As filed with the Securities and Exchange Commission on October 31, 1997
Securities Act Registration No. 333-_______
Investment Company Act Registration No. 811-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. ____ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [X]
Amendment No. ____ [ ]
RZ FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
Wilton Executive Campus
15 River Road, Suite 220 06897
Wilton, Connecticut (Zip Code)
(Address of Principal Executiv
e Offices)
Registrant's Telephone Number, including Area Code:
(203) 761-9600
Robert Zuccaro
Target Investors, Inc.
Wilton Executive Campus
15 River Road, Suite 200
Wilton, Connecticut 06897
(Name and Address of Agent for Service)
Copies to:
Carol A. Gehl
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
Approximate date of proposed public offering: As soon
as practicable after the Registration Statement becomes
effective.
In accordance with Rule 24f-2 under the Investment
Company Act of 1940, Registrant declares that an
indefinite number of shares of its common stock, $.01
par value, is being registered by this Registration
Statement.
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to
delay its effective date until the Registrant shall
file a further amendment which specifically states that
this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in
the Prospectus and the Statement of Additional
Information of the responses to the Items of Parts A
and B of Form N-1A).
Caption or Subheading in
Prospectus or Statement
Item No. on Form N-1A of Additional Information
PART A - INFORMATION REQUIRED IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Investor Expenses;
Highlights
3. Condensed Financial *
Information
4. General Description of Investment Strategy;
Registrant Implementation of
Policies and Risks; Investment
Objective and Restrictions;
Fund Organization and
Management
5. Management of the Fund Fund Organization and
Management
5A. Management's Discussion
of Fund Performance *
6. Capital Stock and Other Highlights; Fund
Securities Organization and
Management; Dividends, Capital
Gain Distributions and
Tax Treatment
7. Purchase of Securities Fund Organization and
Being Offered Management; Your Account;
Determination of Net Asset
Value; Shareholder Servicing
Plan
8. Redemption or Repurchase Your Account;
Determination of Net Asset
Value
9. Pending Legal Proceedings *
PART B - INFORMATION REQUIRED IN STATEMENT OF
ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information *
and History
<PAGE>
13. Investment Investment Objective and
Objectives and Policies Restrictions; Investment
Policies and Techniques; Fund
Transactions and Brokerage
14. Management of the Directors and Officers
Fund
15. Control Persons and Principal Shareholders;
Principal Holders of Directors and Officers
Securities
16. Investment Advisory Investment Advisor; Fund
and Other Services Organization and Management
(in Prospectus); Plan of
Distribution; Custodian,
Transfer Agent and Dividend-
Disbursing Agent; Independent
Accountants
17. Brokerage Allocation Fund Transactions and
and Other Practices Brokerage
18. Capital Stock and Included in Prospectus
Other Securities under the heading Fund
Organization and Management
19. Purchase, Redemption and Included in Prospectus
Pricing of Securities Being under the headings Your
Offered Account; Determination of Net
Asset Value; and in the
Statement of Additional
Information under the heading
Plan of Distribution
20. Tax Status Included in Prospectus
under the heading
Dividends, Capital Gain
Distributions and Tax
Treatment; and in the
Statement of Additional
Information under the heading
Taxes
21. Underwriters *
22. Calculations of Performance Information
Performance Data
23. Financial Financial Statements
Statements
________________________
* Answer negative or inapplicable.
<PAGE>
PROSPECTUS
October 31, 1997
[Logo]
RZ Funds, Inc.
RZ Equity Fund
Wilton Executive Campus
15 River Road, Suite 220
Wilton, Connecticut 06897
Telephone: (203) 761-9600
Facsimile: (203) 761-9795
RZ Funds, Inc. ("Corporation") is an open-end,
management investment company, commonly referred to as
a mutual fund. The Corporation currently comprises one
non-diversified portfolio: the RZ Equity Fund ("Fund").
The Fund's investment objective is capital
appreciation. The Fund seeks to achieve its investment
objective by investing primarily in common stocks of
companies that exhibit fast earnings growth and are
rising in price. Target Holdings Corporation, doing
business as Target Investors (the "Advisor"), believes
that the use of this momentum strategy has the
potential for higher returns than other investment
strategies. Under federal securities laws, the Fund is
"not diversified." As a result, it may be more
vulnerable than a "diversified" fund to fluctuations in
the value of the companies in the Fund's portfolio.
This Prospectus contains information you should
consider before you invest in the Fund. Please read it
carefully and keep it for future reference. A
Statement of Additional Information ("SAI") for the
Fund, dated October 31, 1997, contains further
information, is incorporated by reference into this
Prospectus, and has been filed with the Securities and
Exchange Commission ("SEC"). The SAI, which may be
revised from time to time, is available without charge
upon request to the Fund at the above-noted address or
telephone number.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
CONTENTS
INVESTOR EXPENSES 3
HIGHLIGHTS 4
INVESTMENT STRATEGY 6
IMPLEMENTATION OF POLICIES AND RISKS 6
INVESTMENT OBJECTIVE AND RESTRICTIONS 8
PRIOR PERFORMANCE OF THE ADVISOR 9
FUND ORGANIZATION AND MANAGEMENT 9
YOUR ACCOUNT 11
DETERMINATION OF NET ASSET VALUE 17
DISTRIBUTIoN AND SHAREHOLDER SERVICING PLAN 17
TAX-SHELTERED RETIREMENT PLANS 18
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX TREATMENT 19
FUND PERFORMANCE 19
ADDITIONAL INFORMATION 20
No person has been authorized to give any
information or to make any representations other than
those contained in this Prospectus and the SAI, and if
given or made, such information or representations may
not be relied upon as having been authorized by the
Fund. This Prospectus does not constitute an offer to
sell securities in any state or jurisdiction in which
such offering may not lawfully be made.
<PAGE>
INVESTOR EXPENSES
The following information is provided to help you
understand the various costs and expenses that you, as
an investor in the Fund, will bear directly or
indirectly.
Shareholder Transaction Expenses(1)
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 1.00%
Rule 12b-1 Fees(2) 0.25%
Other Expenses(3) 0.40%
Total Operating Expenses(3) 1.65%
____________
(1) There are certain charges associated with
retirement accounts and with certain other special
shareholder services offered by the Fund.
Additionally, purchases and redemptions may also be
made through broker-dealers or other financial
intermediaries who may charge a commission or other
transaction fee for their services.
(2) See "Distribution and Shareholder Servicing
Plan" for detailed information relating to the Rule
12b-1 distribution and shareholder servicing plan
("Plan"). Consistent with the National Association
of Securities Dealers, Inc.'s ("NASD") rules, Rule
12b-1 fees could cause long-term investors in the
Fund to pay more than the economic equivalent of the
maximum front-end sales charges permitted under
those rules.
(3) The Advisor has agreed to limit the total
operating expenses of the Fund (excluding interest,
taxes, brokerage and extraordinary expenses) to an
annual rate of 1.65% of the Fund's average net
assets until December 31, 1998. After such date,
the expense limitation may be terminated or revised
at any time. Absent this limitation, other expenses
and total operating expenses of the Fund are
estimated to be ____% and ____%, respectively. For
additional information, see "Fund Organization and
Management."
Example
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return and redemption
at the end of each time period.
1 year $17
3 years $52
The Example is based on the above-described "Total
Operating Expenses." REMEMBER THAT THE EXAMPLE SHOULD
NOT BE CONSIDERED AS REPRESENTATIVE OF PAST OR FUTURE
EXPENSES AND THAT ACTUAL EXPENSES MAY BE HIGHER OR
LOWER THAN THOSE SHOWN. The assumption
<PAGE>
in the Example
of a 5% annual return is required by SEC regulations.
The assumed 5% annual return is not a prediction of,
and does not represent, the projected or actual
performance of the Fund's shares.
HIGHLIGHTS
What is the objective of the Fund?
The Fund's investment objective is capital
appreciation. The Fund seeks to achieve its investment
objective by investing primarily in common stocks of
companies that the Advisor believes have the potential
for revenue and earnings growth superior to that of
companies with similar market or business
characteristics. The Advisor will not consider
dividend or interest income in the selection of
investments. See "Investment Strategy" and "Investment
Objective and Restrictions."
In what types of companies/securities will the Fund
invest?
The Advisor intends to invest primarily in common
stocks of companies which the Advisor characterizes as
"growth" companies. The Fund's securities selections
will be made without regard to an issuer's market
capitalization; however, the Advisor anticipates that
most investments will be made in companies that have a
small-to-medium market capitalization. In the
Advisor's opinion, a growth company is a company that
will experience positive sales and earnings growth at
above average rates.
Under normal circumstances, the Fund will be fully
invested in common stocks, except that a small portion
of the Fund's assets may be held in short-term money
market securities and cash to pay redemption requests
and Fund expenses and pending investment. Under
unusual circumstances, as a defensive technique, the
Fund may invest up to 25% of its total assets in cash
and/or money market instruments deemed by the Advisor
to be consistent with a temporary defensive posture.
The Fund may but does not intend to leverage its assets
or invest in options, futures, derivative contracts,
initial public offerings or other exotic securities or
arrangements. See "Implementation of Policies and
Risks."
In an effort to increase returns, the Fund expects
to trade actively and that the annual portfolio
turnover rate could range from 400 to 800% or higher.
Higher portfolio turnover rates usually generate
additional brokerage commissions and expenses and the
short-term gains realized from these transactions are
taxable to shareholders as ordinary income. See
"Implementation of Policies and Risks."
What are the potential risks of investing in the Fund?
Equity securities fluctuate in value, often based
on factors unrelated to the value of the issuer of the
securities, and such fluctuations can be pronounced.
Changes in the value of the Fund's investments will
result in changes in the value of its shares and thus
the Fund's total return to investors. In addition,
because the Fund has elected not to be subject to the
diversification rules of the Investment Company Act of
1940, as amended ("1940 Act"), a relatively larger
percentage of the Fund's assets may be invested in
relatively fewer companies than is typical of other
mutual funds. This concentration may increase
volatility.
Other risks associated with investing in the Fund
include:
Certain securities may be difficult or
Liquidity impossible to sell at the time and price
Risk: that the Fund seeks.
Market The market value of a security will move
Risk: up and down, sometimes rapidly and
unpredictably due to sector rotation or
other market trends.
An investment opportunity may be missed
Opportunity because the assets necessary to take
Risk: advantage of it are tied up in less
advantageous investments.
A strategy used by the Advisor may fail
Management to produce the intended result.
Risk:
See "Implementation of Policies and Risks."
<PAGE>
Is an investment in the Fund appropriate for me?
The Fund is suitable for long-term investors only.
It is not a short-term investment vehicle. An
investment in the Fund may be appropriate if you:
seek capital appreciation;
seek a mutual fund for the aggressive equity
portion of your portfolio;
have no immediate financial requirements for this
investment; and
are willing to accept a high degree of volatility.
The Fund is designed for investors who have the
financial ability to undertake greater risk in exchange
for the opportunity to realize greater financial gains
in the future. See "Investment Objective and
Restrictions."
Who will manage my investment?
Target Investors ("Advisor") serves as investment
advisor to the Fund. As of September 30, 1997, the
Advisor managed approximately $1 billion for individual
and institutional clients. See "Prior Performance of
the Advisor" and "Fund Organization and Management."
How can I purchase or redeem Fund shares?
You may purchase Fund shares at the Fund's net
asset value. Fund shares are sold without a sales
charge. You may be charged a nominal fee if you effect
transactions in Fund shares through a securities
dealer, bank or other financial institution. No
certificates are issued for shares. The Fund reserves
the right to reject any purchase order.
You may request redemption of Fund shares at any
time. There are no redemption charges. For
redemptions by wire, however, there is a $10 fee. When
a redemption request is received in proper form, the
Fund will redeem the shares at the Fund's net asset
value. See "Your Account."
The Fund has adopted a distribution and
shareholder servicing plan under Rule 12b-1 of the 1940
Act, which authorizes the Fund to pay a yearly
distribution and/or shareholder servicing fee of up to
0.25% of the average daily net assets of the Fund. See
"Your Account" and "Shareholder Servicing Plan."
The minimum initial investment is $5,000.
Subsequent investments must be at least $1,000. These
minimums may be changed or waived at any time by the
Fund. See "Your Account."
What is the Fund's policy regarding dividends and other
distributions?
You should not expect income from the Fund.
However, as required by law, to avoid double taxation,
the Fund will distribute substantially all of its net
realized capital gains and net investment income, if
any, to shareholders annually in the form of a
distribution and/or dividend, taxable to you as capital
gain or ordinary income. In the absence of specific
instructions to the contrary, distributions and
dividends will be reinvested in additional Fund shares
and will not be available for the payment of taxes.
See "Implementation of Policies and Risks" and
"Dividends, Capital Gain Distributions and Tax
Treatment."
Who should I contact if I have questions?
General inquiries regarding the Fund can be
addressed to either your investment professional or the
Fund at the address or telephone number listed on the
cover page of this Prospectus.
<PAGE>
INVESTMENT STRATEGY
The Fund seeks to invest in the equity securities
of companies, regardless of size, which, in the opinion
of the Advisor, will experience positive earnings
growth at an above average rate. Although the Advisor
may invest in companies of all sizes, the Advisor
expects that most investments will be made in companies
with small to medium market capitalizations. The
Advisor focuses on companies which exhibit fast
earnings growth and are rising in price. The Advisor's
general strategy is to be fully invested with even-
weighted positions. Although the Advisor's investment
strategy is based on company fundamentals, companies
considered by Advisor to be "growth" companies are
often in the same industry. Thus, the Fund may be
heavily invested in a single industry. To the extent
the Fund is concentrated, it will be susceptible to
adverse economic, political, regulatory or market
developments affecting a single industry.
Additionally, the Fund will invest in a limited number
of companies. This may increase the volatility of
investment performance. Furthermore, as a means to
increase returns, the Fund expects to trade actively
and the annual portfolio turnover rate could range from
400 to 800% or higher.
When making purchase decisions for the Fund, the
Advisor uses a "buy discipline" that involves three key
components: research, fundamentals, and valuation.
The Advisor develops its own research. Using a
computer-driven model, the Advisor screens for certain
fundamental attributes that it believes a "buy"
candidate should possess, including (i) projected sales
growth of 20% or more; (ii) projected earnings growth
of 20% or more; and (iii) unexpected good earnings.
The Advisor then assigns scores to the securities based
on such factors and ranks the securities accordingly.
Pursuant to that ranking, the Advisor constructs a list
of securities for the Fund and purchases the highest
ranking securities for its portfolio. Companies are
rescored and the portfolio is rebalanced weekly for
variations from expectations.
The Advisor makes sell decisions for the Fund
based on two primary factors: significant deterioration
in the price of the securities or better relative value
in other securities.
IMPLEMENTATION OF POLICIES AND RISKS
In implementing its investment strategy, the Fund
may use the following securities and investment
techniques. Some of these securities and investment
techniques involve special risks, which are described
below, elsewhere in this Prospectus or in the Fund's
SAI.
Common Stocks and Other Equity Securities
The Fund will invest in common stocks and other
equity securities. Other equity securities may include
depository receipts and warrants and other securities
convertible or exchangeable into common stock. Common
stocks and other equity securities generally increase
or decrease in value based on the earnings of a company
and on general industry and market conditions. A fund
that invests a significant amount of its assets in
common stocks and other equity securities is likely to
have greater fluctuations in share price than a fund
that invests a significant portion of its assets in
fixed-income securities.
Small and Medium Market Capitalization Companies
The Fund may invest a substantial portion of its
assets in small and medium-sized companies. While
small and medium-sized companies generally have
potential for rapid growth, investments in such
companies often involve greater risks than investments
in larger, more established companies because small and
medium-sized companies may lack the management
experience, financial resources, product
diversification, and competitive strengths of larger
companies. In addition, in many instances the
securities of small and medium-sized companies are
traded only over-the-counter or on a regional
securities exchange, and the frequency and volume of
their trading is substantially less than is typical of
larger companies. Therefore, the securities of small
and medium-sized companies may be subject to greater
and more abrupt price fluctuations. When making large
sales, a Fund may have to sell portfolio holdings at
discounts from quoted prices or may have to make a
series of small sales over an extended period of time
due to the trading volume of small and medium-sized
company securities. Investors should be aware that,
based on the foregoing
<PAGE>
factors, an investment in the
Fund may be subject to greater price fluctuations than
an investment in a fund that invests primarily in
larger, more established companies. The Advisor's
research efforts may also play a greater role in
selecting securities for the Fund than in a fund that
invests in larger, more established companies.
Unseasoned Companies
The Fund may invest in securities of unseasoned
companies. These are companies that have been in
operation less than three years, including the
operations of any of their predecessors. The
securities of such companies may have limited liquidity
and the prices of such securities may be volatile. The
Fund currently intends to invest no more than 10% of
its total assets in securities of unseasoned companies.
