<S> <C>
*William T. Sullivan, Jr. Chairman and Chief Executive Officer,
Trustee, Chairman, CEO and Cadre Financial Services, Inc. and Cadre
President, 52 Securities, Inc. (brokerage services)
*David L. Boyle Vice Chairman of Ambac Financial
Trustee, 50 Group, Inc. Prior to joining Ambac,
Ambac Financial Group, Inc. Managing Director
One State Street of Worldwide Services,
New York, New York 10004 Citibank, N.A.
Donald Gray City of New London
Trustee, 40 Director of Finance
Director of Finance Executive Director New England
City of New London States Government
181 State St. Finance Officers Association
New London,CT 06320
</TABLE>
13
<PAGE> 33
<TABLE>
<S> <C>
Donald W. Green Chief Financial Officer, Managing Director
Trustee, 54 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 O'Neil Chairman, O'Neil Associates (investment
Trustee, 66 and financial consulting firm); Director,
375 Park Avenue Ambac Financial Group, Inc., AMBAC
Suite 2602 Assurance Corporation, Fort Dearborn
New York, New York 10152 Income Securities, Inc. and Beckman
Instruments, Inc.; Trustee, Memorial
Drive Trust (finance)
Russell E. Galipo Vice President and Manager of Shawmut
Trustee, 65 Bank CT., N.A. from 1973 to 1994
4538 Alpine Drive
Lakeland, Florida 33801-0502
William J. Reynolds Retired
Trustee, 74
51 Fox Run Court
Newington, CT 06111
Brian G. Clarke Vice President and Controller of Cadre
Treasurer, 37 Financial Services, Inc.; formerly, from
1994 to 1995, Group Manager, Kidder
Peabody & Co., Inc.; prior thereto,
from 1991 to 1994 Controller, Swiss
Bank Investment Banking, Inc.
William M. Sullivan, Esq. General Counsel of Cadre Financial
Secretary, 30 Services, Inc. and Cadre
Securities, Inc.
Linda Cassesse Registration Manager of Cadre Financial
Assistant Secretary, 45 Services, Inc. and Cadre Securities
Inc.; from 1995 to 1997 assisted
New York City Marshall Henry Daley;
1990 to 1995 Registration Manager
Lanborn Asset Management.
</TABLE>
- --------------------
* Trustee who is an "interested person" of the Trust, as defined in the 1940
Act.
14
<PAGE> 34
Except as otherwise indicated above, the address of each Trustee and
officer of the Trust is 905 Marconi Avenue, Ronkonkoma, New York 11779. Mr.
Sullivan, Mr. Boyle, and Mr. O'Neil 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 (other than Independent Trustees who are affiliated with an
investor in a series of the Trust) who are not employees of the Investment
Adviser, or its affiliated companies, are paid fees by the Trust. Such
Trustees are paid an annual retainer of $5,000 and receive an attendance fee of
$750 for each meeting of the Board of Trustees they attend. If such Trustees
serve as members of the Audit Committee they receive an attendance fee of $750
for each Audit Committee meeting they attend, with the Chairman of the Audit
Committee receiving an additional $1,000 annual fee. The Audit Committee is
comprised of the Independent Trustees. Officers of the Trust receive no
compensation from the Trust. All Trustees not affiliated with the Investment
Adviser are reimbursed for reasonable out-of-pocket expenses incurred in
connection with the performance of their responsibilities, including travel
related expenses. Effective August 1, 1997, Independent Trustees who are
affiliated with shareholders of the Fund will not be paid any fees by the Fund,
but will receive reimbursement for out-of-pocket expenses. 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 the Fund.
The following table sets forth certain information regarding the
compensation received by the Trustees of the Trust for the fiscal year ended
October 31, 1997.
Compensation Table*
<TABLE>
<CAPTION>
Name of Person Aggregate
Compensation Pension or Retirement Total Compensation
from Trust Benefits Accrued from Trust Paid
as Part of Fund Expenses to Trustees
<S> <C> <C> <C>
William T. Sullivan, Jr. $0 $0 $0
Donald W. Green $8,750 $0 $8,750
Eugene J. McDonald* $6,750 $0 $6,750
C. Roderick O'Neil $8,750 $0 $8,750
W. Dayle Nattress* $0 $0 $0
Stephen A. Attanasio* $0 $0 $0
Russell E. Galipo $6,250 $0 $6,250
</TABLE>
*Eugene J. McDonald resigned as a Trustee, effective September 18, 1997, W.
Dayle Nattress resigned as a Trustee, effective February 26, 1997, and Stephen
A. Attanasio resigned as a Trustee, effective May 27, 1997. Mr. Attanasio, who
was appointed to replace Mr. Nattress as a Trustee, was replaced by William T.
Sullivan, Jr., who was appointed on May 27, 1997 by the Board of Trustees to
fill the vacancy created by Mr. Attanasio's resignation.
15
<PAGE> 35
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 Trust's 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
Fund and of the initial registration and qualification of shares of the Fund
under federal and state securities laws are being charged to the Fund's
operations, as an expense, over a period not exceeding five years from the date
of commencement of the Trust's operations.
PERFORMANCE INFORMATION
Calculation of Yield. The 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, 1997 for the Fund was 5.26%,
which is equivalent to an effective yield of 5.40%. Yields also depend on the
quality, length of maturity and type of instruments held and operating expenses
of the Fund. For the fiscal year ended October 31, 1997, the Investment
Adviser had voluntarily agreed to waive its fees and to reimburse certain
expenses of the Fund. The yield of the Fund quoted above reflects the effect
of this fee waiver and reimbursement of expenses without which the yield would
have been lower.
16
<PAGE> 36
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.
365/7
Effective yield = [(base period return + 1) ]-1
Calculation of Total Return. The 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 Fund 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:
n
P (1+T) = 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 the Fund's historical
performance and are not intended to indicate future performance. The Fund's
yield and total return fluctuate and will
17
<PAGE> 37
depend upon not only changes in prevailing interest rates, but also upon any
realized gains and losses and changes in the Fund's expenses.
GENERAL INFORMATION
Description Of Shares. Interests in the Fund are represented by
shares of beneficial interest, $.001 par value. The Trust is authorized to
issue an unlimited number of shares, and may issue shares in series, with each
series representing interests in a separate portfolio of investments (a
"fund").
