HomeMy WebLinkAbout1996-02-21 - Agendas - FinalFAYETTEVI LLE
HE CITY OF FAYETTEVILLE, ARKANSAS
TRACI PAUL, CITU CLERK
TO: Firemen's Pension Board Members
FROM: Traci Paul, City Clerk/Treasurer TV
DATE: February 21, 1996
SUBJECT: Firemen's Pension Board Meeting
The next Firemen's Pension Board meeting is Thursday, February 29,
1996, at 11:00 a.m., in room 326 of City Hall. Attached, please
find a copy of the agenda for the upcoming meeting, the minutes
from the January 25 meeting, and the pension list for March, 1996.
Attachments
113 WEST MOUNTAIN 72701 501 575-8323
AGENDA
FIREMEN'S PENSION AND RELIEF BOARD
February 29, 1996
11:00 a.m.
City Hall Room 326
1. Approval of the minutes of January 25, 1996.
2. Approval of Pension List for March 1996.
3. Old Business
4. New Business
A. Investment Report, Merrill Lynch
B. DROP Applications
5. Adjournment
MINUTES OF A MEETING OF THE FIRE PENSION BOARD
A meeting of the Fayetteville Firemen's Pension and Relief Board
was held on Thursday, January 25, 1996, at 11:00 a.m. in room 326
of the City Administration Building, 113 W. Mountain,
Fayetteville, Arkansas.
PRESENT: Mayor Fred Hanna, Ron Wood, Howard Boudrey, Darrell
Judy, Pete Reagan, and City Clerk/Treasurer Traci Paul
ABSENT: Marion Doss
CALL TO ORDER
Mayor Hanna called the meeting to order.
MINUTES
Reagan, seconded by Boudrey, made a motion to approve the minutes
of the December 28, regular meeting. The motion passed
unanimously.
PENSION LIST
Paul explained that Elizabeth Barnes passed away and has been
removed from the list. Paul stated a revised list has been
distributed.
Reagan, seconded by Wood, made a motion to approve the revised
January pension list. The motion passed unanimously.
OLD BUSINESS
DROP Plan
Reagan explained that he modeled the DROP plan after Little
Rock's plan. He stated Little Rock's plan has passed.
Reagan stated the active members of the Fire Department met this
morning. There were two members absent. Each person who
attended the meeting voted in favor of the DROP. Each person
understands that the Fund will not be held liable in any way and
that the DROP is strictly their personal option.
Reagan, seconded by Wood, made a motion to adopt the proposed
DROP plan.
In answer to a question from City Attorney Jerry Rose, Reagan
stated his motion was to move the proposed resolution.
January 25, 1996
City Attorney Rose explained that he reviewed the resolution.
Rose stated the resolution adopts the DROP program. A copy will
be filed with the Arkansas Fire and Police Pension Review Board.
Article 9 of the DROP plan rules and regulations is a disclaimer
of liability for tax consequences. The purpose of the article is
an attempt to insulate the Board from any unfavorable tax
consequences that any retiree may get for electing the DROP
program. Rose recommended that a copy of the document that says
"Important Notice" at the top be given to each individual who
participates in the DROP program. It sets forth, to the person
who elects to participate in the DROP program, the warning that
it may have serious tax consequences. The notice is attorney
Greg Jones' disclaimer. Anyone who elects to participate in the
DROP program is going to be hard pressed to say to anyone that
they did not realize that there might be some unfavorable
consequences as a result of their election.
Richard Yada, Merrill Lynch, stated the adoption of the DROP plan
will negatively affect the actuary by approximately 1096. In view
of what is happening in the account, there is room.
Mayor Hanna called for a vote on the resolution. The motion
passed unanimously.
Proxy Materials
Paul explained that she contacted Richard Yada about the proxy
materials that Accounting had been forwarding to the City Clerk's
Office. Paul stated Richard suggested forwarding the materials
to him. He said he would handle them.
Affidavits
In answer to a question from Reagan, Paul stated about half of
the affidavits have been returned. There are 27 affidavits still
out. Retirees have until January 31 to turn their forms in.
After January 31, reminder letters will be mailed out and then
the Accounting Division will hold pension checks.
NEW BUSINESS
Investment Report
Richard Yada gave a comparison of the end of 1995 to the end of
1994.
Yada stated $1,000,000 was transferred from NM Capital to
Keystone in September. NM Capital started the year with $4.2
million and finished at $3.9 million. New Mexico would have been
close to $4.5 million if the transfer to Keystone had not been
made. There was $120,000 in deposits over the year in the
income account. There was $53,000 in withdrawals to cover
January 25, 1996
benefits over the year. The income account started the year at
$3.2 million and finished the year with $3,891,000. Keystone
started with $1 million in October. After a down month in
October, they were back up to $1,029,000 by the end of the year.
Yada stated 3 -month treasury bills were up 6°% last year. The Dow
Jones Industrial Average with the dividends reinvested was up
36.92%. The S & P 500 with the dividends reinvested was up
37.5%. Long term treasury bonds were up 31°% and high grade
corporate bonds were up 26.28%. Through November, the Consumer
Price Index was up 2.61%.
The New Mexico account has some bonds and stocks. They are up
16.64%. Compared to the indexes, 16.64% is a good rate of
return. They probably underperformed 7% - 8%. The Income
account is up 16.89% and Keystone is up 3.73%.
There were dramatic changes in our performance from 1994 to 1995.
In answer to a question from Reagan regarding New Mexico's
underperformance, Yada explained the Board has to consider the
other numbers and not just the performance.
Yada stated as of December 31, 1995, the income account was at
$3,891,408; Keystone had $1,029,774; and New Mexico Capital had
$3,924,021. There was approximately $30,000 in the checking
account at the end of the year.
The asset allocation at the end of the year was 42% in stocks, 8%
in cash, 48% in fixed income, and 2% in the other category. The
target asset allocation is 47% in stocks, 45% in fixed income, 5%
cash, and 3% in other. We are close to the target.
Yada stated a study was done at the University of Michigan that
found that asset allocation made up 93% of the return. We look
at the asset allocation on a monthly basis. It is important to
make sure we stay where we want to be.
Curtis Williams stated the suggestion to move to Keystone was not
based on performance from New Mexico. We were making an asset
allocation shift. Williams explained that things go in cycles,
after a four year run, growth stocks would tend to underperform
for a few years. When we came out of New Mexico, value had done
so well for so long and growth stocks had underperformed. We
think we are on a slowing economic environment where growth
stocks now tend to come back to the floor. We want to get more
exposure to growth. The fact that New Mexico underperformed for
one year is not a reason to fire them.
January 25, 1996
Williams explained there are three managers: the fixed income
account, Keystone, and New Mexico. We want to avoid a
correlation with no diversification. With this type of
correlation, what affects one account positively will affect all
three positively. It will be a portfolio that will make the
Board very happy or very sad depending on which way the markets
are going. An unpredictable correlation is better than having
one with no diversification because there is a chance the markets
will not have the same effect on each manager. We are looking
for a correlation where one asset class is going up while the
other is going down so that we hit a return. We want an asset
allocation where we are not always going in the same direction at
the same time. That is why growth stocks and value stocks make
sense in the portfolio with most market cycles.
Williams explained how investing in international stocks reduces
risk and encouraged the Board to begin to incorporate some
international exposure in the portfolio. Williams stated he will
submit specific recommendations to the Board in the future. If
the Board decides to invest in international stocks, we will
increase the return of our portfolio and decrease the overall
volatility in most markets.
Looking at the 1993 actuary, Yada reviewed the actual
contribution from the employer, the summary of financial
information, a comparison with prior years and a short condition
test.
Mayor Hanna left the meeting.
Yada explained that the actuary will be affected close to 10% on
the negative side by the DROP program.
In answer to a question from Wood, Yada stated the DROP will
bring more money into the pension system but between one and five
years there will be a large sum of money going out. It cannot be
projected as being used for long term returns. The money will
have to be in short term investments.
Yada and Williams gave their projections for the year and
explained several things they would be looking for.
Payment to Greg Jones
Paul stated the Board received a bill from Greg Jones for his
services on the DROP. The amount of the bill is $581.97.
Wood, seconded by Boudrey, made a motion to pay Greg Jones
$581.97. The motion passed unanimously.