In addition, the Fund may invest up to 5% of its net
assets in illiquid securities.
Non-Diversification and Industry Concentration
As a "non-diversified" fund, the Fund is permitted
to invest its assets in a more limited number of
issuers than other investment companies. Under the
Internal Revenue Code of 1986 (the "Code"), however,
for income tax purposes, the Fund (i) may not invest
more than 25% of its assets in the securities of any
one company or in the securities of any two or more
companies controlled by the Fund which, pursuant to
regulations under the Code, may be deemed to be engaged
in the same, similar, or related trades or businesses
and (ii) with respect to 50% of its assets, may not
invest more than 5% of its assets in the securities of
any one company and may not own more than 10% of the
outstanding voting securities of a single company.
Thus, as a "non-diversified" fund under the 1940 Act,
the Fund may invest (i) up to 50% of its assets in the
securities of as few as two companies, up to 25% each,
so long as the Fund does not control the two companies
or so long as the two companies are engaged in
different businesses and (ii) up to 50% of its assets
in the securities of as few as ten companies, up to 5%
each, provided that, in any event, the Fund does not
own in excess of 10% of any company's outstanding
voting stock. This practice involves an increased risk
of loss to the Fund if the market value of a security
should decline or its issuer were otherwise unable to
meet its obligations.
The Fund may invest more than 25% of its assets in
securities in one or more industries. The Fund will
only concentrate its investments in a particular
industry if the Advisor believes that the potential
investment return justifies the additional risk
associated with concentration in that industry.
The Fund may invest its assets in fewer than 25
companies. This strategy may increase the volatility
of investment performance and the Fund could incur
greater losses than funds that invest in a greater
number of issuers.
Portfolio Turnover
A change in the investments held by the Fund is
known as "portfolio turnover." The annual portfolio
turnover rate for the Fund is expected to be between
400 and 800% or higher. High portfolio turnover
generally involves above-average expenses to the Fund,
including brokerage commissions or dealer mark-ups and
other transaction costs on the sale of securities and
reinvestment in other securities. In addition, the
short-term gains realized from these transactions are
taxable to shareholders as ordinary income. In fact,
it is possible that 100% of all capital gains and
losses in any fiscal year may qualify as short-term.
Temporary Strategies
Prior to investing the proceeds from sales of Fund
shares, to meet ordinary daily cash needs, and to
retain the flexibility to respond promptly to changes
in market and economic conditions, the Advisor may hold
cash and/or invest up to 25% of the Fund's total assets
in short-term fixed-income securities issued by private
and governmental institutions. It is impossible to
predict when or for how long the Advisor may employ
such strategies. Short-term fixed income securities
must be rated at least A or higher by Standard & Poor's
("S&P"), Moody's Investors Service, Inc. ("Moody's") or
Fitch Investors Service, Inc. ("Fitch") or A- or higher
by Duff & Phelps, Inc. ("D&P"), and include without
limitation the following securities, each of which has
a stated maturity of one year or less from the date of
purchase unless otherwise indicated, or securities
which the Advisor deems to be of comparable quality to
rated securities: U.S. government securities,
including bills, notes and bonds, differing as to
maturity and rate of interest, which are either issued
or guaranteed by the U.S. Treasury or by U.S.
governmental agencies or instrumentalities;
<PAGE>
certificates of deposit issued against funds deposited
in a U.S. bank or savings and loan association; bank
time deposits, which are monies kept on deposit with
U.S. banks or savings and loan associations for a
stated period of time at a fixed rate of interest;
bankers' acceptances which are short-term credit
instruments used to finance commercial transactions;
commercial paper and commercial paper master notes
(which are demand instruments without a fixed maturity
bearing interest at rates which are fixed to known
lending rates and automatically adjusted when such
lending rates change) rated A-1 or better by S&P, Prime-
1 or better by Moody's, Duff 2 or higher by D&P, or
Fitch 2 or higher by Fitch; and repurchase agreements
entered into only with respect to obligations of the
U.S. government, its agencies or instrumentalities.
Repurchase agreements could involve certain risks in
the event of default or insolvency of the other party
to the agreement, including possible delays or
restrictions upon the Fund's ability to dispose of the
underlying securities. Additionally, the Fund may
invest in short-term investment vehicles of a custodian
bank.
ADRs
The Fund may invest up to 20% of its net assets in
American Depositary Receipts ("ADRs") or other foreign
instruments denominated in U.S. dollars. ADRs are
receipts typically issued by a U.S. bank or trust
company evidencing ownership of the underlying foreign
security and denominated in U.S. dollars. Some
institutions issuing ADRs may not be sponsored by the
issuer. A non-sponsored depository may not provide the
same shareholder information that a sponsored
depository is required to provide under the contractual
arrangements with the issuer, including reliable
financial statements.
Investments in securities of foreign issuers
involve risks which are in addition to the usual risks
inherent in domestic investments. In many countries
there is less publicly available information about
issuers than is available in the reports and ratings
published about companies in the United States.
Additionally, foreign countries are not subject to
uniform accounting, auditing and financial reporting
standards. Other risks inherent in foreign investments
include expropriation; confiscatory taxation;
withholding taxes on dividends and interest; less
extensive regulation of foreign brokers, securities
markets and issuers; costs incurred in conversions
between currencies; the possibility of delays in
settlement in foreign securities markets; limitations
on the use or transfer of assets (including suspension
of the ability to transfer currency from a given
country); the difficulty of enforcing obligations in
other countries; diplomatic developments; and political
or social instability. Foreign economies may differ
favorably or unfavorably from the U.S. economy in
various respects, and many foreign securities are less
liquid and their prices are more volatile than
comparable U.S. securities. From time to time, foreign
securities may be difficult to liquidate rapidly
without adverse price effects. Certain costs
attributable to foreign investing, such as custody
charges and brokerage costs, are higher than those
attributable to domestic investing.
Investment OBJECTIVE AND Restrictions
The Fund's investment objective is capital
appreciation. This investment objective is fundamental
and cannot be changed without shareholder approval.
Under normal market conditions, the Fund will attempt
to achieve this objective by investing at least 65% of
its assets in common stocks of companies which the
Advisor characterizes as "growth" companies. There can
be no assurance that the Fund will achieve its
investment objective or that shares in the Fund will be
worth more at redemption than at acquisition. The Fund
may also hold cash and money market instruments to
provide the Fund with liquidity and flexibility.
In addition, the Fund has adopted certain
fundamental investment restrictions that, like the
Fund's investment objective, may not be changed without
shareholder approval.
Limitation on Borrowing: The Fund may (i) borrow
money from banks and (ii) make other investments or
engage in other transactions permissible under the
Investment Company Act of 1940 which may involve a
borrowing, provided that the combination of (i) and
(ii) shall not exceed 33-1/3% of the value of the
Fund's total assets (including the amount borrowed),
less the Fund's liabilities (other than borrowings).
The Fund may also borrow money from other persons to
the extent permitted by applicable law.
<PAGE>
Limitation on "Senior Securities": The Fund may
not issue senior securities, except as permitted under
the 1940 Act.
All of the Fund's fundamental investment
restrictions are described in greater detail in the
Fund's SAI.
PRIOR PERFORMANCE OF THE ADVISOR
The following table shows the Advisor's historical
performance data for a bank commingled fund (the
"Account") managed by the Advisor, for the periods
indicated, that has investment objectives, policies,
strategies, and risks substantially similar to those of
the Fund. The Account is not subject to the same
types of expenses to which the Fund is subject nor to
the specific tax restrictions and investment
limitations imposed on the Fund by the Code and the
1940 Act. Consequently, the performance results for
the Account could have been adversely affected if it
had been regulated as an investment company under the
federal tax and securities laws.
The Account's performance has been calculated in
accordance with recommended standards of the
Association for Investment Management and Research
("AIMR"), retroactively applied to all time periods.
All returns presented were calculated on a total return
basis and include all dividends and interest, if any,
accrued income, if any, and realized and unrealized
gains and losses. All returns reflect the deduction of
investment advisory fees, brokerage commissions, and
execution costs paid by the Account without provision
for federal or state income taxes. Cash and
equivalents are included in performance returns. Total
return is calculated monthly in accordance with the
"time-weighted" rate of return method provided for by
the AIMR standards, accounted for on a trade-date and
accrual basis. No leveraged positions were utilized.
Principal additions and withdrawals are weighted in
computing the monthly returns based on the timing of
these transactions. The monthly returns are
geometrically linked to derive annual total returns.
The following data is provided to illustrate the
past performance of the Advisor in managing an account
which is substantially similar to the Fund as measured
against specified market indices and does not represent
the performance of the Fund. Investors should not
consider this performance data as an indication of the
future performance of the Fund or the Advisor.
Account Annualized Performance Through September 30, 1997
Average Annualized
Time Period Total Return
Account S&P 500
Mid Cap
2nd Quarter 22.51 17.46
3rd Quarter 32.27 7.49
FUND ORGANIZATION AND MANAGEMENT
Organization
The Fund is a series of common stock of a
corporation, RZ Funds, Inc. ("Corporation"), a Maryland
company incorporated on October 30, 1997. The
Corporation is authorized to issue shares of common
stock in series and classes. Each share of common
stock of each class of shares of the Fund is entitled
to one vote, and each share is entitled to participate
equally in dividends and capital gains distributions by
the respective class of shares and in the residual
assets of the respective class of shares in the event
of liquidation. No certificates will be issued for
shares held in your account. You will, however, have
full shareholder rights. Generally, the Fund will not
hold annual shareholders'
<PAGE>
meetings unless required by
the 1940 Act or Maryland Law. As of October 31, 1997,
the Advisor owned a controlling interest in the Fund.
Management
Under the laws of the State of Maryland, the Board
of Directors of the Corporation is responsible for
managing its business and affairs. The Corporation has
entered into an Investment Advisory Agreement with the
Advisor under which the Advisor manages the Fund's
investments and business affairs, subject to the
supervision of the Corporation's Board of Directors.
Advisor
The Advisor is a Florida corporation organized in
February 1992. Under the Investment Advisory
Agreement, the Corporation pays the Advisor an annual
management fee of 1.00% of the Fund's average daily net
assets. The advisory fee is accrued daily and paid
monthly. For the fiscal year ending December 31, 1998,
the Advisor has voluntarily agreed to waive its
management fee and/or reimburse the Fund's operating
expenses to the extent necessary to ensure that the
Fund's total operating expenses do not exceed 1.65% of
the Fund's average daily net assets. After such date,
the Advisor may voluntarily waive all or a portion of
its management fee and/or absorb certain Fund expenses
without further notification of the commencement or
termination of such waiver or absorption. Any waivers
or absorptions will have the effect of temporarily
lowering the Fund's overall expense ratio and
increasing the Fund's overall return to investors.
Under the Investment Advisory Agreement, not only is
the Advisor responsible for management of the Fund's
assets, but also for portfolio transactions and
brokerage.
Portfolio Manager[s]
President and ______________________ of the
Advisor, Robert Zuccaro received a Bachelor's Degree
from the University of Bridgeport in 1965 and a
Master's in Business Administration from Pace
University in 1968. Prior to founding Advisor in
_________, Mr. Zuccaro spent six years with Axe-
Houghton, where he was President and Director of Axe-
Houghton Stock Fund and Vice President and Director of
portfolio management of E.W. Axe & Co. Mr. Zuccaro is
a Chartered Financial Analyst.
Custodian and Transfer Agent
UMB Bank, n.a. ("UMB") acts as custodian of the
Fund's assets ("Custodian"). Sunstone Investor
Services, LLC ("Sunstone") serves as transfer agent for
the Fund ("Transfer Agent").
Administrator
Pursuant to an Administration Servicing Agreement,
Sunstone also performs certain compliance and tax
reporting functions for the Fund. For these services,
Sunstone receives from the Fund a fee, computed daily
and payable monthly, based on the Fund's average net
assets at the annual rate of [insert fee information].
Fund Expenses
The Fund is responsible for its own expenses,
including interest charges; taxes; brokerage
commissions; organizational expenses; expenses of
registering or qualifying shares for sale with the
states and the SEC; expenses of issue, sale,
repurchase, or redemption of shares; expenses of
printing and distributing reports and prospectuses to
existing shareholders; charges of custodians; expenses
for accounting, administrative, audit, and legal
services; fees for outside directors; expenses of
fidelity bond coverage and other insurance; expenses of
indemnification; extraordinary expenses; and costs of
shareholder and director meetings.
<PAGE>
YOUR ACCOUNT
Purchasing Shares
The Fund is no-load, so you may purchase, redeem
or exchange shares directly at the Fund's net asset
value without paying a sales charge. Because the
Fund's net asset value changes daily, your purchase
price will be the next net asset value determined after
the Fund receives and accepts your purchase order. See
"Pricing of Fund Shares."
INITIAL ADDITIONAL
MINIMUM MINIMUM
TYPE OF ACCOUNT INVESTMENT INVESTMENT
Regular $5,000 $1,000
Automatic Investment $5,000 $1,000
Plan
Individual Retirement $5,000 $1,000
Account ("IRA")
Gift to Minors $5,000 $1,000
The Fund reserves the right to reject any order
for the purchase of its shares or to limit or suspend,
without prior notice, the offering of its shares. The
required minimum investments may be waived in the case
of qualified retirement plans. The Fund will not
accept your account if you are investing for another
person as attorney-in-fact. The Fund also will not
accept accounts with a "Power of Attorney" or "POA" in
the registration section of the Purchase Application.
Opening an Account by Mail. Please complete the
Purchase Application. You may duplicate any
application or you can obtain additional copies of the
Purchase Application and a copy of the IRA Purchase
Application from the Fund by calling 1-800-
_____________. (Please complete an IRA application to
establish an IRA.)
Your completed Purchase Application should be
mailed directly to:
The RZ Funds, Inc.
P.O. Box ____
Milwaukee, WI 53201-____
To purchase shares by overnight or express mail,
please use the following street address:
The RZ Funds, Inc.
207 East Buffalo Street, Suite 400
Milwaukee, WI 53202-5712
All applications must be accompanied by payment in
the form of a check made payable to "RZ Funds." All
purchases must be made in U.S. dollars and checks must
be drawn on U.S. banks. No cash, credit cards or third
party checks will be accepted. Payment may be delayed
for up to seven business days on redemption requests
for recent purchases made by check in order to ensure
that the check has cleared. If you contemplate
redeeming your investment shortly after purchase, you
should purchase the shares by wire as discussed below.
Opening an Account by Wire. You may make
purchases by direct wire transfers. To ensure proper
credit to your account, you must call the Fund at 1-800-
_____________ for instructions and to obtain an
investor account number prior to wiring funds. Funds
should be wired through the Federal Reserve System as
follows:
<PAGE>
UMB Bank, n.a.
A.B.A. Number _____________
For credit to ______________________
Account Number __________
For further credit to:
(investor account number)
(name or account registration)
(Social Security or Taxpayer Identification Number)
A Purchase Application must be received by the
Fund to establish privileges and to verify your account
information. Payment of redemption proceeds may be
delayed and taxes may be withheld unless the Fund
receives a properly completed and executed purchase
application. The Fund reserves the right to refuse a
telephone transaction if it believes it advisable to do
so. If you have any questions, please call the Fund at
1-800-__________.
Adding to an Account by Mail. You may make
additional investments by mail or by wire in the
minimums listed previously. When adding to an account
by mail, you should send your check to the Fund,
together with a subsequent investment slip from a
recent statement. If this investment slip is
unavailable, you should send a signed note giving the
full name of the account and the account number. See
"Additional Purchase Information" for more information
regarding purchases made by check or electronic funds
transfer.
Adding to an Account by Electronic Funds Transfer.
You may also make additional investments by telephone
or in writing through electronic funds transfers if you
have previously selected this service. By selecting
this service, you authorize the Fund to draw on your
preauthorized bank account as shown on the records of
the Fund and receive the proceeds by electronic funds
transfer. Electronic funds transfers may be made
commencing 10 business days after receipt by the Fund
of your request to adopt this service. This time
period allows the Fund to verify your bank information.
Investments made by electronic funds transfer in any
one account must be in an amount of at least $1,000 and
will be effective at the net asset value next computed
after receipt by the Fund of the proceeds from your
bank account. See "Additional Purchase Information"
for more information regarding purchases made by check.
Changes to bank information must be made in writing and
signed by all registered holders of the account with
the signatures guaranteed by a commercial bank or trust
company in the United States, a member firm of the NASD
or other eligible guarantor institution. A Notary
Public is not an acceptable guarantor. This service
may be selected by calling the Fund at 1-800-________
for the necessary form and instructions.
Adding to an Account by Wire. For additional
investments made by wire transfer, you should use the
wiring instructions listed previously. Be sure to
include your account number. Wired funds are
considered received in good order on the day they reach
the Fund's bank account by the Fund's cut-off time for
purchases and all required information is provided in
the wire instructions. The wire instructions will
determine the terms of the purchase transaction.
