Exhibit 1(a)
ARTICLES OF AMENDMENT
AND
RESTATEMENT OF CHARTER
OF
THE CORPORATE INCOME FUND SERIES COMPANY, INC., a Maryland
corporation having its principal office at 1300 Mercantile Bank and
Trust Building, 2 Hopkins Plaza, Baltimore, Maryland 21202
(hereinafter called the "Corporation") , hereby certifies to the
Maryland Department of Assessments and Taxation that:
FIRST: The Articles of Incorporation of the Corporation
are hereby amended and restated in their entirety as hereinafter
set forth.
SECOND: The Board of Directors of the Corporation at a
meeting duly convened and held at 165 Broadway, New York, New York
on March 16, 1977 and by consent effective April 1, 1977,
unanimously adopted certain resolutions authorizing the amendment
and restatement of the Articles of Incorporation of the Corporation
in the form hereinafter set forth.
THIRD: To and including the date hereof, there are no
stockholders of the Corporation and no shares of stock of the
Corporation entitled to vote on this Amendment and Restatement.
FOURTH: This Amendment and Restatement of the Articles
of Incorporation of the Corporation has been duly advised by the
Board of Directors and authorized in the manner required by
Article 23 of the Annotated Code of Maryland, as amended.
<PAGE>
FIFTH: The Articles of Incorporation of the Corporation
as herein amended are hereby restated to read in their entirety as
follows:
2
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF THE CORPORATE FUND
ACCUMULATION PROGRAM, INC.
FIRST: The name of the corporation (hereinafter called
the "Corporation") is
THE CORPORATE FUND ACCUMULATION PROGRAM, INC.
SECOND: The purposes for which the Corporation is formed
and the business to be carried on and promoted by it are as
follows:
To conduct, operate and carry on the business of a
management investment company pursuant to applicable state and
federal regulatory statutes, and exercise all the powers
necessary and appropriate for the conduct of such operations.
To subscribe for, purchase or otherwise acquire,
own, hold, pledge, mortgage, hypothecate, sell, exchange or
otherwise dispose of, and to invest and reinvest and generally
deal in, any and all securities, as such term is hereinafter
defined, and, while the owner of any securities, to possess
and exercise all the rights, powers and privileges of
ownership, including the right to vote thereon or consent or
assent with respect thereto for any and all purposes.
The term "securities" as used in these Articles of
Incorporation shall mean any and all notes, stocks, bonds,
debentures, evidences of indebtedness, certificates of
interest or participation in profit-sharing agreements,
collateral trust certificates, transferable shares, investment
contracts, voting trust certificates, fractional undivided
interests in oil, gas or other mineral rights, or, in general,
any interests or instruments commonly known as securities, or
any and all certificates of interest or participation in, or
of deposit of, any of the foregoing, or receipts for,
guarantees of, or warrants or rights to, subscribe to or
purchase the same.
To make, establish and maintain investments in
securities, and to supervise and manage such investments.
To borrow money, and to make and issue notes, bonds,
debentures, obligations and evidences of indebtedness of all
kinds, whether secured by mortgage, pledge or otherwise,
without limit as to amount, and to secure the same by
mortgage, pledge or otherwise, and generally to make and
<PAGE>
perform agreements and contracts of every kind and
description, including contracts of guaranty and suretyship.
To lend money for its corporate purposes, invest and
reinvest its funds, and take, hold and deal with real and
personal property as security for the payment of funds so
loaned or invested.
To do all and everything necessary, suitable and
proper for the accomplishment of any of the purposes or the
attainment of any of the objects or the furtherance of any of
the powers hereinbefore set forth, either alone or in
association with other corporations, firms or individuals, and
to do every other act or acts, thing or things incidental or
appurtenant to or growing out of or connected with the
aforesaid business or powers of any part or parts thereof,
provided the same be not inconsistent with the laws under
which this Corporation is organized.
The business or purpose of the Corporation is from time
to time to do any one or more of the acts and things hereinabove
set forth, and it shall have power to conduct and carry on its said
business, or any part thereof, and to have one or more offices, and
to exercise any or all of its corporate powers and rights, in the
State of Maryland, and in the various other states, territories,
colonies and dependencies of the United States, in the District of
Columbia, and in all or any foreign countries.
The enumeration herein of the objects, business and
purposes of the Corporation shall be construed as powers as well as
objects and purposes and shall not be deemed to exclude by
inference any powers, objects or purposes which the Corporation is
empowered to exercise, whether expressly by force of the laws of
the State of Maryland now or hereafter in effect, or impliedly by
the reasonable construction of the said laws.
THIRD: The postoffice address of the principal office of
the Corporation in the State of Maryland is 1300 Mercantile Bank
and Trust Building, 2 Hopkins Plaza, Baltimore, Maryland 21202.
FOURTH: The resident agent of the Corporation in the
State of Maryland is the United States Corporation Company, whose
postoffice address is 1300 Mercantile Bank and Trust Building, 2
Hopkins Plaza, Baltimore, Maryland 21202. Said resident agent is
a corporation of the State of Maryland.
FIFTH: The total number of shares of capital stock which
the Corporation shall have authority to issue is fifty million
(50,000,000) shares, all of one class, of the par value of one cent
($.Ol) per share and of the aggregate par value of five hundred
thousand dollars ($500,000), and each share shall entitle the owner
thereof to vote at the rate of one (1) vote for each share held.
Any fractional share shall carry proportionately all the rights of
a whole share, excepting any right to receive a certificate
2
<PAGE>
evidencing such fractional share, but including, without
limitation, the right to vote and the right to receive dividends.
SIXTH: The powers and rights appurtenant to the
aforesaid shares of stock and the qualifications, limitations and
restrictions thereon shall be as follows:
1. The assets of the Corporation received as
consideration for the issue or sale of shares, together with
all income, earnings, profits and proceeds thereof; shall be
invested in a portfolio of securities which in the judgment of
the Board of Directors are appropriate for the Corporation.
2. In the case of the dissolution or other
liquidation of the Corporation, the stockholders shall be
entitled to receive, as a class, the assets of the
Corporation. The assets shall be distributed among such
stockholders in proportion to the number of shares held by
them respectively.
3. The holders of the outstanding shares shall be
entitled to receive out of the earned or paid-in surplus of
the Corporation, as dividends, when and as declared by the
Board of Directors, payable in cash and/or stock, an amount
substantially equivalent to the income received by the
Corporation in the form of interest or dividends upon the
assets, after deducting therefrom the expenses (including in
the discretion of the Board of Directors accrued expenses and
reserves) and after making any adjustments therein that may be
necessary in the case of any particular dividend, when the
number of outstanding shares has increased or decreased since
the previous dividend, in order to make the amount payable on
each share the same as it would have been in the absence of
such increase or decrease.
4. Extra dividends may be declared by the Board of
Directors at any time payable in cash and/or stock out of the
earned or paid-in surplus of the Corporation in such amounts
as the Board of Directors in its discretion may deem
advisable. In the computation of the amount available for any
particular dividend, the Board of Directors may, when the
number of outstanding shares has increased or decreased, make
any adjustments with respect thereto which may be necessary in
order to make the amount available for such dividend the same
per share as it would have been in the absence of such
increase or decrease.
5. Upon surrender of any properly endorsed
certificate for shares which are, by their terms, redeemable
by the record holder thereof or legal representative of such
holder or upon delivery of a request for redemption if no such
certificate has been issued, the Corporation shall purchase
the number of shares designated by said holder at the net
asset value of said shares next determined after such
3
<PAGE>
surrender or request or as of such other time as may be
required by any rule or regulation of the Securities and
Exchange Commission. The Corporation shall utilize for this
purpose the earned and paid-in surplus. Payment of the
redemption price shall be made by the Corporation within seven
(7) days after proper tender or request for redemption. The
Corporation may suspend the foregoing right of redemption or
postpone the date of payment upon redemption of its shares
which are redeemable for more than seven (7) days after the
surrender or tender of such shares to the Corporation or its
agent designated for that purpose for redemption (A) for any
period (i) during which the New York Stock Exchange is closed
other than customary weekend and holiday closings or
(ii) during which trading on the New York Stock Exchange is
restricted or an emergency exists, in each case as determined
by rules and regulations of the Securities and Exchange
Commission, or (B) for such other periods as the Securities
and Exchange Commission may by order permit such suspension.
In connection with any redemption or redemptions for any one
stockholder during any ninety (90) -day period, the Corporation
shall make payment or payments in cash up to the lesser of
$250, 000 or one percent (1%) of the net asset value of all
shares. Payments in excess of that amount may be made in cash
or, if the Board of Directors determines that liquidation of
the Corporation's holdings is impracticable or that such
payment in cash would be adverse to the interests of the
Corporation's stockholders, such payment may be made in whole
or in part in securities owned by the Corporation. The value
of any securities so distributed shall be deemed to be their
value used in determining the net asset value of the shares at
the time they were tendered for redemption.
6. Net asset value, as used herein, shall be
determined one or more times during each day on which the New
York Stock Exchange shall be open. The establishment of the
standards to be employed in such determination shall be the
responsibility of the Board of Directors, which may employ
therefor the services of a designated agent whose methods of
evaluation are believed by the Board to be fair and reasonable
for such purpose. In determining the value of securities, the
Corporation or its designated agent for such purpose may rely
on quotations furnished by recognized quotation services.
Amounts receivable for shares which have been sold but have
not been issued shall be included in the valuation of assets.
From the value so determined of all assets shall be deducted
the liabilities (including in the discretion of the Board of
Directors accrued expenses and reserves) . The net asset value
divided by the number of shares issued and outstanding
(including shares which have been sold, but have not been
issued) shall be the net asset value of any one share. The
Corporation, however, shall adjust the actual net asset value
per share to the next higher or the next lower cent per share
as it may from time to time and at any time determine.
4
<PAGE>
7. Except in connection with a merger,
consolidation, acquisition of substantially all of the assets
of another corporation or other reorganization, no shares of
the stock of the Corporation shall at any time be sold by the
Corporation (or otherwise issued except as stock dividends)
unless the Corporation shall receive as the net price of each
share sold (after deducting selling costs) a sum in cash
and/or securities (valued in the manner above provided) not
less than the net asset value of the shares (as determined in
the manner above provided) except that the initial sale of
shares of stock may be made for such consideration not less
than the par value thereof as may be fixed by the Board of
Directors at its discretion.
SEVENTH: The following additional provisions are
inserted for the management of the business and for the conduct of
the affairs of this Corporation and its directors and stockholders:
1. No stockholder of the Corporation shall have
any preemptive or other right to purchase or subscribe for any
shares of the capital stock of the Corporation which it may
issue or sell, whether now or hereafter authorized, other than
such right, if any, as the Board of Directors of this
Corporation in its discretion from time to time may determine.
The stockholders of the Corporation shall have the power, by
affirmative vote of the holders of a majority of the
outstanding shares entitled to vote thereon, to (i) authorize
the sale, lease, exchange, or other disposal of all or
substantially all of the property and assets of the
Corporation, including its good will, (ii) to amend the
Articles of Incorporation of the Corporation, and (iii) to
adopt an agreement of consolidation or merger.
2. In furtherance and not in limitation of the
powers conferred by statute and pursuant to the Articles of
Incorporation of the Corporation, the Board of Directors is
expressly authorized to do the following:
(a) to make, adopt, alter, amend and repeal
the By-laws of the Corporation; provided that the
stockholders may make, adopt, alter, amend or repeal any
of the By-laws of the Corporation;
(b) to distribute, in its discretion, for any
fiscal year (in the year or in the next fiscal year) as
ordinary dividends and as capital gains distributions,
respectively, amounts of the assets of the Corporation
sufficient to enable the Corporation as a regulated
investment company to avoid any liability for federal
income tax in respect of such year. Any distribution or
dividend paid to stockholders from any capital source
shall be accompanied by a written statement showing the
source or sources of such payment;
5
<PAGE>
(c) to authorize, subject to such approval of
stockholders and other conditions, if any, as may be
required by any applicable statute, rule or regulation,
the execution and performance by the Corporation of one
or more agreements with any person, corporation,
association, company, trust, partnership (limited or
general) or other organization whereby, subject to the
supervision and control of the Board of Directors, any
such other person, corporation, association, company,
trust, partnership (limited or general) or other
organization shall render or make available to the
Corporation managerial, investment advisory and/or
related services, office space and other services and
facilities (including, if deemed advisable by the Board
of Directors, the management or supervision of the
investment portfolios of the Corporation) upon such terms
and conditions as may be provided in such agreement or
agreements (including, if deemed fair and equitable by
the Board of Directors, the compensation payable
thereunder by the Corporation);
(d) to authorize any agreement of the
character described in subparagraph (c) of this paragraph
(2) with any person, corporation, association, company,
trust, partnership (limited or general) or other
organization, although one or more of the members of the
Board of Directors or officers of the Corporation may be
the other party to any such agreement or an officer,
director, stockholder, or member of such other party, and
no such agreement shall be invalidated or rendered
voidable by reason of the existence of any such
relationship. Any member of the Board of Directors of
the Corporation who is also a director or officer of such
other corporation or who is so interested or associated
with such other corporation or organization may be
counted in determining the existence of a quorum at any
meeting of the Board of Directors which shall authorize
any such agreement, and may vote thereat to authorize any
such contract or transaction, with like force and effect
as if he were not such director or officer of such other
corporation or not so interested or associated. Any
agreement entered into pursuant to said subparagraph (c)
shall be consistent with and subject to the requirements
of Section 15 of the Investment Company Act of 1940
(including any amendment thereof or other applicable Act
of Congress hereafter enacted), and no amendment to any
agreement entered into pursuant to said subparagraph (c)
(other than an amendment reducing the compensation of the
other party thereto) shall be effective unless assented
to by the affirmative vote of a majority of the
Corporation's outstanding voting securities, as such
phrase is defined in the Investment Company Act of 1940;
6
<PAGE>
(e) to allot and authorize the issuance of the
authorized but unissued shares of the Corporation;
(f) to accept or reject subscriptions for
shares of the Corporation made after incorporation; and
(g) to fix the terms, conditions and
provisions of and authorize the issuance of options to
purchase or subscribe for shares of the Corporation,
including the option price or prices at which shares of
the Corporation may be purchased or subscribed for.
3. The determination as to any of the following
matters made by or pursuant to the direction of the Board of
Directors consistent with the Articles of Incorporation of the
Corporation and in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of duties, shall
be final and conclusive and shall be binding upon the
Corporation and every holder of shares of its capital stock,
namely, the amount of the net income of the Corporation from
dividends and interest for any period and the amount of assets
at any time legally available for the payment of dividends,
the amount of paid-in surplus, other surplus, annual or other
net profits, or net assets in excess of capital, undivided
profits, or excess of profits over losses on sales of
securities; the amount, purpose, time of creation, increase or
decrease, alteration or cancellation of any reserves or
charges and the propriety thereof (whether or not any
obligation or liability for which such reserves or charges
shall have been created shall have been paid or discharged);
the market values, or any sale, bid or asked price to be
applied in determining the market value, of any security owned
or held by the Corporation; the fair value of any other asset
owned by the Corporation; the number of shares issued or
issuable; any matter relating to the acquisition, holding and
disposition of securities and other assets by the Corporation;
and any question as to whether any transaction constitutes a
purchase of securities on margin, a short sale of securities,
or an underwriting of the sale of, or participation in any
underwriting or selling group in connection with the public
distribution of, any securities.
4. The Board of Directors or the stockholders of
the Corporation may adopt, amend, affirm or reject investment
policies and restrictions upon investment or the use of assets
of the Corporation and may designate some such policies as
fundamental and not subject to change other than by a vote of
a majority of its outstanding voting securities, as such
phrase is defined in the Investment Company Act of 1940.
5. At every meeting of the stockholders, the
holders of record of one-third of the outstanding shares
entitled to vote at the meeting, whether present in person or
represented by proxy, shall, except as otherwise provided by
7
<PAGE>
law, constitute a quorum. If at any meeting there shall be no
quorum, the holders of record of a majority of such shares
entitled to vote at the meeting so present or represented may
adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall have
been obtained, whereupon any business may be transacted which
might have been transacted at the meeting as first convened
had there been a quorum.
EIGHTH: The Corporation reserves the right to amend,
alter, change, add to or repeal any provision contained in these
Articles of Incorporation in the manner now or hereafter prescribed
by statute, and all rights and powers conferred by these Articles
of Incorporation on stockholders, directors and officers are
granted subject to this reservation.
NINTH: The number of directors of the Corporation is
three (3), but this number may be increased from time to time in
the manner provided in the By-Laws of the Corporation. The number
of directors shall never be less than the number prescribed by the
General Corporation Law of the State of Maryland.
TENTH: The Corporation is to have perpetual existence.
ELEVENTH: The directors shall have power, if the By-Laws
so provide, to hold their meetings either within or without the
State of Maryland, and the Corporation may have one or more offices
in addition to the principal offices in Maryland and keep its books
outside of the State of Maryland at such places as may from time to
time be designated by the Board.
TWELFTH: No director shall be disqualified from voting
or acting on behalf of the Corporation in contracting with any
other corporation in which he may be a director, officer or a
stockholder, nor shall any director of the Corporation be
disqualified from voting or acting in its behalf by reason of any
personal interest.
THIRTEENTH: The Corporation acknowledges that it is
adopting its corporate name through permission of Fund Asset
Management, Inc. and agrees that such company reserves to itself
and any successors to its business the right to grant the
nonexclusive right to use the name "Corporate Fund Investment
Accumulation Program" or any similar name to any other corporation
or entity, including but not limited to any investment company of
which such company or any subsidiary or affiliate thereof or any
successor to the business thereof shall be the investment adviser.