With a motion by Judy and a second by Reagan, the meeting
adjourned at 11:50 a.m.
•
FIREMEN'S RELIEF AND PENSION FUND
MARCH 1996
TRACI PAUL TREASURER
THE FOLLOWING ARE THE OBLIGATIONS OF THE FIREMEN'S RELIEF FUND FOR THE
Iv MONTH OF MARCH 1996. YOU ARE HEREBY INSTRUCTED TO ISSUE CHECKS TO THE
PAYEES, IN THE AMOUNTS SHOWN, AND FOR THE PURPOSE SO STATED.
EMP# NAME
43 BAIRD, RICHARD H.
2 BLACKARD, PAUL
63 BOLAIN, ANN
44 BOUDREY, BETTY MRS.
45 BOUDREY, HOWARD
49 BOUDREY, JACK
4 CARL, FLOYD JR
5 CASELMAN, ARTHUR
57 CATE, ROY
6 CHRISTIE, ARNOLD
7 COLE, EVERETT
8 COUNTS, WAYNE
61 DAVIS, BEULAH F.
10 DEARING, EMMA MRS.
11 FARRAR, ALONZO
38 FRALEY JOSEPH G.
33 HARRIS, BILL C.
34 HARRIS, JAMES E.
64 JORDAN, CHARLIE
47 JUDY, DARRELL
37 KING, ARNOLD D.
54 KING, ARVIL
12 LANE, HOPE MRS
13 LAYER, MERLIN
14 LEE, HAROLD
51 LEWIS, CHARLES
60 LEWIS, MARVIE
55 LEWIS, ROGER
40 LOGUE, PAUL D.
50 MASON, LARRY
39 MC ARTHUR, RONALD A.
35 MC CHRISTIAN, DWAYNE
15 MC WHORTER, CHARLES
29 MILLER, DONALD
42 MOORE, JAMES H.
17 MORRIS, WILKIE MRS.
16 MORRIS, WILLIAM H.
62 MORRISON, ELIENE
48 MULLENS, DENNIS W.
58 OSBURN, EDWARD
46 OSBURN, TROY
53 POAGE, LARRY
20 POLLY, GRACE A. MRS.
22 REED, JOE
30 SCHADER, EARVEL
41 SCHADER, TROY
23 SKELTON, BURL L.
24 SKELTON, LEE
56 SKELTON, ROY
36 SPRINGSTON, CARL
25 STOUT, ORVILLE
27 TUNE, MILDRED MRS.
GROSS FED. TAX ST. TAX NET
91620 100.00
55.00
55.00
1,266.21 66.21
1,066.66
837.68 287.68
50.00
75.00
909 50
50.00
375.00 32.50
55.00
377.50
50.00
707.84
953.38 100.00
55.00
55.00
1,192.17
837.68
828 42 100.00
1,131.00 130.00
50.00
417.50
55.00
837 68
439.16
439.17
1,469.38 175.00
829.35 29.35
891 62 100.00
55.00 30.00
885.14 50.00
863.01 125.00
55.00
50.00
60.00
70.00
1,114.11
1,284.63 160.00
965.81 65.81
1,201.98 200 00
50.00
55.00
915.78
783.74 20.00
692.50 42.50
390.00
1,626.02 126.02
609.88
590.36 50.00
70.00
• 816.20
55.00
55.00
1,200.00
1,066.66
50.00 500.00
50.00
75.00
909.50
50.00
342.50
55.00
377.50
50.00
707.84
10.00 843.38
55.00
55.00
1,192.17
837 68
10.00 718.42
1,001.00
50.00
41750
55.00
837.68
439.16
439.17
20.00 1,274.38
800.00
791.62
25.00
835.14
738.01
55.00
50.00
60.00
70.00
1,114.11
1,124.63
900.00
30.00 971.98
50.00
55.00
915.78
763.74
650.00
390.00
50.00 1,450.00
609.88
540.36
70.00
26 TUNE, BILLIE SUE
28 WATTS, DONALD
59 WATTS, WAYNE
52 WRIGHT, RANDALL
70.00
400.00
921.17
877.68
96.17
150.00
70.00
400.00
825.00
727.68
31,984.91 2,236.24 170.00 29,578.67
WE, THE UNDERSIGNED, DO SOLEMNLY SWEAR THAT THE ABOVE OBLIGATIONS ARE.
JUST AND CORRECT; THAT NO PART THEREOF HAS BEEN PREVIOUSLY PAID; THAT
THE PENSION PAYMENTS SO CHARGED ARE IN ACCORDANCE WITH THE ACTIONS OF
THE BOARD OF TRUSTEES OF THE FIREMEN'S REUEF AND PENSION FUND; THAT
THE SERVICES OR SUPPLIES FURNISHED, AS THE CASE MAY BE, WERE ACTUALLY
RENDERED OR FURNISHED; AND THAT THE CHARGES MADE THEREFORE DO NOT
EXCEED THE AMOUNT ALLOWED BY LAW OR THE CUSTOMARY CHARGE FOR SIMILAR
SERVICES OR SUPPLIES.
Loki 'Q t
SECRETARY CHAIRMAN
ACKNOWLEDGEMENT
D PRESIDENT
STATE OF ARKANSAS )
COUNTY OF WASHINGTON) )SS
• SWORN TO AND SUBSCRIBED BEFORE ME THIS5 A DAY OF Mgrc4 , 1996.
MY COMMISSION EXPIRES: 3-/ - oZOOS
•
FAYETTEVILLE
• THE CITY OF FAYETTEVILLE, ARKANSAS
TRACI PAUL, CITY CLERK
February 16, 1996
Arkansas Fire & Police Pension Review Board
P.O. Drawer 34164
Little Rock, AR 72203
Dear PRIM
The City of Fayetteville Firemen's Pension Board approved a resolution to elect participation
in the Arkansas Firefighter's Deferred Retirement Option Program at their January 25, 1996
meeting. Please find attached a copy of the resolution, a copy of the Rules and Regulations
for the Fayetteville Firemen's DROP, and a copy of the minutes from the January 25 meeting.
I am forwarding this information to you at the request of the Fayetteville Firemen's Pension
Board. Please feel free to call me at 575-8323 if you have any questions or if there are other
matters we need to address.
Sincerely,
Traci Paul
City Clerk/Treasurer
Attachments
113 WEST MOUNTAIN 72701 501 5754323
01/23/96 10:04 JONES HIXSON + 1 501 575 8257
LAW OFFTCE.S
JONES, JONES 6 HARDIN, P.L.C.
11? S. EAST AVENUE
t'ATLTTTVIL.i.E. A0KAN7A: 12101
•
LEWIS D. JONES
L.REGORT U. JONES
J. r..COTT NAODIH
November 1, 1995
Fayetteville Firemen's Pension
ATT: Mr. Pete Reagan
1015 Lake Sequoyah
Fayetteville, AR 72701
RE: GENERAL FILE
and Relief Fund
TM PAT!!) 1.04 140. 71-0641105 wy c11AII! 11410013T N NW. ACCOUNTS
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NO.256 D03
AREA CODE (5011
TELEPHONE 443.4717
TAX I.0. 171-06.1105
30 OATS Al' AMMAN'S.). MICll!!T I.WWL KAT!
. P O R PROFESSIONAL
3-27-95
3-27-95
5-01-95
6-28-95
7-10-95
7-25-95
9-11-95
9-14-95
10-25-95
10-26-95
• 10-30-95
SERVICES
Correspondence with Beth Long
Correspondence with Pete Reagan
Correspondence with Beth Long
Phone conference with Beth Long; phone
conference with Pete Reagan
Correspondence with Beth Ann Long
Correspondence with Beth Ann Long
Phone conference with Pete Reagan X 2
Correspondence with Fayetteville Fire
Firefighters
Phone conference with Catherine Hinshaw;
Phone conference with Don Bailey
Review Fayetteville Fire Fighters DROP Plan
,File Plan; Presentation to Pension Review Board
Correspondence with Jerry Rose (city attorney)
setting forth tax paragraph for disclosure
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01/23/96 10:04 JONES NIXSON » 1 501 575 8257
FEES:
5.8 Hours X $100.00/hour = $580.00
TOTAL FEES
COSTS:
6 Copies @ $.20 each = $ 1.20
Long Distance Calls = S 0.77
NO.256 004
5580.00
TOTAL COSTS $ 1.97
BALANCE DUE ON ACCOUNT
$5$1,97
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Approved by
January 29, 1995
Ms. Traci Paul
City Clerk/Treasurer
The City of Fayetteville
113 West Mountain Street
• Fayetteville, AK 72701
Dear Ms. Paul.