Each share of each fund would represent 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 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 would be
separate and distinct from the interest of shareholders of the other funds, if
any, comprising the Trust, and shares of a fund would be 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 Trust's 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 other funds. The Board of Trustees would determine those
expenses and liabilities deemed to be general, and these items would be
allocated among funds in a manner deemed fair and equitable by the Board of
Trustees in its sole discretion.
The following entities owned of record or are known by the Trust to
own beneficially 5% or more of the outstanding shares of the Fund as of
January 31, 1998:
<TABLE>
<S> <C>
City of Bridgeport 16.75%
45 Lyons Terrace
Bridgeport, Connecticut 06604
Ambac Financial Group Inc. 6.98%(1)
One State Street Plaza
New York, New York
City of New Britain 21.35%
7 West Main Street
New Britain, Connecticut 06051
City of Waltham 6.32%
610 Main Street
Waltham, Massachusetts 02154
Town of Suffield 9.27%
83 Mountain Road
Suffiled, CT 06078
City of Fort Walton Beach 6.09%
P.O. Box 4009
Fort Walton Beach, FL 32549-4009
Ambac Capital Corporation 5.60%(2)
One State Street
New York, New York 10004
</TABLE>
(1) Shares held by subsidiaries, including Ambac Capital Corporation.
(2) Shares held by subsidiaries.
18
<PAGE> 38
<TABLE>
<S> <C>
</TABLE>
Trustee and Officer Liability. Under the Trust's 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, 345 Park Avenue, New
York, New York 10154, are the independent auditors of the Trust. The
independent auditors are responsible for auditing the financial statements and
prepare the tax returns of the Fund. 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 Trust's assets and maintains custody of
the Fund's 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 are kept fully
informed through annual and semi-annual reports showing diversification of
investments, securities owned and other information regarding the Fund's
activities. The financial statements of the Fund are audited each year by the
Trust's 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.
Financial Statements. The statement of assets and liabilities of the
Fund and the portfolio of investments as of October 31, 1997, 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 Trust's 1997 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.
19
<PAGE> 39
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, 1997 and the Report of Independent
Auditors thereon are incorporated by reference to the Definitive 30b-2 filed
(Edgar Form N-30D) on December 30, 1997, as Accession #0000947562-97-00003.
Included in Part C:
Consent of Independent Auditors is filed as Exhibit 11 to this
Post-Effective Amendment No. 3.
(b) Exhibits:
Exhibit
Number Description
------ -----------
1(a) Amended and Restated Certificate of Trust dated June 30, 1997
is filed herewith.
(b) Amended and Restated Declaration of Trust dated June 30, 1997
is filed herewith.
2 By-Laws of Registrant (previously filed as Exhibit 2 to
Post-Effective Amendment No. 2, February 28, 1997).
3 Not Applicable.
4 Instruments defining rights of holders of the securities being
offered (previously filed as Exhibit 4 to Post-Effective Amendment No. 2,
February 28, 1997).
<PAGE> 40
5 Investment Advisory Agreement between Registrant and AMBAC
Investment Management, Inc. (now known as Cadre Financial Services, Inc.)
(previously filed as Exhibit 5 to Post-Effective Amendment No. 2, February
28, 1997).
6 Distribution Agreement between Registrant and Cadre
Securities, Inc. is filed herewith.
7 Not Applicable.
8 Custodian Agreement between Registrant and Bankers Trust
dated November 1, 1995 (previously filed as Exhibit 8 to Post-Effective
Amendment No. 2, February 28, 1997).
9(a) Administration Agreement between Registrant and Cadre
Financial Services, Inc. is filed herewith.
(b) Transfer Agent Agreement between Registrant and Cadre
Financial Services, Inc. is filed herewith.
10 Not Applicable.
11 Consent of Independent Auditors is filed herewith.
12 Not Applicable.
13 Agreement Regarding Initial Capital (previously filed as
Exhibit 13 to Post-Effective Amendment No. 2, February 28, 1997).
14 Not applicable.
15 Not applicable.
16 Not applicable.
17 Financial Data Schedule is filed herewith.
18 Not applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant.
None
Item 26. Number of Holders of Securities.
Number of Record Holders
Name of Fund as of January 31, 1998
------------ ----------------------
Liquid Asset Fund 30
<PAGE> 41
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, 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), Cadre Securities, 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.
<PAGE> 42
See "Management of the Trust" in the Prospectus constituting Part A
of this Registration Statement and "Investment Advisory Arrangements" in the
Statement of Additional Information constituting Part B of this Registration
Statement.
Reference is made to the Form ADV (File No. 801-50048) and Schedules
thereto on file with the Commission of Cadre Financial Services, Inc., which
serves as the Registrant's investment adviser, for a description of the names
and employments of its directors, officers and partners, and other required
information. Except as otherwise indicated, the address of each such person is
905 Marconi Avenue, Ronkonkoma, New York 11779.
Item 29. Principal Underwriters.
(a) In addition to Cadre Institutional Investors Trust, Cadre
Securities, Inc. (the "Distributor") currently acts as distributor for the
following registered invested companies: The Cadre Network Health Financial
Services Trust and Investment Services for Education Associations. 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, Inc. The Distributor is a wholly-owned subsidiary of Ambac Capital
Corporation which, in turn, is a wholly owned subsidiary of Ambac Financial
Group, Inc.
(b) The information required by this Item 29 (b) with respect
to each director, officer, or partner of Cadre Securities, Inc. is
incorporated by reference to Schedule A of Form BD filed by Cadre Securities,
Inc. with the Securities and Exchange Commission pursuant to the Securities
Act of 1934 (File No. 8-49667)
(c) The Distributor does not receive compensation 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 11779
Item 31. Management Services.
Not Applicable.
Item 32. Undertakings.
(a) Not Applicable.
<PAGE> 43
(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.
<PAGE> 44
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant, Cadre Institutional Investors
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 No. 3 to its Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the County of Suffolk,
and State of New York, on the 2nd day of March, 1998.
Cadre Institutional Investors Trust
By: /s/ William T. Sullivan, Jr.
-----------------------------
William T. Sullivan, Jr.
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 3 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/s/ William T. Sullivan, Jr. Trustee, President March 2, 1998
- ---------------------------- (Principal Executive Officer)
William T. Sullivan, Jr.