Automatic Investment Plan. You may make purchases
of shares of the Fund automatically on a regular basis
($1,000 minimum per transaction). You must meet the
Automatic Investment Plan's (the "Plan" or the "AIP
Plan") minimum initial investment of $5,000 before the
Plan may be established. Under the Plan, your
designated bank or other financial institution debits a
preauthorized amount on your account each designated
period and applies the amount to the purchase of Fund
shares. The Fund requires 10 business days after
receipt of your request to initiate the Plan to verify
your account information. Generally, the Plan will
begin on the next transaction date scheduled by the
Fund for the Plan following this 10 business day
period. AIP Plan transactions are scheduled for the
fifth and/or twentieth of every month. AIP Plan
transactions also may be scheduled monthly, quarterly
or annually. The Plan can be implemented with any
financial institution that is a member of the Automated
Clearing House. No service fee is currently charged by
the Fund for participation in the Plan. You will
receive a statement on a quarterly basis showing the
purchases made under the Plan. A $20 fee will be
imposed by the Fund if sufficient funds are not
available in your account or your account has been
closed at the time of the automatic transaction and
your purchase will be canceled. You will also be
responsible for any losses suffered by the Fund as a
result. When a purchase is made pursuant to the
Automatic Investment Plan, and a redemption of such
shares is
<PAGE>
requested shortly thereafter, the Fund may
delay payment of the redemption proceeds for up to
seven days from the purchase date. This delay allows
the Fund to verify that the proceeds used to purchase
the shares were properly debited from your designated
bank or other financial institution. You may adopt the
Plan at the time an account is opened by completing the
appropriate section of the Purchase Application. You
may obtain an application to establish the Automatic
Investment Plan after an account is opened by calling
the Fund at 1-800-________. A signature guarantee is
required. In the event you discontinue participation in
the Plan, the Fund reserves the right to redeem your
Fund account involuntarily, upon 60 days' written
notice, if the account's net asset value is $5,000 or
less. Changes to bank information must be made in
writing and signed by all registered holders of the
account with the signatures guaranteed by a commercial
bank or trust company in the United States, a member
firm of the NASD or other eligible guarantor
institution. A Notary Public is not an acceptable
guarantor. A redemption of all funds from your Plan
account will automatically discontinue plan privileges.
Purchasing Shares Through Other Institutions. If
you purchase shares through a program of services
offered or administered by a broker-dealer, financial
institution, or other service provider, you should read
the program materials, including information relating
to fees, in addition to the Fund's Prospectus. Certain
services of the Fund may not be available or may be
modified in connection with the program of services
provided. The Fund may only accept requests to
purchase additional shares into a broker-dealer street
name account from the broker-dealer.
Certain broker-dealers, financial institutions, or
other service providers that have entered into an
agreement with the Corporation may enter purchase
orders on behalf of their customers by telephone, with
payment to follow within several days as specified in
the agreement. The Fund may effect such purchase
orders at the net asset value next determined after
receipt of the telephone purchase order. It is the
responsibility of the broker-dealer, financial
institution, or other service provider to place the
order with the Fund on a timely basis. If payment is
not received within the time specified in the
agreement, the broker-dealer, financial institution, or
other service provider could be held liable for any
resulting fees or losses.
Additional Purchase Information. The Fund will
charge a $20 service fee against your account for any
check or electronic funds transfer that is returned
unpaid and your purchase will be canceled. You will
also be responsible for any losses suffered by the Fund
as a result. In order to relieve you of responsibility
for the safekeeping and delivery of stock certificates,
the Fund does not issue certificates.
When a purchase is made by check and a redemption
is requested shortly thereafter, payment may be delayed
for up to seven business days on redemption requests
for recent purchases made by check in order to ensure
that the check has cleared. This delay allows the Fund
to verify that proceeds used to purchase Fund shares
will not be returned due to insufficient funds and is
intended to protect the remaining investors from loss.
New shareholders of the Fund are automatically
provided with the privilege to initiate telephone
inquiries, exchanges and redemptions unless expressly
waived by the shareholder. Consequently, Purchase
Applications provide that investors automatically
authorize the telephone privileges unless they check
the appropriate box on the Purchase Application to
waive the privilege. If you have any questions as to
how to waive this privilege, or how to add or delete a
privilege after an account is established, please call
the Fund at 1-800-________. Generally, after the
account has been established, a request to authorize,
waive, add or delete a privilege must be in writing and
signed by each registered holder of the account with
signatures guaranteed by a commercial bank or trust
company in the United States, a member of the NASD or
other eligible guarantor institution. A Notary Public
is not an acceptable guarantor. For a more detailed
discussion of the rights, responsibilities and risks of
telephone transactions, please refer to "Redeeming by
Telephone."
Exchanging Shares
You may exchange all or a portion of your
investment from the RZ Equity Fund to the Northern
Money Market Fund (the "Money Market Fund"). This
exchange feature is subject to the minimum purchase and
redemption amounts set forth in this Prospectus ($5,000
minimum, $1,000 subsequent). You may obtain a copy of
<PAGE>
the Money Market Fund prospectus from the Fund by
calling 1-800-________, and you are advised to read it
carefully, before authorizing any investment in shares
of the Money Market Fund.
Generally, exchange requests received in proper
order and accepted by the Fund by 3:00 p.m. (Central
time) or the close of the New York Stock Exchange
("Exchange"), if different, on a day during which the
Fund's net asset value is determined will be effective
that day for both the Fund being purchased and the Fund
being redeemed. Please note that when exchanging from
the Fund to the Money Market Fund, you will begin
accruing income from the Money Market Fund the day
following the exchange. When exchanging less than all
of the balance from the Money Market Fund to the Fund,
your exchange proceeds will exclude accrued and unpaid
income from the Money Market Fund through the date of
exchange. When exchanging your entire balance from the
Money Market Fund, accrued income will automatically be
exchanged into the Fund when the income is collected
and paid from the Money Market Fund, at the end of the
month. An exchange between the Fund and the Money
Market Fund is treated the same as an ordinary sale and
purchase for federal income tax purposes.
Because of the risks associated with common stock
investments, the Fund is intended to be a long-term
investment vehicle and is not designed to provide
investors with a means of speculating on short-term
stock market movements. In addition, because excessive
trading can hurt the Fund's performance and
shareholders, the Fund reserves the right to
temporarily or permanently terminate, with or without
advance notice, the exchange privilege of any investor
who makes excessive use of the exchange privilege
(e.g., more than five exchanges per calendar year).
Your exchanges may be restricted or refused if the Fund
receives or anticipates simultaneous orders affecting
significant portions of the Fund's assets. In
particular, a pattern of exchanges with a "market
timer" strategy may be disruptive to the Fund.
Therefore, the maximum number of exchanges you wish to
make may be restricted. Contact the Fund for
additional information concerning the exchange
privilege.
Automatic Exchange Plan. You may make automatic
monthly exchanges from the Money Market Fund account to
a Fund account ($1,000 minimum per transaction). An
exchange from one Fund to another is treated the same
as an ordinary sale and purchase for federal income tax
purposes and generally, you will realize a capital gain
or loss. You must meet the Fund's minimum initial
investment requirements before this plan is
established. You may adopt the plan at the time an
account is opened by completing the appropriate section
of the Purchase Application. To establish the
Automatic Exchange Plan after an account is open, call
the Fund at 1-800-__________.
New shareholders of the Fund are automatically
provided with the privilege to initiate telephone
inquiries, exchanges and redemptions unless expressly
waived by the shareholder. Consequently, Purchase
Applications provide that investors automatically
authorize the telephone privileges unless they check
the appropriate box on the Purchase Application to
waive the privilege. If you have any questions as to
how to waive this privilege, or how to add or delete a
privilege after an account is established, please call
the Fund at 1-800-________. Generally, after the
account has been established, a request to authorize,
waive, add or delete a privilege must be in writing and
signed by each registered holder of the account with
signatures guaranteed by a commercial bank or trust
company in the United States, a member of the NASD or
other eligible guarantor institution. A Notary Public
is not an acceptable guarantor. For a more detailed
discussion of the rights, responsibilities and risks of
telephone transactions, please refer to "Redeeming by
Telephone."
Redeeming Shares
You may redeem shares of the Fund at any time.
The price at which the shares will be redeemed is the
net asset value per share next determined after proper
redemption instructions are received by the Fund. See
"Determination of Net Asset Value." There are no
charges for the redemption of shares except that a fee
of $10 is charged for each wire redemption and a $15
fee is charged when redeeming shares in an IRA. Refer
to the IRA Disclosure Statement and Custodial Agreement
for additional information on IRA accounts and fees.
Depending upon the redemption price you receive, you
may realize a capital gain or loss for federal income
tax purposes.
<PAGE>
Redeeming by Mail. To redeem shares by mail,
simply send an unconditional written request to the
Fund specifying the number of shares or dollar amount
to be redeemed, the name(s) on the account registration
and the account number. If the dollar amount requested
to be redeemed is greater than the current account
value as determined by the net asset value on the
effective date of the redemption, the entire account
balance will be redeemed. A request for redemption
must be signed exactly as the shares are registered.
If the amount requested is greater than $10,000, the
proceeds are to be sent to a person other than the
shareholder(s) of record, to a location other than the
address of record or is made within 30 days of an
address exchange, each signature must be guaranteed by
a commercial bank or trust company in the United
States, a member firm of the NASD or other eligible
guarantor institution. A Notary Public is not an
acceptable guarantor. Additional documentation may be
required for the redemption of shares held in
corporate, partnership or fiduciary accounts. See
"Additional Redemption Information" for instructions on
redeeming shares in corporate accounts. Additional
documentation is required for the redemption of shares
held by persons acting pursuant to a Power of Attorney.
In case of any questions, contact the Fund in advance.
The Fund will mail payment for redemption within
seven days after it receives proper instructions for
redemption. However, the Fund will delay payment for
seven business days on redemptions of recent purchases
made by check. This allows the Fund to verify that the
check used to purchase Fund shares will not be returned
due to insufficient funds and is intended to protect
the remaining investors from loss.
Redeeming by Telephone. Shares may be redeemed,
in an amount up to $10,000, by calling the Fund at
1-800-________. Proceeds redeemed by telephone will be
mailed to your address, or wired or transmitted by
electronic funds transfer to your preauthorized bank
account as shown on the records of the Fund. A
redemption request in excess of $10,000 must be made in
writing and signed by each registered holder of the
account with signatures guaranteed by a commercial bank
or trust company in the United States, a member firm of
the NASD or other eligible guarantor institution. A
Notary Public is not an acceptable guarantor. A
telephone redemption request will not be processed
within 30 calendar days after an address change. A
redemption request within that 30 day time period must
be in writing and signed by each registered holder of
the account with signatures guaranteed. A Notary
Public is not an acceptable guarantor. Telephone
redemptions must be in amounts of $1,000 or more.
Payment of the redemption proceeds for Fund shares
redeemed by telephone when you request wire payment
will normally be made in federal funds on the next
business day. There is currently a $10 fee for each
wire redemption. It will be deducted from your
redemption proceeds. Electronically transferred funds
will ordinarily arrive at your bank within two to three
banking days after transmission. To change the
designated account, send a written request with the
signature(s) guaranteed to the Fund. Once the funds
are transmitted, the time of receipt and the
availability of the funds are not within the Fund's
control. The Fund reserves the right to delay payment
for a period of up to seven days after receipt of the
redemption request.
The Fund reserves the right to refuse a telephone
redemption or exchange transaction if it believes it is
advisable to do so. Procedures for redeeming or
exchanging shares of the Fund by telephone may be
modified or terminated by the Fund at any time. In an
effort to prevent unauthorized or fraudulent redemption
or exchange requests by telephone, the Fund has
implemented procedures designed to reasonably assure
that telephone instructions are genuine. These
procedures include: requesting verification of certain
personal information; recording telephone transactions;
confirming transactions in writing; and restricting
transmittal of redemption proceeds to preauthorized
designations. Other procedures may be implemented from
time to time. If reasonable procedures are not
implemented, the Fund may be liable for any loss due to
unauthorized or fraudulent transactions. In all other
cases, you are liable for any loss for unauthorized
transactions.
You should be aware that during periods of
substantial economic or market change, telephone or
wire redemptions may be difficult to implement. If
you are unable to contact the Fund by telephone, you
may also redeem shares by delivering or mailing the
redemption request to: The RZ Funds, Inc., P.O. Box
_____, Milwaukee, WI 53201-_____. If you wish to send
the information via overnight delivery, you may send it
to: The RZ Funds, Inc., 207 East Buffalo Street, Suite
315, Milwaukee, WI 53202-5712. Redemption requests
made via fax will not be accepted by the Fund.
<PAGE>
Redeeming Shares Through Other Institutions.
Investors may be charged a fee if they redeem shares of
the Fund through a broker or an agent.
Additional Redemption Information. When a
purchase is made by check and a redemption is requested
shortly thereafter, payment may be delayed for up to
seven business days on redemption requests for recent
purchases made by check in order to ensure that the
check has cleared. This delay allows the Fund to
verify that proceeds used to purchase Fund shares will
not be returned due to insufficient funds and is
intended to protect the remaining investors from loss.
New shareholders of the Fund are automatically
provided with the privilege to initiate telephone
inquiries, exchanges and redemptions unless expressly
waived by the shareholder. Consequently, Purchase
Applications provide that investors automatically
authorize the telephone privileges unless they check
the appropriate box on the Purchase Application to
waive the privilege. If you have any questions as to
how to waive this privilege, or how to add or delete a
privilege after an account is established, please call
the Fund at 1-800-___________. Generally, after the
account has been established, a request to authorize,
waive, add or delete a privilege must be in writing and
signed by each registered holder of the account with
signatures guaranteed by a commercial bank or trust
company in the United States, a member of the NASD or
other eligible guarantor institution. A Notary Public
is not an acceptable guarantor. For a more detailed
discussion of the rights, responsibilities and risks of
telephone transactions, please refer to "How to Redeem
by Telephone."
Any redemption or transfer of ownership request
for corporate accounts will require the following
written documentation:
1. A written letter of instruction signed by the
required number of authorized officers, along
with their respective positions. For
redemption requests in excess of $10,000, the
written request must be signature guaranteed.
A signature guarantee may be obtained from a
commercial bank or trust company in the United
States, a member firm of the NASD or other
guarantor and "Signature Guaranteed" must
appear with the signature. A Notary Public is
not an acceptable guarantor.
2. A certified Corporate Resolution that states
the date the Resolution was adopted and who is
empowered to act, transfer or sell assets on
behalf of the corporation.
3. If the Corporate Resolution is more than 60
days old from the date of the transaction
request, a Certificate of Incumbency from the
Corporate Secretary which specifically states
that the officer or officers named in the
resolution have the authority to act on the
account. The Certificate of Incumbency must be
dated within 60 days of the requested
transaction. If the Corporate Resolution
confers authority on officers by title and not
by name, the Certificate of Incumbency must
name the officer(s) and their title(s).
The Fund reserves the right to suspend or postpone
redemptions during any period when: trading on the
Exchange is restricted, as determined by the SEC, or
the Exchange is closed for other than customary weekend
and holiday closing; the SEC has by order permitted
such suspension; or an emergency, as determined by the
SEC, exists, making disposal of portfolio securities or
valuation of net assets of the Fund not reasonably
practicable.
Due to the relatively high cost of maintaining
small accounts, if your account balance falls below the
$5,000 minimum as a result of a redemption or exchange,
you may be given a 60-day notice to reestablish the
minimum balance. If this requirement is not met, your
account may be closed and the proceeds sent to you. If
your account balance in the Money Market Fund is
redeemed, accrued interest will be paid at the end of
the following month.
<PAGE>
Shareholder Reports And Information
The Fund will provide the following statements and
reports:
Confirmation Statements. Except for Automatic
Investment Plans, after each transaction that affects
the account balance or account registration, you will
receive a confirmation statement. Participants in the
Automatic Investment Plan will receive quarterly
confirmations of all automatic transactions.
Account Statements. All shareholders will receive
quarterly account statements. If you need additional
copies of previous statements, you may order statements
for the current and preceding year at no charge.
Statements for earlier years are available for $5 each.
Call 1-800-_______________ to order past statements.
If you need information on your account with the Fund
or if you wish to submit any applications, redemption
requests, inquiries or notifications, you should
contact: The RZ Funds, Inc., P.O. Box _______,
Milwaukee, WI 53201-_______ or call
1-800-_________________. If you wish to send the
information via overnight delivery, you may send it to:
The RZ Funds, Inc., 207 East Buffalo Street, Suite 315,
Milwaukee, WI 53202-5712.