KEYSTONE RECEIVED
INVESTMENTS
FEB 0 1 1996
CITY CLERK'S OFFICE
Enclosed please find Keystone's "SEC Form ADV" which you requested. If I can be of any
further assistance, please do not hesitate to call me at (617) 338-3619.
Sincerely,
K
la.t'v.uma
Kerry . Shearns
Portfolio Assistant
/kas
Enclosure
200 Berkeley Street, Boston, Massachusetts 02116-5034 Phone: (617) 338-3200
FORM ADV
Uniform Application for Investment Adviser Registration
Part 11 - Page 1
.e of Investment Adviser: Keystone Investment Management Company
OMB APPROVAL
OMB Number: 3235-0049
Expires: May 31, 1997
Estimated average burden
hours per response 9.01
Address: (Number and Street) (City) (State) (Zip Code)
200 Berkeley Street Boston MA 02116
Area Code: Telephone No.
(617 ) 338-3200
This part of Form ADV gives information about the investment adviser and its business for the use of clients.
The information has not been approved or verified by any government authority.
Table of Contents
Item Number Item bac
1 Advisory Services and Fees 2
2 Types of Clients 2
3 Types of Investments 3
4 Methods of Analysis, Sources of Information and Investment Strategies 3
5 Education and Business Standards 4
6 Education and Business Background 4
7 Other Business Activities 4
8 Other Financial Industry Activities or Affiliations 4
9 Participation or Interest in Client Transactions 5
10 Conditions for Managing Accounts 5
11 Review of Accounts 5
12 Investment or Brokerage Discretion 6
13 Additional Compensation 6
14 Balance Sheet 6
Continuation Sheet Schedule F
Balance Sheet, if required Schedule D
(Schedules A, 13, C, D, and E are included with Part 1 of this Form, for the use of regulatory bodies, and arc not distributed to clients.)
FORM ADV
Part H - Page 2
•
Applicant:
SEC File Number:
Date:
Keystone Investment Management Company
801-8327
10/20/95
Related person - Any officer, director or partner of applicant or any person directly or indirectly controlling, controlled by, or under
common control with the applicant, including any non -clerical, non -ministerial employee.
Investment Supervisory Services - Giving continuous investment advice to a client (or making investments for the client)based on
the individual needs of the client. Individual needs include, for example, the nature of other client assets and the client's personal
and family obligations. _
1. A. Advisory Services and Fees. (check the applicable boxes) For each typc of service provided, state the approximate
% of total advisory billings from that service.
(See instruction below.)
Applicant:
[x ] (1) Provides investment supervisory services
100
%
[ ] (2) Managed investment advisory accounts not involving investment supervisory services
%
[ ] (3) Furnishes investment advice through consultations not included in either service described above
%
[ ] (4) Issues periodicals about securities by subscription
%
[ ] (5) Issues special reports about securities not included in any service described above
%
[ ] (6) Issues, not as part of any service described above, any charts, graphs, formulas, or other devices which
%
clients may use to evaluate securities
%
[ ] (7) On more than a occasional basis, furnishes advice to clients on matters not involving securities
%
1 ] (8) Provides a timing service
%
[ ] (9) Furnishes advice about securities in any manner not described above
%
(Percentages should be based on applicant's last fiscal year. If applicant has not completed its fiscal year, provide
estimates of advisory billings for that year and state that the percentages are estimates.)
Yes
No
B. Does applicant call any of the services it checked above financial planning or some similar term?
1 1
[x ]
• Applicant offers investment advisory services for: (check all that apply)
[x ] (1) A percentage of assets under management [ ] (4) Subscription fees
[ ] (2) Hourly charges [ ] (5) Commissions
[ ] (3) Fixed fees (not including subscription foes) Ex ] (6) Other
D. For each checked box in A above, describe on Schedule F:
• the services provided, including the name of any publication or report issued by the adviser on a
subscription basis orfor a fee
• applicant's basic fee schedule, how fees are charged and whether its fees are negotiable
• when compensation is payable, and if compensation is payable before service is provided, how client
may get a refund or may terminate an investment advisory contract before its expiration date
2. Types of Clients - - Applicant generally provides investment advice to: (check those that apply)
[x ] A. Individuals Ix 1 E. Trusts, estates, or charitable organizations
[ ] B. Banks or thrift institutions [ ] F. Corporations or business entities other than those
listed above
[x ] C. Investment companies [x ] G. Other (describe on Schedule F)
[x 1 D. Pension and profit sharing plans
Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1).
•
FORM ADV
Part II - Page 3
Applicant:
SEC File Number.
Date:
Keystone Investment Management Company
801-8327
3/31/95
3. Types of Investments. Applicant offers advice on the following: (check those that apply)
• A. Equity Securities
(1) exchange -listed securities
(2) securities traded over-the-counter
(3) foreign issuers
[x ] B. Warrants
[x ] C. Corporate debt securities
(other than commercial paper)
[x ] D. Commercial paper
[x ] E. Certificates of deposit
[x ] F. Municipal securities
G. Investment company securities:
[ ] (1) variable life insurance
[ ] (2) variable annuities
[x ] (3) mutual fund shares
[x ] H. United States government securities
I. Options contracts on:
[x 1 (1) securities
[x ] (2) commodities
.1. Futures contracts on:
[x ] (I) tangibles
[x ] (2) intangibles
K. Interests in partnerships investing in:
[ 1 (1) real estate
[ ] (2) oil and gas interests
[x ] (3) other (explain on Schedule F)
[ ] L. Other (explain on Schedule F)
4. Methods of Analysis, Sources of Information, and Investment Strategies
A. Applicant's security analysis methods include:
(1)
• (2)
(3)
Charting
Fundamental
Technical
(check those that apply)
(4) [x ] Cyclical
(5) [ 1
Other (explain on Schedule F)
B. The main sources of information applicant uses include:
Financial newspapers and magazines
Inspections of corporate activities
Research materials prepared by other
Corporate rating services
(check those that apply)
Timing services
Annual reports, prospectuses, filing with the
Securities and Exchange Commission
Company press releases
Other (explain on Schedule F)
C. The investment strategies used to implement any investment advice given to clients include: (check those that apply)
[x ] Long term purchases
(securities held at least a year)
[x ] Short term purchases
(securities sold within a year)
( ] Trading (securities sold within 30 days)
[1
Short sales
Margin transactions
Option writing, including covered options,
uncovered options or spreading strategies
Other (explain on Schedule F)
Answer all items. Complete amended pages in full, circle amended items and file
h execution page (page 1).
FORM ADV
Part B - Page 4
Applicant: -
SEC File Number:
Date:
Keystone Investment Management Company
801-8327
11/6/95
5. Education and Business Standards.
Are there any general standards or business experience that applicant requires of those invotved in deter-
mining or giving investment advice to clients')
(If yes, describe these standards on Schedule F.)
Yes No
[x] [ ]
6. Education and Business Background.
For:
• each member of the investment committee or group that determines general investment advice to be given to clients, or
• if the applicant has no investment committee or group, each individual who determines general investment advice given
to clients (if more than five, respond only for their supervisors)
• each principal executive officer of applicant or each person with similar status or performing similar functions.
On Schedule F, give the:
• name • formal education after high school
• year of birth • business background for the preceding five years
7. Other Business Activities. (check those that apply)
[ ] A. Applicant is actively engaged in a business other than giving investment advice.
[ ] B. Applicant sells products or services other than investment advice to clients.
[ ] C. The principal business of applicant or its principal executive officers involved something other than
• providing investment advice.
(For each checked box describe the other activities, including the time spent on them, on Schedule F.)
8. Other Financial Industry Activities or Affiliates. (check those that apply)
[ ] A. Applicant is registered (or has an application pending) as a futures broker-dealer.
[ ] B. Applicant is registered (or has an application pending) as a futures commission merchant, commodity
pool operator or commodity trading adviser.
