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HomeMy WebLinkAboutResolution 5170 . . . RESOLUTION NO. 5170 CITY OF MOUNDS VIEW COUNTY OF RAMSEY STATE OF MINNESOTA A RESOLUTION AUTHORIZING ENTRY INTO JOINT POWERS AGREEMENT IN THE FORM OF A DECLARATION OF TRUST ESTABLISHING AN ENTITY KNOWN AS "MINNESOTA MUNICIPAL MONEY MARKET FUND" AND AUTHORIZING PARTICIPATION IN CERTAIN INVESTMENT PROGRAMS IN CONNECTION THEREWITH WHEREAS, Minnesota Statutes Section 471.59 (the Joint Powers Act) provides among other things that governmental units, by agreement entered into through action of their governing bodies, may jointly or cooperatively exercise any power common to the contracting parties; and WHEREAS, Minnesota Municipal Money Market Fund was formed in April 1987 pursuant to the Joint Powers Act by the adoption of a joint powers agreement in the form of a Declaration of a Trust by a group of Minnesota Municipalities acting as the Initial Participants thereof; and WHEREAS; the Declaration of Trust has been presented to this Council; and WHEREAS, the Declaration of Trust authorizes municipalities of the State of Minnesota to adopt and enter into the Declaration of Trust and become a Participants of the Fund; and WHEREAS, this council deems it to be advisable for this municipality to adopt and enter into the Declaration of Trust and become a Participant of the Fund for the purpose of the joint investment of this municipality's monies with those of other municipalities so as to enhance the investment earnings accruing to each; and WHEREAS, this Council deems it to be advisable for this municipality to make use from time to time, in the discretion of the officials of the municipality identified in Section 2 of the following Resolution, of the Fixed Rate Program available to Participants of the Fund. NOW THEREFORE, BE IT RESOLVED AS FOLLOWS: Section 1. This municipality shall join with other municipalities in accordance with the Joint Powers Act by becoming a Participant of the Fund and adopting and entering into the Declaration of Trust, which is adopted by reference herein with the same effect as if it had been set our verbatim in this resolution and a copy of the Declaration of Trust shall be filed in the minutes of the meeting at which this Resolution was adopted. The Finance Director or Clerk- Administrator of this municipality is hereby authorized to take such actions and execute any and all such documents as they may deem necessary and appropriate to effectuate the entry of this municipality into the Declaration of Trust and the adoption thereof by this municipality. Section 2. This municipality is hereby authorized to invest its available monies from time to time and to withdraw such monies from time to time in accordance with the provisions of the . . . Declaration of Trust. The following officers and officials of the municipality and their respective successors in the office each hereby are designated as "Authorized Officials" with full powers and authority to effectuate the investment and withdrawal of monies of this municipality from time to time in accordance with the Declaration of Trust and pursuant to the Fixed Rate Program available to Participants of the Fund: Bruce Kessel, Finance Director -.... .... /'. ...._--i-~ ..~~~ ~ Sign~t~ . - a.<-<--1" b ,~-Z- .' Signature Mary Tatarek, Accountant Charles S. Whiting, Clerk Administrator Signature The Finance Director shall advise the Fund of any changes in Authorized Officials in accordance with the procedures established by the Fund. Section 3. The Trustees of the Fund are hereby designated as having official custody of this municipality's monies which are invested in accordance with the Declaration of Trust. Section 4. State banks, national banks and thrift institutions located either within or outside of the State of Minnesota which qualify as depositories under Minnesota law and are included on a list approved and maintained for such purpose by the Investment Advisor of the Fund are hereby designated as depositories of this municipality pursuant to Minnesota Statues Section 118.005 and monies of this municipality may be deposited therein, from time to time in the discretion ofthe Authorized Officials, pursuant to the Fixed Rate Program available to Participants of the Fund. Adopted this 13th day of October, 1997. ATTEST: 029JU~ Charles S. Whiting, City lerk-AdmInlstrator (SEAL) . THE 4M LIQUID ASSET FUND THE 4M PLus FUND . The Nfinnesota Municipal Money Market Fund Program L'IFORMATION STATEMENT A Comprehensive Financial Service for Municipalities Sponsored by the League of i\1innesota Cities This booklet provides detailed infonnation about the Funds. Please read it carefully and retain it for future reference. . . . . TABLE OF CONTENTS The Trust and the Funds. ......... ............ ................. ......... ... .., ........ ................. .......................3 Investment Objectives and Policies ., ................................................................. ....... .......... 