/s/ David L. Boyle Trustee March 2, 1998
- ----------------------------
David L. Boyle
/s/ Russell E. Galipo Trustee March 2, 1998
- ----------------------------
Russell E. Galipo
/s/ Donald E. Gray Trustee March 2, 1998
- ----------------------------
Donald E. Gray
/s/ Donald W. Green Trustee March 2, 1998
- ----------------------------
Donald W. Green
/s/ C. Roderick O'Neil Trustee March 2, 1998
- ----------------------------
C. Roderick O'Neil
/s/ William J. Reynolds Trustee March 2, 1998
- ----------------------------
William J. Reynolds
/s/ Brian G. Clark Treasurer March 2, 1998
- ---------------------------- (Principal Financial Officer)
Brian G. Clark
<PAGE> 45
INDEX TO EXHIBITS
1(a) Amended and Restated Certificate of Trust dated June 30, 1997
(b) Amended and Restated Declaration of Trust dated June 30, 1997
6 Distribution Agreement between Registrant and Cadre Securities, Inc.
9(a) Administration Agreement between Registrant and Cadre Financial
Services, Inc.
9(b) Transfer Agent Agreement between Registrant and Cadre Financial Services,
Inc.
11 Consent of Independent Auditors
17 Financial Data Schedules
<PAGE> 1
AMENDED AND RESTATED
CERTIFICATE OF TRUST
OF
AMBAC TREASURERS TRUST
This Amended and Restated Certificate of Trust of AMBAC
TREASURERS TRUST, a business trust registered under the Investment Company Act
of 1940, as amended (the "Trust"), filed in accordance with the provisions of
the Delaware Business Trust Act (12 Del. C. 3801 et seq.), amends and restates
the Certificate of Trust of the Trust as follows:
FIRST: The name of the Trust is CADRE INSTITUTIONAL INVESTORS TRUST.
SECOND: As required by 12 Del. Code 3807(b) and 3810(a)(1)(b), the name
and business address of the Trust's Registered Agent for Service of Process and
the address of the Trust's Registered Office are:
The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
THIRD: The nature of the business or purpose or purposes of the 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 trustees of the Trust, as set forth in its governing
instrument, reserve the right to amend, alter, change or repeal any provision
contained in this Amended and Restated Certificate of Trust, in the manner now
or hereafter prescribed by statute.
FIFTH: This Amended and Restated Certificate of Trust shall become
effective immediately upon filing with the Office of the Secretary of State of
the State of Delaware.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned, constituting all of the trustees
of CADRE INSTITUTIONAL INVESTORS TRUST, have duly executed this Amended and
Restated Certificate of Trust as of this 30th day of June, 1997.
By: /s/ William T. Sullivan
-------------------------------
William T. Sullivan, Trustee
By: /s/ Eugene J. McDonald
-------------------------------
Eugene J. McDonald, Trustee
By: /s/ Donald W. Green
-------------------------------
Donald W. Green, Trustee
By: /s/ C. Roderick O'Neil
-------------------------------
C. Roderick O'Neil, Trustee
By: /s/ Russell E. Galipo
-------------------------------
Russell E. Galipo, Trustee
-2-
<PAGE> 1
Effective as of
June 30, 1997
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CADRE INSTITUTIONAL INVESTORS TRUST
A DELAWARE TRUST
PRINCIPAL PLACE OF BUSINESS:
905 MARCONI AVENUE
RONKONKOMA, NEW YORK 11779
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I NAME AND DEFINITIONS................................................ 1
Section 1. Name........................................................................ 1
Section 2. Definitions................................................................. 2
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....................... 5
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............................................. 8
ARTICLE IV THE BOARD OF TRUSTEES............................................... 8
Section 1. Number, Election and Tenure................................................. 8
Section 2. Effect of Death, Resignation, etc. of a Trustee............................. 9
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............................................ 13
Section 7. Service Contracts........................................................... 13
ARTICLE V SHAREHOLDERS' VOTING POWERS......................................... 14
ARTICLE VI NET ASSET VALUE, DISTRIBUTIONS AND REDEMPTIONS...................... 15
Section 1. Determination of Net Asset Value, Net Income, Dividends and Distributions... 15
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............................................... 16
Section 1. Compensation................................................................ 16
Section 2. Indemnification and Limitation of Liability................................. 16
Section 3. Trustee's Good Faith Action; Expert Advice; No Bond or Surety............... 16
Section 4. Insurance................................................................... 16
ARTICLE VIII MISCELLANEOUS....................................................... 17
Section 1. Liability of Third Persons Dealing with Trustees............................ 17
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.............................................................. 19
Section 7. Provisions in Conflict with Law or Regulations.............................. 19
Section 8. Business Trust Only......................................................... 19
Section 9. Use of the Name "Cadre"..................................................... 19
</TABLE>
<PAGE> 3
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CADRE INSTITUTIONAL INVESTORS TRUST
THIS AMENDED AND RESTATED DECLARATION OF TRUST (the "Declaration"), is
made and entered into as of the date set forth below by the trustees named
hereunder (the "Trustees"), and amends and restates the Declaration of Trust of
AMBAC Treasurers Trust (the "Trust").
WHEREAS, Article VIII, Section 4, of the Declaration of Trust, dated as
of June 27, 1995, permits the Trustees to restate or amend such Declaration; and
WHEREAS, the Trustees desire to amend the Declaration of Trust dated as
of June 27, 1995, in certain respects and to restate such Declaration in its
entirety to reflect such amendments, which pursuant to Article VIII, Section 4,
need not be approved by Shareholders;
NOW, THEREFORE, having filed a Certificate of Trust with the Office of
the Secretary of State of the State of Delaware, it is hereby declared that all
money and property contributed to the Trust established hereunder 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 pursuant to this Declaration is CADRE
INSTITUTIONAL INVESTORS TRUST and, insofar as may be practicable, the Trustees
shall conduct the Trust's 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 Trust's 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
1
<PAGE> 4
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;
2
<PAGE> 5
(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
3
<PAGE> 6
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.
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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.
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The sole Series of Shares of the Trust, as of the date of this Amended
and Restated Declaration of Trust, was established and designated pursuant to
this Declaration of Trust on June 27, 1995, and which was known as AMBAC U.S.
Government Money Market Fund, shall hereafter be known as "Liquid Asset Fund".
All Shares of such Series shall be of a single class. Shares of the
aforementioned 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
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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.
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(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.
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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 Trust's 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
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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;
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(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,
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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 Trust's 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 Trust's 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
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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 Trust's
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:
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(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
Underwriter's or distributor's 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 Underwriter's or
distributor's 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 underwriter's or distributor's
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.