8
<PAGE>
IN WITNESS WHEREOF, the aforesaid corporation has caused
these presents to be signed in its name on its behalf by one of its
Vice Presidents and its corporate seal to be hereunto affixed and
attested by its Secretary on April 20, 1977.
THE CORPORATE INCOME FUND SERIES
COMPANY, INC.
By: /s/ William W. Hewitt
-----------------------------
Vice President
[SEAL]
/s/ Stephen M.M. Miller
-------------------------
Secretary
<PAGE>
STATE OF NEW YORK
SS.:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that on April 20, 1977, before me the
subscriber, a Notary Public, personally appeared William W. Hewitt,
Jr., a Vice President of The Corporate Income Fund Series Company,
Inc., a Maryland corporation, and in the name and on behalf of the
Corporation acknowledged the foregoing Articles of Amendment and
Restatement to be the corporate act of the Corporation and further
made oath in due form of law that the matters and facts set forth
in said Articles of Amendment and Restatement with respect to the
approval thereof are true to the best of his knowledge, information
and belief.
WITNESS my hand and written seal, the day and year last
above written.
/s/ Frank T. Jankech
-----------------------------------
Notary Public
[SEAL]
<PAGE>
ARTICLES OF
AMENDMENT AND RESTATEMENT
OF THE
ARTICLES OF INCORPORATION
OF
THE CORPORATE INCOME FUND SERIES COMPANY, INC.
The Corporate Income Fund Series Company, Inc., a
Maryland corporation, having its principal office in the State of
Maryland at 1300 Mercantile Bank and Trust Building, 2 Hopkins
Plaza, Baltimore, Maryland 21202 (hereinafter called the
"Corporation"), hereby certifies to the Maryland Department of
Assessments and Taxation that:
FIRST: The Articles of Incorporation of the Corporation
are hereby amended and restated in their entirety as hereinafter
set forth.
SECOND: The Board of Directors of the Corporation at a
meeting duly convened and held at One Liberty Plaza, 165 Broadway,
New York, New York, on November 16, 1976 unanimously adopted
certain resolutions authorizing the amendment and restatement of
the Articles of Incorporation of the Corporation in the form
hereinafter set forth.
THIRD:, To and including the date hereof, there are no
stockholders of the Corporation and no shares of stock entitled to
vote on this Amendment and Restatement.
FOURTH: This Amendment and Restatement of the Articles
of Incorporation of the Corporation has been duly advised by the
Board of Directors and authorized in the manner required by Article
23 of the Annotated Code of Maryland, as amended.
<PAGE>
FIFTH: The Articles of Incorporation as herein amended
are hereby restated in their entirety as follows:
2
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
THE CORPORATE INCOME FUND SERIES COMPANY, INC.
FIRST: The name of the corporation (hereinafter called
the "Corporation") is
THE CORPORATE INCOME FUND SERIES COMPANY, INC.
SECOND: The purposes for which the Corporation is formed
and the business to be carried on and promoted by it are as
follows:
To conduct, operate and carry on the business of a
management investment company pursuant to applicable state and
federal regulatory statutes, and exercise all the powers
necessary and appropriate to the conduct of such operations.
To subscribe for, purchase or otherwise acquire,
own, hold, pledge, mortgage, hypothecate, sell, exchange or
otherwise dispose of, and to invest and reinvest and generally
deal in, any and all securities, as such term is hereinafter
defined, and, while the owner of any securities, to possess
and exercise all the rights, powers and privileges of
ownership, including the right to vote thereon or consent or
assent with respect thereto for any and all purposes.
The term "securities" as used in these Articles of
Incorporation, shall mean any and all notes, stocks, bonds,
debentures, evidences of indebtedness, certificates of
interest or participation in profit-sharing agreements,
collateral trust certificates, transferable shares, investment
contracts, voting trust certificates, fractional undivided
interests in oil, gas or other mineral rights, or, in general,
any interests or instruments commonly known as securities, or
any and all certificates of interest or participation in, or
of deposit of, any of the foregoing, or receipts for,
guarantees of, or warrants or rights to subscribe to or
purchase the same.
To make, establish and maintain investments in
securities, and to supervise and manage such investments.
To borrow money, and to make and issue notes, bonds,
debentures, obligations and evidences of indebtedness of all
kinds, whether secured by mortgage, pledge or otherwise,
without limit as to amount, and to secure the same by
mortgage, pledge or otherwise, and generally to make and
<PAGE>
perform agreements and contracts of every kind and
description, including contracts of guaranty and suretyship.
To lend money for its corporate purposes, invest and
reinvest its funds, and take, hold and deal with real and
personal property as security for the payment of funds so
loaned or invested.
To do all and everything necessary, suitable and
proper for the accomplishment of any of the purposes or the
attainment of any of the objects or the furtherance of any of
the powers hereinbefore set forth, either alone or in
association with other corporations, firms or individuals, and
to do every other act or acts, thing or things incidental or
appurtenant to or growing out of or connected with the
aforesaid business or powers or any part or parts thereof,
provided the same be not inconsistent with the laws under
which this corporation is organized.
The business or purpose of the Corporation is from time
to time to do any one or more of the acts and things hereinabove
set forth, and it shall have power to conduct and carry on its said
business, or any part thereof, and to have one or more offices, and
to exercise any or all of its corporate powers and rights, in the
State of Maryland, and in the various other states, territories,
colonies and dependencies of the United States, in the District of
Columbia, and in all or any foreign countries.
The enumeration herein of the objects, business and
purposes of the Corporation shall be construed as powers as well as
objects and purposes and shall not be deemed to exclude by
inference any powers, objects of purposes which the Corporation is
empowered to exercise, whether expressly by force of the laws of
the State of Maryland now or hereafter in effect, or impliedly by
the reasonable construction of the said laws.
THIRD: The post office address of the principal office
of the Corporation in the State of Maryland is 1300 Mercantile Bank
and Trust Building, 2 Hopkins Plaza, Baltimore, Maryland 21202.
FOURTH: The resident agent of the corporation in the
State of Maryland is the United States Corporation Company, whose
post office address is 1300 Mercantile Bank and Trust Building,
2 Hopkins Plaza, Baltimore, Maryland 21202. Said resident agent is
a corporation of the State of Maryland.
FIFTH: The total number of shares of all series of stock
which the Corporation shall have authority to issue is fifty
million (50,000,000). All shares of each series shall have a par
value of one cent ($.Ol) each and shall entitle the owner thereof
to vote at the rate of one (1) vote for each share held. The stock
may be issued in series comprising such number of shares and having
such designations, such powers, preferences, provisions as to
redeemability and rights and such qualifications, limitations and
2
<PAGE>
restrictions as shall be fixed and determined from time to time by
resolution or resolutions providing for the issuance of such stock
adopted by the Board of Directors, to whom authority so to fix and
determine the same is hereby expressly granted. In addition, the
Board of Directors is hereby expressly granted authority to
increase or decrease the number of shares of any series, but the
number of shares of any series shall not be decreased by the Board
of Directors below the number of shares thereof then outstanding.
SIXTH: The powers, preferences and rights of the
aforesaid series of stock and the qualifications, limitations and
restrictions thereof shall be as follows:
1. The assets of the corporation received as
consideration for the issue or sale of shares of each series,
together with all income, earnings, profits and proceeds
thereof, shall be invested in a portfolio of securities which
in the judgment of the Board of Directors are appropriate for
such series. Such assets of the Corporation, the income,
earnings and profits derived therefrom, any proceeds derived
from the sale or other liquidation thereof and any assets
derived from any reinvestment of such proceeds, in whatever
form the same may be, shall irrevocably appertain to the
series of shares in exchange for which such assets were
received by the Corporation for all purposes, subject only to
the rights of creditors, and shall be so entered upon the
books of account. Such assets, income, earnings and profits
derived therefrom and such proceeds and assets obtained by the
reinvestment thereof are hereinafter referred to as "assets
appertaining to such series.,, The assets appertaining to any
series of stock shall be charged with the liabilities
(including in the discretion of the Board of Directors accrued
expenses and reserves) in respect of such series, and shall
also be charged with a share of such liabilities (including
general liabilities of the Corporation) in respect of any two
or more series, in proportion to the asset value of the
respective series determined as hereinafter provided. The
determination of the Board of Directors shall be conclusive as
to which of such liabilities are allocable to a given series
and as to which of the same are general or allocable to two or
more series.
2. In case of the dissolution or other liquidation
of the Corporation, the shareholders of each series shall be
entitled to receive, as a class, out of the assets of the
Corporation available for distribution to shareholders (other
than general assets not appertaining to any particular class
of stock) the assets appertaining to such series (not
including such general assets), and the assets so
distributable to the shareholders of any series shall be
distributed among such shareholders in proportion to the
number of shares of such series held by them respectively. In
the event that there are any general assets not appertaining
to any particular series of stock and available for
3
<PAGE>
distributions, such distribution shall be made among the
holders of stock of all series, each share of stock sharing
equally with every other share regardless of series.
3. The holders of the outstanding shares of each
series shall be entitled to receive out of the earned or
paid-in surplus of the Corporation applicable to such series,
as dividends, when and as declared by the Board of Directors,
payable in cash and/or stock, an amount substantially
equivalent to the income received by the Corporation in the
form of interest or dividends upon the assets appertaining to
such series, after deducting therefrom the expenses
(including, in the discretion of the Board of Directors,
accrued expenses and reserves) allocable to such series, and
after making any adjustments therein that may be necessary in
the case of any particular dividend, when the number of
outstanding shares of such series has increased or decreased
since the previous dividend, in order to make the amount
thereof payable in each share the same as it would have been
in the absence of such increase or decrease.
4. Extra dividends on the shares of any series may
be declared by the Board of Directors at any time payable in
cash and/or stock of the same series out of the earned or
paid-in surplus of the Corporation applicable to such series
in such amounts as the Board of Directors, in its discretion,
may deem advisable. In the computation of the amount
available for any particular dividend, the Board of Directors
may, when the number of outstanding shares of such series has
increased or decreased, make any adjustments with respect
thereto which may be necessary in order to make the amount
available for such dividend the same per share as it would
have been in the absence of such increase or decrease.
5. Upon surrender of any properly endorsed
certificate for shares which are, by their terms, redeemable
of any series of its capital stock by the record holder
thereof or legal representative of such holder or upon
delivery of a request for redemption if no such certificate
has been issued, the Corporation shall purchase the number of
shares designated by said holder at the net asset value of
said shares next determined after such surrender or request or
as of such other time as may be required by any rule or
regulation of the Securities and Exchange Commission. The
Corporation shall utilize for this purpose the earned and
paid-in surplus applicable to such series, in such proportion
from each as in the judgment of the Board of Directors will
maintain the same proportionate interest therein of the shares
of such series outstanding after such purchase. Payment of
the redemption price shall be made by the Corporation within
seven (7) days after proper tender or request for redemption.
The Corporation may suspend the foregoing right of redemption
or postpone the date of payment upon redemption of its shares
which are redeemable for more than seven (7) days after the
4
<PAGE>
surrender or tender of such shares to the Corporation or its
agent designated for that purpose for redemption (A) for any
period (i) during which the New York Stock Exchange is closed
other than customary weekend and holiday closings or
(ii) during which trading on the New York Stock Exchange is
restricted or an emergency exists, in each case as determined
by rules and regulations of the Securities and Exchange
Commission, or (B) for such other period as the Securities and
Exchange Commission may by order permit such suspension. In
connection with any redemption or redemptions for any one
shareholder of shares of any one series of stock during any
ninety (90) -day period, the Corporation shall make payment or
payments in cash up to the lesser of $250,000 or one percent
(1%) of the net asset value of such series. Payments in
excess of that amount may be made in cash or, if the Board of
Directors determines that liquidation of the Corporation's
holdings is impracticable or that such payment in cash would
be adverse to the interests of the Corporation's shareholders,
such payment may be made in whole or in part in securities
owned by the Corporation. The value of any securities so
distributed shall be deemed to be their value used in
determining the asset value of the shares at the time they
were tendered for redemption.
6. Net asset value, as used herein, shall be
determined one or more times during each day on which the New
York Stock Exchange shall be open. Such determination shall
be made in the following manner: Securities listed or
commonly dealt in on a national securities exchange shall
generally be valued on the basis of the closing sale price on
the principal exchange on which such security is listed
(unless such price is deemed inappropriate as a basis for
valuation). If there is no such closing sale price or if the
securities are unlisted, such securities shall be valued
(a) on the basis of current bid prices, (b) if bid prices are
not available, on the basis of current bid prices for
comparable securities, (c) by appraising the value of the
securities on the bid side of the market, or (d) by any
combination thereof. Other property, including securities for
which no quotations are available, shall be appraised at fair
value as determined in good faith by the Board of Directors or
its designated agent for such purpose. In determining the
value of securities, the Corporation or its designated agent
for such purpose may rely on quotations furnished by
recognized quotation services and upon evaluations supplied by
security evaluating services. Amounts receivable for shares
which have been sold but have not been issued shall be
included in the valuation of assets. From the value so
determined of all assets appertaining to each series shall be
deducted the liabilities (including in the discretion of the
Board of Directors accrued expenses and reserves) allocated to
such series. The result shall be the net asset value of such
series. The net asset value of any series divided by the
number of shares of said series issued and outstanding
5
<PAGE>
(including shares which have been sold, but have not been
issued) shall be the net asset value of any one share of said
series. The Corporation, however, shall adjust the actual net
asset value per share to the next higher or the next lower
cent per share as it may from time to time and at any time
determine.
7. Except in connection with a merger,
consolidation, acquisition of substantially all of the assets
of another corporation or other reorganization, no shares of
any of the series of stock of the Corporation shall at any
time be sold by the Corporation (or otherwise issued except as
stock dividends) unless the Corporation shall receive as the
net price of each share sold (after deducting selling costs)
a sum in cash and/or securities (valued in the manner above
provided) not less than the net asset value of the shares of
such series (as determined in the manner above provided)
except that the initial sale of shares of each series of stock
may be made for such consideration not less than the par value
thereof as may be fixed by the Board of Directors at its
discretion.
SEVENTH: The following additional provisions are
inserted for the management of the business and for the conduct of
the affairs of this Corporation and its directors and stockholders:
1. No stockholder of the Corporation shall have
any preemptive or other right to purchase or subscribe for any
shares of the capital stock of the Corporation which it may
issue or sell, whether now or hereafter authorized, other than
such right, if any, as the Board of Directors of this
Corporation, in its discretion, from time to time may
determine. The stockholders of the Corporation shall have the
power, by affirmative vote of the holders of a majority of the
outstanding shares entitled to vote thereon, to (i) authorize
the sale, lease, exchange, or other disposal of all or
substantially all of the property and assets of the
Corporation, including its good will, (ii) to amend the
Articles of Incorporation of the Corporation and (iii) to
adopt an agreement of consolidation or merger.
2. In furtherance and not in limitation of the
powers conferred by statute and pursuant to the Articles of
Incorporation of the Corporation, the Board of Directors is
expressly authorized to do the following:
(a) to make, adopt, alter, amend and repeal
the By-laws of the Corporation; provided that the
shareholders may make, adopt, alter, amend or repeal any
of the By-laws of the Corporation;
(b) to distribute, in its discretion, for any
fiscal year (in the year or in the next fiscal year) as
ordinary dividends and as capital gains distributions,
6
<PAGE>
respectively, amounts of the assets appertaining to each
series of stock of the Corporation sufficient to enable
the Corporation as a regulated investment company to
avoid any liability for Federal income tax in respect of
such year. Any distribution or dividend paid to
shareholders from any capital source shall be accompanied
by a written statement showing the source or sources of
such payment;
(c) to authorize, subject to such approval of
shareholders and other conditions, if any, as may be
required by any applicable statute, rule or regulation,
the execution and performance by the Corporation of one
or more agreements with any person, corporation,
association, company, trust, partnership (limited or
general) or other organization whereby, subject to the
supervision and control of the Board of Directors, any
such other person, corporation, association, company,
trust, partnership (limited or general) or other
organization shall render or make available to the
Corporation managerial, investment advisory and/or
related services, office space and other services and
facilities (including, if deemed advisable by the Board
of Directors, the management or supervision of the
investment portfolios of the Corporation) upon such terms
and conditions as may be provided in such agreement or
agreements (including, if deemed fair and equitable by
the Board of Directors, the compensation payable
thereunder by the Corporation);
(d) to authorize any agreement of the
character described in subparagraph (c) of this paragraph
(2) with any person, corporation, association, company,
trust, partnership (limited or general) or other
organization, although one or more of the members of the
Board of Directors or officers of the Corporation may be
the other party to any such agreement or an officer,
director, shareholder, or member of such other party, and
no such agreement shall be invalidated or rendered
voidable by reason of the existence of any such
relationship. Any member of the Board of Directors of
the Corporation who is also a director or officer of such
other corporation or who is so interested or associated
with such other corporation or organization may be
counted in determining the existence of a quorum at any
meeting of the Board of Directors which shall authorize
any such agreement, and may vote thereat to authorize any
such contract or transaction, with like force and effect
as if he were not such director or officer of such other
corporation or not so interest or associated. Any
agreement entered into pursuant to said subparagraph (c)
shall be consistent with and subject to the requirements
of Section 15 of the Investment Company Act of 1940
(including any amendment thereof or other applicable Act
7
<PAGE>
of Congress hereafter enacted), and no amendment to any
agreement entered into pursuant to said subparagraph (c)
(other than an amendment reducing the compensation of the
other party thereto) shall be effective unless assented
to by the affirmative vote of a majority of the
Corporation's outstanding voting securities, as such
phrase is defined in the Investment Company Act of 1940,
and the affirmative vote of a majority of the shares of
the series of stock of the Company, similarly defined,
which appertains to the assets to which such agreement
relates;
(e) to allot and authorize the issuance of the
authorized but unissued shares of any series of the
Corporation;
(f) to accept or reject subscriptions for
shares of any series of the Corporation made after
incorporation; and
(g) to fix the terms, conditions and
provisions of and authorize the issuance of options to
purchase or subscribe for shares of any series of the
Corporation, including the option price or prices at
which shares of any series of the Corporation may be
purchased or subscribed for.