3 Withdrawals from the PLUS Fund.................................. ......... ...................... .....................6 Trustees and Officers .... ............... ............................... ..................... ............ .......................6 Investment Adviser.......................... .............. ..... ..... .......... .......... ........... .............................7 Administrator ........ ......... ............. ......... ........ ..... .......... ................... ..... ................................7 Custodian ......... ...... ...................................... ...... ..... ....... ........................... ..... ......................7 Technical Advisory Board .... ............................. ................. ............ ....... ............. ................ 8 Legal Counsel. ...... ... ......... ........... ......... ..... ...... ...... ....... ........ ... .......... .............. ........ ....... ..... 8 Expenses. ............. .......... ................. ........ ..... ............. ........................................................... 8 DaiI y Income Allocations ................... ............ ...... ...... ........... ............................ ....... ...........9 Computation of Yield ....... ..... ............ .... ............... ...... .................... ..... ............... .................9 Determination of Net Asset V alue ....................................................................................10 Po rtfo lio Transactions.. ........ .... ........ ..... ............. .................................................... ........... 11 ReportS to Participants ...................................................................................... ... ............. 11 Taxes ................. ........................................ .......................................... .............................. 11 Dec laration of Trust ................. ..... ................. .............. .................... ................................. 12 Fixed Rate Program...................... ................. ..................... ......................... ....... ....... .... .... 13 -2- THE TRUST AND THE FUNDS The 4M Liquid Asset Fund and the 4M PLUS Fund (each a "Fund" and. together, the "Funds") are distinct investment portfolios within the Minnesota Municipal Money Market Fund (the "Trust"), a common law trust organized and existing in accordance with the Minnesota Joint Powers Act (Minnesota Statutes, Section 471.59) (the "Joint Powers Act"). The Trust and the Liquid Asset Fund were created in 1987, and the PLUS Fund was created in November 1996. Each Fund is independent of the other. Neither the Liquid Asset Fund nor the PLUS Fund will constitutes security or collateral for obligations of the other, except as may be described in the Declaration of Trust. . Only "Municipalities" (defined to include Minnesota cities, counties, towns, public authorities. public corporations, public commissions, special districts and public instrumentalities, each as defined in the Joint Powers Act) are permitted to open accounts and become participants ("Participants'.) in either or both Funds. The address of the Trust is: Minnesota Municipal Money Market Fund c/o Insight Invesnnent Management 60 South Sixth Street Minneapolis, MN 55402 INVESThIE~! OBJECTIVES Al'ID POLICIES . Investment Objectives Each Fund seeks to provide Participants with safety and stability of principal, liquidity and. within the stringent investment policies and limitations set forth below, a competitive yield. No assurance can be given that either Fund will achieve its investment objective or that any benefits described in this Information Statement will result from placement of assets in either Fund. Each Fund will employ the same investments and investment techniques. However. the PLUS Fund's objective will be to provide Participants with a somewhat enhanced investment yield (compared with that of the Liquid Asset Fund) by having a somewhat longer average portfolio maturity than the Liquid Asset Fund. The PLUS Fund will seek to achieve a longer average portfolio maturity by requiring that Participants agree to an initial 30-day investment period with respect to each investment. after which redemptions may be made upon one Minnesota banking day's notice. Participants in the Liquid Asset Fund will not have to agree to an initial 30-day investment period and may effect redemptions from the Fund at any time. Each Fund seeks to maintain a stable net asset value of $1.00 per share; however, there can be no assurance that either Fund will be able to continually achieve this goal. An investment in either Fund is not a deposit or obligation of, or guaranteed or endorsed by, any bank and is not insured or guaranteed by the U.s. Government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other federal or state agency or instrumentality. For a discussion of the expenses to which Participants of each Fund are indirectly