C. Applicant has arrangements that are material to its advisory business or its clients with a related person
who is a:
[x ] (1) broker-dealer [ ] (7) accounting firm
[ ] (2) investment company [ ] (8) law firm
[x ] (3) other investment adviser [ 1 (9) insurance company or agency
[ ] (4) financial planning firm [ 1 (10) pension consultant
[ ] (5) commodity pool operator, commodity trading [ ] (11) real estate broker or dealer
adviser or futures commission merchant
[ ] (12) entity that creates or packages limited partnerships
[x ] (6) banking or thrift institution
(For each checked box in C, on Schedule F identify the related person and describe the relationship and the arrangements.)
•
D. Is applicant or a related person a general partner in any partnership in which clients arc solicited to
invest')
(If yes, describe on Schedule F the partnerships and what they invest in.)
Yes No
1 1 [x ]
Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1).
FORM ADV
Part 11 - Page 5
Applicant:
SEC File Number:
Date:
Keystone Investment Management Company
801-8327
12/1/94
9. Participation or Interest in Client Transactions.
•pplicant or a related person: (check those that apply)
[ ] A. As a principal, buys securities for itself from or sells securities it owns to any client.
[ ]. B. As a broker or agent effects securities transactions for compensation for any client.
[ j C. As broker or agent for any person other than a client effects transactions in which client securities are sold to
or bought from a brokerage customer.
[x j D. Recommends to clients that they buy or sell securities or investment products in which the applicant or a related
person has some financial interest.
Ix]E
Buy or sells for itself securities that it also recommends to clients.
(For each box checked, describe on Schedule F when the applicant or a related person engages in these transactions and what
restrictions, internal procedures, or disclosures are used for conflicts of interest in those transactions.)
10. Conditions for Managing Accounts. Does the applicant provide investment supervisory services, manage investment advisory
accounts or hold itself out as providing financial planning or some similarly termed services and impose a minimum dollar
value on assets or other conditions for starting or maintaining an account'
(If yes, describe on Schedule F.)
Yes No
[ 1 Ix]
11. Review of Accounts. If applicant provides investment supervisory services, manages investment advisory accounts, or holds
itself out as providing financial, planning or some similarly termed services:
A. Describe below the reviews and reviewers of the accounts. For reviews, include their frequency, different levels, and
triggering factors. For reviewers, include the number of reviewers, their titles and functions, instructions they receive
from applicant on performing review, and number of accounts assigned each.
•
See Schedule F
B. Describe below the nature and frequency of regular reports to clients on their accounts.
See Schedule F
•
Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1).
FORM ADV
Part II - Page 6
Applicant:
SEC File Number:
Date:
Keystone Investment Management Company
801-8327
12/1/94
12. Investment or Brokerage Discretion.
•
Does applicant or any related person have authority tb determine, without obtaining specific client consent, the:
(1) securities to be bought or sold?
(2) amount of the securities to be bought or sold?
(3) broker or dealer to be used?
(4) commission rates paid?
Yes No
[x ] [
Yes No
[x] [ 1
Yes No
[x] [
Yes No
[x] 1 ]
B. Does applicant or a related person suggest brokers to clients?
For each yes answer to A describe on Schedule F any limitations on the authority. For each yes to A(3), A(4), or 13,
describe on Schedule F the factors considered in selecting brokers and determining the reasonableness of their commis-
sions. If the value of products, research and services given to the applicant or a related person is a factor, describe:
• the products, research and services
• whether clients may pay commissions higher than those obtainable from other brokers in return for those products
and services
• whether research is used to service all of applicant's accounts or just those accounts paying for it; and
• any procedures the applicant used during the last fiscal year to direct client transactions to a particular broker in
return for products and research services received.
Yes No
[ ] [x]
13. Additional Compensation.
•oes the applicant or a related person have any arrangements, oral or in writing, where it:
A. is paid cash by or receives some economic benefit (including commissions, equipment or non -research services) from Yes No
a non -client in connections with giving advice to clients? [x 1 [ ]
Ycs No
B. directly or indirectly compensates any person for client referrals? [x 1 1
(For each yes, describe the arrangements on Schedule F.)
14. Balance Sheet. Applicant must provide a balance sheet for the most recent fiscal year on Schedule G if applicant:
• has custody of client funds or securities; or
• requires prepayment of more than 5500 in fees per client and 6 or more months in advance
Yes No
Has applicant provided a Schedule G balance sheet? [ 1 [x
•
Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part D
Applicant:
Keystone Investment Management Company
SEC File Number:
801-8327
Date:
12/1/95
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
•ll name of applicant exactly as stated in Item 1A or Part I of Form ADV:
IRS Empl. (dent. No.:
Item of Form
(identify)
Answer
1.C.6.
and 1.D.
•
•
1. Investment Companies (" the Funds")
Keystone renders fully discretionary investment management for each of the following open end registered
Master Reserves Trust:
investment companies;
decrease from 5% to 2%
decrease from .50% to
rates which decrease
pays Keystone 85% of
decrease from .75%n to
decrease from .55% to
.30%of the net assets of
decrease from .75%
1.00% of the net assets of
and received 85% of
.
The fund pays Keystone a fee, which is deducted daily from the assets of the fund, at annual rates which
of the gross income.
Keystone Capital Preservation and Income Fund:
The fund pays Keystone a fee, which is deducted daily from the assets of the fund, at annual rates which
.25% of the net assets as the average net assets of the fund increase, as well as 2% of its annual gross income.
Keystone World Bond Fund:
The fund pays an affiliate of Keystone a fee, which is deducted daily from the assets of the fund, at annual
from .50% to .40% of the net assets of the fund, as well as 1.5% of its annual gross income. The affiliate
such fee.
Keystone Precious Metals Holdings, Inc.:
The fund pays Keystone a fee, which is deducted daily from the assets of the fund, at annual rates which
.50% of the net assets of the fund.
Keystone Florida Tax Free Fund
Keystone Pennsylvania Tax Free Fund
Keystone Texas Tax Free Fund
Keystone Massachusetts Tax Free Fund
Keystone New York Insured Tax Free Fund
Keystone California Insured Tax Free Fund
Keystone Missouri Tax Free Fund:
Each fund pays Keystone a fee, which is deducted daily from the assets of the fund, at annual rates which
.25% of the net assets of the fund.
Keystone Institutional Adjustable Rate Fund:
The fund pays Keystone a fee, which is deducted daily from the assets of the fund, at the annual rate of
the fund.
Keystone Fund of the Americas:
The fund pays Keystone a fee, which is deducted daily from the assets of the fund, at the annual rates which
to .45% of the net assets of the fund.
Keystone Strategic Development Fund:
The fund pays Keystone a fee, which is deducted daily from the assets of the fund, at the annual rate of
the fund.
Keystone advises the following pursuant to an advisory agreement with Keystone Management, Inc. ('KMI")
the fees paid to KMI as follows:
Complete all pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part 11
Applicant:
Keystone Investment Management Company
SEC File Number:
801-8327
Date:
12/1/95
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
�II name of applicant exactly as stated in Item 1A or Part I of Form ADV:
IRS Empl. Idem No.:
Item of Form
(identify)
Answer
1.C.6.
and 1.D.
Cont'd
•
•
1. Investment Companies (" the Funds") continued
Kcystonc Quality Bond Fund (B-1)
rates which decrease
gross income. The
rates which decrease
85% of such fee.
rates which decrease
gross income. The
decrease from .75% to
decrease from .50% to
rates which decrease
of the fund increase,
average daily net asset
Poor's Index of 500
sixty days written notice
Kcystonc Diversified Bond Fund (B-2)
Keystone High Income Bond Fund (B-4)
Keystone Tax Exempt Trust
Keystone Tax Free Fund
Keystone Government Securities Fund
Keystone Strategic Income Fund
Keystone Intermediate Term Bond Fund
Kcystonc Tax Free Income Fund:
Each fund pays an affiliate of Keystone a fee, which is deducted daily from the assets of the fund, at annual
from .50% to .25% of net assets as the average net assets of the funds increase, as well as 2% of its annual
affiliate pays Keystone 85% of such fee.