Financial Reports. Financial reports are provided
to shareholders semi-annually. Annual reports will
include audited financial statements. To reduce Fund
expenses, one copy of each report will be mailed to
each Taxpayer Identification Number even though the
investor may have more than one account in the Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value per share is determined as of
the close of trading (generally 4:00 p.m. Eastern
Standard Time) on each day the Exchange is open for
business. Purchase orders and redemption requests
received in good order on a day the Exchange is open
for trading, prior to the close of trading on that day,
will be valued as of the close of trading on that day.
Applications for purchase of shares and requests for
redemption of shares received after the close of
trading on the Exchange will be valued as of the close
of trading on the next day the Exchange is open. The
Fund is not required to calculate its net asset value
on days during which the Fund receives no orders to
purchase or redeem shares. Net asset value per share
for each class of shares is calculated by taking the
fair value of the total assets per class, including
interest or dividends accrued, but not yet collected,
less all liabilities, and dividing by the total number
of shares outstanding in that class. The result,
rounded to the nearest cent, is the net asset value per
share.
In determining net asset value, expenses are
accrued and applied daily and securities and other
assets for which market quotations are available are
valued at fair value. Common stocks and other equity-
type securities are valued at the last sales price on
the national securities exchange or NASDAQ on which
such securities are primarily traded; however,
securities traded on a national securities exchange or
NASDAQ for which there were no transactions on a given
day, and securities not listed on a national securities
exchange or NASDAQ, are valued at the average of the
most recent bid and asked prices. Any securities or
other assets for which market quotations are not
readily available are valued at fair value as
determined in good faith by the Board of Directors of
the Corporation or its delegate. The Board of
Directors may approve the use of pricing services to
assist the Fund in the determination of net asset
value. All money market instruments held by the Fund
will be valued on an amortized cost basis.
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The Fund has adopted a plan pursuant to Rule 12b-1
under the 1940 Act ( "Plan"). The Plan provides for
the payment of a 12b-1 fee of up to 0.25% of the
average daily net assets to finance activities
primarily intended to result in the sale of Fund
shares. The Fund is authorized to, in turn, pay all or
a portion of these fees to any registered securities
dealer, financial institution, or other person
("Recipient") who renders assistance in distributing or
promoting the sale of Fund shares, or who provides
certain shareholder services to Fund shareholders,
pursuant to a written agreement ("Rule 12b-1 Related
Agreement"). The Plan is a "reimbursement" plan, which
means that the fees paid by the Fund under the Plan are
intended as reimbursement for services rendered and
commission fees borne up to the maximum allowable
distribution and shareholder servicing fees. If more
money for services rendered and commission fees is due
than is immediately payable because of the expense
limitation under the Plan, the unpaid amount is carried
forward from
<PAGE>
period to period while the Plan is in
effect until such time as it may be paid. No interest,
carrying, or other finance charges will be borne by the
Fund with respect to unpaid amounts carried forward.
Payment of the distribution and servicing fees is to be
made quarterly, within 30 days after the close of the
quarter for which the fee is payable.
The Plan, including a form of the 12b-1 Related
Agreement, has been unanimously approved by the Board
of Directors of the Corporation, including all of the
members of the Board who are not "interested persons"
of the Corporation as defined in the 1940 Act and who
have no direct or indirect financial interest in the
operation of the Plan or any related agreements
("Disinterested Directors") voting separately.
The Plan, and any Rule 12b-1 Related Agreement
which is entered into, will continue in effect for a
period of more than one year only so long as its
continuance is specifically approved at least annually
by a vote of a majority of the Corporation's Board of
Directors, and of the Disinterested Directors, cast in
person at a meeting called for the purpose of voting on
the Plan, or the Rule 12b-1 Related Agreement, as
applicable. In addition, the Plan, and any Rule 12b-1
Related Agreement, may be terminated without penalty,
by vote of a majority of Fund's outstanding voting
securities, or by vote of a majority of Disinterested
Directors (on not more than sixty (60) days' written
notice in the case of the Rule 12b-1 Related Agreement
only).
TAX-SHELTERED RETIREMENT PLANS
The Fund offers through UMB Bank, n.a., in its
capacity as Custodian, certain qualified retirement
plans for adoption by individuals and employers.
Participants in these plans can accumulate shares of
the Fund on a tax-deferred basis. Contributions to
these plans are tax-deductible as provided by law and
earnings are tax-deferred until distributed.
Individual Retirement Accounts
Individuals who receive compensation or earned
income, even if they are active participants in a
qualified retirement plan (or certain similar
retirement plans), may establish their own tax-
sheltered Individual Retirement Account ("IRA") and
purchase shares through such account. The minimum
initial investment in the Fund for an IRA is $5,000.
The Fund offers a prototype IRA plan which may be
adopted by individuals to establish a new IRA or to
rollover funds from an existing IRA. There may be a
charge for establishing an IRA account and there is
also an annual maintenance fee.
Earnings on amounts held in an IRA are not taxed
until withdrawn. However, the amount of the deduction,
if any, allowed for IRA contributions is limited for an
individual who is, or whose spouse is, an active
participant in an employer-sponsored retirement plan
and whose income exceeds specific limits.
Simplified Employee Pension Plan
The Fund also offers a simplified employee pension
("SEP") plan for employers, including self-employed
individuals who wish to purchase Fund shares with tax-
deductible contributions. Under the SEP plan, employer
contributions are made directly to the IRA accounts of
eligible participants.
A complete description of the above plans and any
additional plans, as well as a description of the
applicable service fees, may be obtained by calling
1-800-__________ or writing to the Fund at The RZ
Funds, Inc., c/o Sunstone Investor Services, LLC, P.O.
Box _______, Milwaukee, Wisconsin 53201-______. Please
note that early withdrawals from a retirement plan may
result in adverse tax consequences.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX TREATMENT
The Fund intends to qualify for treatment as a
"Regulated Investment Company" under Subchapter M of
the Code and, if so qualified, will not be liable for
federal income taxes to the extent earnings are
distributed to shareholders on a timely basis.
However, for federal income tax purposes, all dividends
and distributions of net
<PAGE>
realized short-term capital
gains you receive from the Fund are taxable as ordinary
income, whether reinvested in additional shares or
received in cash, unless you are exempt from taxation
or entitled to a tax deferral. Distributions of net
realized long-term capital gains you receive from the
Fund, whether reinvested in additional shares or
received in cash, are taxable as a capital gain. The
capital gain holding period is determined by the length
of time the Fund has held the security and not the
length of time you have held shares in the Fund. You
will be informed annually as to the amount and nature
of all dividends and capital gains paid during the
prior year. Such capital gains and dividends may also
be subject to state or local taxes. If you are not
required to pay taxes on your income, you are generally
not required to pay federal income taxes on the amounts
distributed to you.
The Fund intends to pay dividends from net
investment income annually and to distribute all net
realized capital gains at least annually. In addition,
the Fund may make additional distributions if necessary
to avoid imposition of a 4% excise tax or other tax on
undistributed income and gains. Please note, however,
that the objective of the Fund is capital appreciation,
not the production of distributions. You should
measure the success of your investment by the value of
your investment at any given time and not by the
distributions you receive.
When a dividend or capital gain is distributed,
the Fund's net asset value decreases by the amount of
the payment. If you purchase shares shortly before a
distribution, you will be subject to income taxes on
the distribution, even though the value of your
investment (plus cash received, if any) remains the
same. All dividends and capital gain distributions
will automatically be reinvested in additional Fund
shares at the then prevailing net asset value unless
you specifically request that dividends or capital gain
or both be paid in cash. The election to receive
dividends or reinvest them may be changed by writing to
the Fund at The RZ Funds, Inc., P.O. Box ________,
Milwaukee, WI 53201-_____. The election is effective
for distributions with a dividend record date on or
after the date on which the Fund receives notice of the
election.
If you do not furnish the Fund with your correct
social security number or taxpayer identification
number, the Fund is required by current federal law to
withhold federal income tax from your distributions
(including applicable Fund share reinvestments) and
redemption proceeds at a rate of 31%.
This section is not intended to be a full
discussion of federal income tax laws and the effect of
such laws on you. There may be other federal, state,
or local tax considerations applicable to a particular
investor. You are urged to consult your own tax
advisor.
FUND PERFORMANCE
The Fund may from time to time compare its
investment results to various passive indices or other
mutual funds and cite such comparisons in reports to
shareholders, sales literature, and advertisements.
The results may be calculated on several bases,
including average annual total return, total return and
cumulative total return.
Average annual total return and total return
figures measure both the net investment income
generated by, and the effect of any realized and
unrealized appreciation or depreciation of, the
underlying investments in the Fund over a specified
period of time, assuming the reinvestment of all
dividends and distributions. Average annual total
return figures are annualized and therefore represent
the average annual percentage change over the specified
period. Total return figures are not annualized and
represent the aggregate percentage or dollar value
change over the period. Cumulative total return simply
reflects performance over a stated period of time.
<PAGE>
ADDITIONAL INFORMATION
DIRECTORS
Robert Zuccaro
OFFICERS
Robert Zuccaro, President
INVESTMENT ADVISOR
Target Holdings Corporation, d.b.a. Target Investors
15 River Road, Suite 200
Wilton, Connecticut 06897
CUSTODIAN
UMB Bank, n.a.
928 Grand Boulevard
Kansas City, Missouri 64141-6226
ADMINISTRATOR
Sunstone Financial Group, Inc.
207 East Buffalo Street, Suite 400
Milwaukee, Wisconsin 53202
TRANSFER AGENT
Sunstone Investor Services, LLC
For overnight deliveries, use: For regular mail deliveries, use:
The RZ Funds, Inc. The RZ Funds, Inc.
c/o Sunstone Investor Services, LLC c/o Sunstone Investor Services, LLC
207 East Buffalo Street, Suite 315 P.O. Box ______
Milwaukee, Wisconsin 53202-5712 Milwaukee, WI 53201-______
INDEPENDENT ACCOUNTANTS
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 N. Water Street
Milwaukee, Wisconsin 53202
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
[Logo]
RZ FUNDS, INC.
RZ EQUITY FUND
Wilton Executive Company
15 River Road, Suite 220
Wilton Connecticut 06897
Telephone: (203) 761-9600
Facsimile: (203) 761-9795
This Statement of Additional Information is not a
prospectus and should be read in conjunction with the
Prospectus of the RZ Equity Fund ("Fund"), dated
October 31, 1997. The Prospectus, which may be revised
from time to time, is available without charge upon
request to the above-noted address or telephone number.
This Statement of Additional Information is dated
October 31, 1997.
<PAGE>
CONTENTS
INVESTMENT OBJECTIVE AND RESTRICTIONS 3
INVESTMENT POLICIES AND TECHNIQUES 4
DIRECTORS AND OFFICERS 6
PRINCIPAL SHAREHOLDERS 7
INVESTMENT ADVISOR 7
FUND TRANSACTIONS AND BROKERAGE 8
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT 9
PLAN OF DISTRIBUTION 9
TAXES 10
DETERMINATION OF NET ASSET VALUE 10
SHAREHOLDER MEETINGS 10
PERFORMANCE INFORMATION 10
INDEPENDENT ACCOUNTANTS 12
FINANCIAL STATEMENTS 12
No person has been authorized to give any
information or to make any representations other than
those contained in this Statement of Additional
Information ("SAI") and the Prospectus dated October
31, 1997, and if given or made, such information or
representations may not be relied upon as having been
authorized by the Fund. This SAI does not constitute
an offer to sell securities in any state or
jurisdiction in which such offering may not lawfully be
made.
<PAGE>
INVESTMENT OBJECTIVE AND RESTRICTIONS
The Fund's investment objective is capital
appreciation. The Fund's investment objective and
policies are described in detail in the Prospectus
under the captions "Investment Objective and
Restrictions" and "Implementation of Policies and
Risks." The following are the Fund's fundamental
investment restrictions which cannot be changed without
shareholder approval.
The Fund:
1. May not issue senior securities, except as
permitted under the Investment Company Act of
1940, as amended (the "1940 Act");
2. May not act as an underwriter of another company's
securities, except to the extent that the Fund may
be deemed to be an underwriter within the meaning
of the Securities Act of 1933, as amended ("1933
Act"), in connection with the purchase and sale of
portfolio securities;
3. May not purchase or sell physical commodities
unless acquired as a result of ownership of
securities or other instruments (but this shall
not prevent the Fund from purchasing or selling
options, futures contracts, or other derivative
instruments, or from investing in securities or
other instruments backed by physical commodities);
4. May not make loans if, as a result, more than 33
1/3% of the Fund's assets would be lent to other
persons, except through purchases of debt
securities or other debt instruments or engaging
in repurchase agreements;
5. May invest more than 25% of its assets in
securities of companies in any one industry;
6. May not purchase or sell real estate unless
acquired as a result of ownership of securities or
other instruments (but this shall not prohibit the
Fund from purchasing or selling securities or
other instruments backed by real estate or of
issuers engaged in real estate activities);
7. May (i) borrow money from banks, and (ii) make
other investments or engage in other transactions
permissible under the 1940 Act, which may involve
a borrowing, provided that the combination of (i)
and (ii) shall not exceed 33 1/3% of the value of
the Fund's assets (including the amount borrowed),
less the Fund's liabilities (other than
borrowings), except that the Fund may borrow up to
an additional 5% of its assets (not including the
amount borrowed) from a bank for temporary or
emergency purposes (but not for leverage or the
purchase of investments). The Fund may also
borrow money from other persons to the extent
permitted by applicable law;
8. Notwithstanding any other fundamental investment
policy or restriction, may invest all of its
assets in the securities of a single open-end
management investment company with substantially
the same fundamental investment objective,
policies, and restrictions as the Fund.
The following non-fundamental operating policies
may be changed by the Board of Directors without
shareholder approval.
The Fund may not:
1. Sell securities short, unless the Fund owns or has
the right to obtain securities equivalent in kind
and amount to the securities sold short, or unless
it covers such short sale as required by the
current rules and positions of the Securities and
Exchange Commission ("SEC") or its staff, and
provided that transactions in options, futures
contracts, options on futures contracts, or other
derivative instruments are not deemed to
constitute selling securities short.
<PAGE>
2. Purchase securities on margin, except that the
Fund may obtain such short-term credits as are
necessary for the clearance of transactions; and
provided that margin deposits in connection with
futures contracts, options on futures contracts,
or other derivative instruments shall not
constitute purchasing securities on margin.
3. Invest in illiquid securities if, as a result of
such investment, more than 5% of its net assets
would be invested in illiquid securities.
4. Purchase securities of other investment companies
except in compliance with the 1940 Act.
5. Engage in futures or options on futures
transactions which are impermissible pursuant to
Rule 4.5 under the Commodity Exchange Act ("CEA")
and, in accordance with Rule 4.5, will use futures
or options on futures transactions solely for bona
fide hedging transactions (within the meaning of
the CEA); provided, however, that the Fund may,
in addition to bona fide hedging transactions, use
futures and options on futures transactions if the
aggregate initial margin and premiums required to
establish such positions, less the amount by which
any such options positions are in the money
(within the meaning of the CEA), do not exceed 5%
of the Fund's net assets.
6. Make any loans other than loans of portfolio
securities, except through purchases of debt
securities or other debt instruments or engaging
in repurchase agreements with respect to portfolio
securities.
7. Borrow money except from banks or through reverse
repurchase agreements or mortgage dollar rolls,
and will not purchase securities when bank
borrowings exceed 5% of its assets.
Except for the fundamental investment restrictions
listed above and the Fund's investment objective, the
other investment policies described in the Prospectus
and this SAI are not fundamental and may be changed
with approval of the Fund's Board of Directors. Unless
noted otherwise, if a percentage restriction is adhered
to at the time of investment, a later increase or
decrease in percentage resulting from a change in the
Fund's assets (i.e., due to cash inflows or
redemptions) or in market value of the investment or
the Fund's assets will not constitute a violation of
that restriction.
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the
discussion of the Fund's investment objective,
strategy, and policies that are described in the
Prospectus under the captions "Investment Strategy,"
"Implementation of Policies and Risks," and "Investment
Objective and Restrictions."
Depositary Receipts
The Fund may invest in foreign securities by
purchasing depositary receipts, including American
Depositary Receipts ("ADRs") and European Depositary
Receipts ("EDRs") or other securities convertible into
securities of companies based in foreign countries.
These securities may not necessarily be denominated in
the same currency as the securities into which they may
be converted. Generally, ADRs, in registered form, are
denominated in U.S. dollars and are designed for use in
the U.S. securities markets, while EDRs, in bearer
form, may be denominated in other currencies and are
designed for use in European securities markets. ADRs
are receipts typically issued by a U.S. bank or trust
company evidencing ownership of the underlying
securities. EDRs are European receipts evidencing a
similar arrangement. For purposes of the Fund's
investment policies, ADRs and EDRs are deemed to have
the same classification as the underlying securities
they represent. Thus, an ADR or EDR representing
ownership of common stock will be treated as common
stock.