subject, see "Expenses." . -3- Fund Investments .. Each Fund is specifically designed for Minnesola Municipalities. Accordingly. each Fund may invest only in securities and instruments in which Municipalities are permitted to invest directly, as delineated in Minnesota Statutes, Section 475.66 ("Permitted Investments"). Permitted Investments include: (a) Government bonds, notes, bills. mongages and other secunnes which are direct obliga!ions or are guaranteed or insured issues of the United States. its agencies, its instrumentalities. or organizations created by an Act of Congress. (b) Any security which is a general obligation of the State of Minnesota or any of its municipalities. (c) Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System. (d) Commercial paper issued by United States corporations or their Canadian subsidiaries that is of the highest quality and matures in 270 days or less. . (e) Deposits in a national bank or in a state bank or thrift institution insured by the Federal Deposit Insurance Corporation. provided that any such deposit shall be insured. bonded. or collateralized as required by law and that any such bank or thrift institution shall meet criteria designated from time to time by the Trustees. (f) Repurchase Agreements with "broker-dealers" (as more fully described below) and with "banks" (as more fully described below). 1. Broker/Dealers: a. The Funds may only enter into repurchase agreements with broker- dealers which. in the judgment of the Investment Adviser (as defined below), have a reputation for sound management and ethical business practices. b. Each broker/dealer must be registered with the Securities and Exchange COmmission and be a primary reponing dealer to the Federal Reserve Bank of New York. c. Broker/dealers must have at least $50 million in "Excess Capital". "Excess Capital" is that ponion of a firm's permanent capital which is in excess of the minimum capital required under the Uniform Net Capital Rule of the Securities and Exchange Commission. Broker/dealer subsidiaries of companies having at least $1 billion in net wonh shall also be considered creditwonhy, in the event of a lack of publicly available financial information. The Investment Adviser will use its best effons to monitor the creditwonhiness of broker/dealers. . -4- d. Broker/dealers must have short-term. unsecured debt ratings of "A I" by Standard & Poor's Corporation ("S&P") or "PI" by Moody's Investors Service. Inc. ("Moody's"). . 2. Banks: a. The Funds may only enter into repurchase agreements with banks whose short-term. unsecured debt is rated '.A 1" by S&P or "P I" by Moody's. b. The Funds may only enter into repurchase agreements with banks that are among the 100 largest United States commercial banks. (g) Any other investment instruments now or hereafter designated as a Permitted Investment under applicable law. Investment Restrictions Each Fund may buy and sell, and enter into agreements to buy and sell Permitted Investments subject to the restrictions described below. These restrictions are considered to be fundamental to the operation and activities of each Fund and may not be changed without the affirmative vote of a majority of the Panicipants. Each Fund: (a) May not make any investment other than a Permitted Investment; (b) May not purchase any Permitted Investment which has a maturity date more than one year from the date of purchase, unless it is subject at the time of purchase to an irrevocable agreement on the pan of a responsible party to repurchase it from the Fund within one year, . (c) May not purchase any Permitted Investment if the effect of such purchase would result in the Fund's portfolio weighted average maturity to exceed ninety days (however, in determining the effect of a purchase on the average portfolio maturity, any Permitted Investment which is subject to an irrevocable agreement of the nature referred to in the preceding clause (b) is deemed to mature on the day on which the Fund is obligated to sell such Permitted Investment back to the responsible party); (d) May not borrow money or incur indebtedness whether or not the proceeds thereof are intended to be used to purchase Permitted Investment, except as a temporary measure to facilitate withdrawal requests which might otherwise require unscheduled disposition of portfolio investments; and (e) May not purchase securities or shares of investment companies or any entities similar to either Fund. . -5- ~RAWALSFROMTHEPLUSFUND . All investments in the PLUS Fund must be deposited for a minimum of 30 calendar days. and a ne Minnesota banking day notice period is required for withdrawals from the PLUS Fund. Wi~drawals during such 30-<iay period will be subject to a penalty equal to 15 days interest on the amount wIthdrawn (calculated using the dividend rates in effect for the 15-<iay period immediately preceding the withdrawal date). The penalty will be payable even if the amount withdrawn had not been invested in the PLUS Fund for the full 15-<iay period