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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 Shareholder's 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
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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 Trustee's
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. Trustee's 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
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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;
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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
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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 "Cadre."
The name "Cadre" and all rights to the use of the name "Cadre" belong
to Cadre Financial Services, Inc. ("Cadre Financial") and other affiliates of
AMBAC Inc. Cadre Financial has consented to the use by the Trust of the
identifying word Cadre and has granted to the Trust a non-exclusive license to
use the name Cadre as part of the name of the Trust and the name of any Series
of Shares. In the event an affiliate of Cadre Financial 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 Cadre
Financial and the Trust
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shall cease using the name Cadre as part of its name or the name of any Series
of Shares, unless otherwise consented to by Cadre Financial or any successor to
its interest in such name.
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IN WITNESS WHEREOF, the Trustees named below, constituting all of the
Trustees, hereby make and enter into this Amended and Restated Declaration of
Trust as of the 30th day of June, 1997.
/s/ William T. Sullivan, Jr.
-------------------------------------
William T. Sullivan, Jr., Trustee
/s/ Eugene J. McDonald
-------------------------------------
Eugene J. McDonald, Trustee
/s/ Donald W. Green
-------------------------------------
Donald W. Green, Trustee
/s/ C. Roderick O'Neil
-------------------------------------
C. Roderick O'Neil, Trustee
/s/ Russell E. Galipo
-------------------------------------
Russell E. Galipo, Trustee
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<PAGE> 1
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this first day of July, 1997, by and
between Cadre Institutional Investors Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware, and Cadre Securities, Inc.
(the "Distributor"), a corporation organized under the laws of the State of
Delaware.
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
the investment portfolio of the Trust identified on Schedule A hereto (the
"Fund"), which is registered with the Securities and Exchange Commission ("SEC")
pursuant to the Trust's Registration Statement on Form N-1A, as amended (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 Fund
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.
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 such efforts as is deemed
appropriate by the Distributor to solicit orders for the sale of the Shares and
to undertake such advertising and promotion and other activities as it believes
reasonable in connection with such solicitation. The Trust understands that the
Distributor serves as the distributor of the shares of other investment
companies and series thereof (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 payment of
compensation to brokers, dealers and other financial institutions which make
shares available to their customers (collectively, "Dealers"), the payment
<PAGE> 2
of compensation to sales personnel of the Distributor, and the printing and
mailing of prospectuses to other than current shareholders.
1.4 All activities by the Distributor and its agents and
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 and 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 each 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 comprising the portfolio of each Fund,
(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 and the Funds 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 the SEC. 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 thereunder; all statements of fact contained in
any such Registration Statement will be true and correct when such Registration
Statement becomes effective; and no Registration Statement when such
Registration Statement becomes effective will include an untrue statement of a
material fact or omit to state a
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<PAGE> 3
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 and Dealers 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
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<PAGE> 4
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
the Trust or 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, and sent to the Distributor by the person against whom
such action is brought,
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<PAGE> 5
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, its 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 to so
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 field 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.
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<PAGE> 6
1.14 The Distributor may enter into selling agreements with
Dealers with respect to the offering of the Shares to the public. Each such
selling agreement will provide (a) that all payments for purchases of Shares
will be sent directly from the Dealer to the Funds' transfer agent and (b) that,
if payment is not made with respect to purchases of Shares at the customary or
required time for settlement of the transaction, the Distributor will have the
right to cancel the sale of the Shares ordered by the Dealer, in which case the
Dealer will be responsible for any loss suffered by any Fund or the Distributor
resulting from such cancellation. The Distributor may also act as disclosed
agent for a Fund and sell Shares of that Fund to individual investors. The
Distributor shall enter into selling agreements only with Dealers that are
either members in good standing of the National Association of Securities
Dealers, Inc. or entities that are not required to be such members. All selling
agreements shall be in such form as is approved by the President of the Trust.
2. TERM
This Agreement shall become effective on July 1, 1997, and,
unless sooner terminated as provided herein, shall continue for an initial two
year term and shall continue in effect from year to year thereafter, provided
that 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, and further 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 shall 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.
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4. NOTICES
All notices and other communications (collectively referred to
as a "Notice" or "Notices" in this paragraph) hereunder shall be given in
writing or by telegram, cable, telex or facsimile sending device. Notices shall
be addressed (a) if to the Distributor at its principal place of business, 905
Marconi Avenue, Ronkonkoma, New York 11779; (b) if to the Trust, at its
principal place of business, 905 Marconi Avenue, Ronkonkoma, N.Y. 11779; 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.
Either party hereto may change the address to which Notices to it shall be sent
by giving Notice of such change to the other party.
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
This Agreement shall be governed by and its provisions shall
be construed in accordance with the laws of the State of New York and the
applicable provisions of the 1940 Act. To the extent the provisions of New York
law conflict with the 1940 Act, the latter shall control.
8. MATTERS RELATING TO THE TRUST AS A DELAWARE BUSINESS TRUST
The names "Cadre Institutional Investors Trust" and "Trustees
of Cadre Institutional Investors Trust" refer respectively to the Trust created
and the trustees of the Trust, 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 "Cadre
Institutional Investors Trust" entered into in the name or on behalf thereof by
any of its 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.
-7-
<PAGE> 8
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.
CADRE INSTITUTIONAL INVESTORS TRUST
By: /s/ William T. Sullivan, Jr.
-----------------------------
Title: President
CADRE SECURITIES, INC.
By: /s/ Richard I. Bauer
-----------------------------
Title: President
-8-
<PAGE> 9
SCHEDULE A
to the Distribution Agreement
between Cadre Institutional Investors Trust and
Cadre Securities, Inc.
NAME OF SERIES
* Liquid Asset Fund
CADRE INSTITUTIONAL INVESTORS TRUST CADRE SECURITIES, INC.
By: /s/ William T. Sullivan, Jr. By: /s/ Richard I. Bauer
---------------------------- --------------------
Title: President Title: President
-9-
<PAGE> 1
ADMINISTRATION AGREEMENT
This Administration Agreement is made as of August 1, 1997 by and
between Cadre Financial Services, Inc., a Delaware Corporation ("CF"), and Cadre
Institutional Investors 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 CF 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 CF 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 CF to act as Administrator of
the Trust on the terms set forth in this Agreement. CF 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 CF to act as administrator and accounting
services provider, the Trust shall so notify CF in writing. If CF is willing to
render such services, CF 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 CF) are
modified with respect to such Fund in writing by the Trust and CF 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. CF 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 CF with copies
properly certified or authenticated of each of the following:
<PAGE> 2
(a) Resolutions of the Trust's Board of Trustees authorizing
the appointment of CF 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 CF (the
"Adviser") and the Trust dated as of 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 CF (the
"Transfer Agent") and the Trust dated as of August 1, 1997;
(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 for each Fund(together, the "Prospectus").