ADR facilities may be established as either
"unsponsored" or "sponsored." While ADRs issued under
these two types of facilities are in some respects
similar, there are distinctions between them relating
to the rights and obligations of ADR holders and the
practices of market participants. For example, a non-
sponsored depositary may not provide the same
shareholder information that a sponsored depositary is
required to provide under its contractual
<PAGE>
arrangements
with the issuer, including reliable financial
statements. Under the terms of most sponsored
arrangements, depositaries agree to distribute notices
of shareholder meetings and voting instructions, and to
provide shareholder communications and other
information to the ADR holders at the request of the
issuer of the deposited securities.
Convertible Securities
The Fund may invest in convertible securities,
which are bonds, debentures, notes, preferred stocks,
or other securities that may be converted into or
exchanged for a specified amount of common stock or
warrants of the same or a different company within a
particular period of time at a specified price or
formula. A convertible security entitles the holder to
receive interest normally paid or accrued on debt or
the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted,
or exchanged. Convertible securities have unique
investment characteristics in that they generally (i)
have higher yields than common stocks, but lower yields
than comparable non-convertible securities, (ii) are
less subject to fluctuation in value than the
underlying stock (or warrant) since they have fixed
income characteristics, and (iii) provide the potential
for capital appreciation if the market price of the
underlying common stock (or warrant) increases. A
convertible security may be subject to redemption at
the option of the issuer at a price established in the
convertible security's governing instrument. If a
convertible security held by the Fund is called for
redemption, the Fund will be required to permit the
issuer to redeem the security, convert it into the
underlying common stock (or warrant), or sell it to a
third party.
Concentration
While the Fund is "non-diversified," which means
that it is permitted to invest its assets in a more
limited number of issuers than other investment
companies, the Fund intends to diversify its assets to
qualify for tax treatment as a regulated investment
company under the Internal Revenue Code of 1986, as
amended ("Code"). To so qualify (i) not more than 25%
of the total value of the Fund's assets may be invested
in securities of any one issuer (other than U.S.
Government securities and the securities of other
regulated investment companies under the Code) or of
any two or more issuers controlled by the Fund, which,
pursuant to the regulations under the Code, may be
deemed to be engaged in the same, similar, or related
trades or businesses, and (ii) with respect to 50% of
the total value of the Fund's assets (a) not more than
5% of its total assets may be invested in the
securities of any one issuer (other than U.S.
Government securities and the securities of other
regulated investment companies under the Code) and (b)
the Fund may not own more than 10% of the outstanding
voting securities of any one issuer (other than U.S.
Government securities and the securities of other
regulated investment companies under the Code). To the
extent that a relatively high percentage of the Fund's
assets may be invested in the securities of a limited
number of companies, the Fund's portfolio securities
may be more susceptible to any single economic,
political, or regulatory occurrence than the portfolio
securities of a diversified investment company.
In addition, the Fund may invest more than 25% of
its assets in securities of companies in one or more
industries. An industry is defined as a business-line
subsector of a stock-market sector. While the Fund may
be heavily invested in one industry from time to time,
rotation in asset management may be experienced.
Temporary Strategies
As described in the Prospectus under the heading
"Implementation of Policies and Risks," prior to
investing proceeds from sales of Fund shares, to meet
ordinary daily cash needs, and to retain the
flexibility to respond promptly to changes in market
and economic conditions, the Fund may hold cash and/or
invest up to 25% of its total assets in money market
instruments. The money market instruments which the
Fund may purchase include U.S. Government securities,
bank obligations, obligations of savings institutions,
fully insured certificates of deposit, commercial
paper, and securities issued by registered investment
companies holding themselves out as money market funds.
Such securities are limited to:
U.S. Government Securities. Obligations issued or
guaranteed as to principal and interest by the United
States or its agencies (such as the Export-Import Bank
of the United States, Federal Housing Administration
and
<PAGE>
Government National Mortgage Association) or its
instrumentalities (such as the Federal Home Loan Bank),
including Treasury bills, notes, and bonds;
Bank Obligations. Obligations (including
certificates of deposit, bankers' acceptances,
commercial paper (see below) and other debt
obligations) of banks subject to regulation by the U.S.
Government and having total assets of $1 billion or
more, and instruments secured by such obligations, not
including obligations of foreign branches of domestic
banks;
Obligations of Savings Institutions. Certificates
of deposit of savings banks and savings and loan
associations, having total assets of $1 billion or
more;
Fully Insured Certificates of Deposit.
Certificates of deposit of banks and savings
institutions, having total assets of less than $1
billion, if the principal amount of the obligation is
insured by the Bank Insurance Fund or the Savings
Association Insurance Fund (each of which is
administered by the Federal Deposit Insurance
Corporation), limited to $100,000 principal amount per
certificate and to 5% or less of the Fund's total
assets in all such obligations and in all illiquid
assets, in the aggregate;
Commercial Paper. Commercial paper rated Prime-1
or better by Moody's Investors Service, Inc.
("Moody's"), A-1 or better by Standard & Poor's
Corporation ("S&P"), Duff 2 or higher by Duff & Phelps,
Inc. ("D&P"), or Fitch 2 or higher by Fitch Investor
Services, Inc. ("Fitch"); and
Money Market Funds. Securities issued by
registered investment companies holding themselves out
as money market funds which attempt to maintain a
stable net asset value of $1.00 per share.
DIRECTORS AND OFFICERS
The directors and officers of the RZ Funds, Inc.
("Corporation"), of which the Fund is a series,
together with information as to their principal
business occupations during the last five years, and
other information, are shown below. Each director and
officer who is deemed an "interested person" as defined
in the 1940 Act is indicated by an asterisk. The
directors and officers listed below have served as such
since inception of the Corporation on October 30, 1997,
except as otherwise noted.
*Robert Zuccaro, President of the Corporation.
Mr. Zuccaro, 55 years old, received a Bachelor's
Degree from the University of Bridgeport in 1965 and a
Master's Degree in Business Administration from Pace
University in 1968. Prior to founding Target Holdings
Corporation, doing business as Target Investors
("Advisor") in 1992, Mr. Zuccaro spent six years with
Axe-Houghton, where he was President and Director of
Axe-Houghton Stock Fund and Vice President and Director
of portfolio management of E.W. Axe & Co. Mr. Zuccaro
is a Chartered Financial Analyst.
Mr. Zuccaro's address is 15 River Road, Suite 200,
Wilton, Connecticut 06897.
[Additional directors and officers will be added
by amendment.]
As of October 31, 1997, officers and directors of
the Corporation did not beneficially own any of the
shares of common stock of the Fund's then outstanding
shares; however, Advisor, which is controlled by Mr.
Zuccaro, owned [100%] of such shares. Directors and
officers of the Corporation who are also officers,
directors, employees, or shareholders of Advisor do not
receive any remuneration from the Fund for serving as
directors or officers.
<PAGE>
The following table provides information relating
to annual compensation to be paid to directors of the
Corporation for their services as such:
Name Cash Other Total
Compensation Compensation
Robert Zuccaro $0 $0 $0
[Additional
directors to be
added]
PRINCIPAL SHAREHOLDERS
As of October 31, 1997, the following persons
owned of record or are known by the Fund to own of
record or beneficially 5% or more of the outstanding
shares of the Fund:
Name and Address No. Shares Percentage
Target Holdings Corporation,
d.b.a. Target Investors [ ] ____%
15 River Road, Suite 200
Wilton, Connecticut 06897
Based on the foregoing, as of October 31, 1997,
Advisor owned a controlling interest in the Fund.
Shareholders with a controlling interest could effect
the outcome of proxy voting or the direction of
management of the Fund.
INVESTMENT ADVISOR
Target Holdings Corporation, d.b.a. Target
Investors ("Advisor") is the investment advisor to the
Fund. Advisor is controlled by Robert Zuccaro.
The investment advisory agreement between the
Corporation and Advisor dated as of December 31, 1997
("Advisory Agreement") has an initial term of two years
and thereafter is required to be approved annually by
the Board of Directors of the Corporation or by vote of
a majority of the Fund's outstanding voting securities
(as defined in the 1940 Act). Each annual renewal must
also be approved by the vote of a majority of the
Corporation's directors who are not parties to the
Advisory Agreement or interested persons of any such
party, cast in person at a meeting called for the
purpose of voting on such approval. The Advisory
Agreement was approved by the Board of Directors,
including a majority of the disinterested directors on
December ___, 1997, and by the initial shareholder[s]
on December ___, 1997. The Advisory Agreement is
terminable without penalty on 60 days' written notice
by the Board of Directors, by vote of a majority of the
Fund's outstanding voting securities, or by Advisor,
and will terminate automatically in the event of its
assignment.
Under the terms of the Advisory Agreement, Advisor
manages the Fund's investments and business affairs,
subject to the supervision of the Board of Directors.
At its expense, Advisor provides office space and all
necessary office facilities, equipment, and personnel
for managing the investments of the Fund. As
compensation for its services, the Corporation pays
Advisor an annual management fee of 1.00% of the Fund's
average daily net assets. The advisory fee is accrued
daily and paid monthly. The organizational expenses of
the Fund were advanced by Advisor and will be
reimbursed by the Fund over a period of not more than
60 months. The organizational expenses were
approximately $_______________.
Advisor may from time to time voluntarily (but is
not required or obligated to) waive all or a portion of
its fee and/or absorb certain Fund expenses. Any
waiver of fees or absorption of expenses will be made
on a monthly basis and, with respect to the latter,
will be paid to the Fund by reduction of Advisor's fee.
Any such waiver/absorption is
<PAGE>
subject to later
adjustment during the term of the Advisory Agreement to
allow Advisor to recoup amounts waived/absorbed to the
extent actual fees and expenses for a specific month
are less than the expense limitation caps.
FUND TRANSACTIONS AND BROKERAGE
Under the Advisory Agreement, Advisor, in its
capacity as portfolio manager, is responsible for
decisions to buy and sell securities for the Fund and
for the placement of the Fund's securities business,
the negotiation of the commissions to be paid on such
transactions, and the allocation of portfolio brokerage
business. The Fund has no obligation to deal with any
particular broker or dealer; in executing transactions,
Advisor seeks to obtain the best execution at the best
security price available with respect to each
transaction. The best price to the Fund means the best
net price without regard to the mix between purchase or
sale price and commission, if any. While Advisor seeks
reasonably competitive commission rates, the Fund does
not necessarily pay the lowest available commission.
Brokerage will not be allocated based on the sale of
the Fund's shares.
Section 28(e) of the Securities Exchange Act of
1934, as amended ("Section 28(e)"), permits an
investment advisor, under certain circumstances, to
cause an account to pay a broker or dealer who supplies
brokerage and research services a commission for
effecting a transaction in excess of the amount of
commission another broker or dealer would have charged
for effecting the transaction. Brokerage and research
services include (a) furnishing advice as to the value
of securities, the advisability of investing,
purchasing, or selling securities, and the availability
of securities or purchasers or sellers of securities;
(b) furnishing analyses and reports concerning issuers,
industries, sectors, securities, economic factors and
trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities transactions and
performing functions incidental thereto (such as
clearance, settlement, and custody).
In selecting brokers or dealers, Advisor considers
investment and market information and other research,
such as economic, securities, and performance
measurement research provided by such brokers or
dealers and the quality and reliability of brokerage
services, including execution capability, performance,
and financial responsibility. Accordingly, the
commissions charged by any such broker or dealer may be
greater than the amount another firm might charge if
Advisor determines in good faith that the amount of
such commissions is reasonable in relation to the value
of the research information and brokerage services
provided by such broker or dealer to the Fund. Advisor
believes that the research information received in this
manner provides the Fund with benefits by supplementing
the research otherwise available to the Fund. Such
higher commissions will not be paid by the Fund unless
(a) Advisor determines in good faith that the amount is
reasonable in relation to the services in terms of the
particular transaction or in terms of Advisor's overall
responsibilities with respect to the accounts,
including the Fund, as to which it exercises investment
discretion; (b) such payment is made in compliance with
the provisions of Section 28(e) and other applicable
state and federal laws; and (c) in the opinion of
Advisor, the total commissions paid by the Fund will be
reasonable in relation to the benefits to the Fund over
the long term.
Advisor places portfolio transactions for other
advisory accounts in addition to the Fund. Research
services furnished by firms through which the Fund
effects its securities transactions may be used by
Advisor in servicing all of its accounts; not all of
such services may be used by Advisor in connection with
the Fund. Advisor believes it is not possible to
measure separately the benefits from research services
to each of the accounts (including the Fund) managed by
it. Because the volume and nature of the trading
activities of the accounts are not uniform, the amount
of commissions in excess of those charged by another
broker or dealer paid by each account for brokerage and
research services will vary. However, Advisor believes
such costs to the Fund will not be disproportionate to
the benefits received by the Fund on a continuing
basis. Advisor seeks to allocate portfolio
transactions equitably whenever concurrent decisions
are made to purchase or sell securities by the Fund and
another advisory account. In some cases, this
procedure could have an adverse effect on the price or
the amount of securities available to the Fund. There
can be no assurance that a particular purchase or sale
opportunity will be allocated to the Fund. In making
such allocations between the Fund and other advisory
accounts, certain factors considered by Advisor are the
respective investment objectives, the relative size of
portfolio holdings of the same or comparable
securities, the availability of cash for investment,
and the size of investment commitments generally held.
<PAGE>
The Fund anticipates that its annual portfolio
turnover rate will be between 400 and 800% or higher.
The annual portfolio turnover rate indicates changes in
the Fund's securities holdings; for instance, a rate of
100% would result if all the securities in a portfolio
(excluding securities whose maturities at acquisition
were one year or less) at the beginning of an annual
period had been replaced by the end of the period. The
turnover rate may vary from year to year, as well as
within a year, and may be affected by portfolio sales
necessary to meet cash requirements for redemptions of
the Fund's shares.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
As custodian of the Fund's assets, UMB Bank, n.a.
("UMB"), 928 Grand Boulevard, Kansas City, Missouri
64141-6226, has custody of all securities and cash of
the Fund, delivers and receives payment for portfolio
securities sold, receives and pays for portfolio
securities purchased, collects income from investments,
if any, and performs other duties, all as directed by
the officers of the Corporation. Sunstone Investor
Services, LLC ("Sunstone"), 207 East Buffalo Street,
Suite 315, Milwaukee, Wisconsin 53202-5712, acts as
transfer agent and dividend-disbursing agent for the
Fund.
PLAN OF DISTRIBUTION
Distribution and Shareholder Servicing Plan
As described more fully in the Prospectus under
the heading "Shareholder Servicing Plan," the Fund has
adopted a plan pursuant to Rule 12b-1 under the 1940
Act ("Plan") with respect to which certain distribution
and shareholder servicing fees may be paid to
registered securities dealers, financial institutions,
or other persons ("Recipients") who render assistance
in distributing or promoting the sale of Fund shares,
or who provide certain shareholder services to Fund
shareholders, pursuant to a written agreement ("Rule
12b-1 Related Agreement"). Under the terms of the
Plan, the Fund may be required to pay the Recipients a
fee of up to 0.25% of the average daily net assets to
finance activities primarily intended to result in the
sale of Fund shares. The Plan is a "reimbursement"
plan, which means that the fees paid by the Fund under
the Plan are intended as reimbursement for services
rendered and commission fees borne up to the maximum
allowable distribution and shareholder servicing fees.
If more money for services rendered and commission fees
is due than is immediately payable because of the
expense limitation under the Plan, the unpaid amount is
carried forward from period to period while the Plan is
in effect until such time as it may be paid. No
interest, carrying, or other finance charges will be
borne by the Fund with respect to unpaid amounts
carried forward.
Anticipated Benefits to the Fund
The Board of Directors of the Corporation
considered various factors in connection with its
decision to approve the Plan, including: (a) the
nature and causes of the circumstances which make
implementation of the Plan necessary and appropriate;
(b) the way in which the Plan would address those
circumstances, including the nature and potential
amount of expenditures; (c) the nature of the
anticipated benefits; (d) the merits of possible
alternative plans or pricing structures; and (e) the
possible benefits of the Plan to any other person
relative to those of the Fund.
Based upon its review of the foregoing factors and
the material presented to it, and in light of its
fiduciary duties under relevant state law and the 1940
Act, the Board of Directors determined, in the exercise
of its business judgment, that the Plan was reasonably
likely to benefit the Fund and its shareholders in at
least one or several potential ways. Specifically, the
Board concluded that any Recipients operating under
Rule 12b-1 Related Agreements would have little or no
incentive to incur promotional expenses on behalf of
the Fund if a Rule 12b-1 plan were not in place to
reimburse them, thus making the adoption of the Plan
important to the initial success and thereafter,
continued viability of the Fund. In addition, the
Board determined that the payment of Rule 12b-1 fees to
these persons should motivate them to provide an
enhanced level of service to Fund shareholders, which
would, of course, benefit such shareholders. Finally,
the adoption of the Plan would help to increase net
assets under management in a relatively short amount of
<PAGE>
time, given the marketing efforts on the part of the
Recipients to sell Fund shares, which should result in
certain economies of scale.