3. The determination as to any of the following
matters made by or pursuant to the direction of the Board of
Directors consistent with the Articles of Incorporation of the
Corporation and in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of duties, shall
be final and conclusive and shall be binding upon the
Corporation and every holder of shares of any series of its
capital stock, namely, the amount of the assets, obligations,
liabilities and expenses of the Corporation appertaining to
any series of stock of the Corporation; the amount of the net
income of the Corporation from dividends and interest
appertaining to any series of stock of the Corporation for any
period and the amount of assets appertaining to any series of
stock of the Corporation at any time legally available for the
payment of dividends; the amount appertaining to any series of
stock of the Corporation of paid-in surplus, other surplus,
annual or other net profits, or net assets in excess of
capital, undivided profits, or excess of profits over losses
on sales of securities; the amount, purpose, time of creation,
increase or decrease, alteration or cancellation of any
reserves or charges appertaining to any series of stock of the
Corporation and the propriety thereof (whether or not any
obligation or liability for which such reserves or charges
shall have been created shall have been paid or discharged);
the market values, or any sale, bid or asked price to be
applied in determining the market value, of any security owned
or held by the Corporation; the fair value of any other asset
8
<PAGE>
owned by the Corporation; the number of shares of any series
of the Corporation issued or issuable; any matter relating to
the acquisition, holding or disposition of securities and
other assets by the Corporation appertaining to any series of
stock of the Corporation; and any question as to whether any
transaction constitutes a purchase of securities on margin, a
short sale of securities, or an underwriting of the sale of,
or participation in any underwriting or selling group in
connection with the public distribution of, any securities.
4. The Board of Directors or the shareholders of
the Corporation may adopt, amend, affirm or reject investment
policies and restrictions upon investment or the use of assets
appertaining to one or more series of the capital stock of the
Corporation and may designate some such policies as
fundamental and not subject to change other than by a vote of
a majority of its outstanding voting securities, as such
phrase is defined in the Investment Company Act of 1940, of
such series.
EIGHTH: The Corporation reserves the right to amend,
alter, change, add to or repeal any provision contained in these
Articles of Incorporation in the manner now or hereafter prescribed
by statute, and all rights and powers conferred by these Articles
of Incorporation on stockholders, directors and officers are
granted subject to this reservation.
NINTH: The number of directors of the Corporation is
three (3), but this number may be increased from time to time in
the manner provided in the By-laws of the Corporation. The number
of directors shall never be less than the number prescribed by the
General Corporation Law of the State of Maryland.
TENTH: The Corporation is to have perpetual existence.
ELEVENTH: The directors shall have power, if the By-laws
so provide, to hold their meetings either within or without the
State of Maryland, and the Corporation may have one or more offices
in addition to the principal office in Maryland and keep its books
outside of the State of Maryland at such places as may from time to
time be designated by the Board.
TWELFTH: No directors shall be disqualified from voting
or acting on behalf of the Corporation in contracting with any
other corporation in which he may be a director, officer or a
stockholder, nor shall any director of the Corporation be
disqualified from voting or acting in its behalf by reason of any
personal interest.
THIRTEENTH: The Corporation acknowledges that it is
adopting its corporate name through permission of Fixed Income Fund
Services, Inc. , Basub Advisors Ltd. and Reydend Inc. and agrees
that such companies reserve to themselves and any successors to
their respective businesses the right to grant the non-exclusive
9
<PAGE>
right to use the names "Municipal Fund" and "Municipal Investment
Trust Fund" or any similar name to any other corporation or entity,
including but not limited to any investment company of which such
companies or any subsidiaries or affiliates thereof or any
successors to the businesses of any thereof shall be the investment
adviser.
FOURTEENTH: The Corporation acknowledges that under its
Articles of Incorporation prior to this Amendment and Restatement,
the Corporation was authorized to issue one million (1, 000, 000)
shares of all series of its capital stock par value ten cents
($.10) each, amounting to an aggregate par value of $100,000.
10
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these
presents to be signed in its name on its behalf by its President
and its corporate seal to be hereunto affixed and attested by its
Secretary on December 15, 1976.
THE CORPORATE INCOME FUND
SERIES COMPANY, INC.
/s/ Norman I. Schvey
-----------------------------------
Norman I. Schvey
President
Attest: /s/ Deedie C. Gurnee
---------------------
Deedie C. Gurnee
Secretary
STATE OF NEW YORK
) Ss.:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that on December 15, 1976, before me, a
Notary Public, personally appeared Norman I. Schvey, President of
The Corporate Income Fund Series Company, Inc., a Maryland
corporation, and in the name and on behalf of the Corporation
acknowledged the foregoing Articles of Amendment and Restatement to
be the corporate act of the Corporation and further made oath in
due form of law that the matters and facts set forth in said
Articles of Amendment and Restatement with respect to the approval
thereof are true to the best of his knowledge, information and
belief.
WITNESS my hand and notarial seal, the day and year last
above written.
Notary Public
Exhibit 2
BY - LAWS
OF
THE CORPORATE FUND ACCUMULATION PROGRAM, INC.
ARTICLE I
Offices
Section 1. Principal Office. The principal office of
the Corporation shall be in the City of Baltimore, State of
Maryland.
Section 2. Principal Executive Office. The principal
executive office of the Corporation shall be at 800 Scudders Mill
Road, Plainsboro, New Jersey 08536.
Section 3. 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
Section 1. Annual Meeting. 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. In the
event that the Corporation shall be required to hold an annual
meeting of stockholders to elect directors by the Investment
Company Act of 1940, as amended, such meeting shall be held no
later than 120 days after the occurrence of the event requiring
the meeting. Any stockholders' meeting held in accordance with
<PAGE>
this Section shall for all purposes constitute the annual meeting
of stockholders for the year in which the meeting is held.
Section 2. Special Meetings. Special meetings of the
stockholders, unless otherwise provided by law, may be called for
any purpose or purposes by a majority of the Board of Directors,
the President, or on the written request of the holders of at
least 10% of the outstanding shares of capital stock of the
Corporation entitled to vote at such meeting if they comply with
Section 2-502(b) or (c) of the Maryland General Corporation Law.
Section 3. Place of Meetings. Meetings of the
stockholders shall be held at such place within the United States
as the Board of Directors may from time to time determine.
Section 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 special 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 address as it appears on the
records of the Corporation, with postage thereon prepaid.
Notice of any meeting of stockholders shall be deemed
waived by any stockholder who shall attend such meeting in person
or by proxy, or who shall, either before or after the meeting,
submit a signed waiver of notice which is filed with the records
2
<PAGE>
of the meeting. when a meeting is adjourned to another time and
place, unless the Board of Directors, after the adjournment,
shall fix a new record date for an adjourned meeting, or the
adjournment is for more than one hundred and twenty days after
the original record date, notice of such adjourned meeting need
not be given if the time and place to which the meeting shall be
adjourned were announced at the meeting at which the adjournment
is taken.
Section 5. Quorum. At all meetings of the
stockholders, the holders of shares of stock of the Corporation
entitled to cast a majority of the votes entitled to be cast,
present in person or by proxy, shall constitute a quorum for the
transaction of any business, except with respect to any matter
which requires approval by a separate vote of one or more classes
of stock, in which case the presence in person or by proxy of the
holders of shares entitled to cast a majority of the votes
entitled to be cast by each class entitled to vote as a separate
class shall constitute a quorum. In the absence of a quorum no
business may be transacted, except that the holders of a majority
of the shares of stock present in person or by proxy and entitled
to vote may adjourn the meeting from time to time, without notice
other than announcement thereat except as otherwise required by
these By-Laws, until the holders of the requisite amount of
shares of stock shall be so present. At any such adjourned
meeting at which a quorum may be present any business may be
transacted which might have been transacted at the meeting as
originally called. The absence from any meeting, in person or by
3
<PAGE>
proxy, of holders of the number of shares of stock of the
Corporation in excess of a majority thereof which may be required
by the laws of the State of Maryland, the Investment Company Act
of 1940, as amended, or other applicable statute, the Articles of
Incorporation, or these By-Laws, for action upon any given matter
shall not prevent action at such meeting upon any other matter or
matters which may properly come before the meeting, if there
shall be present thereat, in person or by proxy, holders of the
number of shares of stock of the Corporation required for action
in respect of such other matter or matters.
Section 6. Organization. At each meeting of the
stockholders, the Chairman of the Board (if one has been
designated by the Board), or in his absence or inability to act,
the President, or in the absence or inability to act of the
Chairman of the Board and the President, a Vice President, shall
act as chairman of the meeting. The Secretary, or in his 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.
Section 7. Order of Business. The order of business
at all meetings of the stockholders shall be as determined by the
chairman of the meeting.
Section 8. Voting. Except as otherwise provided by
statute or the Articles of Incorporation, each holder of record
of shares of stock of the Corporation having voting power shall
be entitled at each meeting of the stockholders to one vote for
every share of such stock standing in his name on the record of
4
<PAGE>
stockholders of the Corporation as of the record date determined
pursuant to Section 9 of this Article or if such record date
shall not have been so 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 by a proxy signed by such stockholder or his 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 an irrevocable proxy is
permitted by law. 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 (other than the election
of directors, which shall be by plurality vote) shall be
authorized by a majority of the total votes cast at a meeting of
stockholders by the holders of shares present in person or
represented by proxy and entitled to vote on such action.
If a vote shall be taken on any question other than the
election of directors, which shall be by written ballot, then
unless required by statute or these By-Laws, or determined by the
chairman of the meeting to be advisable, any such vote need not
be by ballot. On a vote by ballot, each ballot shall be signed
by the stockholder voting, or by his proxy, if there be such
proxy, and shall state the number of shares voted.
5
<PAGE>
Section 9. Fixing of Record Date. The Board of
Directors may set a record date for the purpose of determining
stockholders entitled to vote at any meeting of the stockholders.
The record date, which may not be prior to the close of business
on the day the record date is fixed, shall be not more than
ninety nor less than ten days before the date of the meeting of
the stockholders. All persons who were holders of record of
shares at such time, and not others, shall be entitled to vote at
such meeting and any adjournment thereof.
Section 10. Inspectors. The Board may, in advance of
any meeting of stockholders, appoint one or more inspectors to
act at such meeting or any adjournment thereof. If the
inspectors shall not be so appointed or if any of them shall fail
to appear or act, the chairman of the meeting may, and on the
request of any stockholder entitled to vote thereat shall,
appoint inspectors. Each inspector, before entering upon the
discharge of his duties, may be required to take and sign an oath
to execute faithfully the duties of inspector at such meeting
with strict impartiality and according to the best of his
ability. The inspectors may be empowered to determine the number
of shares outstanding and the voting powers of each, the number
of shares represented at the meeting, the existence of a quorum,
the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote
6
<PAGE>
with fairness to all stockholders. On request of the chairman of
the meeting or any stockholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge,
request or matter determined by them and shall execute a
certificate of any fact found by them. No director or candidate
for the office of director shall act as inspector of an election
of directors. Inspectors need not be stockholders.
Section 11. 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
stockholder 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
Section 1. General Powers. Except as otherwise
provided in the Articles of Incorporation, the business and
affairs of the Corporation shall be managed under the direction
of the Board of Directors. All powers of the Corporation may be
exercised by or under authority of the Board of Directors except
7
<PAGE>
as conferred on or reserved to the stockholders by law or by the
Articles of Incorporation or these By-Laws.
Section 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 entire Board of
Directors; provided, however, that the number of directors shall
in no event be less than three nor more than fifteen. Any
vacancy created by an increase in Directors may be filled in
accordance with Section 6 of this Article III. No reduction in
the number of directors shall have the effect of removing any
director from office prior to the expiration of his term unless
such director is specifically removed pursuant to Section 5 of
this Article III at the time of such decrease. Directors need
not be stockholders.
Section 3. Election and Term of Directors. Directors
shall be elected annually by written ballot at a meeting of
stockholders held for that purpose; provided, however, that if no
meeting of the stockholders of the Corporation is required to be
held in a particular year pursuant to Section 1 of Article II of
these By-Laws, directors shall be elected at the next meeting
held. The term of office of each director shall be from the time
of his election and qualification until the election of directors
next succeeding his election and until his successor shall have
been elected and shall have qualified, or until his death, or
until he shall have resigned, or until December 31 of the year in
which he shall have reached seventy-two years of age, or until he
shall have been removed as hereinafter provided in these By-Laws,
8
<PAGE>
or as otherwise provided by statute or the Articles of
Incorporation.
Section 4. Resignation. A director of the
Corporation may resign at any time by giving written notice of
his resignation to the Board or the Chairman of the Board or 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; and, unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 5. Removal of Directors. Any director of the
Corporation may be removed by the stockholders by a vote of a
majority of the votes entitled to be cast for the election of
directors.
Section 6. Vacancies. Any vacancies in the Board,
whether arising from death, resignation, removal, an increase in
the number of directors or any other cause, may be filled by a
vote of the majority of the Board of Directors then in office
even though such majority is less than a quorum, provided that no
vacancies shall be filled by action of the remaining directors,
if after the filling of said vacancy or vacancies, less than two-
thirds of the directors then holding office shall have been
elected by the stockholders of the Corporation. In the event
that at any time there is a vacancy in any office of a director
which vacancy may not be filled by the remaining directors, a
special meeting of the stockholders shall be held as promptly as
9
<PAGE>
possible and in any event within sixty days, for the purpose of
filling said vacancy or vacancies.
Section 7. Place of Meetings. Meetings of the Board
may be held at such place as the Board may from time to time
determine or as shall be specified in the notice of such meeting.
Section 8. Regular Meetings. Regular meetings of the
Board may be held without notice at such time and place as may be
determined by the Board of Directors.
Section 9. Special Meetings. Special meetings of the
Board may be called by two or more directors of the Corporation
or by the Chairman of the Board or the President.
Section 10. Telephone Meetings. Members of the Board
of Directors or of any committee thereof may participate in a
meeting by means of a conference telephone or similar
communications equipment if all persons participating in the
meeting can hear each other at the same time. Subject to the
provisions of the Investment Company Act of 1940, as amended,
participation in a meeting by these means constitutes presence in
person at the meeting.
Section 11. Notice of Special Meetings. Notice of
each special meeting of the Board shall be given by the Secretary
as hereinafter provided, in which notice shall be stated the time
and place of the meeting. Notice of each such meeting shall be
delivered to each director, either personally or by telephone or
any standard form of telecommunication, at least twenty-four
hours before the time at which such meeting is to be held, or by
first-class mail, postage prepaid, addressed to him at his
10
<PAGE>
residence or usual place of business, at least three days before
the day on which such meeting is to be held.
Section 12. waiver of Notice of Meetings. Notice of
any special meeting need not be given to any director who shall,
either before or after the meeting, sign a written waiver of
notice which is filed with the records of the meeting or who
shall attend such meeting. Except as otherwise specifically
required by these By-Laws, a notice or waiver or notice of any
meeting need not state the purposes of such meeting.
Section 13. Quorum and Voting. One-third, but not
less than two, of the members of the entire Board shall be
present in person at any meeting of the Board in order to
constitute a quorum for the transaction of business at such
meeting, and except as otherwise expressly required by statute,
the Articles of Incorporation, these By-Laws, the Investment
Company Act of 1940, as amended, or other applicable statute, the
act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the Board. In the
absence of a quorum at any meeting of the Board, a majority of
the directors present thereat may adjourn such meeting to another
time and place until a quorum shall be present thereat. Notice
of the time and place of any such adjourned meeting shall be
given to the directors who were not present at the time of the
adjournment and, unless such time and place were announced at the
meeting at which the adjournment was taken, to the other
directors. At any adjourned meeting at which a quorum is
11
<PAGE>
present, any business may be transacted which might have been
transacted at the meeting as originally called.
Section 14. Organization. The Board may, by
resolution adopted by a majority of the entire Board, designate a
Chairman of the Board, who shall preside at each meeting of the
Board. In the absence or inability of the Chairman of the Board
to preside at a meeting, the President or, in his 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 absence or inability
to act, any person appointed by the Chairman) shall act as
secretary of the meeting and keep the minutes thereof.
Section 15. Written Consent of Directors in Lieu of a
Meeting. Subject to the provisions of the Investment Company Act
of 1940, as amended, 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 or committee, as the case may be, consent thereto in
writing, and the writings or writing are filed with the minutes
of the proceedings of the Board or committee.
Section 16. 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.
Section 17. Investment Policies. It shall be the duty
of the Board of Directors to direct that the purchase, sale,
retention and disposal of portfolio securities and the other
12
<PAGE>
investment practices of the Corporation are at all times
consistent with the investment policies and restrictions with
respect to securities investments and otherwise of the
Corporation, as recited in the current Prospectus and Statement
of Additional Information of the Corporation, as filed from time
to time with the Securities and Exchange Commission and as
required by the Investment Company Act of 1940, as amended. The
Board however, may delegate the duty of management of the assets
and the administration of its day to day operations to an
individual or corporate management company and/or investment
adviser pursuant to a written contract or contracts which have
obtained the requisite approvals, including the requisite
approvals of renewals thereof, of the Board of Directors and/or
the stockholders of the Corporation in accordance with the
provisions of the Investment Company Act of 1940, as amended.