The Trust will furnish CF from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing. Furthermore, the Trust will provide CF with any other documents that
CF may reasonably request and will notify CF as soon as possible of any matter
materially affecting the performance by CF of its services under this Agreement.
3. Duties as Administrator. Subject to the supervision and
direction of the Board of Trustees of the Trust, CF, 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 CF or a
corporate affiliate);
<PAGE> 3
(b) Furnishing non-investment related statistical and research
data, data processing services, clerical services, 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 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) Assisting the Trust in routine regulatory examinations of
the Trust, and working closely with outside counsel to the Trust in response to
any litigation, investigations or 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
Prospectus of each Fund 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;
<PAGE> 4
(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, CF will act in
accordance with the Declaration of Trust, By-Laws, Prospectus of each Fund 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 and Fees. CF shall bear all expenses in
connection with the performance of its services under this Agreement, except as
noted below.
(a) CF will from time to time employ or associate with itself
such person or persons as CF 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 CF and the Trust. The
compensation of such person or persons shall be paid by CF and no obligation
shall be incurred on behalf of the Trust in such respect.
(b) CF 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 CF; 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 CF, as provided for in this Agreement,
the Trust shall compensate CF 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
CF for which CF will be entitled to bill
<PAGE> 5
separately. Out-of-pocket disbursements shall include the items specified in
Schedule C, annexed hereto and incorporated herein.
(d) CF 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 CF the amount of
such billing.
5. Limitation of Liability.
(a) CF 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 CF'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 CF 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 CF in the performance of such obligations and duties or by reason
of its reckless disregard thereof. The Trust and CF 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 two (2) years (the "Initial Term") unless
earlier terminated pursuant to the terms of this Agreement. Thereafter this
Agreement may be renewed for successive terms of one (1) year ("Renewal Term")
each, provided, that each such Renewal Term is approved by the Board of Trustees
of the Trust, including the vote of a majority of the Trustees who are not
"Interested Persons," as defined by the 1940 Act and the rules thereunder, of
the Trust.
<PAGE> 6
(b) Either party may terminate this Agreement, without
penalty, at any time upon not than less than sixty (60) 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) This Agreement shall terminate automatically in the event
of its "assignment," as such term is defined by the 1940 Act and the rules
thereunder.
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 bought.
8. Miscellaneous.
(a) Any notice or other instrument authorized or required by
this Agreement to be given in writing to the Trust or CF 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:
Cadre Institutional Investors Trust
905 Marconi Avenue
Ronkonkoma, New York 11779-7255
Attention: Treasurer
To CF:
Cadre Financial Services, Inc..
c/o Ambac Financial Group, Inc.
One State Street
New York, New York 10004
Attention: Richard Gross
(b) This Agreement shall be construed in accordance with the
laws of the State of New York.
<PAGE> 7
(c) 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.
(d) 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.
(e) This Agreement and the schedules hereto constitute the
entire agreement between the parties hereto with respect to the matters
described herein.
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.
Cadre Financial Services, Inc.
By: /s/ Frank X. Sullivan
------------------------------
Frank X. Sullivan
Title: President
Cadre Institutional Investors Trust
By: /s/ William T. Sullivan, Jr.
------------------------------
William T. Sullivan, Jr.
Title: President
<PAGE> 8
SCHEDULE A
SERIES OF THE TRUST
* Liquid Asset Fund
<PAGE> 9
SCHEDULE B
FEE SCHEDULE FOR FUND ADMINISTRATION SERVICES
1. Administration Charges*
First $250 million of Funds average daily net assets 5 basis points per annum
Next $750 million of Funds average daily net assets 4 basis points per annum
Over $1 billion of Funds average daily net assets 3 basis points per annum
*Based on average daily net assets of the Fund.
<PAGE> 1
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of
August, 1997, by and between Cadre Institutional Investors Trust (the "Trust")
on behalf of its portfolio known as the Liquid Asset Fund (the "Fund") and Cadre
Financial Services, Inc., a corporation organized under the laws of the State of
Delaware (hereinafter referred to as the "Agent").
W I T N E S S E T H:
WHEREAS, the Trust is an open-end management investment
company which is registered under the Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Agent is registered under the Securities Exchange
Act of 1934 (the "1934 Act") as a transfer agent;
NOW, THEREFORE, the Trust, on behalf of the Fund, and the
Agent do mutually promise and agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF THE AGENT
Subject to the terms and conditions set forth in this
Agreement, the Trust hereby employs and appoints the Agent to act as transfer
agent, dividend disbursing agent, and shareholder servicing agent for the Fund.
The Agent shall perform all of the customary services of a
transfer agent, dividend disbursing agent and shareholder servicing agent, and
as relevant, agent in connection with accumulation, open account or similar
plans (including without limitation any periodic investment plan or periodic
withdrawal program), including but not limited to the following and as more
fully described in Exhibit A:
A. Receive orders for the purchase of shares, with
prompt delivery, where appropriate, of payment and
supporting documentation to the Fund's custodian;
B. Process purchase orders and issue the appropriate
number of uncertificated shares with such
uncertificated shares being held in the appropriate
shareholder account;
C. Process redemption requests received in good order
and, where relevant, deliver appropriate
documentation to the Fund's custodian;
D. Pay moneys (upon receipt from the Fund's custodian,
where relevant) in accordance with the instructions
of redeeming shareholders;
E. Process transfers of shares in accordance with the
shareowner's instructions;
F. Process exchanges between funds within the same
family of funds, if applicable;
<PAGE> 2
G. Prepare and transmit payments for dividends and
distributions declared by the Fund;
H. Make changes to shareholder records, including, but
not limited to, address changes in plans (i.e.,
systematic withdrawal, automatic investment, dividend
reinvestment, etc.);
I. Record the issuance of shares of the Fund and
maintain, pursuant to Rule 17Ad-10(e) under the 1934
Act, a record of the total number of shares of the
Fund's which are authorized, issued and outstanding
and such other records as are required to be
maintained by a transfer agent for open-end
registered investment companies by the rules adopted
under the 1934 Act;
J. Prepare shareholder meeting lists and, if applicable,
mail, receive and tabulate proxies;
K. Mail shareholder reports and prospectuses to current
shareholders;
L. Prepare and file U.S. Treasury Department forms 1099
and other appropriate information returns required
with respect to dividends and distributions for all
shareholders;
M. Provide shareholder account information upon request
and prepare and mail confirmations and statements of
account to shareholders for all purchases,
redemptions and other confirmable transactions as
agreed upon with the Trust; and
N. Provide a Blue Sky System which will enable the Fund
to monitor the total number of shares sold in each
state. In addition, the Fund shall identify to the
Agent in writing those transactions and assets to be
treated as exempt from the Blue Sky reporting to the
Fund for each state. The responsibility of the Agent
for the Fund's Blue Sky state registration status is
solely limited to the initial compliance by the Fund
and the reporting of such transactions to the Fund.