preceding the withdrawal. In determining whether an amount is eligible for withdrawal from a Participant account without the payment of a penalty. the first-inlfirst-out method will be used. Withdrawal requests must be received by the Fund's Administrator not less than one Minnesota banking day prior to the requested withdrawal date. The notice requirement will be deemed to have been met if it is received by the Fund's Administrator not later than 11:00 a.m. (Central Time) on the day prior to withdrawal. In the event that a Participant withdraws an investment from the PLUS Fund without giving the required One Minnesota banking day notice. it will be subject to a penalty equal to the loss of 15 days interest on the amount so withdrawn calculated in the same manner as set forth above with respect to the penalty applicable to premature withdrawals. There are no restrictions on withdrawals from the Liquid Asset Fund, which may be effected on a same-day basis. TRUSTEES AND OFFICERS . Subject to the power of the Participants to amend the DecIaration of Trust, the Board of rectors of the League of Minnesota Cities serves as the Board of Trustees of the Trust. Appointments and vacancies are filled in accordance with the by-laws of the League of Minnesota Cities and the DecIaration of Trust. The Trustees have full, exclusive. and absolute control and authority over the business and affairs of the Trust and each Fund, in all cases subject to the rights of the Participants as provided in the Declaration of Trust. The Trustees may perform such acts as in their sole judgment and discretion are necessary and proper for conducting the business and affairs of the Trust or promoting the interests of the Trust. The Trustees duties include, but are not limited to. overseeing, reviewing and supervising the activities of all consultants and professional advisers to the Fund (including, but not limited to, the Investment Adviser. the Administrator. the Sub-Administrator, if any. and the Custodian). The Trustees serve without compensation but are reimbursed by the Trust for reasonable travel and other out-of-pocket expenses incurred in connection with their duties as Trustees. The Trustees are not required to devote their entire time to the affairs of the Trust. The officers of the League of Minnesota Cities serve also as officers of the Trust. The executive director of the League of Minnesota Cities serves as the Trust's Secretary and as an ex-officio. non- voting member of the Board of Trustees. The Trustees may elect or appoint such other officers or agents who, subject to the DecIaration of Trust and Bylaws of the Trust. shall have such powers, duties and responsibilities as the Trustees may deem to be advisable and appropriate. . -6- The Trustees are responsible for the general investment policy and program of each Fund and for the general supervision and administration of the business and affairs of the Trust. However, the Trustees are not required personally to conduct all of the business of the Trust and. consistent with their ultimate responsibility, the Trustees have appointed the Administrator and Investment Adviser, a Sub- Administrator, the Custodian, and a Technical Advisory Board. . INVESTMENT ADVISER Insight Investment Management ("Insight" or the "Investment Adviser"), a division of IFG Asset Management Services, Inc. ("AMS"), has been appointed by the Trustees as each Fund's investment adviser. In such capacity, Insight provides investment advice to, and supervises the investment program of, each Fund. The agreement pursuant to which Insight serves as each Fund's investment adviser will remain in effect with respect to each Fund until September 30, 1997, and thereafter from year to year if approved annually by the Board of Trustees or by a majority of the applicable Fund's Participants. The agreement may be terminated without penalty on sixty days' written notice at the option of the Fund or the Investment Adviser. A.vtS is a wholly-owned subsidiary of Inter-Regional Financial Group, Inc. ("IFG.') of Minneapolis, Minnesota. The Fund does not engage in the trading of investment instruments with or through IFG or any of its subsidiaries (which also include Dain Bosworth Incorporated and Rauscher Pierce Refsnes, Inc., each a registered full-service broker-dealer). ADt\1INISTRA TOR . The Trustees also have appointed Insight as each Fund's administrator (the "Administrator"). MBIA Municipal Investors Service Corporation. a wholly-owned subsidiary of MBIA Inc. of Armonk. New York. has been appointed by the Administrator to serve as each Fund's Sub-Administrator. The agreements pursuant to which the Administrator and the Sub-Administrator serve each Fund will remain in effect with respect to each Fund until September 30, 1997, and thereafter from year to year if approved annually by the Board of Trustees or by a majority of the applicable Fund's Participants. Each agreement may be terminated without penalty on sixty days written notice at the option