ARTICLE IV
Committees
Section 1. Executive Committee. The Board may, by
resolution adopted by a majority of the entire Board, designate
an Executive Committee consisting of two or more of the directors
of the Corporation, which committee shall have and may exercise
all the powers and authority of the Board with respect to all
matters other than:
(a) the submission to stockholders of any action
requiring authorization of stockholders pursuant to statute or
the Articles of Incorporation;
13
<PAGE>
(b) the filling of vacancies on the Board of
Directors;
(c) the fixing of compensation of the directors for
serving on the Board or on any committee of the Board, including
the Executive Committee;
(d) the approval or termination of any contract with
an investment adviser or principal underwriter, as such terms are
defined in the Investment Company Act of 1940, as amended, or the
taking of any other action required to be taken by the Board of
Directors by the Investment Company Act of 1940, as amended;
(e) the amendment or repeal of these By-Laws or the
adoption of new By-Laws;
(f) the amendment or repeal of any resolution of the
Board which by its terms may be amended or repealed only by the
Board;
(g) the declaration of dividends and the issuance of
capital stock of the Corporation; and
(h) the approval of any merger or share exchange which
does not require stockholder approval.
The Executive Committee shall keep written minutes of
its proceedings and shall report such minutes to the Board. All
such proceedings shall be subject to revision or alteration by
the Board; provided, however, that third parties shall not be
prejudiced by such revision or alteration.
Section 2. Other Committees of the Board. The Board
of Directors may from time to time, by resolution adopted by a
majority of the whole Board, designate one or more other
14
<PAGE>
committees of the Board, each such committee to consist of two or
more directors and to have such powers and duties as the Board of
Directors may, by resolution, prescribe.
Section 3. General. One-third, but not less than
two, of the members of any committee shall be present in person
at any meeting of such committee in order to constitute a quorum
for the transaction of business at such meeting, and the act of a
majority present shall be the act of such committee. The Board
may designate a chairman of any committee and such chairman or
any two members of any committee may fix the time and place of
its meetings unless the Board shall otherwise provide. In the
absence or disqualification of any member of any committee, the
member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent
or disqualified member. The Board shall have the power at any
time to change the membership of any committee, to fill all
vacancies, to designate alternate members to replace any absent
or disqualified member, or to dissolve any such committee.
Nothing herein shall be deemed to prevent the Board from
appointing one or more committees consisting in whole or in part
of persons who are not directors of the Corporation; provided,
however, that no such committee shall have or may exercise any
authority or power of the Board in the management of the business
or affairs of the Corporation.
15
<PAGE>
ARTICLE V
Officers, Agents and Employees
Section 1. Number and Qualifications. The officers
of the Corporation shall be a President, a Secretary and a
Treasurer, each of whom shall be elected by the Board of
Directors. The Board of Directors may elect or appoint one or
more Vice Presidents and may also appoint such other officers,
agents and employees as it may deem necessary or proper. Any two
or more offices may be held by the same person, except the
offices of President and Vice President, but no officer shall
execute acknowledge or verify any instrument in more than one
capacity. Such officers shall be elected by the Board of
Directors each year at a meeting of the Board of Directors, each
to hold office for the ensuing year and until his successor shall
have been duly elected and shall have qualified, or until his
death, or until he shall have resigned, or have been removed, as
hereinafter provided in these By-Laws. The Board may from time
to time elect, or delegate to the President the power to appoint,
such officers (including one or more Assistant Vice Presidents,
one or more Assistant Treasurers and one or more Assistant
Secretaries) and such agents, as may be necessary or desirable
for the business of the Corporation. Such officers and agents
shall have such duties and shall hold their offices for such
terms as may be prescribed by the Board or by the appointing
authority.
Section 2. Resignations. Any officer of the
Corporation may resign at any time by giving written notice of
16
<PAGE>
resignation to the Board, the Chairman of the Board, 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; and, unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
Section 3. Removal of Officer, Agent or Employee.
Any officer, agent or employee of the Corporation may be removed
by the Board of Directors with or without cause at any time, and
the Board may delegate such power of removal as to agents and
employees not elected or appointed by the Board of Directors.
Such removal shall be without prejudice to such person's contract
rights, if any, but the appointment of any person as an officer,
agent or employee of the Corporation shall not of itself create
contract rights.
Section 4. Vacancies. A vacancy in any office,
whether arising from death, resignation, removal or any other
cause, may be filled for the unexpired portion of the term of the
office which shall be vacant, in the manner prescribed in these
By-Laws for the regular election or appointment to such office.
Section 5. Compensation. The compensation of the
officers of the Corporation shall be fixed by the Board of
Directors, but this power may be delegated to any officer in
respect of other officers under his control.
Section 6. Bonds or Other Security. If required by
the Board, any officer, agent or employee of the Corporation
shall give a bond or other security for the faithful performance
17
<PAGE>
of his duties, in such amount and with such surety or sureties as
the Board may require.
Section 7. President. The President shall be the
chief executive officer of the Corporation. In the absence of
the Chairman of the Board (or if there be none), he shall preside
at all meetings of the stockholders and of the Board Directors.
He shall have, subject to the control of the Board of Directors,
general charge of the business and affairs of the Corporation.
He may employ and discharge employees and agents of the
Corporation, except such as shall be appointed by the Board, and
he may delegate these powers.
Section 8. Vice President. Each Vice President shall
have such powers and perform such duties as the Board of
Directors or the President may from time to time prescribe.
Section 9. Treasurer. The Treasurer shall:
(a) have charge and custody of, and be responsible
for, all the funds and securities of the Corporation, except
those which the Corporation has placed in the custody of a bank
or trust company or member of a national securities exchange (as
that term is defined in the Securities Exchange Act of 1934, as
amended) pursuant to a written agreement designating such bank or
trust company or member of a national securities exchange as
custodian of the property of the Corporation;
(b) keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation;
(c) cause all moneys and other valuables to be
deposited to the credit of the Corporation;
18
<PAGE>
(d) receive, and give receipts for, moneys due and
payable, to the Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and
supervise the investment of its funds as ordered or authorized by
the Board, taking proper vouchers therefor; and
(f) in general, perform all the duties incident to the
office of Treasurer and such other duties as from time to time
may be assigned to him by the Board or the President.
Section 10. Secretary. The Secretary shall:
(a) keep or cause to be kept in one or more books
provided for the purpose, the minutes of all meetings of the
Board, the committees of the Board and the stockholders;
(b) see that all notices are duly given in accordance
with the provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the
Corporation and affix and attest the seal to all stock
certificates of the Corporation (unless the seal of the
Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other
documents to be executed on behalf of the Corporation under its
seal;
(d) see that the books, reports, statements,
certificates and other documents and records required by law to
be kept and filed are properly kept and filed; and
(e) in general, perform all the duties incident to the
office of Secretary and such other duties as from time to time
may be assigned to him by the Board or the President.
19
<PAGE>
Section 11. Delegation of Duties. In case of the
absence of any officer of the Corporation, or for any other
reason that the Board may deem sufficient, the Board may confer
for the time being the powers or duties, or any of them, of such
officer upon any other officer or upon any director.
ARTICLE VI
Indemnification
Each officer and director of the Corporation shall be
indemnified by the Corporation to the full extent permitted under
the Maryland General Corporation Law, except that such indemnity
shall not protect any such person against any liability to the
Corporation or any stockholder thereof to which such person would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his office. Absent a court determination that an
officer or director seeking indemnification was not liable on the
merits or guilty of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office, the decision by the Corporation to
indemnify such person must be based upon the reasonable
determination of independent legal counsel in a written opinion
or the vote of a majority of a quorum of the directors who are
neither "interested persons," as defined in Section 2(a)(19) of
the Investment Company Act of 1940, as amended, nor parties to
the proceeding ("non-party independent directors"), after review
of the facts, that such officer or director is not guilty of
20
<PAGE>
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Each officer and director of the Corporation claiming
indemnification within the scope of this Article VI shall be
entitled to advances from the Corporation for payment of the
reasonable expenses incurred by him in connection with
proceedings to which he is a party in the manner and to the full
extent permitted under the Maryland General Corporation Law
without a preliminary determination as to his or her ultimate
entitlement to indemnification (except as set forth below);
provided, however, that the person seeking indemnification shall
provide to the Corporation a written affirmation of his good
faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met and a written
undertaking to repay any such advance, if it should ultimately be
determined that the standard of conduct has not been met, and
provided further that at least one of the following additional
conditions is met: (a) the person seeking indemnification shall
provide a security in form and amount acceptable to the
Corporation for his undertaking; (b) the Corporation is insured
against losses arising by reason of the advance; (c) a majority
of a quorum of non-party independent directors, or independent
legal counsel in a written opinion, shall determine, based on a
review of facts readily available to the Corporation at the time
the advance is proposed to be made, that there is reason to
believe that the person seeking indemnification will ultimately
be found to be entitled to indemnification.
21
<PAGE>
The Corporation may purchase insurance on behalf of an
officer or director protecting such person to the full extent
permitted under the General Laws of the State of Maryland, from
liability arising from his activities as officer or director of
the Corporation. The Corporation, however, may not purchase
insurance on behalf of any officer or director of the Corporation
that protects or purports to protect such person from liability
to the Corporation or to its stockholders to which such officer
or director would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard
of the duties involved in the conduct of his office.
The Corporation may indemnify, make advances or
purchase insurance to the extent provided in this Article VI on
behalf of an employee or agent who is not an officer or director
of the Corporation.
ARTICLE VII
Capital Stock
Section 1. Stock Certificates. Each holder of stock
of the Corporation shall be entitled upon request to have a
certificate or certificates, in such form as shall be approved by
the Board, representing the number of shares of stock of the
Corporation owned by him, provided, however, that certificates
for fractional shares will not be delivered in any case. The
certificates representing shares of stock shall be signed by or
in the name of the Corporation by the Chairman, President or a
Vice President and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer and sealed with the seal
22
<PAGE>
of the Corporation. Any or all of the signatures or the seal on
the certificate may be 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.
Section 2. Books of Account and Record of
Stockholders. There shall be kept at the principal executive
office of the Corporation correct and complete books and records
of account of all the business and transactions of the
Corporation. There shall be made available upon request of any
stockholder, in accordance with Maryland law, a record containing
the number of shares of stock issued during a specified period
not to exceed twelve months and the consideration received by the
Corporation for each such share.
Section 3. Transfers of Shares. Transfers of shares
of stock of the Corporation shall be made on the stock records of
the Corporation only by the registered holder thereof, or by his
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 certificates, if
issued, for such shares properly endorsed or accompanied by a
duly executed stock transfer power 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
23
<PAGE>
whose name any share or shares 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 on the
part of any other person.
Section 4. Regulations. The Board 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 stock of the
Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer agents or one or more
transfer clerks and one or more registrars and may require all
certificates for shares of stock to bear the signature or
signatures of any of them.
Section 5. Lost, Destroyed or Mutilated Certificates.
The holder of any certificates representing shares of 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 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 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
24
<PAGE>
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.
Section 6. Fixing of a Record Date for Dividends and
Distributions. The Board may fix, in advance, a date not more
than ninety days preceding the date fixed for the payment of any
dividend or the making of any distribution or the allotment of
rights to subscribe for securities of the Corporation, or for the
delivery of evidences of rights or evidences of interests arising
out of any change, conversion or exchange of common stock or
other securities, as the record date for the determination of the
stockholders entitled to receive any such dividend, distribution,
allotment, rights or interests, and in such case only the
stockholders of record at the time so fixed shall be entitled to
receive such dividend, distribution, allotment, rights or
interests.
Section 7. Information to Stockholders and Others.
Any stockholder of the Corporation or his agent may inspect and
copy during usual business hours the Corporation's By-Laws,
minutes of the proceedings of its stockholders, annual statements
of its affairs, and voting trust agreements on file at its
principal office.
25
<PAGE>
ARTICLE VIII
Seal
The seal of the Corporation shall be circular in form
and shall bear, in addition to any other emblem or device
approved by a the Board of Directors, the name of the
Corporation, the year of its incorporation and the words
"Corporate Seal" and "Maryland." Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or
in any other manner reproduced.
ARTICLE IX
Fiscal Year
Unless otherwise determined by the Board, the fiscal
year of the Corporation shall end on the 31st day of December.
ARTICLE X
Additional Provisions
SECTION 1. The books of account of the Corporation
shall be examined by an independent firm of public accountants at
the close of each fiscal year of the Corporation and at such
other times as may be directed by the Board. The President shall
prepare annually a full and correct statement of the affairs of
the Corporation, to include a balance sheet and a financial
statement of operations for the preceding fiscal year. The
statement of affairs shall be submitted at the annual meeting of
the stockholders, if any, and, within 20 days after the meeting
(or in the absence of an annual meeting within 20 days after the
end of the month of June following the end of the fiscal year),
26
<PAGE>
placed on file at the Corporation's principal office. The
statement of affairs shall be mailed to each stockholder of the
Corporation of record on such date as may be determined by the
Board, at his address as the same appears on the books of the
Corporation.
Section 2. In any case where an officer or director
of the Corporation or of any investment adviser of the
Corporation, or a member of any committee of the Corporation, is
also an officer or director of another corporation and the
purchase or sale of the securities issued by such other
corporation is under consideration, the officer, director or
committee member concerned will abstain from participating in any
decision made on behalf of the Corporation to purchase or sell
any securities issued by such other corporation.
ARTICLE XI
Amendments
The By-Laws of the Corporation may be altered, amended
added to, rescinded or repealed at any meeting of the
stockholders, or by vote of a majority of the directors then in
office at any meeting of the Board of Directors, provided notice
of the substance of the proposed change is contained in the
notice of the meeting or any waiver thereof; except that after
the initial issue of any shares of capital stock of the
Corporation, the provisions of Article X hereof and this Article
XI, may be altered, amended or repealed only upon the affirmative
vote of the holders of a majority of the capital stock of the
Corporation at the time outstanding and entitled to vote.
27
<PAGE>
ARTICLE XII
Depositories and Custodians
Section 1. Depositories. The funds of the
Corporation shall be deposited with such banks or other
depositories as the Board of Directors of the Corporation may
from time to time determine.
Section 2. Custodians. All securities and other
investments shall be deposited in the safekeeping of such banks
or other companies as the Board of Directors of the Corporation
may from time to time determine. Every arrangement entered into
with any bank or other company for the safekeeping of the
securities and investments of the Corporation shall contain
provisions complying with the Investment Company Act of 1940. as
amended, and the general rules and regulations thereunder.
ARTICLE XIII
Execution of Instruments
Section 1. Checks, Notes, Drafts, etc. Checks,
notes, drafts, acceptances, bills of exchange and other orders or
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.
Section 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 and, when so authorized to be held on behalf of the
28
<PAGE>
Corporation or sold, transferred or otherwise disposed of, may be
transferred from the name of the Corporation by the signature of
the President or a Vice President or the Treasurer or pursuant to
any procedure approved by the Board of Directors, subject to
applicable law.
ARTICLE XIV
Independent Public Accountants
The firm of independent public accountants which shall
sign or certify the financial statements of the Corporation which
are filed with the Securities and Exchange Commission shall be
selected annually by the Board of Directors and, if required by
the provisions of the Investment Company Act of 1940, as amended,
ratified by the stockholders.
29
Exhibit 4
THE CORPORATE FUND
ACCUMULATION PROGRAM, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
NUMBER SHARES
THIS CERTIFIES THAT CUSIP 219894 10 2
SEE REVERSE FOR
CERTAIN DEFINITIONS
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES, PAR VALUE ONE
CENT (.01) PER SHARES, OF COMMON STOCK OF
THE CORPORATE FUND ACCUMULATION PROGRAM, INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed.
This Certificate and the shares represented hereby are issued and shall
be held subject to all the provisions of the Articles of Incorporation and of
the By-Laws of the Corporation, and of all the amendments from time to time made
thereto.
This Certificate is not valid unless countersigned by the Transfer Agent.
WITNESS the seal of the Corporation and the signatures of its duly
authorized officers
DATED
[SEAL]
Countersigned:
THE BANK OF NEW YORK
(New York, N.Y.)
Transfer Agent
/s/ /s/
President Secretary Authorized Signature
Exhibit 5
THE CORPORATE FUND
ACCUMULATION PROGRAM, INC.
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of this lst day of May, 1977,
between THE CORPORATE FUND ACCUMULATION PROGRAM, INC.,
a Maryland corporation (hereinafter called the
"Company"), and FUND ASSET MANAGEMENT, INC., a Delaware
corporation (hereinafter called the "Advisor").
WHEREAS, the Company has been organized as a
corporation under the laws of the State of Maryland and
proposes to issue shares of its Common Stock (par value
$.Ol per share) (hereinafter called the 'Shares"); and
WHEREAS, the pool of assets held by the Company
for the benefit of the holders of the Shares is
hereinafter referred to as the Fund; and
WHEREAS, the Company desires to avail itself of
the experience, sources of information, advice,
assistance and facilities available to the Advisor and
to have the Advisor manage the Fund and perform for the
Company various other services appropriate to the
operations of the Company pertaining to the Shares, and
the Advisor is willing to furnish such management and
other services in accordance with the terms hereinafter
set forth;
NOW THEREFORE, in consideration of the premises
and mutual covenants contained herein, it is agreed as
follows:
1. Definitions. The following terms are hereby
defined for the purpose of this Agreement:
a. "The period of this Agreement" means
the term of this Agreement and any renewal or
extension thereof, or until any prior termination
thereof.
<PAGE>
b. The "1940 Act" means the Investment
Company Act of 1940, as amended.