2. COMPENSATION AND EXPENSES
As full compensation for the services and facilities furnished
to the Trust and the expenses assumed by the Agent under this Agreement, the
Trust shall pay to the Agent a fee with respect to each Fund, as calculated in
accordance with Schedule A hereto. The Agent shall bear all of the costs of
providing services hereunder.
The Fund agrees to pay all reimbursable expenses within thirty
(30) days following receipt of a notice for reimbursement of such expenses.
3. REPRESENTATIONS OF AGENT
2
<PAGE> 3
The Agent represents and warrants to the Trust that:
A. It is a corporation duly organized, existing and in
good standing under the laws of Delaware.
B. It is duly qualified to carry on its business and
duly registered as a transfer agent under the 1934
Act;
C. It is empowered under applicable laws and by its
charter and bylaws to enter into and perform this
Agreement;
D. All requisite corporate proceedings have been taken
to authorize it to enter and perform 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.
4. REPRESENTATIONS OF THE TRUST
The Trust represents and warrants to the Agent that:
A. The Trust is registered under the 1940 Act as an
open-ended, diversified management investment
company;
B. The Trust is a business trust organized, existing,
and in good standing under the laws of Delaware;
C. The Trust is empowered under applicable laws and by
its Declaration of Trust and other governing
documents to enter into and perform this Agreement;
D. All necessary proceedings required to be taken by the
Trust to authorize it to enter into and perform this
Agreement;
E. The Trust will comply with all applicable
requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, and all other laws,
rules and regulations of governmental authorities
having jurisdiction; and
F. A registration statement under the Securities Act of
1933 covering shares of the Fund is currently
effective and will remain effective. Appropriate
state securities law filings have been made and will
continue to be made, with respect to all shares of
the Fund being offered and sold.
5. COVENANTS OF THE TRUST AND THE AGENT
The Fund shall furnish the Agent a certified copy of the
resolution of the Board of Trustees of the Trust authorizing the appointment of
the Agent and the execution of this Agreement. The Trust shall provide to the
Agent a copy of its Declaration of Trust and all amendments.
3
<PAGE> 4
The Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the 1940 Act and the rules thereunder, the
Agent agrees that all such records prepared or maintained by the Agent relating
to the services to be performed by the Agent hereunder are the property of the
Trust and will be preserved, maintained and made available in accordance with
such section and rules and will be surrendered to the Trust on and in accordance
with its request.
6. LIABILITY; INDEMNIFICATION
The Agent agrees to use reasonable care and to act in good
faith in performing its duties hereunder and shall not be liable for any error
in judgment or mistake of law or for any loss suffered by the Trust or the Fund
in connection with the matters to which this Agreement relates, provided that
the Agent has acted in accordance with such standard and with the terms of this
Agreement.
Notwithstanding the foregoing, the Agent shall not be liable
or responsible for delays or errors occurring by reason of circumstances beyond
its control, including acts of civil or military authority, national or state
emergencies, fire, mechanical or equipment failure, flood or catastrophe, acts
of God, insurrection or war. In the event of a mechanical breakdown beyond its
control, the Agent shall take all reasonable steps to minimize service
interruptions for any period that such interruption continues beyond the Agent's
control. The Agent will make every reasonable effort to restore any lost or
damaged data, and the correct of any errors resulting from such a breakdown will
be at the Agent's expense. The Agent agrees that it shall, at all times, have
reasonable contingency plans with appropriate parties, making reasonable
provision for emergency use of electrical data processing equipment to the
extent appropriate equipment is available.
The Trust will indemnify and hold the Agent harmless against
any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) ("Losses") resulting from any claim,
demand, action or suit and arising out of or in connection with the Agent's
duties on behalf of the Trust hereunder, except insofar as such Losses result
from the willful misfeasance, bad faith or gross negligence of the Agent in the
performance of its duties hereunder or from its reckless disregard of such
duties.
In performing services hereunder, Agent shall be entitled to
rely and to act upon: (i) telephone instructions relating to the exchange or
redemption of shares received by the Agent and reasonably believed by the Agent
to have originated from the record owner of the subject shares; (ii) any
instructions executed or orally communicated by a duly authorized officer or
employee of the Trust, according to such lists of authorized officers and
employees furnished to the Agent and as amended from time to time in writing by
a resolution of the Board of Directors of the Trust; and (iii) any genuine
instrument signed, countersigned or executed by any person or persons authorized
to sign, countersign or execute the same.
7. NEW YORK LAW TO APPLY
4
<PAGE> 5
This Agreement shall be deemed to have been executed in New
York and shall be construed and the provisions thereof interpreted under and in
accordance with the substantive laws of the State of New York, without regard to
the conflicts of laws provisions of such state.
8. TERM, AMENDMENT, ASSIGNMENT, TERMINATION AND NOTICE
A. This Agreement shall become effective as of the date
set forth above for an initial term of two years and
shall continue in effect from year to year thereafter
provided that each such continuance is approved
annually by the Board of Trustees of the Trust,
including the vote of a majority of the Trustees who
are not "interested persons" of the Trust, as defined
by the 1940 Act and the rules thereunder.
B. This Agreement may be amended by the mutual written
consent of the parties.
C. This Agreement may be terminated upon ninety (90)
days written notice given by one party to the other.
D. This Agreement and any right or obligation hereunder
may not be assigned by either party without the
signed, written consent of the other party; provided,
however, that the Agent may assign this Agreement
without such consent in a transaction which does not
constitute an "assignment" as defined by the 1940 Act
and the rules thereunder.
E. Any notice required to be given by the parties to
each other under the terms of this Agreement shall be
in writing, addressed and delivered, or mailed to the
principal place of business of the other party.