of non- terminating party. The Administrator or the Sub-Administrator services all Participant accounts; determines and allocates income of each Fund; provides certain written confirmation of the investment and withdrawal of monies by Participants; determines the net asset value of each Fund on a daily basis; provides administrative personnel and facilities to the Trust and each Fund; bears certain expenses of the Trust and each Fund; and perfonns other related administrative services for the Trust and each Fund. On a quarterly basis. the Administrator provides the Trustees with a detailed evaluation of the perfonnance of each Fund compared against money market mutual funds and various indices of money market securities. CUSTODIAJ.'f First Bank National Association serves as Custodian for each Fund pursuant to a Custodian Agreement with the Trust. The Custodian acts as a safekeeping agent for each Fund's investment portfolio and serves as the depository in connection with the direct investment and withdrawals of each . -7- Fund. The Custodian does not participate in either Fund's investment decision-making process. Each Fund may invest in obligations of the Custodian, and the Custodian may buy and sell Permitted .vestments from and to each Fund. TECHNICAL ADVISORY BOARD The Trustees have appointed a Technical Advisory Board to assist and advise the Board of Trustees in developing policies and overseeing and reviewing the activities of the Trust and each Fund. The Technical Advisory Board consists of individuals skilled in the area of municipal finance and investments. LEGAL COUNSEL Legal counsel of the League of Minnesota Cities serves as General Counsel to the Trust pursuant to the direction of the Board of Trustees. EXPENSES Administrative and Investment Advisory Expenses Under its Administrative and Investment Advisory Agreement with Insight, each Fund has agreed to pay Insight a fee at an annual rate equal to 0.26% of the Fund's average daily net assets. This fee is .mputed daily and paid monthly. Of the amount so received, Insight has agreed to pay to the League of innesota Cities for its sponsorship and administrative services an amount equal to 0.04% of the Fund's average daily net assets. This fee likewise will be calculated daily and paid monthly. The Sub- Administrator is compensated by the Administrator. The Administrator or the Sub-Administrator is responsible for administrative costs of serving as Administrator or Sub-Administrator (as applicable) of the Fund, such as postage, telephone charges and computer time. Additionally, the Administrator is responsible for paying all costs associated with marketing the Fund. Custodial Expenses Under its agreement with the Custodian, the Liquid Asset Fund compensates the Custodian based on the following schedule (calculated daily and paid monthly): A vera~e Dailv Net Assets Annual Fee First $50 million Next $50 million Over $ I 00 million .15% .12% .10% In addition. the Liquid Asset Fund pays the Custodian a flat fee of $300 per month for the tiovision of various cash management services. For its fees, in addition to its role as custodian of the 'quid Asset Fund's assets, the Custodian provides check-writing, lock-box and cenain other services to quid Asset Fund Participants. -8- Under its agreement with the Custodian, the PLUS Fund compensates the Custodian in the annual amount of .03% of the Fund's average daily net assets (calculated daily and paid monchly). The Custodian only provides custodial services for the PLUS Fund and its Participants. Other Expenses In addition, each Fund pays all of its other operating and other expenses not expressly assumed by the Administrator and the Sub-Administrator, including, without limitation, its legal costs, insurance costs and the cost of promotional material including Information Statemencs, Application Forms. brochures and meeting materials for Participants. DAIL Y INCO:ME ALLOCA nONS Each Fund's net income is determined as of the close of business on each Minnesota banking day (and at such other times as the Trustees may determine) and is credited immediately thereafter pro rata to each Participant's account. Such accrued income is reinvested in additional Fund shares at their net asset value (generally, $1.00 per share). Although daily income accruals are not automatically transmitted in cash, Participants may obtain cash by withdrawing shares at their net asset value without charge. Each Fund's net income for each income period consists of (1) all accrued incerest income on Fund assets, (2) plus or minus all realized gains or losses on Fund assets and any amonized purchase discount or premium, and (3) less the Fund's accrued expenses applicable to that income period. Each Fund expects to have net income each day. If for any reason there is a net loss on any day, the applicable Fund will reduce the number of its outstanding shares by having each Participant contribute its pro rata portion of the total number of shares required to be canceled in