I
C. The 'vote of the majority of Shares"
means the vote at an annual or special meeting of
shareholders of the lesser of (i) the holders of
sixty-seven percent (67%) or more of the Shares
present at such meeting, if the holders of more than
fifty percent (50%) of the Shares are present in
person or represented by proxy, or (ii) the holders
of more than fifty percent (50%) of the Shares.
d. The terms "interested person",
"affiliated person" and "assignment' have the
meanings contained in the 1940 Act.
2. Duties of the Advisor. The Company hereby
retains the Advisor, and the A visor hereby agrees, for
the period of this Agreement and under the terms and
conditions set forth herein and subject at all times to
the control and direction of the Board of Directors of
the Company, to (1) manage the Fund in accordance with
the Companv's investment objectives and policies and
furnish to the Companv investment advice and (2) (a)
assist in supervising all aspects of the Company's
operations including coordinating all matters relating
to the functions of the Program Agent, custodian and
other parties performing operational functions for the
Company; (b) provide the Company, at the Advisor's
expense, with the services of such persons competent to
perform such administrative and clerical functions as are
necessary in order to provide effective administration
of the Company, including duties in connection with
Shareholder relations, reports, redemption requests and
account adjustments and the maintenance of certain
Company books and records; (c) provide the Company at the
Advisor's expense, with adequate office space and related
services; (d) supervise and administer the operation of
the Exchange Privilege referred to under the heading
'Redemption of Shares and Exchange Privilege" in the
Prospectus dated April 5, 1977 (or in such Prospectus as
it may henceforth be amended or supplemented) of the
Company relating to the Shares; and (e) to the extent
required by then current Federal securities laws',
regulations thereunder or interpretations thereof, pay
for the printing of all Company prospectuses used in
connection with the distribution and sale of the Shares.
2
<PAGE>
The Company acknowledges that the Advisor intends to
arrange for the provision of services and the performance
of functions referred to in the foregoing clause (2) by
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bache
Halsey Stuart Inc. and Reynolds Securities Inc.
(collectively, the "Administrators") pursuant to an
Administration Agreement between the Advisor and the
Administrators.
3. Advisor to Be Governed by Company is
Objectives* The Advisor hereby covenants and agrees
that, in acting on behalf of the Company pursuant to this
Agreement, it shall at all times be governed by the
Company's investment objectives and policies for the Fund
as set forth in the various documents most recently filed
by the Company with the Securities and Exchange
Commission (the "Commission") as such documents may from
time to time be amended (whether or not such amendments
are filed with the Commission). The Company will supply
the Advisor with copies of all documents filed with the
Commission, together with any amendments thereto (whether
or not such amendments are filed with the Commission).
4. Records to Be Property of the Company. The
Advisor hereby acknowledges that all records necessary
to the operation of the Company, including records
pertaining to the Company's shareholders and investments,
are the sole and exclusive property of the Company, and
in the event that a transfer of management or investment
advisory services to someone other than the Advisor
should ever occur, the Advisor will promptly, and at its
own cost, take all steps necessary to segregate such
records and deliver. then to the Company.
5. Use of Names Not Exclusive. The use of the
name "Municipal Fund Investment Accumulation Program" by
the Company is non-exclusive, and the Advisor may allow
other persons, including other investment companies, to
use such name. The name may be withdrawn by the Advisor,
in which event the Advisor agrees to present the question
of continuing this Agreement to the holders of the
Shares.
3
<PAGE>
6. Compensation of Advisor. The Company
covenants and agrees to pay to the Advisor, and the
Advisor covenants and agrees to accept from the Company
as full compensation for all investment advice and other
services furnished by the Advisor hereunder, a monthly
fee at an annual rate of 0.5% of the average daily net
asset value of the Fund from the beginning of the year
to the end of such month (hereinafter called the
*Advisory Fee"). The Advisory Fee shall be computed as
of the close of business on the last business day of each
month and shall be prorated for any fraction of a month
at the commencement and termination of this Agreement.
The Advisory Fee provided for herein shall be paid in
cash by the Company to the Advisor within ten (10)
business days after the last day of each month. "Net
asset value' of the Fund for purposes of computing the
Advisory Fee will be determined as of the close of
trading on the last business day in each month on which
the New York Stock Exchange is open and will be computed
pursuant to the provisions of the Company's Articles of
Incorporation and By-Laws and any currently effective
Prospectus of the Company with respect to the Shares.
7. Expenses. The Company shall pay all costs
and expenses incurred in connection with its
organization, all costs and expenses incurred in
connection with the offer, sale, issue or redemption of
its securities (including registration fees and printing
and mailing costs) and all other costs and expenses of
its operations, including fees of its directors, legal
fees, expenses of independent accountants, costs of
acquiring and disposing of portfolio securities, costs
of printing certificates for shares, reports to
shareholders, proxies, proxy statements and mailing
envelopes, postage, insurance costs, taxes, interest,
stock exchange listing fees and expenses and fees and
expenses of the Company's program agent, transfer agents,
registrars, custodian, dividend disbursing agent, pricing
agent and bookkeeper; provided, however, that if the
expenses of the Company payable out of the Fund
(including the Advisory Fee but excluding interest,
taxes, brokerage fees and extraordinary expenses), in any
fiscal year exceed the lesser of either (a) 1-1/2% of the
Fund's average annual net assets up to $30,000,000 and
1% of its average annual net assets over $30,000,000 or
(b) 25% of the total investment income of the Fund, then
(unless such reimbursement is not required pursuant to
4
<PAGE>
applicable requirements of state Blue Sky or securities
laws, in which event the Advisory Fee will be payable in
the normal manner), the Advisor shall reimburse the Fund
the amount of such excess by postponing receipt of all
or a portion of the Advisory Fee which will be paid in
subsequent periods subject to the foregoing limitations.
In any event, no Advisory Fee payment will be made to the
Advisor or be retained by the Advisor for any fiscal year
which would cause such expenses of the Company to exceed
the foregoing expense limitation applicable at the time
of such payment.
8. Purchase and Sale of Portfolio Securities.
The Advisor shall provide adequate facilities and
qualified personnel for the placement with broker-dealers
of orders for the purchase, or other acquisition, and
sale, or other disposition, of portfolio securities for
the Company. With respect to such transactions, the
Advisor, subject to such directions as may be furnished
from time to time by the Board of Directors of the
Company, shall endeavor to obtain the most favorable
prices consistent with the best available execution. The
Company agrees that, so long as the Advisor believes that
the Advisor is obtaining the best available price and
execution, portfolio transactions may be placed with
broker-dealers furnishing to the Advisor research,
statistical information or other services which the
Advisor deems valuable in performing its duties to the
Company hereunder. The Advisor shall not be precluded
from placing portfolio transactions with broker-dealers
who participate as underwriters or selected dealers in
the public offering of the Company's securities as a
result of such participation.
9. Advisor May Act in Other Capacities.
Nothing contained in this Agreement shall be deemed to
prohibit the Advisor and its affiliates from acting, and
being separately compensated for acting, in one or more
capacities for or on behalf of the Company. Whenever the
Advisor shall act in multiple capacities for or on behalf
of the Company, the Advisor shall maintain appropriate
separate accounts and records for each such capacity.
While information and recommendations supplied to the
Company shall, in the Advisor's judgment, be appropriate
under the circumstances and in light of the investment
objectives and policies of the Company, they may be
different from the information and recommendations
5
<PAGE>
supplied by the Advisor to other investment companies and
customers. The Company shall be entitled to equitable
treatment under the circumstances in receiving
information, recommendations and any other services
pursuant to this Agreement, but the Company recognizes
that it is not entitled to receive preferential treatment
as compared with the treatment given to any other
investment company or customer.
10. Limitation on Advisor's Liability. The
Advisor shall have no liability to the Company or any
shareholder of the Company for any error of judgment,
mistake of law or any loss arising out of any investment,
or for any other act or omission in the performance by
the Advisor of its duties hereunder, except for liability
resulting from willful misfeasance, bad faith or gross
negligence on the Advisor's part or from reckless
disregard by the Advisor of its obligations and duties
under this Agreement.
11. Entire Agreement. No provision of this
Agreement may be amended, waived or terminated except by
an instrument in writing signed by the parties hereto.
12. Term of Agreement. This Agreement shall
become effective upon its execution and delivery and
shall remain in force until approved or rejected at the
first special or annual meeting of the shareholders of
the Company held thereafter and called to consider the
adoption of this Agreement, and if approved at that time
by the vote of the majority of Shares, this Agreement
shall be in effect for two years after its date of
execution and shall continue in force from year to year
thereafter, subject to prior termination as provided
herein, but only so long as its continuance shall be
specifically approved at least annually (i) by the Board
or by a vote of the majority of shares in the Program,
and (ii) by the vote of a majority of the directors who
are not parties to this Agreement or 'interested persons'
of any such party, cast in person at a meeting called for
the purpose of voting on such approval.
6
<PAGE>
13. Termination. This Agreement may be
terminated by either the company on sixty (60) days'
notice to the Advisor or by the Advisor, on ninety (90)
days' notice to the Company; provided that any such
termination shall be made without the payment of any
penalty, and provided further that such termination may
be effected either by the Board of Directors of the
Company or by a vote of the majority of Shares.
14. No Assignment. This Agreement shall
terminate automatically in the event of its assignment.
15. Advisor Independent. The Company and the
Advisor are not partners or joint venturers with each
other, and nothing herein shall be construed so as to
make them such partners or joint venturers or impose any
liability as such on any one of them. The Advisor shall
be deemed to be an independent contractor and, except as
expressly provided or authorized in this Agreement, shall
have no authority to act for or represent the Company.
16. Notices. Any notice under this Agreement
shall be given in writing, addressed and delivered, or
mailed postpaid, to the party to this Agreement entitled
to receive such notice at such address as such other
party may designate in writing for the purpose of -such
notice.
17. Transactions with Certain Persons. Neither
this Agreement nor any transaction made pursuant hereto
shall be invalidated or in any way affected by the fact
that directors, officers, agents and/or shareholders of
the Company are or may be interested in the Advisor, or
any successor or assignee thereof, as directors,
officers, shareholders or otherwise; that directors,
officers, shareholders or agents of the Advisor are or
may be interested in the Company as directors, officers,
shareholders or otherwise; or that the Advisor or any
successor or Assignee, is or may be interested in the
Company as shareholders or otherwise.
18. Provisions of Law to Control. This
Agreement shall be subject to all applicable provisions
of law, including, without limitation, the applicable
provisions of the 1940 Act. To the extent that any
provisions herein contained conflict with any applicable
provisions of law, the latter shall control.
7
<PAGE>
19. Governing Law. This Agreement is executed
and delivered in the State of New York and shall be
construed in accordance with the laws and decisions of
said State.
20. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall
be deemed to be an original but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Advisor
have executed this Agreement as of the day and year first
above written.
THE CORPORATE FUND ACCUMULATION
PROGRAM, INC.
BY /s/ Arthur Zeikel
-----------------------------
ATTEST:
/s/ Stephen M.M. Miller
-------------------------
FUND ASSET MANAGEMENT, I
By /s/
-----------------------------
ATTEST:
/s/
-------------------------
8
Exhibit 8
CUSTODY AGREEMENT, made this 28th day of April,
1977, between THE CORPORATE FUND ACCUMULATION PROGRAM,
INC., a corporation organized and existing under the laws
of the State of Maryland and having its principal office
and place of business at One Liberty Plaza, 165 Broadway,
New York, New York 10006 (hereinafter called the
"Company"), and THE BANK OF NEW YORK, a corporation
organized and existing under the laws of the State of New
York, having its principal office and place of business
at 48 Wall Street, New York, New York 10015 (hereinafter
sometimes called the "Custodian", the "Paying Agent" or
the "Transfer Agent"),
W I T N E S S E T H
that for and in consideration of the mutual promises
hereinafter set forth, the Company and the Custodian
agree as follows:
I.
APPOINTMENT OF CUSTODIAN
1. The Company hereby constitutes and appoints
the Custodian as custodian of all of the securities and
moneys at any time owned by the Company during the period
of this Agreement.
2. The Custodian hereby accepts appointment as
such custodian and agrees to perform the duties thereof
as hereinafter set forth.
II.
CUSTODY OF CASH AND SECURITIES
1. The Company will deliver or cause to be
delivered to the Custodian all securities and all moneys
owned by it, including cash received for the issuance of
its shares, at any time during the period of this
Agreement. The Custodian will not be responsible for
such securities and such moneys until actually received
<PAGE>
by it.
2. The Custodian shall maintain a separate
account in the name of the Company. The Custodian shall
credit to the account so maintained all moneys received
by it for the account of the Company and shall disburse
the same only:
(a) In payment for securities purchased
for the Company, as provided in Article III hereof;
or,
(b) In payment of dividends or other
distributions from the Company as provided in Article
V hereof; or,
(c) In payment of original issue or other
taxes payable by the Company, as provided in Article
VI hereof; or,
(d) In payment for capital stock of the
Company redeemed by the Company, as provided in
Article VI hereof; or,
(e) Pursuant to Certificates, notices or
Written Instructions of the Company, signed in its
name by any two Officers or Authorized Persons, or
with respect to Money Market Securities pursuant to
the oral instructions of an Officer or Authorized
Person setting forth the name and address of the
person to whom payment is to be made, the amount to
be paid and the corporate purpose for which payment
is to be made; or,
(f) In payment of the fees and in
reimbursement of the expenses and liabilities of the
Custodian, as provided in Article VIII hereof.
3. The Custodian shall supply the Company
promptly after the close of business on each day with a
statement summarizing all transactions and entries for
the account of the Company during said day; and the
Custodian shall, at least monthly and from time to time
upon request'of the Company or when the Custodian deems
it advisable, render a detailed statement of the
securities and moneys held for the Company under this
Agreement in such account.
2
<PAGE>
4. All securities held for the Company which
are issued or issuable only in bearer form shall be held
by the Custodian in that form; all other securities held
for the Company may be registered in the name of the
Company, or in the name of any duly appointed and
registered nominee of the Custodian, as the Custodian may
from time to time determine. The Company agrees to
furnish to the Custodian appropriate instruments to
enable the Custodian to hold or deliver in proper form
for transfer, or to register in the name of its
registered nominee, any securities which it may hold for
the account of the Company and which may from time to
time be registered in the name of the Company. The
Custodian shall hold all such securities in a separate
physically segregated account, for the benefit of the
Company, and all such securities shall be physically
segregated at all times from those of any other account
or person.
5. Unless otherwise instructed to the contrary
by a Certificate signed in the name of the Company by any
two Officers or Authorized Persons the Custodian shall,
with respect to all securities held in the account of the
Company hereunder and for the benefit of such account:
(a) Collect all income due or payable;
(b) Present for payment and collect the
amount payable upon all securities which may mature
or be called, redeemed, or retired, or otherwise
become payable;
(c) Surrender securities in temporary form
for definitive securities;
(d) Execute, as Custodian, any necessary
declarations or certificates of ownership under the
Federal Income Tax laws or the laws or regulations
of any other taxing authority now or hereafter in
effect; and
3
<PAGE>
(e) Hold for such account all stock
dividends, rights and similar securities issued with
respect to any securities held by it in such account
hereunder.
6. Upon receipt of a Certificate signed in the
name of the Company by any two Officers or Authorized
Persons and not otherwise, the Custodian shall:
(a) Execute and deliver to such persons
as may be designated in such Certificate, proxies,
consents, authorizations, and any other instruments
whereby the authority of the Company as owner of any
securities may be exercised;
(b) Deliver from the account of the
Company hereunder any securities held for the Company
in such account in exchange for other securities or
cash (which shall be received for the benefit of such
account) issued or paid in connection with the
liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege;
(c) Deliver from the account of the
Company hereunder any securities held for the Company
to any protective committee, reorganization committee
or other person in connection with the
reorganization, refinancing, merger, consolidation,
recapitalization or sale of assets of any
corporation, and receive and hold under the terms of
this Agreement and for the benefit of such account,
such certificates of deposit,.interim receipts or
other instruments or documents as may be issued to
it to evidence such delivery;
(d) Make such transfer or exchanges of the
assets of the Company, and take such other steps, as
shall be stated in said Certificate to be for the
purpose of effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation
or recapitalization of the Company.
4
<PAGE>
PURCHASE AND SALE OF INVESTMENTS OF THE COMPANY
1. Promptly after each purchase of securities
by the Company, the Company shall deliver to the
Custodian (i) with respect to each purchase of securities
which are not Money Market Securities, a Certificate
signed in the name of the Company by any two Officers and
(ii) with respect to each purchase of Money Market
Securities such a Certificate or oral instructions from
an Authorized Person. Such Certificate or instructions
with respect to each such purchase shall specify: (a)
the name of the issuer and the title of the securities,
(b) the number of shares or the principal amount
purchased, and accrued interest, if any, (c) the date of
purchase and settlement, (d) the purchase price per unit,
(e) the total amount payable upon such purchase, and (f)
the name of the person from whom or the broker through
whom the purchase was made. The Custodian shall receive
all securities purchased by or for the Company from the
persons through or from whom the same were purchased, and
upon receipt thereof shall pay, out of the moneys held
for the account of the Company, the total amount payable
upon such purchase as set forth in such Certificate or
such oral instructions, as the case may be, provided that
the same conforms to the total amount payable shown on
such Certificate or such oral instructions.