F. In the event that the Trust gives to the Agent
written notice of its intention to terminate this
Agreement and appoint a successor transfer agent, the
Agent agrees to cooperate in the transfer of its
duties and responsibilities to the successor,
including the transfer of any and all relevant books,
records and other data established or maintained by
the Agent under this Agreement.
G. Should the Trust exercise its right to terminate, all
out-of-pocket expenses associated with the movement
of records and material will be paid by the Trust.
9. NATURE OF THE TRUST
A. Article 5 of the Declaration of Trust contains
provisions limiting the liability of the Trustees,
officers, employees and agents of the Trust. The
obligations of the Trust created hereunder are not
personally binding upon, nor shall resort be had to
the property of, any of the Trustees, officers,
employees or agents of the Trust or of the
Shareholders of the Fund, and only that portion of
the Fund property necessary to satisfy the
obligations of the trust arising hereunder shall be
bound or affected by the operation of this Agreement.
5
<PAGE> 6
B. Third Parties. When dealing with third parties on
behalf of the Fund, Agent shall include such recitals
in written documents as may be reasonably requested
by the Trust regarding the limitation of liability of
the Board of Trustees, the Fund's shareholders, and
the Trust's officers, employees and agents to third
parties.
IN WITNESS WHEREOF, the authorized representatives of the
parties hereto have executed this Agreement as of the date first written above.
Cadre Institutional Investors Trust Cadre Financial Services, Inc.
By: /s/ William T. Sullivan, Jr. By: /s/ Frank X. Sullivan
---------------------------- -------------------------
Attest: William M. Sullivan Attest: William M. Sullivan
--------------------------- ---------------------
6
<PAGE> 7
SCHEDULE A
As full compensation for the services and facilities furnished to the Trust
and the expenses assumed by the Agent under this Agreement, the Liquid Asset
Fund, the sole Fund as of the date of this Agreement, shall pay to the Agent
monthly compensation calculated daily at the annual rate of .05% of such Fund's
net assets up to $250,000,000, .04% of the Fund's net assets greater the
$250,000,000 and less than $1,000,000,000, and .03% of the Fund's net assets
above $1,000,000,000. Such calculations shall be made by applying 1/365th of the
annual rate to the Fund's 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
<PAGE> 8
EXHIBIT A
DUTIES OF THE AGENT
1. SHAREHOLDER INFORMATION
The Agent shall maintain a record of the number of shares held by each
holder of record which shall include their addresses and taxpayer
identification numbers.
2. SHAREHOLDER SERVICES
The Agent will investigate all shareholder inquiries relating to
shareholder accounts, and will answer all correspondence from
shareholders and others relating to its duties hereunder and such other
correspondence as may from time to time be mutually agreed upon between
the Agent and the Trust. The Agent shall keep records of shareholder
correspondence and replies thereto, and of the lapse of time between
the receipt of such correspondence and the mailing of such replies.
3. STATE REGISTRATION REPORTS
The Agent shall furnish the Trust on a state-by-state basis, sales
reports, such periodic and special reports as the Trust may reasonably
request, and such other information, including shareholder lists and
statistical information concerning accounts, as may be agreed upon from
time to time between the Trust and the Agent.
4. UNCERTIFICATED SHARES
(a) With respect to shares held in open accounts or uncertificated
form (i.e., no certificate being issued with respect thereto),
the Agent shall maintain comparable records of the
recordholders thereof, including their names, addresses, and
taxpayer identification numbers.
5. MAILING COMMUNICATIONS TO SHAREHOLDERS: PROXY MATERIALS
At the expense of the Trust, the Agent will address and mail to
shareholders of the Fund, all reports to shareholders, dividend and
distribution notices, and proxy material for meeting of shareholders.
In connection with the meetings of shareholders, the 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).
6. SALES OF SHARES
(a) PROCESSING OF INVESTMENT CHECKS OR OTHER INVESTMENTS
<PAGE> 9
Upon receipt of any check or other instrument drawn or
endorsed to it as agent for, or identified as being for the
account of the Fund, or drawn or endorsed to the Distributor
of the Fund's shares for the purchase of shares, the Agent
shall stamp the check with the date of receipt, shall
forthwith process the same for collection and, shall record
the number of shares sold, the trade date and price per share,
and the amount of money to be delivered to the custodian of
the Fund for the sale of such shares.
(b) ISSUANCE OF SHARES
Upon receipt of notification that the Fund's custodian has
received the amount of money specified in the immediately
preceding paragraph, the Agent shall issue to and hold in the
account of the purchaser/shareholder, or if no account is
specified therein, in a new account established in the name of
the purchaser, the number of shares such purchaser is entitled
to receive, as determined in accordance with applicable
Federal law and regulations.
(c) CONFIRMATIONS
The Agent shall send to purchasers of shares confirmations of
their purchases and periodic statements which will show the
new share balance, the shares held under a particular plan, if
any, for withdrawing investments, the amount invested, and the
price paid for the newly purchased shares, or will be in such
other form as the Trust and the Agent may agree from time to
time. Such confirmations and statements will be sent at such
times as may be required by applicable laws and regulations or
as may otherwise be agreed to by the Trust and the Agent in
compliance with such laws and regulations.
(d) SUSPENSION OF SALE OF SHARES
The Agent shall not be required to issue any shares of the
Fund where it has received a written instruction from the
Trust or written notice from any appropriate Federal or state
authority that the sale of the shares of the Fund has been
suspended or discontinued, and the Agent shall be entitled to
rely upon such written instructions or written notification.
(e) TAXES IN CONNECTION WITH ISSUANCE OF SHARES
Upon the issuance of any shares in accordance with the
foregoing provisions of this Section, the Agent shall not be
responsible for the payment of any original issue or other
taxes required to be paid in connection with such issuance.
(f) RETURNED CHECKS
In the event that any check or other order for the payment of
money is returned unpaid for any reason, the Agent will: (i)
give prompt notice of such return to the Trust or its
designee; (ii) place a stop transfer order against all shares
issued as a result of such
2
<PAGE> 10
check or order; and (iii) take such actions as the Agent may
from time to time deem appropriate.
7. REDEMPTIONS
(a) REQUIREMENTS FOR TRANSFER OR REDEMPTION OF SHARES
The Agent shall process all requests from shareholders to
transfer or redeem shares in accordance with the procedures
set forth in the Fund's Prospectus, including, but not limited
to, all requests from shareholders to redeem shares and all
determinations of the number of shares required to be redeemed
to fund designated monthly payments, automatic payments, or
any other such distribution or withdrawal plan.