order to maintain the net asset value per share at a constant value of S 1.00. Each Participant will be deemed to have agreed to such a contribution in these circumstances by its adoption of the Declaration of Trust and its investment of monies into the Fund. CO~tpIJTA nON OF YIELD The "daily rate" and "annual yield" of each Fund may, from time to time, be quoted in repons, literature and information published by the Trust. The daily rate of each Fund is computed by taking daily investment income, plus or minus any purchased discount or premium less all accrued expenses, including realized capital gains or losses. and dividing by the total shares in the Fund, multiplied by 365. Each Fund will also report an "annual yield" calculated by compounding the daily rate as follows: by adding 1 to the daily rate, raising the sum to the power of 365, and subtracting I from the result. Each Fund may also quote a 7 -day average yield and a 30-day average yield which is an average of the preceding 7- and 30-day daily annual yields, respectively. Each Fund's yield may vary over time, and, therefore, the yields quoted from time to time should not be considered an indication of furore investment results. Actual yields will depend not only on the type, quality, and maturities of the investments held by each Fund and changes in interest rates on such investments, but also on changes in the Fund's expenses during the period. -9- . . . Yield infonnation may be useful in reviewing the performance of each Fund and for providing a basis for comparison with other investment alternatives. However. each Fund's yield will fluctuate. .~nlike cenificates of deposit or other investments which typically pay a fixed yield for a stated period of tlme. DETElt.\1INATION OF NET ASSET VALUE The net asset value per share of each Fund for the purpose of calculating the price at which each Fund's shares are issued and redeemed is detennined by the Administrator as of the dose of business on each Minnesota banking day. Such detennination is made by subtracting from the value of the assets of the applicable Fund the amount of the Fund's liabilities and dividing the remainder by the number of outstanding shares of the Fund. The value of each Fund's investments are detennined using the amortized cost method. The amortized cost method of valuation involves valuing an investment instrument at its cost at the time of purchase and thereafter assuming a constant amortization to maturity of any discount or premium. regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides certainty in valuation. it may result in periods during which value. as detennined by amortized cost. is higher or lower than the price the applicable Fund would receive if it sold the instrument. During such periods. the yield to Participants may differ somewhat from that which would be obtained if the applicable Fund used the market value method for all its portfolio investments. For example. if the use of amortized cost resulted in a lower (higher) aggregate portfolio value on a particular day, a prospective Participant would be able to obtain a somewhat higher (lower) yield than would result _if the applicable Fund used the market value method. and existing Participants would receive less (more) .vestment income. The purpose of this method of calculation is to attempt to maintain a constant net set value per share of $1.00. The Board of Trustees has adopted procedures with respect to each Fund's use of the amortized cost method to value its portfolio. These procedures are designed and intended (taking into account market conditions and each Fund's investment objectives) to stabilize net asset value per share as computed for the purpose of investment and redemption at $1.00 per share. The procedures indude a periodic review by the Board of Trustees. in such manner as they deem appropriate and at such intervals as are reasonable in light of current market conditions. of the relationship between net asset value per share based upon the amortized cost value of each Fund's investments and the net asset value per share based upon available indications of market value with respect to such portfolio investments. The Board of Trustees will consider steps. if any, that should be taken in the event of a difference of more than 1/2 of 1 % between the two methods of valuation. The Board of Trustees will take such steps as they consider appropriate (such as shortening the average portfolio maturity or realizing gains or losses) to minimize any material dilution or other unfair results which might arise from differences between the two methods of valuation. The Trust has adopted policies on behalf of each Fund to (1) maintain a dollar weighted average portfolio maturity (which will not be more than ninety days) appropriate to the objective of maintaining a stable net asset value of $1.00 per share, and (2) not purchase any instrument with a remaining maturity of more than one year (unless such investment is subject at the time of