2. Promptly after each sale of securities by
the Company, the Company shall deliver to the Custodian
(i) with respect to each sale of securities which are not
Money Market Securities a Certificate signed in the name
of the Company by any two officers and (ii) with respect
to each sale of Money Market Securities such a
Certificate or oral instructions from an Authorized
Person. Such Certificate or instructions with respect
to each such sale shall specify: (a) the name of the
issuer and the title of the security, (b) the number of
shares or principal amount sold, and accrued interest,
if any, (c) the date of sale, (d) the sale price per
unit, (e) the total amount payable to the Company upon
such sale, and (f) the name of the broker through whom
or the person to whom the sale was made. The Custodian
shall deliver the securities thus designated to the
broker or other person named in such Certificate upon
receipt for the account of the Company of the total
5
<PAGE>
amount payable to the Company upon such sale provided
that the same conforms to the total amount payable to the
Company as set forth in such Certificate or such oral
instructions as the case may be, with respect to such
sale. The Custodian may accept payment in such form as
shall be satisfactory to it, and may deliver securities
and arrange for payment, in accordance with the customs
prevailing among dealers in securities.
IV.
LOAN OF PORTFOLIO SECURITIES OF THE COMPANY
1. Where the Company is permitted to lend its
portfolio securities and within 24 hours after each loan
of portfolio securities by the Company, the Company shall
deliver to the Custodian a Certificate signed in the name
of the Company by two Officers or Authorized Persons
specifying with respect to each such loan: (a) the name
of the issuer and the title of the securities, (b) the
number of shares or the principal amount loaned, (c) the
date of loan and delivery, (d) the-total amount to be
delivered to the Custodian against the loan of the
securities including the amount of cash collateral and.
the premium, if any, separately identified, and (e) the
name of the broker to whom the loan was made. The
Custodian shall deliver the securities thus designated
to the broker to whom the loan was made upon receipt of
the total amount to be delivered against the loan of the
designated securities. Such amount shall be credited to
the account of the Company. The Custodian may accept
payment only in the form of a certified or bank cashier's
check payable to the order of the-Company or the
Custodian drawn on New York Clearing House funds and may
deliver securities in accordance with the customs
prevailing among dealers in securities.
2. Promptly after each termination of a loan
of securities by the Company, the Company shall deliver
to the Custodian a Certificate signed in the name of the
Company by two officers or Authorized Persons specifying
with respect to each such loan termination and return of
securities: (a) the name of the issuer and the title of
the securities to be returned, (b) the number of shares
or the principal amount to be returned, (c) the date of
termination, (d) the total amount to be delivered by the
Custodian (including the cash collateral for such
6
<PAGE>
securities minus any offsetting credits as described in
said certificate), and (e) the name of the broker from
whom the securities will be returned. The Custodian
shall receive all securities returned from the broker to
whom such securities were loaned and upon receipt thereof
shall pay, out of the moneys held for the account of the
Company, the total amount payable upon such return of
securities as set forth in the Certificate.
V.
PAYMENT AND REINVESTMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Company shall furnish to the Custodian,
with respect to Shares of Common Stock of the Company
(the "Shares"), a copy of a resolution or resolutions of
its Board of Directors, certified by the Secretary or any
Assistant Secretary, either (a) authorizing the
declaration of dividends on such Shares on a monthly
basis and authorizing the Custodian to rely on the
Written Instructions or oral instructions from an
Authorized Person in connection therewith, or (b) setting
forth the date of the declaration of such dividend or
distribution, the date of payment thereof, the record
date as of which stockholders entitled to payment shall
be determined, and the amount payable per Share to the
stockholders of record as of that date and the total
amount payable to the Paying Agent on the payment date.
2. Upon the payment date specified in such
certified resolutions, Written Instructions or oral
instructions relating to the Shares of the Company, the
Custodian shall, (a) with respect-to each holder of
Shares who has elected to receive dividends and/or other
distributions in cash, pay out of the moneys held for the
account of the Company the total amount payable to the
Paying Agent for the Company in respect of the Shares of
all holders so electing, and (b) with respect to each
holder of Shares which has elected to have such dividends
and other distributions reinvested, retain the moneys
held for the account of the Company and apply such moneys
to the purchase of Shares for the account of each such
holder so electing at the net asset value of such Shares
on such date which the Company shall specify in a
Certificate furnished to the Custodian and signed in the
name of the Company by any two Officers or Authorized
Persons.
7
<PAGE>
VI.
SALE AND REDEMPTION OF CAPITAL STOCK OF THE COMPANY
1. Whenever the Company shall sell any Shares
of the Company other than pursuant to a reinvestment plan
as set forth in the following paragraph 2, it shall cause
to be delivered to the Custodian a Certificate signed on
behalf of the Company by any two Officers or Authorized
Persons duly specifying:
(a) The number of Shares sold, trade date,
and price; and
(b) The amount of money to be received by
the Custodian for the sale of such Shares for the
account of the Company.
2. With respect to Shares of the Company
purchased by any shareholder upon reinvestment of
distributions on such shareholder's units of the several
series of The Corporate Income Fund or the Corporate
Investment Trust Fund or distributions on-such
shareholder's Shares of the Company pursuant to a
reinvestment authorization executed by such shareholder
in form satisfactory to the Company and the Custodian,
the Custodian shall receive (pursuant to arrangements
satisfactory to the Company) the funds to be reinvested
directly from the trustee or agent disbursing the same
(which trustee or agent may be the Custodian) and shall
reinvest such funds, for the account of such shareholder
in Shares of the Company at the net asset value of such
Shares on the respective dates of receipt of such
distribution. The Custodian shall notify the Company,
and maintain and furnish (upon the request of the
Company) records, of the amount of funds so received on
each such date. Upon receipt of such notice and as to
each such date, the Company shall furnish to the
Custodian a Certificate signed in the name of the Company
by any two Officers or Authorized Persons specifying the
net asset value at which such reinvestment in Shares
shall be made.
8
<PAGE>
3. Upon receipt of such money pursuant to the
foregoing paragraphs 1 and 2, the Custodian shall credit
such money to the account of the Company.
4. Upon the issuance of any of the Shares of
the Company in accordance with the foregoing provisions
of this-article, the Custodian shall pay, out of the
money held for the account of the Company, all original
issue or other taxes required to be paid by the Company
in connection with such issuance upon the receipt, in the
case of such issuance pursuant to the foregoing paragraph
1, of a notice signed by any two Officers specifying the
amount to be paid.
5. Except as provided hereinafter, whenever the
Company shall hereafter redeem any of its Shares, it
shall furnish to the Custodian a Certificate signed in
the name of the Company by any two Officers or Authorized
Persons specifying:
(a) The number of Shares redeemed;
(b) The amount to be paid for the Shares
redeemed; and
(c) The number of such Shares as to which
the holder had elected to receive dividends and/or
other distributions in cash and the number of such
Shares as to which the holder had elected to reinvest
dividends and/or other distributions.
6. Upon receipt from the Transfer Agent of an
advice setting forth the number of Shares received by the
Transfer Agent for redemption and that such Shares are
valid and in good form for redemption, the Custodian
Shall make payment to the Transfer Agent out of the
moneys held for the account of the Company, of the total
amount specified in the Certificate issued pursuant to
the foregoing paragraphs of this Article VI.
9
<PAGE>
VII.
OVERDRAFTS OR INDEBTEDNESS
If the Custodian should in its sole discretion
advance funds on behalf of the Company, which advance
results in an overdraft because the moneys held by the
Custodian for the account of the Company shall be
insufficient to pay the total amount payable upon
purchase of securities as set forth in a Certificate or
oral instructions issued pursuant to Article III, or
which advance results in an overdraft for some other
reason, or if the Company is for any other reason
indebted to the Custodian, such overdraft or indebtedness
shall be deemed to be a loan made by the Custodian to the
account of the Company payable on demand and shall bear
interest from the date incurred at a rate per annum
(based on a 365-day year for the actual number of days
involved) equal to the sum of the Custodian's prime
commercial lending rate in effect from time to time plus
one-half of one percent, such rate to be adjusted on the
effective date of any change in such prime commercial
lending rate. Any such overdraft or indebtedness shall
be reduced by an amount equal to the total of all amounts
due the account of the Company which have not been
collected by the Custodian on behalf of the Company when
due because of the failure of the Custodian to timely
make demand or presentment for payment. In addition
thereto the Company hereby agrees that the Custodian
shall have a continuing lien and security interest in and
to any property at any time held by it for the benefit
of the Company or in which the Company may have an
interest and which is then in the Custodian's possession
or control or the possession or control of any third
party acting on the Custodian's behalf. The Company
authorizes the Custodian, in its sole discretion, at any
time to charge any such overdraft or indebtedness with
respect to the account of the Company hereunder, together
with interest due thereon, against any balance of such
account standing to the Company's credit on the
Custodian's books.
10
<PAGE>
VIII.
CONCERNING THE CUSTODIAN
1. Neither the Custodian nor its nominees shall
be liable to the Company hereunder, or to the holders of
Shares of the Company, for any loss or damage, including
counsel fees, resulting from its action or omission to
act or otherwise, except for any willful misconduct. The
Custodian may, with respect to questions of law relating
to such account, apply for and obtain the advice and
opinion of counsel to the Company or of its own counsel,
at the expense of such account, and shall be fully
protected with respect to anything done or omitted by it
in 'good faith in conformity with such advice or opinion.
2. Without limiting the generality of the
foregoing, the Custodian shall be under no duty or
obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any
securities purchased by or for the Company, the
legality of the purchase thereof, or the propriety
of the amount paid therefor;
(b) The legality of the sale of any
securities by or for the Company, or the propriety
of the amount for which the same are sold;
(c) The legality of the issue or sale of
any Shares of the Company, or the sufficiency of the
amount to be received therefor;
(d) The legality of the redemption of any
Shares of the Company, or the propriety of the amount
to be paid therefor;
(e) The legality of the declaration of any
dividend by the Company, or the legality of the issue
of any Shares of the Company in connection with any
reinvestment of dividends or other distributions
hereunder or in payment of any stock dividend;
11
<PAGE>
(f) The legality of any loan of portfolio
securities pursuant to Article IV of this Agreement,
nor shall the Custodian be under any duty or
obligation to see to it that any cash collateral
delivered to it by a brokerage firm or held by it at
any time as a result of such loan of the portfolio
securities of the Company is adequate collateral for
the Company against any loss it might sustain as a
result of such loan. The Custodian specifically, but
not by way of limitation, shall not be under any duty
or obligation to periodically check or notify the
Company that the amount of such cash collateral held
by it for the Company is sufficient collateral for
the Company, but such duty or obligation shall be the
sole responsibility of the Company. In addition, the
Custodian shall be under no duty or obligation to see
that any brokerage firm to whom portfolio securities
of the Company are lent pursuant to Article IV of
this Agreement makes payment to it of any dividends
or interest which are payable to or for the account
of the Company during the period of such loan or at
the termination of such loan; provided, however, that
the Custodian shall promptly notify the Company in
the event that such dividends or interest are not
paid and received when due.
3. The Custodian shall not be liable for, or
considered to be the Custodian of, any money represented
by any check, draft, or other instrument for the payment
of money received by it on behalf of the Company, until
the Custodian actually receives such money.
4. The Custodian shall not, be under any duty
or obligation to take action to effect collection of any
amount, if the securities upon which such amount is
payable are in default, or if payment is refused after
due demand or presentation, unless and until (i) it shall
be directed to take such action by a Certificate signed
in the name of the Company by any two Officers or
Authorized Persons, and (ii) it shall be assured to its
satisfaction of reimbursement of its costs and expenses
in connection with any such action.
12
<PAGE>
5. The Custodian may appoint one or more
banking institutions (the functions and physical
facilities of which are, in any such case, supervised by
an authority of the United States, or a state thereof,
having supervision over banks) as Depositary or
Depositaries or as Sub-Custodian or Sub-Custodians,
including but not limited to such banking institutions
located in foreign countries, of securities and moneys
at any time owned by the Company, upon terms and
conditions approved in written instructions from two
officers or Authorized Persons of the Company.
6. The Custodian shall not be under any duty
or obligation to ascertain whether any securities at any
time delivered to or held by it for the account of the
Company are such as may properly be held in such account
by the Company under the provisions of its Articles of
Incorporation.
7. The Custodian shall be entitled to receive,
and the Company agrees to pay to the Custodian, from out
of the moneys held in the account of the Company
hereunder, such compensation as may be agreed upon from
time to time between the Custodian and the Company for
the services of the Custodian. The Custodian may charge
such compensation and any expenses incurred by the
Custodian in the performance of its duties pursuant to
such agreement against any money held by it in such
account of the Company. The Custodian shall also be
entitled to charge against any money held by it for the
account of the Company the amount of any loss, damage,
liability or expense, including counsel fees, for which
it shall be entitled to reimbursement from out of such
account under the provisions of this Agreement. The
expenses which the Custodian may charge against the
account of the Company include, but are not limited to,
the expenses of Sub-Custodians and foreign branches of
the Custodian incurred in settling transactions involving
the purchase and sale of securities for such account of
the Company. The Custodian will at all times record the
amounts of charges to the account of the Company
hereunder and will render to the Company a statement for
services with respect to such account.
13
<PAGE>
8. The Custodian shall be entitled to rely upon
any Certificate, notice or other instrument in writing
received by the Custodian and believed by the Custodian
to be genuine and to be sent by two Officers or
Authorized Persons of the Company. The Custodian shall
be entitled to rely upon any oral instructions received
by the Custodian pursuant to Article III or V hereof and
believed by the Custodian to be genuine and to be given
by an officer or Authorized Person. The Company agrees
to forward to the Custodian written instructions from an
Officer or Authorized Person confirming such oral
instructions in such manner so that such written
instructions are received by the Custodian,, whether by
hand delivery, telex or otherwise, by the close of
business of the same day that such oral instructions are
given to the Custodian. The Company agrees that the fact
that such confirming instructions are not received by the
Custodian shall in no way affect the validity of the
transactions or enforceability of the transactions hereby
authorized by the Company. The Company agrees that the
Custodian shall incur no liability to the Company in
acting upon oral instructions given to the Custodian
hereunder concerning such transactions provided such
instructions reasonably appear to have been received from
an Officer or Authorized Person.
9. The Custodian hereby acknowledges that all
records necessary in the operation of the Company,
including records pertaining to its shareholders and
investments, are the sole and exclusive property of the
Company, and in the event that a transfer of any or all
of the services assigned to the Custodian under this
Agreement to someone other than the Custodian should ever
occur, the Custodian will promptly, and at its own cost,
take all steps necessary to segregate the records which
relate to the services to be transferred and deliver them
to the Company.
14
<PAGE>
IX.
TERMINATION
1. Either of the parties hereto may terminate
this Agreement by giving to the other party a notice in
writing specifying the date of such termination, which
shall be not less than 90 days after the date of giving
of such notice. In the event such notice is given by the
Company, it shall be accompanied by a copy of a
resolution of the Board of Directors of the Company,
certified by the Secretary or any Assistant Secretary,
electing to terminate this Agreement and designating a
successor custodian or custodians, each of which shall
be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided
profits. In the event such notice is given by the
Custodian, the Company shall, on or before the
termination date, deliver to the Custodian a copy of
resolution of its Board of Directors, certified by the
Secretary or any Assistant Secretary,.designating a
successor custodian or custodians reasonably satisfactory
to the Board of Directors of the Company. In the absence
of such designation by the Company, the Custodian may
designate a successor custodian which shall be a bank or
trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. If the Company
fails to designate a successor custodian, the Company
shall upon the date specified in the notice of
termination of this Agreement and upon the delivery by
the Custodian to the Company of all securities and moneys
then owned by the Company be deemed to be its own
custodian and the Custodian shall-thereby be relieved of
all duties and responsibilities pursuant to this
Agreement.
2. Upon the date set forth in such notice this
Agreement shall terminate, and the Custodian shall upon
receipt of a notice of acceptance by the successor
custodian on that date deliver directly to the successor
custodian all securities and moneys then owned by the
Company and held by it as Custodian for the account of the
Company hereunder, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which
it shall then be entitled from such account.
15
<PAGE>
X
MISCELLANEOUS
1. The term "Authorized Person" shall be deemed
to include the Treasurer, the Controller or any other
persons, whether or not any such person is an officer or
employee of the Company, duly authorized by the Board of
Directors to execute any Certificate, instruction,
notice, Written Instructions, or other instrument or to
deliver oral instructions on behalf of the Company.
2. The term "Certificate" shall mean any
notice, instruction or other instrument in writing,
authorized or required by this Agreement to be given to
the Custodian signed by two Officers or Authorized
Persons on behalf of the Company.
3. The term "Officers" shall include the
President, any Vice President, the Secretary, the
Treasurer, the Controller, any Assistant Controller, any
Assistant Secretary, any Assistant Treasurer, or any
other person or persons duly authorized by the Board of
Directors to execute any Certificate, instruction, notice
.or other instrument on behalf of the Company.
4. The term "Money Market Security" shall be
deemed to include, but not be limited to, short-term
state, municipal and public authority obligations the
interest on which is, in the opinion of bond counsel to
the issuing authorities, exempt from Federal income tax,
where the purchase or sale of such securities normally
requires settlement in federal funds on the same day as
such purchase or sale.
5. The term "Written Instructions" shall mean
written communications by telex or any other such system
whereby the receiver of such communications is able to
verify by codes or otherwise with a reasonable degree of
certainty the authenticity of the sender of such
communication.
16
<PAGE>
6. Annexed hereto as Appendix A is a
Certificate signed by two of the present Officers of the
Company under its corporate seal, setting forth the names
and the signatures of the present Officers of the
Company. The Company agrees to furnish to the Custodian
a new Certificate in similar form in the event any such
present officer ceases to be an Officer of the Company,
or in the event that other or additional Officers are
elected or appointed. Until such new Certificate shall
be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon the
signatures of the present Officers as set forth in said
annexed Certificate or upon the signatures of the present
officers as set forth in a subsequently issued
Certificate.
7. Annexed hereto as Appendix B is a
Certificate signed by two of the present Officers of the
Company under its corporate seal, setting forth the names
and the signatures of the present Authorized Persons.