While there is no assurance that the expenditure
of Fund assets to finance distribution of Fund shares
will have the anticipated results, the Board of
Directors believes there is a reasonable likelihood
that one or more of such benefits will result, and
since the Board will be in a position to monitor the
distribution and shareholder servicing expenses of the
Fund, it will be able to evaluate the benefit of such
expenditures in deciding whether to continue the Plan.
TAXES
As indicated under "Dividends, Capital Gain
Distributions and Tax Treatment" in the Prospectus, the
Fund intends to qualify annually as a "regulated
investment company" under the Code. This qualification
does not require government supervision of the Fund's
management practices or policies.
A dividend or capital gains distribution received
shortly after the purchase of shares reduces the net
asset value of shares by the amount of the dividend or
distribution and, although in effect a return of
capital, will be subject to income taxes. Net gains on
sales of securities when realized and distributed are
taxable as capital gains. If the net asset value of
shares were reduced below a shareholder's cost by
distribution of gains realized on sales of securities,
such distribution would be a return of investment
although taxable as indicated above.
DETERMINATION OF NET ASSET VALUE
As set forth in the Prospectus under the same
heading, the Fund's net asset value will be determined
as of the close of trading on each day the New York
Stock Exchange ("NYSE") is open for trading. The Fund
does not determine net asset value on days the NYSE is
closed and at other times described in the Prospectus.
The NYSE is closed on New Year's Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. Additionally, if
any of the aforementioned holidays falls on a Saturday,
the NYSE will not be open for trading on the preceding
Friday and when such holiday falls on a Sunday, the
NYSE will not be open for trading on the succeeding
Monday, unless unusual business conditions exist, such
as the ending of a monthly or the yearly accounting
period.
SHAREHOLDER MEETINGS
Maryland law permits registered investment
companies, such as the Corporation, to operate without
an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by
the 1940 Act. The Corporation has adopted the
appropriate provisions in its Bylaws and may, at its
discretion, not hold an annual meeting in any year in
which the election of directors is not required to be
acted on by shareholders under the 1940 Act.
PERFORMANCE INFORMATION
As described in the "Fund Performance" section of
the Fund's Prospectus, the Fund's historical
performance or return may be shown in the form of
various performance figures. The Fund's performance
figures are based upon historical results and are not
necessarily representative of future performance.
Factors affecting the Fund's performance include
general market conditions, operating expenses, and
investment management.
<PAGE>
Total Return
The average annual total return of the Fund is
computed by finding the average annual compounded rates
of return over the periods that would equate the
initial amount invested to the ending redeemable value,
according to the following formula:
P(1+T)n = ERV
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a
hypothetical $1,000 payment made at
the beginning of the stated periods at
the end of the stated periods.
Performance for a specific period is calculated by
first taking an investment (assumed to be $1,000)
("initial investment") on the first day of the period
and computing the "ending value" of that investment at
the end of the period. The total return percentage is
then determined by subtracting the initial investment
from the ending value and dividing the remainder by the
initial investment and expressing the result as a
percentage. The calculation assumes that all income
and capital gains dividends paid by the Fund have been
reinvested at the Fund's net asset value on the
reinvestment dates during the period. Total return may
also be shown as the increased dollar value of the
hypothetical investment over the period.
Cumulative total return represents the simple
change in value of an investment over a stated period
and may be quoted as a percentage or as a dollar
amount. Total returns may be broken down into their
components of income and capital (including capital
gains and changes in share price) in order to
illustrate the relationship between these factors and
their contributions to total return.
Comparisons
From time to time, in marketing and other Fund
literature, the Fund's performance may be compared to
the performance of other mutual funds in general or to
the performance of particular types of mutual funds
with similar investment goals, as tracked by
independent organizations. Among these organizations,
Lipper Analytical Services, Inc. ("Lipper"), a widely
used independent research firm which ranks mutual funds
by overall performance, investment objectives, and
assets, may be cited. Lipper performance figures are
based on changes in net asset value, with all income
and capital gains dividends reinvested. Such
calculations do not include the effect of any sales
charges imposed by other mutual funds. The Fund will
be compared to Lipper's appropriate fund category, that
is, by fund objective and portfolio holdings.
The Fund's performance may also be compared to the
performance of other mutual funds by Morningstar, Inc.
("Morningstar"), which ranks funds on the basis of
historical risk and total return. Morningstar's
rankings range from five stars (highest) to one star
(lowest) and represent Morningstar's assessment of the
historical risk level and total return of a fund as a
weighted average for 3, 5, and 10 year periods.
Rankings are not absolute or necessarily predictive of
future performance.
Evaluations of the Fund's performance made by
independent sources may also be used in advertisements
concerning the Fund, including reprints of or
selections from, editorials or articles about the Fund.
Sources for Fund performance and articles about the
Fund may include publications such as Money, Forbes,
Kiplinger's, Financial World, Business Week, U.S. News
and World Report, the Wall Street Journal, Barron's,
and a variety of investment newsletters.
The Fund may compare its performance to a wide
variety of indices and measures of inflation. There
are differences and similarities between the
investments that the Fund may purchase and the
investments measured by these indices.
<PAGE>
Investors may want to compare the Fund's
performance to that of certificates of deposit offered
by banks and other depository institutions.
Certificates of deposit may offer fixed or variable
interest rates and principal is guaranteed and may be
insured. Withdrawal of the deposits prior to maturity
normally will be subject to a penalty. Rates offered
by banks and other depository institutions are subject
to change at any time specified by the issuing
institution.
Investors may also want to compare the Fund's
performance to that of money market funds. Money
market fund yields will fluctuate and shares are not
insured, but share values usually remain stable.
INDEPENDENT ACCOUNTANTS
FINANCIAL STATEMENTS
The following financial statements of the Fund are
contained herein:
(a) Report of Independent Accountants.*
(b) Statement of Assets and Liabilities.*
(c) Notes to Statement of Assets and Liabilities.*
- -----------------
* To be filed by Amendment.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements (Included in Parts A and B)
Report of Independent Accountants
Statement of Assets and Liabilities
Notes to Statement of Assets and Liabilities
(b) Exhibits
(1) Registrant's Articles of Incorporation
(2) Registrant's By-Laws
(3) None
(4) None
(5) Investment Advisory Agreement*
(6) None
(7) None
(8) Custodian Agreement*
(9.1) Transfer Agency Agreement*
(9.2) Administration and Fund Accounting
Agreement*
(10) Opinion and Consent of Godfrey & Kahn,
S.C.*
(11) Consent of [Accountants]*
(12) None
(13) Subscription Agreement*
(14) Individual Retirement Account Disclosure
Statement and Custodial Account*
(15.1) Rule 12b-1 Distribution and
Shareholder Servicing Plan*
(15.2) Form of 12b-1 Related Agreement*
<PAGE>
(16) None
(17) None
(18) None
- -----------------
*To be filed by Amendment.
Item 25. Persons Controlled by or under Common Control
with Registrant
Registrant neither controls any person nor is
under common control with any other person.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Securities as of October 31, 1997
Common Stock, $.01 par value [ ]
Item 27. Indemnification
Article 6.4 of Registrant's Articles of
Incorporation provides as follows:
The Corporation shall indemnify (a) its Directors
and officers, whether serving the Corporation or at its
request any other entity, to the full extent required
by (i) Maryland law now or hereafter in force,
including the advance of expenses under the procedures
and to the full extent permitted by law, and (ii) the
Investment Company Act of 1940, as amended, and (b)
other employees and agents to such extent as shall be
authorized by the Board of Directors and be permitted
by law. The foregoing rights of indemnification shall
not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry
out these indemnification provisions and is expressly
empowered to adopt, approve and amend from time to time
such resolutions or contracts implementing such
provisions or such further indemnification arrangements
as may be permitted by law.
Item 28. Business and Other Connections of Investment
Advisor
Besides serving as investment advisor to private
accounts, Advisor is not currently and has not during
the past two fiscal years engaged in any other
business, profession, vocation, or employment of a
substantial nature. Information regarding the
business, profession, vocation, or employment of a
substantial nature of Advisor's directors and officers
is hereby incorporated by reference from the
information contained under "Fund Organization and
Management-Management" in the Prospectus.
Item 29. Principal Underwriters
(a) None.
(b) None.
(c) None.
<PAGE>
Item 30. Location of Accounts and Records
All accounts, books or other documents required to
be maintained by Section 31(a) of the Investment
Company Act of 1940, as amended, and the rules
promulgated thereunder are in the possession of Target
Holdings Corporation, doing business as Target
Investors, Registrant's investment advisor, at
Registrant's corporate offices, except (1) records held
and maintained by UMB Bank, n.a., 928 Grand Boulevard,
Kansas City, Missouri 64141-6226, relating to its
function as custodian, (2) records held and maintained
by Sunstone Investor Services, LLC, 207 East Buffalo
Street, Suite 315, Milwaukee, Wisconsin 53202, relating
to its function as transfer agent, and (3) records held
and maintained by Sunstone Financial Group, Inc., 207
East Buffalo Street, Suite 400, Milwaukee, Wisconsin
53202, relating to its function as administrator and
fund accountant.
Item 31. Management Services
All management-related service contracts entered
into by Registrant are discussed in Parts A and B of
this Registration Statement.
Item 32. Undertakings.
(a) Registrant undertakes to file a post-
effective amendment to this Registration
Statement which will contain financial
statements (which need not be certified) no
later than 60 days after the end of the four
to six month period after effectiveness of
this Registration Statement.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933 and the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement
on Form N-1A to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of
Wilton and State of Connecticut on the 29th day of
October, 1997.
RZ Funds, Inc. (Registrant)
By:/s/ Robert Zuccaro
----------------------
Robert Zuccaro
President and Director
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
(1) Registrant's Articles of Incorporation
(2) Registrant's By-Laws
(3) None
(4) None
(5) Investment Advisory Agreement *
(6) None
(7) None
(8) Custodian Agreement *
(9.1) Transfer Agency Agreement *
(9.2) Administration and Fund Accounting Agreement *
(10) Opinion and Consent of Godfrey & Kahn, S.C. *
(11) Consent of [Accountants] *
(12) None
(13) Subscription Agreement *
(14) Individual Retirement Account Disclosure
Statement and Custodial Account *
(15.1) Rule 12b-1 Distribution and Shareholder
Servicing Plan *
(15.2) Form of 12b-1 Related Agreement *
(16) None
(17) None
(18) None
___________________
* To be filed by amendment.
Exhibit 1
ARTICLES OF INCORPORATION
OF
RZ FUNDS, INC.
ARTICLE I
Incorporator
1.1 Incorporator. The undersigned, Renee Hardt
Torr, whose post office address is Godfrey & Kahn,
S.C., 780 North Water Street, Milwaukee, Wisconsin
53202, being at least eighteen (18) years of age, does
hereby act as incorporator to form a corporation under
the general laws of the State of Maryland.
ARTICLE II
Name
2.1 Name. The name of the corporation is RZ
Funds, Inc. (the "Corporation").
ARTICLE III
Corporate Purposes and Powers
3.1 Corporate Purposes and Powers. The purpose
for which the Corporation is formed is, without
limitation, to act as an investment company pursuant to
the Investment Company Act of 1940, as amended (the
"1940 Act"), and to exercise and enjoy all the powers,
rights and privileges granted to, or conferred upon,
corporations by the Maryland General Corporation Law,
as amended from time to time (the "MGCL").
ARTICLE IV
Principal Office and Resident Agent
4.1 Principal Office and Resident Agent. The
post office address of the principal office of the
Corporation in the State of Maryland is c/o The
Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202-3242. The name of the
Corporation's resident agent in the State of Maryland
is The Corporation Trust Incorporated, a corporation of
the State of Maryland, and the post office address of
the resident agent is 32 South Street, Baltimore,
Maryland 21202-3242.
ARTICLE V
Capital Stock
5.1 Authorized Shares. The total number of
shares of capital stock which the Corporation shall
have authority to issue is Five Hundred Million
(500,000,000) shares of Common Stock with a par value
of one cent ($0.01) per share and with an aggregate par
value of Five Million Dollars ($5,000,000).
5.2 Power to Classify. The Board of Directors
may classify or reclassify (i.e., into classes and/or
series), from time to time, any unissued shares of
Common Stock of the Corporation, whether now or
hereafter authorized, by setting or changing the prefer
ences, conversion or other rights, voting powers,
restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of
such shares of stock and, pursuant to such
classification or reclassification, to increase or
decrease the number of authorized shares of Common
Stock, or the number of shares of any class or series
of Common Stock, that the Corporation has the authority
to issue. Except as otherwise provided herein, all
references to Common Stock shall apply without
discrimination to the shares of each class or series of
Common Stock. Pursuant to such power, the Board of
Directors has initially designated the authorized
shares of the Corporation into one series of shares of
Common Stock as follows:
Name of SeriesNumber of Shares Initially Allocated
RZ Equity Fund 50,000,000
The remaining Four Hundred Fifty Million (450,000,000)
shares of Common Stock shall remain unclassified until
action is taken by the Board of Directors pursuant to
this paragraph.
5.3 Classes and Series. Unless otherwise
provided by the Board of Directors prior to the
issuance of shares, the shares of any and all classes
and series of Common Stock shall be subject to the
following:
(a) Redesignation of Class or Series. The
Board may change the designation of a class or series,
whether or not shares of such class or series are
issued and outstanding, provided that such change does
not affect the preferences, conversion or other rights,
voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of
redemption of such class or series.
(b) Authorization of Stock Issuance. The
Board of Directors may authorize the issuance and sale
of any class or series of shares of Common Stock from
time to time in such amounts and on such terms and
conditions, for such purposes and for such amounts or
kind of consideration as the Board of Directors shall
determine, subject to any limits required by then
applicable law. Nothing in this paragraph shall be
construed in any way as limiting the Board of
Director's authority to issue shares of Common Stock in
connection with a share dividend under the MGCL.
(c) Assets, Liabilities, Income and Expenses
of Each Class or Series. The assets and liabilities
and the income and expenses for each class or series of
Common Stock shall be attributable to that class or
series. The income or gain and the expense or
liabilities of the Corporation shall be allocated to
each class or series as determined by or under the
direction of the Board of Directors.
(d) Dividends and Distributions. The
holders of each class or series of Common Stock of
record as of a date determined by the Board of
Directors from time to time shall be entitled, from
funds or other assets legally available therefor, to
dividends or distributions, payable in shares or in
cash or both, in such amounts and at such times as may
be determined by the Board of Directors. Dividends or
distributions shall be paid on shares of a class or
series only out of the assets belonging to that class
or series. The amounts of dividends or distributions
declared and paid with respect to the various classes
or series of Common Stock and the timing thereof may
vary among such classes and series.
(e) Liquidation. At any time there are no
shares outstanding for a particular class or series of
Common Stock, the Board of Directors may liquidate such
class or series in accordance with applicable law. In
the event of the liquidation or dissolution of the
Corporation, or of a class or series thereof when there
are shares outstanding of the Corporation or of such
class or series, as applicable, the stockholders of the
Corporation or of each class or series, as applicable,
shall be entitled to receive, as a class or series, out
of the assets of the Corporation available for
distribution to stockholders, the assets belonging to
that class or series less the liabilities allocated to
that class or series. The assets so distributed to the
holders of a class or series shall be distributed among
such holders in proportion to the number of shares of
that class or series held by them and recorded on the
books of the Corporation. In the event that there are
any assets available for distribution that are not
attributable to any particular class or series, such
assets shall be allocated to all classes or series in
proportion to the net asset value of the respective
class or series.
(f) Fractional Shares. The Corporation may
issue fractional shares. Any fractional shares shall
carry proportionately all the rights of whole shares,
including, without limitation, the right to vote and
the right to receive dividends and distributions.
(g) Voting Rights. On each matter submitted
to a vote of stockholders, each holder of a share of
Common Stock of the Corporation shall be entitled to
one vote for each full share, and a fractional vote for
each fractional share, of stock standing in such
holder's name on the books of the Corporation,
irrespective of the class or series thereof. In
addition, all shares of all classes and series shall
vote together as a single class; provided, however,
that (i) when the MGCL or the 1940 Act requires that a
class or series vote separately with respect to a given
matter, the separate voting requirements of the
applicable law shall govern with respect to the
affected class and/or series and other classes and
series shall vote as a single class, and (ii) unless
otherwise required by the MGCL or the 1940 Act, no
class or series shall have the right to vote on any
matter which does not affect the interest of that class
or series.