its purchase to an irrevocable agreement on the part of a responsible person to purchase such investment from the applicable Fund .hin one year). Should the disposition of a portfolio investment result in a dollar weighted average -10- portfolio maturity of more than ninety days, available cash will be invested in such a manner as to reduce such average portfolio maturity to ninety days or less as soon as reasonably practicable. . PORTFOLIO TRANSACTIONS Subject to the general supervision of the Board of Trostees, the Investment Adviser is responsible for the investment decisions and the placing of the orders for portfolio transactions for each Fund. Each Fund's portfolio transactions occur primarily with major dealers in money market instruments acting as principals. Such transactions are nonnally on a net basis which do not involve payment of brokerage commissions. Transactions with dealers nonnally reflect the spread between bid and asked prices. The Investment Adviser places order for all purchases and sales of portfolio securities. Although neither Fund ordinarily seeks profits from short-term trading, the Investment Adviser may, on behalf of a Fund, dispose of any portfolio investment prior to its maturity if it believes such disposition is advisable. The Investment Adviser seeks to obtain the best net price and most favorable execution of orders for the purchase and sale of portfolio securities. Where price and execution offered by more than one dealer are comparable, the Investment Adviser may, in its discretion, purchase and sell investments through dealers which provide research, statistical and other infonnation to the Investment Adviser or to the Trost. Such supplemental infonnation received from a dealer is in addition to the services required [0 be performed by the Investment Adviser under its agreement with each Fund, and the expenses of the Investment Adviser will not necessarily be reduced as a result of the receipt of such infonnation. Fund investments will not be purchased from or sold to the Investment Adviser or the Administrator or any affiliate of the Investment Adviser or the Administrator. . REPORTS TO PARTICIPANTS Panicipants in each Fund receive transaction advise subsequent to all investments and wire withdrawals that they make. Each Panicipant receives annual reportS providing financial information regarding each applicable Fund (including a statement of net income) as well as a monthly statement of the Participant's account. The annual report includes audited financial statements of the Funds. Each Fund's fiscal year ends on December 31 of each year. Potential Panicipants are advised to review the fmancial reportS of the Funds that are made available to them. The Trost answers inquiries at any time during business hours (8:00 a.m. through 4:00 p.m., Minneapolis time) from a Participant concerning the status of its account (number of shares, etc.) and the current yield available through the Fund's investment program. Such inquiries can be made by telephoning (800) 373-1525. TAXES In the opinion of Counsel to the Trost, neither Fund is subject to federal or Minnesota income tax upon the income realized by it, and the Participants are not subject to tax upon distributions to them of such income. Counsel to the Trost is funher of the opinion that the Participants are not subject to taxation as a result of their investment of municipal monies in either Fund. . -11- . DECLARATION OF TRUST Each prospective Participant is given a copy of the Declaration of Trust before becoming a Participant. Certain ponions of the Declaration of Trust are summarized in this Information Scatemenr. The following summary is qualified in its entirety by reference to the text of the Declaration of Trust. as amended. Description of Shares. The Declaration of Trust provides that the beneficial interests of Participants in the net assets of each Fund are, for convenience of reference. divided into shares which are used as units to measure the proponionate allocation of beneficial interest among the Participants of such Fund. The Declaration of Trust authorizes an unlimited number of full and fractional shares for each Fund. as well as adjustments in the total number of shares outstanding from time to time in order to pennit each Fund to maintain a constant net asset value of $1.00 per share. Shares of each Fund are of the same class. Each Fund share has equal rights with respect to dividends and distributions of such Fund The shares have no preference, conversion. exchange. or preemptive rights. For all matters requiring a vote of Participants. each Participant is entitled to one vote with respect to each matter, without regard to the number of shares held by the Participant. It is not necessary for a Participant to hold any minimum number of shares to be entitled to vote. Separate votes are taken by each Fund except with respect to matters pertaining to the Trust as a whole. in which case Participants vote together. irrespective of the Fund in