The Company agrees to furnish to the Custodian a new
Certificate in similar form in the-event that any such
present Authorized Person ceases to be an Authorized
Person or in the event that other or additional
Authorized Persons are elected or appointed. Until such
new Certificate shall be received, the Custodian shall
be fully protected in acting under the provisions of this
Agreement upon oral instructions or signatures of the
present Authorized Persons as set forth in said annexed
Certificate or upon oral instructions or the signatures
of the present Authorized Persons as set forth in a
subsequently issued Certificate.
8. The Custodian may act, and be compensated
for acting, in one or more capacities on behalf of the
Company. Whenever the Custodian shall be required to act
in multiple capacities on behalf of the Company, either
under this Agreement or by virtue of this and any other
agreement between the Custodian and the Company, the
Custodian shall maintain the appropriate separate
accounts and records for each such capacity. The Company
understands that the Custodian or any of its subsidiaries
or affiliates may act in one or more capacities on behalf
of other investment companies and customers, and the
Company consents thereto. The Company shall be entitled
to equitable treatment under the circumstances in
receiving any services provided by the Custodian, but the
17
<PAGE>
Company recognizes that it is not entitled to receive
preferential treatment in the rendering of such services
as compared with the treatment given to any other
investment company or customer.
9. The Company and the Custodian are not
partners or joint venturers with each other and nothing
herein shall be construed so as to make them such
partners or joint venturers or impose any liability as
such on either of them. The Custodian shall be deemed
to be an independent contractor and, except as expressly
provided or authorized in this Agreement, as it may be
amended from time to time, or in any other written
agreement with the Company, shall have no authority to
act for or represent the Company.
10. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to
the Custodian, shall be sufficiently given if addressed
to the Custodian and mailed to it 'at P.O. Box 11089, New
York, New York 10249 or delivered to it at its offices
at 90 Washington Street, New York, New York 10015, or at
such other place as the Custodian may from time to time
designate in writing.
11. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to
the Company shall be sufficiently given if addressed to
the Company and mailed or delivered to it at its office
at One Liberty Plaza, 165 Broadway, New York, New York
10006 or at such other place as the Company may from time
to time designate in writing.
12. This Agreement may not be amended or
modified in any manner except by a written agreement
executed by both parties and authorized and approved by
a resolution of the Board of Directors of the Company.
13. This Agreement shall extend to and shall
be binding upon the parties hereto, and their respective
successors and assigns; provided, however, that this
Agreement shall not be assignable by the Company without
the written consent of the Custodian, or by the Custodian
without the written consent of the Company, authorized
or approved by a resolution of its Board of Directors.
18
<PAGE>
14. This Agreement shall be construed in
accordance with the laws of the State of New York.
15. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to
be an original, but such counterparts shall, together,
constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their respective
corporate officers,, thereunder duly authorized and their
respective corporate seals to be hereunto affixed, as of
the day and year first above written.
THE CORPORATE FUND
ACCUMULATION PROGRAM, INC.
By /S/WILLIAM W. HEWITT, JR.
William W. Hewitt, Jr.
Vice President
Attest:
/S/STEPHEN M. M. MILLER
Stephen M. M. Mlller
Secretary
THE BANK OF NEW YORK
By /S/JEROME P. ISOLDI
Jerome P. Isoldi
Vice President
Attest:
/S/NICKO J. MEXTORF
Nicko J. Mextorf
Vice President
19
<PAGE>
APPENDIX A
I, President and I,
Secretary of The Corporate Fund Accumulation Program,
Inc., a Maryland corporation (the "Company"), do hereby
certify that:
The following individuals serve in the following
positions with the Company and each individual has been
duly elected or appointed to each such position and
qualified therefor in conformity with the Company's
Articles of Incorporation and By-Laws, and the signatures
set forth opposite their respective names are their true
and correct signatures:
Name Position Signature
IN WITNESS WHEREOF, we have hereunto set our
hands and seals this day of 1977.
President
Secretary
20
<PAGE>
APPENDIX B
I, President and I,
Secretary of The Corporate Fund Accumulation Program,
Inc., a Maryland corporation (the "Company"), do hereby
certify that:
The following individuals have been duly
authorized in conformity with the Company's Articles of
incorporation and By-Laws to execute any certificate,
instruction, notice or other instrument or to give oral
instructions on behalf of the Company, and the signatures
set forth opposite their respective names are their true
and correct signatures:
Name Signature
IN WITNESS WHEREOF, we have hereunto set our
hands and seals this day of 1977.
President
Secretary
21
Exhibit 9(a)
ADMINISTRATION AGREEMENT
THE CORPORATE FUND ACCUMULATION PROGRAM, INC.
AGREEMENT, made this 2nd day of April 1984 by
and among FUND ASSET MANAGEMENT, INC., a Delaware corporation
(hereinafter called "FAMI"), and MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED, a Delaware corporation (hereinafter called
"Merrill Lynch"), PRUDENTIAL-BACHE SECURITIES, INC., a Delaware
corporation (hereinafter called "Bache"), DEAN WITTER REYNOLDS,
INC., a Delaware corporation (hereinafter called "Dean Witter")
and SHEARSON LEHMAN HUTTON INC., a New York corporation
(hereinafter called "Shearson"). Merrill Lynch, Bache, Dean
Witter and Shearson are hereinafter sometimes referred to
collectively as the "Administrators".
WHEREAS, FAMI has entered into an Investment Advisory
Agreement dated May 1, 1977 (the "Investment Advisory
Agreement") with The Corporate Fund Accumulation Program, Inc.,
a Maryland corporation (the "Company"), which provides for the
performance of certain functions for, and the provision of
certain services to, the Company by FAMI; and
WHEREAS,, the Company proposes to issue shares of its
common stock (par value $.Ol per share) (hereinafter referred to
as the "Shares") and the pool of assets held by the Company for
<PAGE>
the benefit of the holders of the Shares is hereinafter referred
to as the "Fund"; and
WHEREAS, FAMI desires to avail itself of the
experience, assistance and facilities available to the
Administrators and to have the Administrators perform for the
Company various services appropriate to the operations of the
Company pertaining to the Shares, and the Administrators are
willing to furnish such services in accordance with the terms
hereinafter set forth;
NOW THEREFORE, in consideration of the premises and
mutual covenants contained herein, it is agreed as follows:
1. Definitions. The following terms are hereby
defined for the purpose of this Agreement:
a. "The period of this Agreement" means the
term of this Agreement and any renewal or extension thereof, or
until any prior termination thereof.
b. The "1940 Act" means the Investment
Company Act of 1940, as amended.
2
<PAGE>
C. "Percentage", with respect to each
Administrator, means the percentage set forth below opposite the
name of such Administrator:
Administrator Percentage
Merrill Lynch 48%
Bache 21%
Dean Witter 21%
Shearson 10%
provided, however, that if any one or more of the
Administrators shall cease to act as Administrator pursuant to
Section 13 of this Agreement, then the Percentage of such
Administrator or Administrators so ceasing to act shall be
allocated, effective immediately upon such Administrator's so
ceasing to act, to the Administrator or Administrator's
continuing so to act, and in the event such allocation is to two
Administrators the amount to be allocated to each of such two
Administrators shall in each case be in the proportion which the
Percentage of such Administrator bears to the aggregate of the
Percentages of such two Administrators.
d. The "vote of the majority of Shares"
means the vote at an annual or special meeting of shareholders
of the lesser of (i) the holders of sixty-seven percent (67%) or
3
<PAGE>
more of the Shares present at such meeting, if the holders of
more than fifty percent (50%) of the Shares are present in
person or represented by proxy, or (ii) the holders of more than
fifty percent (50%) of the Shares.
e. The terms "interested person",
"affiliated person" and "assignment" have the meanings contained
in the 1940 Act.
2. Duties of the Administrators. FAMI hereby
retains the Administrators, and the Administrators hereby agree,
for the period of this Agreement and under the terms and
conditions set forth herein and subject at all times to the
control and direction of the Board of Directors of the Company,
to (a) assist in supervising all aspects of the Company's
operations including coordinating all matters relating to the
functions of the Program Agent, custodian and other parties
performing operational functions for the Company; (b) provide
the Company, at the Administrators' expense, with the services
of such persons competent to perform such administrative and
clerical functions as are necessary in order to provide
effective administration of the Company, including duties in
connection with shareholder relations, reports, redemption
requests and account adjustments and the maintenance of certain
4
<PAGE>
company books and records; (c) provide the Company, at the
Administrators' expense, with adequate office space and related
services; (d) supervise and administer the operation of the
Exchange Privilege referred to under the heading "Redemption of
Shares and Exchange Privilege" in the Prospectus dated April 5,
1977 (or in such Prospectus as it may henceforth be amended) of
the Company relating to the Shares; and (e) to the extent
required by then current Federal securities laws, regulations
thereunder or interpretations thereof, pay for the printing of
all Company prospectuses used in connection with the
distribution and sale of the Shares.
3. Records to Be Property of the Companv. The
Administrators hereby acknowledge that all records necessary to
the operation of the Company, including records pertaining to
the Company's shareholders and investments, are the sole and
exclusive property of the Company, and in the event that a
transfer of management or investment advisory services to
someone other than FAMI or of administrative services to someone
other than the Administrators should ever occur, the
Administrators will promptly, and at their own cost, take all
steps necessary to segregate such records and deliver them to
the Company.
5
<PAGE>
4. Compensation of Administrators. FAMI covenants
and agrees to pay to the Administrators, and the Administrators
covenant and agree to accept from FAMI as full compensation for
all services furnished by the Administrators hereunder, a
monthly fee at an annual rate of 0.2% of the average daily net
asset value of the Fund from the beginning of the year to the
end of such month (hereinafter called the "Administrative
Feel'). The Administrative Fee shall be computed as of the close
of business on the last business day of each month and shall be
prorated for any fraction of a month at the commencement and
termination of this Agreement. The Administrative Fee provided
for herein shall be paid in cash by FAMI to the Administrators
within ten (10) business days after the later of (x) receipt by
FAMI of the Advisory Fee payable to FAMI by the Company pursuant
to the Investment Advisory Agreement or (y) the last day of each
month. All payments of the Administrative Fee - shall be
allocated among the several Administrators, and paid by FAMI to
the several Administrators, in such Administrators' respective
Percentages. "Net asset value" of the Fund for purposes of
computing the Administrative Fee will be determined as of the
close of trading on the last business day in each month on which
the New York Stock Exchange is open and will be computed
pursuant to the provisions of the Company's Articles of
Incorporation and By-Laws and any currently effective Prospectus
of the Company with respect to the Shares.
6
<PAGE>
5. Expenses- Pursuant to the Investment Advisory
Agreement the Company shall pay all costs and expenses incurred
in connection with its organization, all costs and expenses
incurred in connection with the offer, sale, issue or redemption
of its securities (including registration fees and printing and
mailing costs) and all other costs and expenses of its
operations, including fees of its directors, legal fees,
expenses of independent accountants, costs of acquiring and
disposing of portfolio securities, costs of printing
certificates for shares, reports to shareholders, proxies, proxy
statements and mailing envelopes, postage, insurance costs,
taxes, interest, stock exchange listing fees and expenses and
fees and expenses of the Company's program agent, transfer
agents, registrars, custodian, dividend disbursing agent,
pricing agent, and bookkeeper; provided, however, that if the
expenses of the Company payable out of the Fund (including the
Advisory Fee payable to FAMI by the Company pursuant to the
investment Advisory Agreement but excluding interest, taxes,
brokerage fees and extraordinary expenses), in any fiscal year
exceed the lesser of either (a) 1-1/2% of the Fund's average
annual net assets up to $30,000,000 and 1% of its average annual
net assets over $30,000 000 or (b) 25% of the total investment
income of the Fund, then (unless reimbursement of the Company by
FAMI is not required pursuant to applicable requirements of
7
<PAGE>
state Blue Sky or securities laws, in which event the
Administrative Fee will be payable in the normal manner), the
Administrators shall reimburse FAMI in an aggregate amount equal
to 40% of the amount of such excess by postponing receipt of all
or a portion of the Administrative Fee which will be paid in
subsequent periods subject to the foregoing limitations. Any
reimbursement by or to the Administrators pursuant to the
provisions of this Section shall be allocated among the several
Administrators, and paid by or to the several Administrators, in
such Administrators' respective Percentages.
6. Administrators May Act in Other Capacities.
Nothing contained in this Agreement shall be deemed to prohibit
the Administrators and their affiliates from acting, and being
separately compensated for acting, in one or more capacities for
or on behalf of FAMI or the Company. Whenever the
Administrators shall act in multiple capacities for or on behalf
of FAMI or the Company, the Administrators shall maintain
appropriate separate accounts and records for each such
capacity. FAMI shall be entitled to equitable treatment under
the circumstances in receiving services pursuant to this
Agreement, but FAMI recognizes that it is not entitled to
receive preferential treatment as compared with the treatment
given to any other customer of one or more of the Administrators.
8
<PAGE>
7. Limitation on Administrators' Liability. The
Administrators shall have no liability to FAMI or the Company or
any shareholder of FAMI or the Company for any error of
judgement, mistake of law or any loss arising out of any act or
omission in the performance by the Administrators of their
duties hereunder, except for liability resulting from willful
misfeasance, bad faith or gross negligence on the
Administrators' part or from reckless disregard by the
Administrators of their obligations and duties under this
Agreement.
8. Entire Agreement. No provision of this
Agreement may be amended, waived or terminated except by an
instrument in writing signed by the parties hereto.
9. Term of Agreement. This Agreement shall become
effective upon its execution and delivery and shall remain in
force until the Investment Advisory Agreement is approved or
rejected at the first special or annual meeting of the
shareholders of the Company held thereafter and called to
consider the adoption of such Investment Advisory Agreement, and
if such Investment Advisory Agreement is approved at that time
by the vote of the majority of Shares, this Agreement shall be
in effect for two years after its date of execution and shall
9
<PAGE>
continue in force from year to year thereafter, subject to prior
termination as provided herein, but only so long as the
Investment Advisory Agreement shall continue in force as
provided therein.
10. Termination. This Agreement may be terminated
by either FAMI on sixty (60) days' notice to the Administrators
or by the Administrators, acting as a group,, on ninety (90)
days' notice to FAMI; provided that any such termination shall
be made without the payment of any penalty.
11. No Assignment. This Agreement shall terminate
automatically in the event of its assignment.
12. Administrators Independent. The Company, FAMI
and the Administrators, and any of them, are not partners or
joint venturers with each other, and nothing herein shall be
construed so as to make them such partners or joint venturers or
impose any liability as such on any one of them. The
Administrators shall be deemed to be independent contractors
and, except as expressly provided or authorized in this
Agreement, shall have no authority to act for or represent FAMI
or the Company.
10
<PAGE>
13. Concerning the Administrators. Except as set
forth in Section. 5, the Administrators shall be jointly and
severally liable in accordance herewith for the obligations
imposed upon and undertaken by the Administrators hereunder,
provided, that, without in any way affecting or diminishing such
joint and several liability, each Administrator shall indemnify
the other Administrators and hold the other Administrators
harmless from and against any and all costs, expenses and
liabilities (including attorneys' fees) which such other
Administrators may suffer or incur as a result of or by reason'
of any act or failure to act hereunder on the part of the
indemnifying Administrator. At all times prior to the
termination of this Agreement and while the Administrators shall
continue to act jointly hereunder, there shall be maintained on
file with FAMI a power of attorney executed in favor of one
Administrator by the other Administrators constituting and
appointing the non-executing Administrator the true and lawful
agent and attorney-in-fact of the executing Administrators to
execute and deliver for and on behalf of the executing
Administrators any and all notices, opinions, certificates,
lists, demands, directions, instruments, or other documents
provided or permitted to be executed or delivered by the
Administrators hereunder or to take any other action in respect
hereof. Such power of attorney shall continue in effect as to
11
<PAGE>
each executing Administrator until written notice of revocation
thereof has been given by such executing Administrator to FAMI.
Prior to receipt of such notice of revocation FAMI shall be
entitled to rely conclusively upon such power of attorney as
authorizing the non-executing Administrator to give any notice,
opinion, certificate, list, demand, direction, instrument or
other document provided for or permitted hereunder or to take
any action in respect hereof on behalf of the executing
Administrators as to which such power of attorney is in effect.
In the event that any Administrator shall fail to
undertake or perform any of the duties which by the terms of
this Agreement are required by it to be undertaken or performed
and such failure shall continue for 30 days after notice to all
Administrators from FAMI or if any Administrator shall become
incapable of acting or shall be adjudged a bankrupt or
insolvent, or a receiver of the property of any Administrator
shall be appointed or any public officer shall take charge or
control of any Administrator or its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then
such Administrator shall forthwith be and shall be deemed to be
discharged forever as an Administrator hereunder and thereupon
the remaining Administrators shall act hereunder without the
necessity of any other or further action on their part or on the
part of FAMI.
12
<PAGE>
In the event that the power of attorney referred to
in the first paragraph of this Section 13 shall be revoked by
written notice given by an executing Administrator and it shall
not be replaced within one business day by another power of
attorney conforming with the requirements of said paragraph, the
Administrators shall be deemed to have been unable to reach
agreement with respect to action to be taken jointly by them
hereunder and thereupon the Administrators shall, by an
instrument executed by at least two Administrators, within one
business day designate either one or two Administrators to be
discharged hereunder, provided that, if they are unable to agree
on such designation within one business day, all Administrators
other than Merrill Lynch shall be deemed to have been designated
to be discharged hereunder upon the expiration of such one-day
period and thereupon each Administrator designated to be
discharged or deemed to have been so designated shall be and
shall be deemed to be discharged forever as Administrator
hereunder and thereupon Merrill Lynch shall act hereunder
without the necessity of any other or further action on its part
or on the part of FAMI.