Keystone Growth and Income Fund (S-1)
Keystone Mid -Cap Growth Fund (5-3)
Keystone Small Company Growth Fund (S-4)
Keystone Strategic Growth Fund (K-2):
Each fund pays an affiliate of Keystone a fee, which is deducted daily from the assets of the fund, at annual
from .70% to .35% of net assets as the average net assets of the funds increase. The affiliate pays Keystone
Keystone Balanced Fund (K-1)
Keystone Fund for Total Return:
Each fund pays an affiliate of Keystone a fee, which is deducted daily from the assets of the fund, at annual
from .60% to .30% of net assets as the average net assets of the fund increase, as well as 1.5% of its annual
affiliate pays Keystone 85%of such fee.
Keystone International Fund, Inc.
Keystone Global Opportunities Fund:
Each fund pays Keystone a fee, which is deducted daily from the assets of the fund, at annual rates which
.45% of net assets as the average net assets of the fund increase.
Keystone Liquid Trust:
The fund pays Keystone a fee, which is deducted daily from the assets of the fund, at annual rates which
.40% of net assets as the average net assets of the fund increase.
Keystone Omega Fund:
The fund pays an affiliate of Keystone a fee, which is deducted daily from the assets of the fund, at annual
from .75% to .50%n of net assets of the fund. The affiliate pays Keystone 85% of such fee.
Keystone Hartwell Growth Fund
Keystone America Hartwell Emerging Growth Fund, Inc.:
Each fund pays Keystone a fee at annual rates which decrease from 1.00% to .65% as average net assets
based on a moving average method. The basic fee may be increased or decreased by up to 1/2 of 1% of
value (using a moving average method) depending on the fund's performance relative to the Standard and
Stocks.
Either Keystone or any fund may terminate the advisory agreement between them without penalty upon
to the other.
Complete all pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
Keystone Investment Management Company
SEC File Number:
801-8327
Date:
12/1/95
(Do not use this Schedule as a continuation sheet for Form ADV Part 1 or any other schedules.)
1I name of applicant exactly as stated in Item lA or Part I of Form ADV:
IRS Empl. Ident. No.:
Item of Form
(identify)
Answer
1.C.6.
and 1.D.
Cont'd
Investment Companies (' the Funds') continued
2. Managed Account Wrap Program
Keystone participates in a managed account program ("wrap fee" program) sponsored by Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), an unaffiliated broker/dealer and sponsor of the program known as Merrill Lynch
Consults. Under the Merrill Lynch Consults program, Merrill Lynch may recommend to the client the retention of
Keystone as investment adviser, or other investment advisers, pay the adviser's fee for investment advisory services
rendered to the client, monitor and evaluate the adviser's investment performance, and execute the client's portfolio
transactions. Transactions are effected net, i.e., without commission charges, and a portion of the wrap fee is generally
considered as being in lieu of commissions. Merrill Lynch may also provide custodial services, confirmation of
. transactions and monthly statements. The minimum size of an individual client account is 5100,000.
For its services, Keystone receives the following compensation from Merrill Lynch:
Total $ Value of Merrill Lynch
Consults Client Portfolios Portion of Fee
Under Management Paid to Keystone
First $50 million 0.75%
Next 5100 million 0.70% '
Assets Over $150 million 0.65%
On the second anniversary of the agreement between Keystone and Merrill Lynch, the Cee schedule will be 0.65% of the
dollar value of all assets managed by Keystone for Merrill Lynch Consults clients. Portfolio assets are valued and fees
•
are payable quarterly in advance. The client may terminate the investment advisory contract with Merrill Lynch at any
time upon written notice. In the event of termination of a client account prior to the end of the quarter, Keystone will
refund to Merrill Lynch, for payment to the client, a pro rata portion, based on the days remaining in such quarter, of
the quarterly fcc paid in advance with respect to such client account.
3.
Private Accounts
Keystone provides investment supervisory services for clients on a fully discretionary basis and, rarely, on a non -
discretionary basis. Portfolio decisions or recommendations are made according to the investment objectives sought by
the client.
Fees are normally payable in arrears. The investment management agreement may be terminated on five days written
notice. In unusual circumstances, fees for large pension and profit-sharing plans may be negotiable. A 10%n discount is
generally given for charitable foundations and endowments whose accounts are over $1 million.
Fees are charged on a quarterly basis typically at the following annual rates:
U.S. Equity Products:
Small Cap - fees decrease from 1% to 0.65% as assets increase to 5100 million.'
Value - fees decrease from 1%n to .40% as assets increase to 5100 million.'
Core - fees decrease from 1% to .30% as assets increase to 5100 million.'
Growth - fees decrease from .75% to .40% as assets increase to $100 million.•
U.S. Fixed Income Products:
High Yield and
Full Spectrum - fees decrease from .65% to .25% as assets increase to 5100,000 million.•
High Grade - fees decrease from .50% to .15% as assets increase to $100 million.•
Intermediate Bond - fees decrease from .25% to .15% as assets increase to $100 million?
U.S. Balanced
•
Account Products - fees decrease from 1% to .30% as assets increase to 5100 million.'
(') Fees are negotiable on amounts in excess of 5100 million.
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part If
Applicant:
Keystone Investment Management Company
SEC File Number:
801-8327
Date:
12/1/95
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
•I name of applicant exactly as stated in Item 1A or Part I of Form ADV:
IRS Empl. Ident. No.:
Item of Form
(identify)
Answer
2G
Individually Managed Accounts
Governmental Units; jointly -trusteed (Taft Hartley) accounts
3 K(3)
Certain mutual funds may invest a portion of their assets in limited partnerships.
4 B(8)
Private Accounts
Keystone gathers information from a variety of sources. They include financial and economic periodicals; information prepared
by companies, such as quarterly and annual reports, prospectuses, 10K and 10Q reports and press releases; and reports prepared
by brokerage firms, such as money market monitors, investment strategy outlines, economic statistical summaries and company
analysts.
5.
Pursuant to the laws of the various states where the adviser is registered, individuals who determine or approve what investment
advice is given to clients have appropriate experience and qualification examinations.
6.
Keystone has a "team approach" to the management of the assets of its mutual funds, its private accounts, and its wrap account
clients. The head of each team is a member of the Investment Policy Committee which is responsible for determining general
investment advice to be given to mutual funds and certain other investment advisory clients. The teams, their members and a
biography for each of them are as follows:
EQUITIES. Core
•
Walter McCormick, Sr. Vice President and Sr. Portfolio Manager since May 1984. Born 1946. Providence College, B.A., 1968;
Rutgers University Graduate School of Business, M.B.A., 1970.
Judith Warners, Vice President and Portfolio Manager since March 1995. Born 1948. University of Michigan, B.A., 1977; Babson
College, M.B.A., 1979.
George F. Wilkins Jr., Sr. Vice President since May 1981. Born 1938. Harvard College, B.A. 1959. Babson College, M.B.A., 1968.
Jonathan Noonan, Vice President and Portfolio Manager since April 1990. Born 1938. Northeastern University, B.S./B.A., 1962.
Northeastern University, M.B.A., 1967.
Walter Zagrobski, Vice President and Portfolio Manager since January 1981. Born 1950. University of New Hampshire, B.S.,
1972. Babson College, M.B.A., 1977.
Andrew G. Baldassarre, Vice President and Portfolio Manager since February 1995. Born 1959. St. Anselm's College, B.A. in
business and economics and Boston College, M.S. in finance.
Loren M. Wood Sr. Vice President and Sr. Portfolio Manager since January 1991. Born 1930. University
of Arizona, B.S., 1952.
Harvard Graduate School of Business, M.B.A., 1958.
Edmund D. Kellogg, Vice President and Portfolio Manager since August 1987. Born 1957. University of Vermont, B.A., 1980.
EQUITIES: Growth
Maureen Cullinane, Sr. Vice President and Sr. Portfolio Manager since January 1974. Born 1945. Emmanuel College B.A., 1967;
Universite de Paris Sorbonne, M.A., 1970; Boston University, M.B.A., 1981.
Margery Parker, Vice President and Portfolio Manager since June 1993. Born 1950. Wellesley College, B.A., 1980. Babson
College, M.B.A., 1989.
•
Complete amended pages in full, circle amended items and file with execution page (page 1).