(h) Quorum. The presence in person or by
proxy of the holders of one-third of the shares of
Common Stock of the Corporation entitled to vote,
without regard to class or series, shall constitute a
quorum at any meeting of the stockholders, except with
respect to any matter which, under applicable statutes
or regulatory requirements, requires approval by a
separate vote of one or more classes or series of
Common Stock, in which case the presence in person or
by proxy of the holders of one-third of the shares of
each class or series of Common Stock required to vote
as a class or series on the matter shall constitute a
quorum. If, at any meeting of the stockholders, there
shall be less than a quorum present, the stockholders
present at such meeting may, without further notice,
adjourn the same from time to time until a quorum shall
be present.
(i) Authorizing Vote. Notwithstanding any
provision of the MGCL requiring for any purpose a
proportion greater than a majority of the votes of the
Corporation or of a class or series of Common Stock of
the Corporation, the affirmative vote of the holders of
a majority of the total number of shares of Common
Stock of the Corporation, or of a class or series of
Common Stock of the Corporation, as applicable,
outstanding and entitled to vote under such
circumstances pursuant to these Articles of
Incorporation and the By-Laws of the Corporation shall
be effective for such purpose, except to the extent
otherwise required by the 1940 Act and rules
thereunder; provided, however, that, to the extent
consistent with the MGCL and other applicable law, the
By-Laws may provide for authorization to be by the vote
of a proportion less than a majority of the votes of
the Corporation, or of a class or series of Common
Stock.
(j) Change of Name. The Board of Directors,
without action by the Corporation's stockholders, shall
have the authority to change the name of the
Corporation or of any class or series of its Common
Stock created herein or hereafter.
(k) Preemptive Rights. No holder of any
class or series of Common Stock of the Corporation
shall, as such holder, have any right to purchase or
subscribe for any shares of any class or series of
Common Stock which the Corporation may issue or sell
(whether out of the number of shares authorized by
these Articles of Incorporation, or out of any shares
of any class or series of Common Stock of the
Corporation acquired by it after the issue thereof, or
otherwise), other than such right, if any, as the Board
of Directors, in its sole discretion, may determine.
(l) Redemption.
(i) Subject to the suspension of the
right of redemption or postponement of the date of
payment or satisfaction upon redemption in
accordance with the 1940 Act, each holder of any
class or series of the Common Stock of the
Corporation, upon request and after complying with
the redemption procedures established by or under
the supervision of the Board of Directors, shall
be entitled to require the Corporation to redeem,
out of legally available funds, all or any part of
the Common Stock standing in the name of such
holder on the books of the Corporation at the net
asset value (as determined in accordance with the
1940 Act) of such shares (less any applicable
redemption fee).
(ii) The Board of Directors may
authorize the Corporation, at its option and to
the extent permitted by and in accordance with the
conditions of the 1940 Act, to redeem any shares
of any class or series of Common Stock of the
Corporation owned by any stockholder under
circumstances deemed appropriate by the Board of
Directors in its sole discretion from time to
time, including, without limitation, failure to
maintain ownership of a specified minimum number
or value of shares of any class or series of
Common Stock of the Corporation, at the net asset
value (as determined in accordance with the 1940
Act) of such shares (less any applicable
redemption fee).
(iii) Payment for redeemed stock shall be
made in cash unless, in the opinion of the Board of
Directors, which shall be conclusive, conditions exist
which make it advisable for the Corporation to make
payment wholly or partially in securities or other
property or assets of the class or series of Common
Stock being redeemed. Payment made wholly or partially
in securities or other property or assets may be delayed
to such reasonable extent, not inconsistent with applicable
law, as is reasonably necessary under the circumstances.
No stockholder shall have the right, except as determined
by the Board of Directors, to have his shares redeemed
in such securities, property or other assets.
(iv) The Board of Directors may, upon
reasonable notice to the holders of any class or
series of Common Stock of the Corporation, impose
a fee for the redemption of shares, such fee to be
not in excess of the amount set forth in the
Corporation's then existing By-Laws and to apply
in the case of such redemptions and under such
terms and conditions as the Board of Directors
shall determine. The Board of Directors shall
have the authority to rescind the imposition of
any such fee in its discretion and to reimpose the
redemption fee from time to time upon reasonable
notice.
(v) Any shares of Common Stock redeemed
by the Corporation shall be deemed to be canceled
and restored to the status of authorized but
unissued shares of the particular class or series.
(m) Valuation. With respect to any class or
series of Common Stock, the Board of Directors may
adopt provisions to seek to maintain a stable net asset
value per share. Without limiting the foregoing, the
Board of Directors may determine that the net asset
value per share of any class or series should be
maintained at a designated constant value and may
establish procedures, not inconsistent with applicable
law, to accomplish that result. Such procedures may
include a requirement, in the event of a net loss with
respect to the particular class or series from time to
time, for automatic pro rata capital contributions from
each stockholder of that class or series in amounts
sufficient to maintain the designated constant share
value.
ARTICLE VI
Board Of Directors
6.1 Number of Directors. The number of directors
of the Corporation shall be one (1), which may be
changed in accordance with the By-Laws and subject to
the limitations of the MGCL. The directors may fix a
different number of directors and may authorize a
majority of the directors to increase or decrease the
number of directors set by these Articles or the By-
Laws within limits set by the By-Laws. The directors
may also fill vacancies created by an increase in the
number of directors. Unless otherwise provided by the
By-Laws, the directors of the Corporation need not be
stockholders of the Corporation.
6.2 Names of Directors. The names of the
directors who will serve until the first annual meeting
and until their successors are elected and qualify are
as follows:
Robert Zuccaro
6.3 Limits on Liability of Directors and
Officers. To the fullest extent that limitations on
the liability of directors and officers are permitted
by the MGCL, no director or officer of the Corporation
shall have any personal liability to the Corporation or
to its stockholders for monetary damages. No amendment
to these Articles of Incorporation or repeal of any of
its provisions shall limit or eliminate the benefits
provided to directors and officers under this provision
with respect to any act or omission which occurred
prior to such amendment or repeal.
6.4 Indemnification of Directors and Officers.
The Corporation shall indemnify its directors and
officers and make advance payment of related expenses
to the fullest extent permitted, and in accordance with
the procedures required, by the MGCL and the 1940 Act.
The By-Laws may provide that the Corporation shall
indemnify its employees and/or agents in any manner and
within such limits as permitted by applicable law.
Such indemnification shall be in addition to any other
right or claim to which any director, officer, employee
or agent may otherwise be entitled. The Corporation
may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or
agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer,
partner, trustee, employee or agent of another foreign
or domestic corporation, partnership, joint venture,
trust or other enterprise or employee benefit plan,
against any liability (including, with respect to
employee benefit plans, excise taxes) asserted against
and incurred by such person in any such capacity or
arising out of such person's position, whether or not
the Corporation would have had the power to indemnify
against such liability. The rights provided to any
person by this Article 6.4 shall be enforceable against
the Corporation by such person who shall be presumed to
have relied upon such rights in serving or continuing
to serve in the capacities indicated herein. No
amendment of these Articles of Incorporation shall
impair the rights of any person arising at any time
with respect to events occurring prior to such
amendment.
6.5 Powers of Directors. In addition to any
powers conferred herein or in the By-Laws, the Board of
Directors may, subject to any express limitations
contained in these Articles of Incorporation or in the
By-Laws, exercise the full extent of powers conferred
by the MGCL, and the enumeration and definition of
particular powers herein or in the By-Laws shall in no
way be deemed to restrict or otherwise limit those
lawfully conferred powers. In furtherance and without
limitation of the foregoing, the Board of Directors
shall have power:
(a) To cause the Corporation to enter into,
from time to time, investment advisory agreements
providing for the management and supervision of the
investments of the Corporation and the furnishing of
advice to the Corporation with respect to the
desirability of investing in, purchasing or selling
securities or other assets. Such agreements shall
contain such terms, provisions and conditions as the
Board of Directors may deem advisable and as are
permitted by the 1940 Act.
(b) To designate, without limitation,
distributors, custodians, transfer agents,
administrators, account servicing and other agents for
the stock, assets and business of the Corporation and
employ and fix the powers, rights, duties,
responsibilities and compensation of each such
distributor, custodian, transfer agent, administrator,
account servicing and other agent.
ARTICLE VII
Amendments
7.1 Amendments. The Corporation reserves the
right from time to time to amend, alter, change or
repeal any provision of these Articles of
Incorporation, and all rights conferred upon
stockholders herein are granted subject to this
reservation.
IN WITNESS WHEREOF, the undersigned incorporator
of RZ Funds, Inc. hereby executes the foregoing
Articles of Incorporation and acknowledges the same to
be her act.
Dated this 29th day of October, 1997.
/s/ Renee Hardt Torr
--------------------------
Renee Hardt Torr
Exhibit 2
BY-LAWS
OF
RZ FUNDS, INC.
ARTICLE I
Offices
1.1 Principal Office. The principal office of RZ
Funds, Inc. ("the Corporation") in the State of
Maryland shall be in the City of Baltimore.
1.2 Other Offices. The Corporation may have such
other offices in such places as the Board of Directors
may from time to time determine.
ARTICLE II
Meetings of Stockholders
2.1 Annual Meeting. Subject to this Article II,
an annual meeting of stockholders for the election of
directors and the transaction of such other business as
may properly come before the meeting shall be held at
such time and place as the Board of Directors shall
select. The Corporation shall not be required to hold
an annual meeting of its stockholders in any year in
which the election of directors is not required to be
acted upon under the Investment Company Act of 1940, as
amended (the "1940 Act").
2.2 Special Meetings. Special meetings of
stockholders may be called at any time by the
President, the Secretary, the Treasurer, or by a
majority of the Board of Directors and shall be held at
such time and place as may be stated in the notice of
the meeting. Special meetings of the stockholders
shall be called by the Secretary upon receipt of
written request of the holders of shares entitled to
cast not less than 10% of the votes entitled to be cast
at such meeting, provided that such request shall state
the purposes of such meeting and the matters proposed
to be acted on.
2.3 Place of Meetings. Meetings of stockholders
shall be held at such place within the United States as
the Board of Directors may from time to time determine.
2.4 Notice of Meetings; Waiver of Notice. Notice
of the place, date and time of the holding of each
stockholders' meeting and, if the meeting is a special
meeting, the purpose or purposes of the meeting, shall
be given personally or by mail, not less than ten nor
more than ninety days before the date of such meeting,
to each stockholder entitled to vote at such meeting
and to each other stockholder entitled to notice of the
meeting. Notice by mail shall be deemed to be duly
given when deposited in the United States mail
addressed to the stockholder at his or her address as
it appears on the records of the Corporation, with
postage prepaid. Notice of any meeting of stockholders
shall be deemed waived by any stockholder who attends
such meeting in person or by proxy, or who, either
before or after the meeting, submits a signed waiver of
notice which is filed with the records of the meeting.
2.5 Quorum, Adjournment of Meetings. The
presence at any stockholders' meeting, in person or by
proxy, of stockholders of one-third of the shares of
the Common Stock of the Corporation entitled to vote,
without regard to class or series, shall be necessary
and sufficient to constitute a quorum for the
transaction of business, except for any matter which,
under applicable statutes or regulatory requirements,
requires approval by a separate vote of one or more
classes or series of Common Stock, in which case the
presence in person or by proxy of holders of one-third
of the shares of each class or series of Common Stock
required to vote as a class or series on the matter
shall constitute a quorum. The holders of a majority
of shares of Common Stock entitled to vote at the
meeting and present in person or by proxy, whether or
not sufficient to constitute a quorum, or, any officer
present entitled to preside or act as Secretary of such
meeting may adjourn the meeting without determining the
date of the new meeting or from time to time without
further notice to a date not more than one hundred and
twenty days after the original record date. Any
business that might have been transacted at the meeting
originally called may be transacted at any such
adjourned meeting at which a quorum is present.
2.6 Organization. At each meeting of the
stockholders, the President, or in his or her absence
or inability to act, a Vice President, shall act as
chairman of the meeting; provided, however, that if no
such officer is present or able to act, a chairman of
the meeting shall be elected at the meeting. The
Secretary or, in his or her absence or inability to
act, any person appointed by the chairman of the
meeting, shall act as secretary of the meeting and keep
the minutes thereof.
2.7 Order of Business. The order of business at
all meetings of the stockholders shall be as determined
by the chairman of the meeting.
2.8 Voting. Except as otherwise provided by
statute or the Articles of Incorporation, each holder
of record of shares of Common Stock of the Corporation
shall be entitled at each meeting of the stockholders
to one vote for every full share of such stock, with a
fractional vote for any fractional shares, standing in
his or her name on the record of stockholders of the
Corporation, irrespective of the class or series
thereof, as of the record date determined pursuant to
Section 2.9 or if the record date has not been fixed,
then at the later of (i) the close of business on the
day on which notice of the meeting is mailed or (ii)
the thirtieth day before the meeting. Each stockholder
entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him or
her by a proxy signed by such stockholder or his or her
attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof,
unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the stockholder
executing it, except in those cases where such proxy
states that it is irrevocable and where the proxy is
coupled with an interest in the stock to be voted under
the proxy or another general interest in the
Corporation or its assets or liabilities. Except as
otherwise provided by statute, the Articles of
Incorporation or these By-Laws, any corporate action to
be taken by vote of the stockholders shall be
authorized by the affirmative vote of the holders of a
majority of the total number of shares of Common Stock,
or of a class or series of Common Stock, as applicable,
outstanding and entitled to vote at a meeting of
stockholders at which a quorum is present. No votes
need to be taken by ballot other than the election of
directors, which shall be by written ballot, or unless
required by statute, these By-Laws, or determined by
the chairman of the meeting to be advisable. On a vote
by ballot, each ballot shall be signed by the
stockholder voting or by his or her proxy and shall
state the number of shares voted.
2.9 Fixing of Record Date. The Board of
Directors may fix a time not less than ten nor more
than ninety days prior to the date of any meeting of
stockholders or prior to the last day on which the
consent or dissent of stockholders may be effectively
expressed for any purpose without a meeting, as the
time as of which stockholders entitled to notice of and
to vote at such a meeting or whose consent or dissent
is required or may be expressed for any purpose, as the
case may be, shall be determined; and only persons who
were holders of record of Common Stock at such time and
no other shall be entitled to notice of and to vote at
such meeting or to express their consent or dissent, as
the case may be. If no record date has been fixed, the
record date for the determination of stockholders
entitled to notice of or to vote at a meeting of
stockholders shall be the later of the close of
business on the day on which notice of the meeting is
mailed or the thirtieth day before the meeting, or if
notice is waived by all stockholders, at the close of
business on the tenth day next preceding the day on
which the meeting is held. The Board of Directors may
fix a record date for determining stockholders entitled
to receive payment of a dividend or distribution, but
such date shall be not more than ninety days before the
date on which such payment is made. If no record date
has been fixed, the record date for determining
stockholders entitled to receive dividends or
distributions shall be the close of business on the day
on which the resolution of the Board of Directors
declaring the dividend or distribution is adopted, but
the payment shall not be made more than sixty days
after the date on which the resolution is adopted.
2.10 Consent of Stockholders in Lieu of Meeting.
Except as otherwise provided by statute or the Articles
of Incorporation, any action required to be taken at
any meeting of stockholders, or any action which may be
taken at any meeting of such stockholders, may be taken
without a meeting, without prior notice and without a
vote, if the following are filed with the records of
stockholders meetings: (i) a unanimous written consent
which sets forth the action and is signed by each stock
holder entitled to vote on the matter and (ii) a
written waiver of any right to dissent signed by each
stockholder entitled to notice of the meeting but not
entitled to vote thereat.
ARTICLE III
Board of Directors
3.1 General Powers. The business and affairs of
the Corporation shall be managed under the direction of
the Board of Directors and all powers of the
Corporation may be exercised by or under authority of
the Board of Directors.
3.2 Number of Directors. The number of directors
shall be fixed from time to time by resolution of the
Board of Directors adopted by a majority of the
Directors then in office; provided, however, that the
number of Directors shall in no event be less than
three nor more than fifteen except that the Corporation
may have less than three but no less than one director
if there is no stock outstanding, and may have a number
of directors no fewer than the number of stockholders
so long as there are fewer than three stockholders.
Any vacancy created by an increase in directors may be
filled in accordance with Section 3.6. No reduction in
the number of directors shall have the effect of
removing any director from office prior to the
expiration of his or her term unless such director is
specifically removed pursuant to Section 3.5 at the
time of such decrease. Directors need not be
stockholders.