which such Participant participates. Shares have non- cumulative voting rights. · . No shares may be transferred to any person other than the respective Fund's ponfolios from which it originated at the time of withdrawal of monies by a Participant. Participant Liability. The DecIaration of Trust provides that Participants shall not be subject to any individual liability for the acts or obligations of the Trust and provides that every written undertaking made by the Trust shall contain a provision that such undertaking is not binding upon any of the Participants individually. In the opinion of the Board of Trustees. no individual liability will attach to the Participants under any undenaking containing such a provision. The Trustees intend to conduct the operations of the Trust and each Fund. with advice of counsel. in such a way as to avoid ultimate liability of the Participants for liabilities of the Trust or any Fund. Responsibility of Trustees, Officers and Agents. No Trustee, officer, employee, or agent of the Trust is individuaJIy liable to the Trust or any Fund. a Participant. an officer. an employee or an agent of the Trust for any action or failure to act unless it is taken or omitted in bad faith or constitutes willful misfeasance. reckless disregard of duty, or gross negligence. AJI third panies shall look solely to the propeny of the applicable Fund for the satisfaction of claims arising in connection with the affairs of the Fund. The Trust will indetlUlify each Trustee. officer. employee, or agent of the Trust designated by the Trustees to receive such indetlUlification to the extent pennitted by law, against all claims and liabilities to which they may become subject by reason of serving in such capacities for the Trust. except in certain circumstances set fonh in the Declaration of Trust. _ Termination of the Declaration of Trust. Either or both Funds and/or the Trust may be yenninated by the affirmative vote of a majority of the Trustees and consented to by a majority of the -12- Participants entitled to vote. Upon the tennination of any Fund or the Trust. and after paying or adequately providing for the payment of all of the Fund's or Trust's (as applicable) liabilities. and upon receipt of such releases, indemnities and refunding agreements as they deem necessary for their protection, the Trustees may distribute the remaining Fund or Trust property, in cash or in kind, or partly in cash and partly in kind. among the Participants according to their respective proportionate beneficial interests. . Amendment of the Declaration of Trust. The Declaration of Trust may be amended by the affirmative vote of a majority of the Participants entitled to vote or by an instrument in writing, signed by a majority of the Trustees and consented to by not less than a majority of the Participants entitled to vote. The Trustees may, from time to time, by a two-thirds vote of the Trustees. and after fifteen days prior written notice to the Participants, amend the Declaration of Trust without the vote or consent of the Participants, to the extent they deem necessary to conform the Declaration of Trust to the requirements of applicable laws or regulations, or any interpretation thereof by a court or other governmental agency, but the Trustees shall not be liable for failing to do so. The name. "The Minnesota Municipal Money Market Fund" is the designation of the Trust under the Declaration of Trust. The Declaration of Trust is filed in the Office of the Secretary of State of Minnesota and provides that the name of the Fund refers to the Participants jointly in such capacity and not personally or as individuals. All persons dealing with a Fund must look solely to the property of such Fund for the enforcement of any claims against the Trust with respect to such Fund. since neither the Trustees, officers, agents, nor Participants assume any personal liability for obligations entered into on behalf of a Fund. FIXED RATE PROGRAJ.\1 .. The League of Minnesota Cities has endorsed Dain Bosworth Incorporated ("Dain Bosworth') as a dealer and provider of various fixed income securities (including Certificates of Deposit and various other fixed rate instruments) and related financial services to the Participants. As a condition to the League's endorsement of Dain Bosworth for this program, Dain Bosworth has agreed that its compensation in connection with any trade shall not exceed 0.25% of the total purchase price of each fixed rate security. Of the amount so received, Dain Bosworth has agreed to pay the League of Minnesota Cities an amount generally equal to 0.03% of the total purchase price of each fixed rate security. Any Participant that also wishes to participate in the Fixed Rate Program should contact Stefanie Adams of Insight Investment Management at (800) 333-0813. Other than the eligibility of Participants to participate in this fixed rate investment program with Dain Bosworth, the fixed rate program is unrelated to the Trust. 1011:0193095.01 ~ -13-