•
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
Keystone Investment Management Company
SEC File Number:
801-8327
Date:
12/1/95
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1011 name of applicant exactly as stated in Item 1A or Part I of Form ADV:
IRS Empl. Idcnt. No.:
Item of Form
(identity)
Answer
6
Cont'd
•
•
EQUITIES: Small Cap
Christopher R. Ely, Sr. Vice President and Sr. Portfolio Manager since 1986. Brown University, B.A., 1978. Babson College,
M.B.A., 1984. Born 1955.
David Smith, Vice President and Portfolio Manager since March 1995. Born 1959. University of Massachusetts, B.A., 1982.
Cornell University, M.B.A., 1990.
Philip Fine, Vice President and Portfolio Manager since September 1993. Born 1949. Harvard University, A.B., 1971. Harvard
University, Ph.D., 1987.
FIXED INCOME: High Grade
Christopher P. Conkcy, Sr. Vice President and Sr. Portfolio Manager since January 1988. Born 1960. Clark University, B.A.,
1982. Boston University, M.B.A., 1987.
Barbara McCue, Vice President and Portfolio Manager since October 1980, Born 1947. Boston University, B.S., 1970; Boston
University, M.B.A., 1985.
Gary Pzegeo, Analyst since October 1990. Born 1967. University of Massachusetts, B.A., 1989.
Richard Litchfield, Analyst since January 1992. Born 1967. Boston College , B.S., 1989.
FIXED INCOME: Tax -Exempt
Betsy A. Blacher, Sr. Vice President and Sr. Portfolio Manager since January 1988. Born 1957. Wheaton College, B.A., 1979.
Daniel A. Rabasco, Vice President and Portfolio Manager since October 1990. Born 1957. Boston College, B.A., 1979. Suffolk
University, M.B.A., 1981.
George J. Kimball, Vice President and Analyst since July 1994. Born 1959. Hamilton College, S.A., 1982. Duke University,
M.B.A., 1987.
David Moore, Analyst since March 1994. Born 1964. University of New Hampshire, B.A., 1986. Babson College, M.B.A., 1990.
FIXED INCOME: High Yield
Donald Keller, Sr. Vice President and Sr. Portfolio Manager since January 1987. Born 1933. Dartmouth College, A.B., 1954;
Dartmouth College, M.B.A., 1955.
Richard M. Cryan, Sr. Vice President and Sr. Portfolio Manager since April 1982. Born 1956. University of Colorado, B.S., 1978.
Columbia University, M.B.A., 1980.
Kristine R. Cloyes, Vice President and Portfolio Manager since May 1978. Born 1952. North Park College, B.A., 1973.
Robert Hocken, Vice President and Analyst since September 1994. Born 1963. Pomona College, B.A., 1985. Stanford University,
M.B.A., 1989.
John Addeo, Vice President since August 1985. Born 1962. Sienna College, B.S., 1984.
Audrey Meyer Lampert, Analyst since July 1990. Born 1963. Lidenwood College, B.A., 1987.
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part D
Applicant:
Keystone Investment Management Company
SEC File Number:
801-8327
Date:
12/1/95
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
'11 name of applicant exactly as stated in Item 1A or Part I of Form ADV:
IRS Empl. Idcnt. No.:
• Item of Form
(identify)
Answer
6
LNTERNATIONAL:
Cont'd
Gilman Gunn, Sr. Vice President and Sr. Portfolio Manager since January 1991. Born 1945. Florida State University, B.A., 1968.
New York University, M.B.A., 1974.
John Madden, Vice President and Portfolio Manager since October 1994. Born 1941. Yale University, B.A., 1964.
Eleanor Marsh, Vice President and Analyst since July 1994. Born 1960. Yale University, B.A., 1981. Stanford University, M.A.,
1986.
Tony Docal, Vice President and Analyst since July 1994. Born 1959. Trinity College, B.A., 1981. Massachusetts Institute of
Technology, M.S.M., 1985.
Frances Claro, Analyst since October 1994. Born 1961. Esade, B.A., 1983, London School of Economics, M.S., 1984. Harvard
University, M.B.A., 1991.
Rick Wisentaner, Analyst since September 1994. Born 1962. Harvard College, A.B., 1985. University of Chicago, M.B.A., 1990.
Sami 1. Karam, Vice President since November 1994. Born 1961. University of Texas, B.A., 1984. Cornell University, M.B.A.
1986.
QUANTITATIVE:
Herb Bishop, Sr. Vice President since May 1977. Born 1944. Northeastern University, B.S./B.A., 1967, M.B.A., 1975, M.A., 1976,
M.S., 1977, Boston University, D.B.A., 1980.
•
Kathy Wang, Vice President and Sr. Quantitative Analyst since July 1977. Born 1942. National Taiwan University, B.A., 1964.
University of Minnesota, M.S., 1967.
ASSET ALLOCATION TEAM:
James R. McCall, President since December 1991. Born 1945. Boston College, B.A., 1967; Iona College, M.B.A., 1969.
George F. Wilkins, Jr., Sr. Vice President and Sr. Portfolio Manager since May 1981. Born 1938. Harvard College, B.A. 1959.
Babson College, M.B.A., 1968.
Donald C. Dates, Sr. Vice President since February 1980. Born 1934. Lafayette College, B.A., 1956. University of Pennsylvania,
M.B.A., 1962.
Walter McCormick, Sr. Vice President and Sr. Portfolio Manager since May 1984. Born 1946. Providence College, B.A., 1968;
Rutgers University Graduate School of Business, M.B.A., 1970.
Maureen Cullinane, Sr. Vice President and Sr. Portfolio since January 1974. Born 1945. Emmanuel College B.A., 1967; Universite
de Paris Sorbonne, M.A., 1970; Boston University, M.B.A., 1981.
Loren Wood, Sr. Vice President and Sr. Portfolio Manager since January 1991. Born 1930. University of Arizona, B.S., 1952.
Harvard Graduate School of Business, M.B.A., 1958.
Christopher Conkey, Sr. Vice President and Sr. Portfolio Manager since January 1988. Born 1960. Clark University, B.A., 1982.
Boston University, M.B.A., 1987.
Christopher R. Ely, Sr. Vice President and Sr. Portfolio Manager since 1986. Brown University, B.A., 1978. Babson College,
M.B.A., 1984. Born 1955.
•
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
Keystone Investment Management Company
SEC File Number:
801-8327
Date:
12/1/95
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
Will name of applicant exactly as stated in Item 1A or Part 1 of Form ADV:
IRS Empi. (dent. No.:
Item of Form
(identify)
Answer
6
Betsy Blacher, Sr. Vice President and Sr. Portfolio Manager since January 1988. Born 1957. Wheaton College, B.A., 1979.
Cont'd
Donald Keller, Sr. Vice President and Sr. Portfolio Manager since January 1987. Born 1933. Dartmouth College, A.B., 1954;
Dartmouth College, M.B.A., 1955.
Richard M. Cryan, Sr. Vice President and Sr. Portfolio Manager since April 1982. Born 1956. University of Colorado, B.S., 1978.
Columbia University, M.B.A., 1980.
Gilman Gunn, Sr. Vice President and Sr. Portfolio Manager since January 1991. Born 1945. Florida State University, B.A., 1968.
New York University, M.B.A., 1974.
WRAP ACCOUNT POLICY COMMITTEE:
As noted above in response to Item 1.D., Keystone provides investment management services in connection with a managed
account wrap program. The investment advice to be provided to clients of this program is determined by the members of the
Wrap Account Policy Committee, whose activities are more fully described in Schedule F, Item11.A. The following is a list of the
members of the Wrap Account Policy Committee and a brief biography of each of them.
James R. McCall, President since December 1991. Born 1945. Boston College, B.A., 1967; Iona College, M.B.A., 1969.
Donald C. Dates, Sr. Vice President since February 1980. Born 1934. Lafayette College, B.A., 1956. University of Pennsylvania,
M.B.A., 1962.
Christopher R. Ely, Sr. Vice President and Sr. Portfolio Manager since April 1986. Born 1955. Brown University, B.A., 1978.
•
Babson College, M.B.A., 1984.
David L. Smith, Vice President and Portfolio Manager since March 1995. Born 1959. University of Massachusetts, B.A., 1982.
Cornell University, M.B.A., 1990.