3.3 Election and Term of Directors. Directors
shall be elected annually, by written ballot at the
annual meeting of stockholders or a special meeting
held for that purpose; provided, however, that if no
annual meeting of the stockholders of the Corporation
is required to be held in a particular year pursuant to
Section 2.1, directors shall be elected at the next
annual meeting held. The term of office of each
director shall be from the time of his or her election
and qualification until the election of directors next
succeeding his or her election and until his or her
successor shall have been elected and shall have
qualified.
3.4 Resignation. A director of the Corporation
may resign at any time by giving written notice of his
or her resignation to the Board of Directors, the
President or the Secretary. Any such resignation shall
take effect at the time specified therein or, if the
time when it shall become effective shall not be
specified therein, immediately upon its receipt.
Unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it
effective.
3.5 Removal of Directors. Any director of the
Corporation may be removed by the affirmative vote of a
majority of (a) the Board of Directors, (b) a committee
of the Board of Directors appointed for such purpose,
or (c) the stockholders by vote of a majority of the
outstanding shares of Common Stock of the Corporation.
3.6 Vacancies. If any vacancies occur in the
Board of Directors (i) by reason of death, resignation,
removal or otherwise, the remaining directors shall
continue to act, and subject to the provisions of the
1940 Act, such vacancies (if not previously filled by
the stockholders) may be filled by a majority of the
remaining directors and (ii) by reason of an increase
in the authorized number of directors, such vacancies
(if not previously filled by the stockholders) may be
filled by a majority vote of the entire Board of
Directors.
3.7 Place of Meeting. The directors may hold
their meetings, have one or more offices and keep the
books of the Corporation at any office or offices of
the Corporation or at any other place within or without
the State of Maryland as they may determine, or in the
case of meetings, as they may determine or as shall be
specified or fixed in the respective notices or waivers
of notice thereof.
3.8 Regular Meetings. The Board of Directors
from time to time may provide by resolution for the
holding of regular meetings and fix their time and
place as the Board of Directors may determine. Notice
of such regular meetings need not be in writing,
provided that notice of any change in the time or place
or such fixed regular meetings shall be communicated
promptly to each director not present at the meeting at
which such change was made in the manner provided in
Section 3.9 for notice of special meetings. Members of
the Board of Directors or any committee designated
thereby may participate in a meeting of such Board of
Directors or committee by means of a conference
telephone or similar communications equipment by means
of which all persons participating in the meeting can
hear each other at the same time, and participation by
such means shall constitute presence in person at a
meeting, except where meetings are required to be held
in person pursuant to the 1940 Act.
3.9 Special Meetings. Special meetings of the
Board of Directors may be held at any time or place and
for any purpose when called by the President, the
Secretary or two or more of the directors. Notice of
special meetings, stating the time and place, shall be
communicated to each director personally by telephone
or transmitted to him or her by telegraph, telefax,
telex, cable or wireless at least one day before the
meeting.
3.10 Waiver of Notice. No notice of any meeting
of the Board of Directors or a committee of the Board
of Directors need be given to any director who is
present at the meeting or who waives notice of such
meeting in writing (which waiver shall be filed with
the records of such meeting), either before or after
the time of the meeting.
3.11 Quorum and Voting. At all meetings of the
Board of Directors, the presence of one-third of the
entire Board of Directors shall constitute a quorum
unless there are only two or three Directors, in which
case two directors shall constitute a quorum. If there
is only one director, the sole director shall
constitute a quorum. At any adjourned meeting at which
a quorum is present, any business may be transacted
which might have been transacted at the meeting as
originally called.
3.12 Organization. The Board of Directors may, by
resolution adopted by a majority of the entire Board of
Directors, designate a chairman who shall preside at
each meeting. In the absence or inability of such
person to preside at a meeting, the President, or in
his or her absence or inability to act, another
director chosen by a majority of the directors present,
shall act as chairman of the meeting and preside
thereat. The Secretary (or in his or her absence or
inability to act, any person appointed by the chairman)
shall act as secretary of the meeting and keep the
minutes thereof.
3.13 Written Consent of Directors in Lieu of a
Meeting. Subject to the provisions of the 1940 Act,
any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if all members
of the Board of Directors or committee, as the case may
be, consent thereto in writing, and the writing or
writings are filed with the minutes of the proceedings.
3.14 Compensation. Directors may receive
compensation for services to the Corporation in their
capacities as directors or otherwise in such manner and
in such amounts as may be fixed from time to time by
the Board of Directors.
ARTICLE IV
Committees
4.1 Organization. By resolution adopted by the
Board of Directors, the Board may designate one or more
committees composed of two or more directors. The
Chairmen of such committees shall be elected by the
Board of Directors. The Board of Directors shall have
the power at any time to change the members of such
committees and to fill vacancies in the committees.
The Board of Directors may delegate to these committees
any of its powers, except the power to authorize the
issuance of stock, declare a dividend or distribution
on stock, recommend to stockholders any action
requiring stockholder approval, amend these By-Laws, or
approve any merger or share exchange which does not
require stockholder approval. If the Board of
Directors has given general authorization for the
issuance of stock, a committee of the Board, in
accordance with a general formula or method specified
by the Board by resolution or by adoption of a stock
option or other plan, may fix the terms of stock
subject to classification or reclassification and the
terms on which any stock may be issued, including all
terms and conditions required or permitted to be
established or authorized by the Board of Directors.
4.2 Proceedings and Quorum. In the absence of an
appropriate resolution of the Board of Directors, each
committee may adopt such rules and regulations
governing its proceedings, quorum and manner of acting
as it shall deem proper and desirable. In the event
any member of any committee is absent from any meeting,
the members thereof present at the meeting, whether or
not they constitute a quorum, may appoint a member of
the Board of Directors to act in the place of such
absent member.
ARTICLE V
Officers, Agents and Employees
5.1 General. The officers of the Corporation
shall be a President, Secretary and Treasurer, and may
include one or more additional Vice Presidents and/or
such other officers as may be appointed in accordance
with the provisions of Section 5.8.
5.2 Election, Tenure and Qualifications. The
officers of the Corporation, except those appointed as
provided in Section 5.8, shall be elected by the Board
of Directors at its first meeting and thereafter
annually at an annual meeting. If any officers are not
chosen at any annual meeting, such officers may be
chosen at any subsequent regular or special meeting of
the Board. Except as otherwise provided in this
Article V, each officer chosen by the Board of
Directors shall hold office until the next annual
meeting of the Board of Directors and until his or her
successor shall have been elected and qualified. Any
person may hold one or more offices of the Corporation
except the offices of President and Vice President.
5.3 Removal and Resignation. Whenever in the
judgment of the Board of Directors the best interest of
the Corporation will be served thereby, any officer may
be removed from office by the vote of a majority of the
members of the Board of Directors at any regular
meeting or at a special meeting called for such
purpose. Any officer may resign his office at any time
by delivering a written resignation to the Board of
Directors, the President or the Secretary. Unless
otherwise specified therein, such resignation shall
take effect upon delivery.
5.4 President. The President shall be the chief
executive officer of the Corporation, and shall have
general charge of the business, affairs and property of
the Corporation and general supervision over its
officers, employees and agents. Except as the Board of
Directors may otherwise order, he or she may sign in
the name and on behalf of the Corporation all deeds,
bonds, contracts, or agreements. He or she shall
exercise such other powers and perform such other
duties as from time to time may be assigned to him or
her by the Board of Directors.
5.5 Vice President. The Board of Directors may
from time to time elect one or more Vice Presidents who
shall have such powers and perform such duties as from
time to time may be assigned to them by the Board of
Directors or the President. At the request or in the
absence or disability of the President, the Vice
President (or if there are two or more Vice Presidents,
then the more senior of such officers present and able
to act) may perform all the duties of the President and
when so acting, shall have all the powers of and be
subject to all the restrictions upon the President.
Any Vice President may perform such duties as the Board
of Directors may assign.
5.6 Treasurer. The Treasurer shall be the
principal financial and accounting officer of the
Corporation and shall have general charge of the
finances and books of account of the Corporation.
Except as otherwise provided by the Board of Directors,
he or she shall have general supervision of the funds
and property of the Corporation and of the performance
by the Custodian of its duties with respect thereto.
He or she shall render to the Board of Directors,
whenever directed, an account of the financial
condition of the Corporation and of all his or her
transactions as Treasurer; and as soon as possible
after the close of each fiscal year he or she shall
make and submit to the Board of Directors a like report
for such fiscal year.
5.7 Secretary. The Secretary shall attend to the
giving and serving of all notices of the Corporation
and shall record all proceedings of the meetings of the
stockholders and directors in books to be kept for that
purpose. He or she shall keep in safe custody the seal
of the Corporation, and shall have charge of the
records of the Corporation, including the stock books
and such other books and papers as the Board of
Directors may direct and such books, reports,
certificates and other documents required by law to be
kept, all of which shall at all reasonable times be
open to inspection by any director. He or she shall
perform such other duties as appertain to his or her
office or as may be required by the Board of Directors.
5.8 Subordinate Officers. The Board of Directors
from time to time may appoint such other officers or
agents as it may deem advisable, each of whom shall
have such title, hold office for such period, have such
authority and perform such duties as the Board of
Directors may determine. The Board of Directors from
time to time may delegate to one or more officers or
agents the power to appoint any such subordinate
officers or agents and to prescribe their rights, terms
of office, authorities and duties.
5.9 Remuneration. The salaries or other
compensation of the officers of the Corporation shall
be fixed from time to time by resolution of the Board
of Directors, except that the Board of Directors may by
resolution delegate to any person or group of persons
the power to fix the salaries or other compensation of
any subordinate officers or agents appointed in
accordance with the provisions of Section 5.8.
5.10 Surety Bonds. The Board of Directors may
require any officer or agent of the Corporation to
execute a bond (including, without limitation, any bond
required by the 1940 Act, and the rules and regulations
of the Securities and Exchange Commission) to the
Corporation in such sum and with such surety or
sureties as the Board of Directors may determine,
conditioned upon the faithful performance of his or her
duties to the Corporation, including responsibility for
negligence and for the accounting of any of the
Corporation's property, funds or securities that may
come into his or her hands.
ARTICLE VI
Indemnification
6.1 Indemnification. The Corporation shall
indemnify (a) its directors and officers, whether
serving the Corporation or, at its request, any other
entity, to the full extent required or permitted by (i)
Maryland law now or hereafter in force, including the
advance of expenses under the procedures and to the
full extent permitted by law, and (ii) the 1940 Act,
and (b) other employees and agents to such extent as
shall be authorized by the Board of Directors and be
permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other
rights to which those seeking indemnification may be
entitled. The Board of Directors may take such action
as is necessary to carry out these indemnification
provisions and is expressly empowered to adopt, approve
and amend from time to time such resolutions or
contracts implementing such provisions or such further
indemnification arrangements as may be permitted by
law.
ARTICLE VII
Capital Stock
7.1 Stock Certificates. The interest of each
stockholder of the Corporation may be evidenced by
certificates for shares of Common Stock in such form as
the Board of Directors may from time to time prescribe.
The certificates representing shares of Common Stock
shall be signed by or in the name of the Corporation by
the President or a Vice President and countersigned by
the Secretary or the Treasurer. Certificates may be
sealed with the actual corporate seal or a facsimile of
it or in any other form. Any or all of the signatures
or the seal on the certificate may be manual or a
facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to
be such officer, transfer agent or registrar before
such certificate shall be issued, it may be issued by
the Corporation with the same effect as if such
officer, transfer agent or registrar were still in
office at the date of issue unless written instructions
of the Corporation to the contrary are delivered to
such officer, transfer agent or registrar.
7.2 Stock Ledgers. The stock ledgers of the
Corporation, containing the names and addresses of the
stockholders and the number of shares held by them
respectively, shall be kept at the principal offices of
the Corporation or, if the Corporation employs a
transfer agent, at the offices of the transfer agent of
the Corporation.
7.3 Transfers of Shares. Transfers of shares of
Common Stock of the Corporation shall be made on the
stock records of the Corporation only by the registered
holder thereof, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed
with the Secretary or with a transfer agent or transfer
clerk, and on surrender of the certificate or certifi
cates, if issued, for such shares properly endorsed or
accompanied by proper evidence of succession,
assignment or authority to transfer, with such proof of
the authenticity of the signature as the Corporation or
its agents may reasonably require and the payment of
all taxes thereon. Except as otherwise provided by
law, the Corporation shall be entitled to recognize the
exclusive right of a person in whose name any share or
shares of Common Stock stand on the record of
stockholders as the owner of such share or shares for
all purposes, including, without limitation, the rights
to receive dividends or other distributions, and to
vote as such owner, and the Corporation shall not be
bound to recognize any equitable or legal claim to or
interest in any such share or shares of Common Stock on
the part of any other person. The Board of Directors
may make such additional rules and regulations, not
inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and
registration of certificates for shares of Common Stock
of the Corporation.
7.4 Transfer Agents and Registrars. The Board of
Directors may from time to time appoint or remove
transfer agents and/or registrars of transfers of
shares of Common Stock of the Corporation, and it may
appoint the same person as both transfer agent and
registrar. Upon any such appointment being made, all
certificates representing shares of capital stock
thereafter issued shall be countersigned by one of such
transfer agents or by one of such registrars of
transfers or by both and shall not be valid unless so
countersigned. If the same person shall be both
transfer agent and registrar, only one countersignature
by such person shall be required.
7.5 Lost, Destroyed or Mutilated Certificates.
The holder of any certificates representing shares of
Common Stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or
mutilation of such certificate, and the Corporation may
issue a new certificate of Common Stock in the place of
any certificate theretofore issued by it which the
owner thereof shall allege to have been lost or
destroyed or which shall have been mutilated, and the
Board may, in its discretion, require such owner or his
or her legal representatives to give to the Corporation
a bond in such sum, limited or unlimited, and in such
form and with such surety or sureties, as the Board in
its absolute discretion shall determine, to indemnify
the Corporation against any claim that may be made
against it on account of the alleged loss or
destruction of any such certificate, or issuance of a
new certificate. Anything herein to the contrary
notwithstanding, the Board, in its absolute discretion,
may refuse to issue any such new certificate, except
pursuant to legal proceedings under the laws of the
State of Maryland.
ARTICLE VIII
Seal
8.1 Seal. The seal of the Corporation shall
bear, in addition to any other emblem or device
approved by the Board of Directors, the name of the
Corporation, the year of its incorporation and the
words "Corporate Seal" and "Maryland." The form of the
seal may be altered by the Board of Directors. Said
seal may be used by causing it or a facsimile thereof
to be impressed or affixed or in any other manner repro
duced. Any officer or director of the Corporation
shall have the authority to affix the corporate seal of
the Corporation to any document requiring the same.
ARTICLE IX
Fiscal Year
9.1 Fiscal Year. The fiscal year of the Company
shall be determined by resolution of the Board of
Directors.
ARTICLE X
Depositories and Custodians
10.1 Depositories. The funds of the Corporation
shall be deposited with such banks or other
depositories as the Board of Directors may from time to
time determine.
10.2 Custodians. All securities and other
investments shall be deposited in the safe keeping of
such banks or other companies as the Board of Directors
may from time to time determine. Every arrangement
entered into with any bank or other company for the
safe keeping of the securities and investments of the
Corporation shall contain provisions complying with the
1940 Act and the general rules and regulations
thereunder.
ARTICLE XI
Execution of Instruments
11.1 Checks, Notes, Drafts, etc. Checks, notes,
drafts, acceptances, bills of exchange and other orders
obligations for the payment of money shall be signed by
such officer or officers or person or persons as the
Board of Directors by resolution shall from time to
time designate or as these By-Laws provide.
11.2 Sale or Transfer of Securities. Stock
certificates, bonds or other securities at any time
owned by the Corporation may be held on behalf of the
Corporation or sold, transferred or otherwise disposed
of subject to any limits imposed by these By-Laws and
pursuant to authorization by the Board of Directors
and, when so authorized to be held on behalf of the
Corporation or sold, transferred or otherwise disposed
of, may be transferred from the name of the Corporation
by the signature of the President, any Vice President
or the Treasurer or pursuant to any procedure approved
by the Board of Directors, subject to applicable law.
ARTICLE XII
Independent Public Accountants
12.1 Independent Public Accountants. The
Corporation shall employ an independent public
accountant or a firm of independent public accountants
as its accountants to examine the accounts of the
Corporation and to sign and certify financial
statements filed by the Corporation.
ARTICLE XIII
Amendments
13.1 Amendments. These By-Laws may be amended,
altered or repealed at any regular meeting of the
stockholders or at any special meeting of the
stockholders at which a quorum is present or
represented, provided that notice of the proposed
amendment, alteration or repeal be contained in the
notice of such special meeting. These By-Laws may also
be amended, altered or repealed by the affirmative vote
of a majority of the Board of Directors at any regular
or special meeting of the Board of Directors, except
any particular By-Law which is specified as not subject
to alteration or repeal by the Board of Directors,
subject to the requirements of the 1940 Act.