The Agent will transfer or redeem shares upon receipt of
written instructions, accompanied by such documents as the
Agent reasonably may deem necessary to evidence the authority
of the person making such transfer or redemption, and bearing
satisfactory evidence of the payment of stock transfer taxes,
if any.
The Agent reserves the right to refuse to transfer or redeem
shares until it is satisfied that the endorsement on the
instructions is valid and genuine, and for that purpose it may
require a guarantee of signature by a member firm of a
national securities exchange, by any national bank or trust
company, by any member bank of the Federal Reserve system or
by other eligible guarantor institution. The Agent also
reserves the right to refuse to transfer or redeem shares
until it is satisfied that the requested transfer or
redemption is legally authorized, and it shall incur no
liability for the refusal, in good faith, to make transfers or
redemptions which the Agent, in its judgment, deems improper
or unauthorized, or until it is reasonably satisfied that
there is no basis to any claims adverse to such transfer or
redemption.
The Agent may, in effecting transactions, rely upon the
provisions of the Uniform Act for the Simplification of
Fiduciary Security Transfers or the provisions of Article 8 of
the Uniform Commercial Code, as the same may be amended from
time to time in the State of New York, which, in the opinion
of legal counsel for the Trust or of its own legal counsel
protect it in not requiring certain documents in connection
with the transfer or redemption of shares. The Trust may
authorize the Agent to waive the signature guarantee in
certain cases by written instructions.
For the purposes of the redemption of shares of the Fund which
have been purchased within 15 days of a redemption request,
the Trust shall provide the Agent with written instructions
concerning the time within which such requests may be honored.
(b) NOTICE TO CUSTODIAN AND FUND
When shares are redeemed, the Agent shall, upon receipt of the
instructions and documents in proper form, deliver to the
Fund's custodian and the Trust a notification setting forth
the number of shares to be redeemed. Such redemptions shall be
reflected
3
<PAGE> 11
on appropriate accounts maintained by the Agent reflecting
outstanding shares of the Fund and shares attributed to
individual accounts and, if applicable, any individual
withdrawal or distribution plan.
(c) PAYMENT OF REDEMPTION PROCEEDS
The Agent shall, upon receipt of the moneys paid to it by the
Fund's custodian for the redemption of shares, pay to the
shareholder, or his authorized agent or legal representative,
such moneys as are received from the custodian, all in
accordance with the redemption procedures described in the
Fund's Prospectus; provided, however, that the Agent shall pay
the proceeds of any redemption of shares purchased within a
period of time agreed upon in writing by the Agent and the
Trust, only in accordance with procedures agreed to in writing
by the Agent and the Trust, for determining that good funds
have been collected for the purchase of such shares. The Trust
shall indemnify the Agent for any payment of redemption
proceeds or refusal to make such payment, if the payment or
refusal to pay is in accordance with said written procedures.
The Agent shall not process or effect any redemptions pursuant
to a plan of distribution or redemption, or in accordance with
any other shareholder request upon the receipt by the Agent of
notification of the suspension of the determination of the
Fund's net asset value.
8. DIVIDENDS
(a) NOTICE TO AGENT AND CUSTODIAN
Upon the declaration of each dividend and each capital gains
distribution by the Board of Trustees of the Trust with
respect to shares, the Trust shall furnish to the Agent a copy
of a resolution of its Board of Trustees, certified by the
Secretary of the Trust, 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 Agent on the
payment date, and whether such dividend or distribution is to
be paid in shares of such class at net asset value.
On or before the payment date specified in such resolution of
the Board of Trustees, the Trust will cause the custodian of
the Fund to pay to the Agent sufficient cash to make payment
to the shareholders of record as of such payment date.
(b) PAYMENT OF DIVIDENDS BY THE AGENT
The Agent will, on the designated payment date, automatically
reinvest all dividends required to be reinvested in additional
shares at net asset value (determined on such date), and mail
to shareholders statements at such times as may be required by
4
<PAGE> 12
applicable law or agreed to by the Trust and the Agent showing
the number of full and fractional shares (rounded to three
decimal places) then currently owned by the shareholders and
the net asset value of the shares so credited to the
shareholders' accounts.
(c) INSUFFICIENT FUNDS FOR PAYMENTS
If the Agent does not receive sufficient cash from the Fund's
custodian to make total dividend and/or distribution payments
to all shareholders as of the record date, the Agent will,
upon notifying the Trust, withhold payment to all shareholders
of record as of the record date, until such sufficient cash is
provided to the Agent.
(d) INFORMATION RETURNS
It is understood that the Agent shall file such appropriate
information returns concerning the payment of dividends,
return of capital, and capital gain distributions with the
proper Federal, state, and local authorities as are required
by law to be filed and shall be responsible for the
withholding of taxes, if any, due on such dividends or
distributions to shareholders when required to withhold taxes
under applicable law.
5
<PAGE> 1
Independent Auditors' Consent
To the Shareholders and Board of Trustees of
Cadre Institutional Investors Liquid Asset Fund:
We consent to the use of our report dated December 18, 1997 with respect to
Cadre Institutional Investors Liquid Asset Fund incorporated herein by reference
and to the references to our Firm under the headings "Financial Highlights" and
"General Information, Shareholder Reports" in the Prospectus and "General
Information, Independent Auditors" in the Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
February 27, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 138,655,187
<INVESTMENTS-AT-VALUE> 138,655,187
<RECEIVABLES> 44,820
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 82,610
<TOTAL-ASSETS> 138,782,617
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 122,001
<TOTAL-LIABILITIES> 122,001
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 138,522,161
<SHARES-COMMON-STOCK> 138,661
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (206)
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 138,660,616
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,803,175
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<EXPENSES-NET> 263,963
<NET-INVESTMENT-INCOME> 5,539,212
<REALIZED-GAINS-CURRENT> (206)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5,539,006
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,539,212
<DISTRIBUTIONS-OF-GAINS> 707
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 191,135,630
<NUMBER-OF-SHARES-REDEEMED> 128,198,780
<SHARES-REINVESTED> 4,844,012
<NET-CHANGE-IN-ASSETS> 67,780,862
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 157,394
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<GROSS-EXPENSE> 480,967
<AVERAGE-NET-ASSETS> 103,031,956
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (.05)
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