Philip Fine, Vice President and Portfolio Manager since September 1993. Born 1949. Harvard University, A.B., 1971. Harvard
University, Ph.D., 1987.
INVESTMENT POLICY COMMITTEE:
James R. McCall, President since December 1991. Born 1945. Boston College, B.A., 1967; Iona College, M.B.A., 1969.
George F. Wilkins, Jr., Sr. Vice President and Sr. Portfolio Manager since May 1981. Born 1938 Harvard
College, B.A. 1959.
Babson College, M.B.A., 1968.
Donald C. Dates, Sr. Vice President since February 1980. Born 1934. Lafayette College, B.A., 1956. University of Pennsylvania,
M.B.A., 1962.
Walter McCormick, Sr. Vice President and Sr. Portfolio Manager since May 1984. Born 1946. Providence College, B.A., 1968;
Rutgers University Graduate School of Business, M.B.A., 1970.
Maureen Cullinane, Sr. Vice President and Sr. Portfolio since January 1974. Born 1945. Emmanuel College B.A., 1967; Universite
de Paris Sorbonne, M.A., 1970; Boston University, M.B.A., 1981.
Lorcn Wood, Sr. Vice President and Sr. Portfolio Manager since January 1991. Born 1930. University of Arizona, D.S., 1952.
Harvard Graduate School of Business, M.B.A., 1958.
Christopher Conkey, Sr. Vice President and Sr. Portfolio Manager since January 1988. Born 1960. Clark University, B.A., 1982.
Boston University, M.B.A., 1987.
•
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
Keystone Investment Management Company
SEC File Number:
801-8327
Date:
12/1/95
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
�II name of applicant exactly as stated in Item lA or Part I of Form ADV:
IRS Empl. Ident. No.:
Item of Form
(identify)
Answer
6
Christopher R. Ely, Sr. Vice President and Sr. Portfolio Manager since 1986. Brown University, B.A., 1978. Babson College,
Cont'd
M.H.A., 1984. Born 1955.
Betsy A. Blacher, Sr. Vice President and Sr. Portfolio Manager since January 1988. Born 1957. Wheaton College, B.A., 1979.
Donald Keller, Sr. Vice President and Sr. Portfolio Manager since January 1987. Born 1933. Dartmouth College, A.B., 1954;
Dartmouth College, M.B.A., 1955.
Richard M. Cryan, Sr. Vice President and Sr. Portfolio Manager since April 1982. Born 1956. University of Colorado, B.S., 1978.
Columbia University, M.B.A., 1980.
Gilman Gunn, Sr. Vice President and Sr. Portfolio Manager since January 1991. Born 1945. Florida State University, B.A., 1968.
New York University, M.B.A., 1974.
PRIVATE ACCOUNT POLICY COMMITTEE:
As noted above in response to Item 1.D., Keystone provides investment management services to private accounts. The investment
advice to be provided to these clients is determined by the members of the Private Account Policy Committee, whose activities are
more fully described in Schedule F, Item 11A. The following is a list of the members of the Private Account Policy Committee
and a brief biography of each of them.
James R. McCall, President since December 1991. Born 1945. Boston College, B.A., 1967; Iona College, M.B.A., 1969.
•
Donald C. Dates, Sr. Vice President since February 1980. Born 1934. Lafayette College, B.A., 1956. University of Pennsylvania,
M.B.A., 1962.
Walter Zagrobski, Vice President and Portfolio Manager since January 1981. Born 1950. University of New Hampshire, B.S.,
1972. Babson College, M.B.A., 1977.
Jonathan Noonan, Vice President and Portfolio Manager since April 1990. Born 1938. Northeastern University, B.S./B.A., 1962.
Northeastern University, M.B.A., 1967.
Andrew G. Baldassare, Vice President and Portfolio Manager since February 1995. Born 1959. St. Anselm's College, .B.A. in
business and economics and Boston College, M.S. in finance.
Walter McCormick, Sr. Vice President and Sr. Portfolio Manager since May 1984. Born 1.946. Providence College, B.A., 1968;
Rutgers University Graduate School of Business, M.B.A., 1970.
Judith Warners, Vice President and Portfolio Manager since March 1995. Born 1948. University of Michigan, B.A., 1977; Babson
College, M.B.A., 1979.
George F. Wilkins Jr., Sr. Vice President since May 1981. Born 1938. Harvard College, B.A. 1959. Babson College, M.B.A., 1968.
Betsy Blacher, Sr. Vice President and Sr. Portfolio Manager since January 1988. Born 1957. Wheaton College, B.A., 1979.
Christopher Conkey, Sr. Vice President and Sr. Portfolio Manager since January 1988. Born 1960. Clark University, B.A., 1982.
Boston University, M.B.A., 1987.
8.C.(1)
Keystone also controls Keystone Investment Distributors Company ("KIDC") and Fiduciary Investment Company, Inc., ("FICO")
each of which is the underwriter for one or more investment companies of which Keystone is the adviser or manager. KIDC and
FICO provide marketing support services to Keystone.
8.C.(3)
Keystone also controls KMI, which is investment manager for one or more investment companies of which Keystone is the adviser.
8.C.(6)
Keystone also controls Keystone Trust Company, Inc., which provides trust administrative services to certain individuals with
•
trust assets invested in investment companies for which Keystone Investment Management Company is the manager.
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part 11
Applicant:
Keystone Investment Management Company
SEC File Number:
801-8327
Date:
12/1/95
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
•11 name of applicant exactly as stated in Item 1A or Part I of Form ADV:
IRS Empl. Ident. No.:
Item of Form
(identity)
Answer
9.D.
Shares of investment companies managed or advised by Keystone Management, Inc. ("KMI") and/or Keystone may be owned from
time to time by Keystone. KMI and Keystone receive management fees and expense reimbursements from these investment
companies.
No director, officer or "advisory person" (as defined below) of the applicant may purchase or sell any security in which he then
holds or thereby acquires any beneficial interest and which he knows at the time:
1. Is being purchased or sold by any account of an advisory client of applicant or by any investment company managed or advised
by Keystone Investments, Inc. or by an affiliate thereof (including the applicant); or
2. Is currently being recommended by such a director, officer or advisory person for purchase or sale by such an advisory client's
account or investment company. An "advisory person" includes any employee of applicant who, in the course of his regular duties,
makes, participates in or obtains information about the purchase or sale of a security by an advisory client's account or invest-
ment company referred to above or whose functions relate to the making of any recommendations about such a purchase or sale.
Before any director, officer or advisory person of the applicant may purchase or sell any security as above, he must obtain the
written consent of the President of Keystone Investment Management Company or the President's delegate.
At the close of each quarter, applicant's directors, officers and employees are required to file reports of their personal securities
transactions during such quarter with applicant's Compliance Department which reviews these reports to determine whether these
persons have complied with the foregoing restrictions.
9 E.
Keystone Investments, Inc., Keystone, their affiliates and their related parties, may from time to time have an interest in securities
which Keystone purchases or sells for its clients or recommends for or sale by its clients.
•
To prevent conflicts of interest, all employeesand directors of Keystone must comply with Keystone Investments, Inc.'s Code of
Ethics: Policies on Personal Securities Trading, Insider Trading and Conflicts of Interest. The Code of Ethics imposes restrictions
on the purchase and sale of securities for the accounts of employees and directors, and the accounts of certain affiliated persons.
In summary, the Code of Ethics requires prior clearance and quarterly reporting of all personal securities transactions, except
certain exempt transactions. Copies of all brokerage firm confirmations and year-end brokerage statements must be sent directly
to Keystone Investments, Inc. Each employee or director is required to submit a Personal Securities Holdings Statement upon
commencement of employment and at least annually thereafter. In addition, Keystone has adopted certain policies and procedures
(a) concerning the misuse of material non-public information that arc designed to prevent insider trading by any director, officer
or employee of Keystone Investments, Inc.; and (b) -to prevent conflicts of interest.
Keystone may recommend that its clients invest in securities issued by a domestic registered investment company or comparable
entity formed pursuant to the laws of a foreign country to whom it, an affiliate or related party, provides investment advice or
may provide investment advice or to an entity or a related party of such an entity whose securities it recommends for purchase or
sale by its clients. In those instances where clients invest in securities issued by such an entity to whom Keystone provides
investment advice, Keystone will waive that portion of its advisory fee attributable to those assets invested in such securities by
its clients.
Keystone provides investment advice to numerous funds and other advisory clients. While the advice rendered to such clients is
furnished in light of their respective investment objectives and policies, securities owned by one client may also be owned by other
clients and it may occasionally develop that the same investment advice and decision for more than one client is made at the
same time. Furthermore, it may develop that a particular security is bought or sold (or only some clients even though it might be
held or bought or sold for other clients, or that a particular security is bought for some clients when other clients are selling the
security.
Keystone may manage accounts for related persons, and in such cases, will have full discretion with respect to such accounts.
Other than establishing the investment objectives and policies of the portfolio, the related person has no influence or control over
the investment decisions made for the account, and no prior knowledge of transactions which take place in the account.
•
Complete amended pages in full, circle amended items and file with execution page (page 1).
' Schedule F of
Form ADV
Continuation Shect for Form ADV Part II
Applicant:
Keystone Investment Management Company
SEC File Number:
801-8327
Date:
12/1/95
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
Complete amended pages in full, circle amended items and file with execution page (page 1).
Si11 name of
applicant exactly as stated in Item lA or Part I of Form ADV:
IRS Empl. Iden[. No.:
Item of Form
(identify)
Answer
11.A.
•
•
1. Mutual Funds and Other Advisory Clients
The members of Keystone's professional staff will have responsibility for the selection of securities to be held in mutual fund and
other advisory client accounts. Portfolio holdings arc routinely reviewed on a daily basis. Among other reasons, a review of
individual portfolio holdings may be stimulated by economic, political or other events or by specific occurrences in a company or
industry whose securities are held in the client accounts. Review of an account will also occur if the investment objective changes.
Periodically, the Board of Trustees/Directors reviews the objectives and portfolio holdings in the client accounts, the decisions of
Keystone's professional staff and officers, and the investment strategy underlying the portfolio holdings.
H. The Teams
As noted above in response to Item 6, Keystone has a team approach to the management of its mutual funds and certain other
advisory clients. The head of each team is also a member of the Investment Policy Committee. The following is a brief
description of the teams and their functions:
1. Equity Teams
Equity strategy is determined by the Core, Value, Growth and Small Cap Teams. The principal function of these teams is to
examine the macro -economic conditions and issues which will impact the markets in which equity securities are traded. The
members of the equity teams meet periodically to share their views and arrive at conclusions regarding the following:
(a) The probability of economic developments and their expected effect on the marketplace and the business cycle;
(b) Identification of the current status of the business cycle, on a spectrum ranging from recession to recovery to strong growth;
(c) The likelihood and duration of market corrections;
(d) Estimation of the probable speed of economic recovery;
(e) Observations on signs of economic stability as evidenced by interest rates, the U.S. dollar and the equity market; and
(0 Estimation of a trading range for the stock market.
In reaching their conclusions, the equity teams consider such factors as the rate of factory production, durable goods orders, retail
sales, new jobs created, unemployment claims, home sales, mortgage applications, inflation, stability in interest rates, the U.S.
dollar and the equity market, and the leading economic indicators.
In addition to the four teams described above which formulate equity strategy for the mutual funds and certain other advisory
clients, the members of the Equity Research Team are responsible for researching, digesting and providing relevant analytical data
regarding a broad range of companies which any be eligible for investment.
2. Fixed income Teams
The High Grade, Tax -Exempt and High Yield Teams are responsible for investment activities in the fixed income area. In
performing their functions, the fixed income teams examine the macro -economic conditions and issues which will impact the value
and yield of fixedincome securities. The members of the fixed income teams meet periodically to share their views and to
formulate conclusions regarding the following:
(a) Estimates regarding inflation rates;
(b) Identification of the current status of the business cycle and its expected impact on interest rates;
(c) The regulatory environment;
(d) Estimation of the pace of economic growth; and
(e) Observations on signs of economic stability as evidenced by interest rates and the U.S. dollar
In reaching their conclusions, the fixed income teams consider such factors as the rate of capacity utilization, unemployment,
inventory levels, productivity, defense cuts, consumer spending, trade balances, worldwide inflation levels, tax proposals and the
federal budget.
3. International Team
The principal function of the International Policy Team is to examine economic conditions and political climates of all world
regions where mutual funds or private client accounts advised by Keystone arc investing or are contemplating investment. The
members of the International Policy Team meet periodically to share their views and arrive at conclusions on such fundamental
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
Keystone Investment Management Company
SEC File Number:
801-8327
Date:
12/1/95
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
411 name of applicant exactly as stated in Item 1A or Part I of Form ADV:
IRS Empl. Idcnt. No.:
Item of Form
(identify)
Answer
11.A.
Cont'd
•
•
•
economic criteria as the performance of international stocks, bonds and currencies; the strength of the U.S.
currencies; projected growth rates in regions and individual countries; balance of payments status relative
trends; interest rates; liquidity; commodities prices; and local and regional political developments and economic
4. Asset Allocation Team
The members of the Asset Allocation Tcam are responsible for determining, with respect to certain of Keystone's
and private client accounts, the allocation of investments among U.S. and foreign stocks and bonds. In making
as to the relative weightings of a portfolio's investments, the Asset Allocation Committee analyzes changes
economic conditions, both domestic and foreign, and considers many of the same factors as the members
Income and International Policy Committees.
dollar against foreign
inflation rates and
reforms.
mutual funds
its determinations
in relative market and
of the Equity, Fixed
models which
the analysis of the above
the Boards of
and political
These reports
Managed Account Wrap
be held in client
the securities of the
for continuously
may be stimulated
are held in the client
management process. In
routinely occurs on a
managers and
portfolio (as a result,
the portfolio
objectives and portfolio
strategy underlying
if the portfolio
if any.
grade bonds,
respectively.
account. The manager
objectives and
M. Quantitative Committee
It is the responsibility of the members of the Quantitative Committee to develop proprietary internal quantitative
will assist members of the strategy formulating teams in determining such matters as:
(a) allocation policy, both internationally and domestically;
(b) weightings of industries within portfolios;
(c) monitoring the results of selections and strategies; and
(d) identifying trends, based on available historical quantitative data.
IV. Investment Policy Committee
The principal function of the Investment Policy Committee is to formulate investment policy drawing on
described investment teams. In addition, the Investment Policy Committee reports on a quarterly basis to
Trustees/Directors, providing an overview and summary of the investment environment, including economic
developments, as it affects Keystone's investment management activities and the performance of its investments.
are formulated in part from the information provided by the investment teams described above.
V. Managed Account Wrap Program
The Wrap Account Policy Committee is responsible for determining investment strategy for clients in the
Program. There are three primary portfolio managers with responsibility for the selection of securities to
accounts. The portfolio managers will create a "model portfolio" and each client account will initially hold
model portfolio in the same relative proportions as that portfolio. The portfolio managers are responsible
reviewing holdings and implementing decisions. Among other reasons, a review of individual portfolio holdings
by economic, political or other events or by specific occurrences in a company or industry whose securities
accounts. The continuous review of portfolio holdings is an integral component of Keystone's investment
addition to the continuous review of portfolio holdings conducted by the primary portfolio managers, which
daily basis, client accounts will be reviewed regularly and compared against the model portfolio by the portfolio
account administrators. In instances where a client account's holdings deviate significantly from the model
for example, of cash withdrawals, or a client's election not to own certain securities held by the model portfolio)
managers will determine an appropriate course of action. Periodically, the Board of Directors reviews the
holdings in the client accounts, the decisions of Keystone's professional staff and officers, and the investment
the portfolio holdings. Furthermore, Merrill Lynch will review each client account at least quarterly to determine
appears to be consistent with the investment philosophy of Keystone and the client's objectives and restrictions,
VI. Private Accounts
For most client accounts, Keystone manages balanced accounts combining a core equity approach and investment
either taxable or exempt. A small number of accounts hold only equity securities or only fixed income securities,
Each account is reviewed at least once a month upon receipt of a report on the status of all assets in the
may review the account more often when economic or market conditions generally or the client's investment
individual circumstances suggest securities ought to be purchased or sold. -
Complete amended pages in full, circle amended items and file with execution page (page 1).