Notwithstanding the discharge of an Administrator in
accordance with this Section 13, such Administrator shall
continue to be fully liable in accordance with the provisions
hereof in respect of action taken or refrained from under this
13
<PAGE>
Agreement by the Administrators before the date of such
discharge or by Merrill Lynch before the date of such discharge,
as fully and to the same extent as if no discharge had occurred.
If at any time any Administrator shall desire to
resign its position as Administrator hereunder and the other
Administrator or Administrators are agreeable to such
resignation, the Administrator desiring to resign may resign by
delivering to FAMI an instrument executed by such resigning
Administrator and consented to by the remaining Administrator or
Administrators and upon such delivery, the resigning
Administrator shall be discharged and shall no longer be liable
in any manner hereunder except as to acts or omissions occurring
prior to such delivery and the remaining Administrator or
Administrators shall thereupon perform all duties and be
entitled to all rights under this Agreement.
14. Notices. Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed
postpaid, to the party to this Agreement entitled to receive
such notice at such address as such other party may designate in
writing for the purpose of such notice.
15. Transactions with Certain Persons. Neither
this Agreement nor any transaction made pursuant hereto shall be
14
<PAGE>
invalidated or in any way affected by the fact that directors,
officers, agents and/or shareholders of FAMI or the Company are
or may be interested in any one of the Administrators, or any
successor or assignee thereof, as directors, officers,
shareholders or otherwise; that directors, officers,
shareholders or agents of any one of the Administrators are or
may be interested in FAMI or the Company as directors, officers,
shareholders or otherwise; or that any one of the Administrators
or any successor or assignee, is or may be interested in FAMI or
the Company as shareholders or otherwise.
16. Provisions of Law to Control. This Agreement
shall be subject to all applicable provisions of law, including,
without limitation, the applicable provisions of the 1940 Act.
To the extent that any provisions herein contained conflict with
any applicable provisions of law, the latter shall control.
17. Governing Law. This Agreement is executed and
delivered in the State of New York and shall be construed in
accordance with the laws and decisions of said State.
18. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed to be
15
<PAGE>
an original but all of which shall constitute one and the same
instrument.
IN WITNESS WHEREOF, FAMI and the Administrators have
executed this Agreement on the day and year first above written.
FUND ASSET MANAGEMENT, INC.
By /s/
--------------------------
ATTEST:
/s/ Philip Kirstein
--------------------------
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By /s/
---------------------------
ATTEST:
/s/
--------------------------
PRUDENTIAL-BACHE SECURITIES,
INC.
By /s/
--------------------------
ATTEST:
/s/ Richard Hoffman
--------------------------
<PAGE>
DEAN WITTER REYNOLDS, INC.
By /s/
-------------------------
ATTEST:
/s/
- -----------------------------------
SHEARSON LEHMAN HUTTON INC.
By /s/
-------------------------
ATTEST:
/s/
- -----------------------------------
17
Exhibit 9(b)
AGENCY AGREEMENT made this 28th day of April 1977,
between The Corporate Fund Accumulation Program, Inc. a
corporation organized and existing under the laws of the
state of Maryland, having its principal office and place
of business at One Liberty Plaza, 165 Broadway, New York,
New York 10006 (the "Company"), and The Bank of New York,
a corporation organized and existing under the laws of
the State of New York, having its principal office and
place of business at 48 Wall Street, New York, New York
10015 (the "Bank"),
WITNESSETH:
WHEREAS, the Company is an investment company
registered under the Investment Company Act of 1940, as
amended;
WHEREAS, the Company is the issuer of shares of
its Common Stock (par value $.Ol per share)(such shares
being hereinafter referred to as the "Shares"); and
WHEREAS, the Board of Directors of the Company
(the "Board") has selected the Bank to act as Program
Agent, Dividend Agent, Transfer Agent and Registrar for
the Company and the Bank is willing to act in such
capacities and to perform the respective duties and
functions thereof in the manner and on the conditions
hereinafter set forth;
NOW, THEREFORE, for and in consideration of the
mutual promises hereinafter set forth, the Company and
the Bank agree as follows:
<PAGE>
1. Appointment of the Bank. The Company hereby
constitutes and appoints the Ban as Program Agent,
Dividend Agent, Transfer Agent and Registrar for all of
the authorized Shares issued, and the Bank accepts such
appointment and agrees to perform the duties thereof as
hereinafter set forth.
2. Copies of Corporate Documents. The Company
shall furnish to the Bank copies of the Articles of
Incorporation and By-Laws of the Company and a resolution
of the Board appointing the Bank as Program Agent,
Dividend Agent, Transfer Agent and Registrar of the
Company for the Shares, in each case certified by the
Secretary of the Company. The Company shall also furnish
to the Bank copies of the Registration Statements, as
amended to date, filed by it with the Securities and
Exchange Commission under the Securities Act of 1933, as
amended, and relating to the Shares together with any
financial statements and exhibits included therein. The
Company shall furnish to the Bank promptly any amendments
or supplements to any of the foregoing documents. The
Company shall also furnish to the Bank an opinion of
counsel to the Company to the effect that the aforesaid
Registration Statements, as amended to date, were
declared effective by the Securities and Exchange
Commission.
3. Authorized Shares. The Company represents
to the Bank and has furnished to the Bank a Certificate
of the Secretary of the Company dated the date of this
Agreement as to the number of authorized Shares of the
Company and the par value thereof and as to the number
of Shares issued and outstanding. The Company agrees
promptly to notify the Bank of any change in the number
of authorized Shares.
4. Registration of Shares. The Bank shall keep
a register relating to the Shares in which, subject to
such reasonable regulations as the Company may prescribe
and subject to the provisions hereinafter set forth, the
Bank on behalf of the Company shall register, and shall
register transfer of, the Shares. Such register shall
be in written form or in any other form capable of being
converted into written form within a reasonable time.
Such register may record such other information relating
to the holders of Shares as the Company may request.
2
<PAGE>
Subject to receipt of the Certificate provided
for in paragraph 3 hereof, the Bank shall record issues
of Shares and shall notify the Company in case any
proposed issue of Shares would result in an over-issue
as defined by Section 8-104(2) of the Uniform Commercial
Code and, in such case, shall refuse to credit such
Shares to a shareholder's account and shall not
countersign, issue or deliver certificates for such
Shares and shall not take any other action which would
reflect any issuance of such Shares.
5. Transfer of Shares. The Bank is authorized
to transfer on the records of the Company maintained by
the Bank from time to time Shares for which certificates
are surrendered in proper form for transfer in accordance
with the customs and usage prevailing among transfer
agents to effect such transfer, and upon cancellation
thereof, to countersign and issue new certificates for
the same number of Shares and to deliver them pursuant
to instructions received. The Bank is also authorized
to transfer on such records Shares for which no
certificates are issued upon receipt by the Bank of
sufficient documentation in proper form in accordance
with the customs and usage prevailing among transfer
agents to effect such transfer, and, if requested by the
transferee, to countersign and issue certificates for the
same number of Shares and to deliver them pursuant to
instructions received.
6. Stock Certificates. The Company shall
supply the Bank with sufficient blank stock certificates
representing the Shares in the form approved from time
to time by the Board of Directors of the Company. Such
blank stock certificates shall be properly signed,
manually or by facsimile signature, by the duly
authorized officers of the Company, and shall bear the
corporate seal of the Company or a facsimile thereof.
Notwithstanding the death, resignation or removal of any
officer of the Company authorized to sign such stock
certificates, the Bank may continue to countersign
certificates which bear the manual or facsimile signature
Of such officer until otherwise directed by the Company.
3
<PAGE>
7. Lost, Stolen or Destroyed Certificates. In
case of the alleged loss, theft or destruction of any
certificate for Shares, no new certificate shall be
issued in lieu thereof, unless there shall first be
furnished an appropriate affidavit of loss and a bond of
indemnity in form, and issued by a surety company,
satisfactory to the Bank and the Company, in an amount
at least equal to the then current net asset value of the
Shares represented by such lost, stolen or destroyed
certificate.
8. Receipt of Monies for Investment. Upon
receipt of any check, Federal Reserve Draft, wire order
drawn or endorsed to the Bank, as Program Agent, or other
evidence satisfactory to the Bank of the transfer of
funds, from a trustee (including the Bank acting in such
capacity) of any series of The Corporate Income Fund or
the Corporate Investment Trust Fund or upon receipt of
funds otherwise identified as being an investment in
Shares of the Company, the Bank will credit the amount
represented by such monies to the account maintained by
the Company with the Bank as Custodian for the Company.
9. Shareholder Accounts. Unless otherwise
directed by the Company, upon the collection of the
monies referred to in paragraph 8 hereof, the Bank will
compute the number of Shares purchased by the investor
on the basis of the net asset value of the Shares as
supplied to the Bank by the Company or its agent
designated for the purpose (including the Bank as Pricing
Agent for the Company, if and so long as the Bank shall
have been appointed as such Pricing Agent and such
appointment of the Bank remains effective) and in
accordance with the terms of the then current Prospectus
of the Company relating to the Shares, and shall also
(a) In the case of a new Company investor,
open and maintain a regular account for such investor
in the name or names and address set forth in the
authorization form received from a trustee of any
series of The Corporate Income Fund or the Corporate
Investment Trust Fund;
4
<PAGE>
(b) If specifically requested in writing
by the investor, countersign, issue and mail, by not
less than first class mail, insured, to the investor
at his address as set forth in such authorization
form, a stock certificate for full Shares, together
with a statement of account showing the number of
full Shares represented by certificates and the
number of full and fractional Shares, if any, which
the investor has in his account; and
(c) Send a statement of the investor's
account, indicating the amount of full and fractional
Shares purchased (in the case of fractional Shares,
rounded to three decimal places), and the purchase
price per Share of such Shares.
Unless otherwise instructed by an authorized
officer of the Company, the Bank will issue Shares only
to the persons eligible to purchase Shares as set forth
in the then current Prospectus of the Company relating
to the Shares.
10. Dividends and Distributions. The Company
intends to declare a dividend monthly (payable on the
15th day of the month) and a capital gains distribution
at least once a year. The Company will notify the Bank
of the rate per Share of any dividend or capital gains
distribution payable on the Shares.
All dividends and capital gains distributions
on Shares will be either (i) automatically invested in
additional Shares at net asset value on the payment date
therefore or (ii) paid in cash in accordance with the
written instructions of the shareholder. If no such
written instructions are received, such dividends and
capital gains distributions will be automatically
invested in additional Shares on the payment date
therefor.
The Bank will also maintain a record of the
amount of funds anticipated to be required by the Bank
as Dividend Agent for the payment of dividends and other
distributions on Shares, the dates as of which such
amounts are expected to be required and the amount of
cash, if any, held by the Bank as Custodian for the
account of the Company, and will advise the Company with
respect thereto.
5
<PAGE>
11. Redemption. The Bank shall receive, during
usual business hours, and shall stamp the date and time
of receipt on, all stock certificates and requests
delivered to it for redemption of Shares, and shall
process redemptions as follows:
(a) The Bank shall accept and process
redemption requests relating to Shares in accordance
with the redemption procedure described in the then
current Prospectus of the Company relating to the
Shares;
(b) If the stock certificate and/or
request complies with the standards for redemption
set forth in such Prospectus and is, except as
otherwise provided in such Prospectus, otherwise in
accordance with the customs and usage prevailing
among transfer agents, the Bank shall process such
redemption and notify the Company thereof. Unless
otherwise directed by the Company, the Bank will
instruct the Custodian to transfer to its account as
Transfer Agent for the Company out of the custodial
account of the Company with the Bank sufficient
amounts to pay the redemption price to redeeming
holders of Shares. The Bank will then pay the
appropriate redemption price in accordance with the
request of the shareholder as promptly as possible
and in any event within seven days of proper tender
for redemption, unless-the provisions of the
Company's Articles of Incorporation, the then current
Prospectus relating to the Shares or the written
instructions of an authorized officer of the Company
provide for a delay in such payment; and
(c) If such stock certificate or request
does not comply with such standards for redemption
or is otherwise not in accordance with such customs
and usage, the Bank shall promptly notify the
shareholder of such fact and the reason therefor and
shall effect such redemption at the price in effect
at the time of receipt of documents complying with
such standards or custom and usage.
6
<PAGE>
12. Tax Returns and Reports. The Bank will
prepare, file with the Internal Revenue Service and with
the appropriate state agencies, and, if required, mail
to shareholders such returns for reporting dividends and
other distributions as are required to be so prepared,
filed and mailed by applicable laws, rules and
regulations, and shall withhold such sums as are required
to be withheld by it under applicable Federal laws.
13. Shareholder Record Keeping. The Bank shall
maintain records, which at all times will be the property
of the Company and will be available for inspection by
the Company or by any person or persons designated by the
Company, showing for each shareholder's account the
following:
(a) Name, address and United States tax
identification or Social Security number (if
provided);
(b) Number of Shares held;
(c) Historical information regarding the
account of such shareholder, including dividends and
distributions paid and the date and price for all
transactions in such shareholder's account;
(d) Any stop or restraining order placed
against such shareholder's account;
(e) Information with respect to
withholdings on accounts;
(f) Any instructions as to the election
of form of payment of dividends and distributions,
dividend and distribution address and any
correspondence relating to the current maintenance
of such shareholder's account;
(g) If such shareholder holds Share
certificates, the certificate numbers and
denominations thereof;
7
<PAGE>
(h) Based on information supplied to the
Bank by the trustees of each of the several series
of The Corporate Income Fund and the Corporate
Investment Trust Fund, the number of units of each
such Funds registered in the name of such shareholder
and whether such shareholder has elected to have (i)
all distributions on such units, or (ii)
distributions only in respect of capital gains and
principal on such units, or (iii) distributions only
in respect of interest on such units, invested in
Shares; and
(i) Such other shareholder records as may
be required of the Company by the Investment Company
Act of 1940, as amended from time to time, and any
regulations promulgated thereunder.
The Company may demand surrender of such
records, which shall include computer records on tape,
disc, cards or other data processing media ("Computer
Records"), in which case the Bank shall be entitled to
retain a copy. The Bank shall be obligated to maintain
only those records required by this Agreement or
otherwise necessary to carry out its duties hereunder.
The Bank hereby acknowledges that all records necessary
in the operation of the Company, including records
pertaining to its shareholders and investments, are the
sole and exclusive property of the Company, and in the
event that a transfer of any or all of the services
assigned to the Bank under this Agreement to someone
other than the Bank should ever occur, the Bank will
promptly take all steps necessary to segregate the
records which relate to the services to be transferred
and deliver them to the Company.
14. other Information Furnished. The Bank will
furnish to the Company a sales report (by State) and Blue
Sky accounting information monthly. In addition, the
Bank will furnish to the Company such other information,
including shareholder lists and statistical information,
as may be agreed upon from time to time by the Bank and
the Company.
8
<PAGE>
The Bank will advise the Company of the
estimated amount of funds expected to become available
for investment in Shares from distributions on units of
The Corporate Income Fund and The Corporate Investment
Trust Fund, based on the then current information
supplied to the Bank, as Program Agent, by the trustees
of such Funds. The Bank will also advise the Company of
the information maintained by it in accordance with the
third paragraph of paragraph 10 of this Agreement.
The Bank shall notify the Company of any request
or demand to inspect the stock records of the Company and
will act upon any instructions of the Company to permit
or refuse such inspection.
15. Correspondence and Telephone Inquiries.
The Bank will answer such correspondence and telephone
inquiries as may from time to time be mutually agreed
upon. Correspondence and telephone inquiries concerning
investments and Company policy shall be referred to the
Company.
16. Communications to Shareholders. The Bank
will address and mail communications by the Company to
its shareholders, including a Statement of Account to all
shareholders reflecting each transaction, a monthly
account summary of each account transaction and semi-
annual and annual reports to shareholders and proxy
material for the Company's shareholder meetings supplied
to the Bank by the Company. The Bank will receive and
tabulate the proxy cards for the shareholder meetings in
accordance with instructions from the Company. In
addition, the Bank will address and mail such other
communications from the Company to its shareholders as
may be agreed upon from time to time.
17. Compensation. The Bank shall be paid as
compensation for its services pursuant to this Agreement
such compensation as may from time to time be agreed upon
in writing.
18. Concerning the Bank. The Bank may act, and
be compensated-for acting, in one-or more capacities on
behalf of the Company. Whenever the Bank shall be
required to act in multiple capacities on behalf of the
Company, either under this Agreement or by virtue of this
Agreement and any other agreement between the Bank and
9
<PAGE>
the Company, the Bank shall maintain the appropriate
separate accounts and records for each such capacity.
The Company understands that the Bank or any of its
subsidiaries or affiliates may act in one or more
capacities on behalf of other investment companies and
customers, and the Company consents thereto. The Company
shall be entitled to equitable treatment under the
circumstances in receiving any services provided by the
Bank, but the Company recognizes that it is not entitled
to receive preferential treatment in the rendering of
such services as compared with the treatment given to any
other investment company or customer.
19. Liability; Indemnity. The Bank shall not
be liable for any action taken or omitted to be taken in
good faith, in accordance with this Agreement, or upon
any written instrument, order or stock certificate
believed by it to be genuine and to be signed or
countersigned, or executed by any duly authorized person.
The Bank shall be entitled to obtain, at the expense of
the Company, and shall be entitled to rely upon, the
advice or opinion of counsel to the Company or counsel
to the Bank and shall not be liable to any action taken
or omitted to be taken in good faith in reliance on such
advice or opinion.
The Company agrees to indemnify and hold the
Bank harmless from all claims and liabilities (including
counsel fees) incurred or assessed against the Bank in
connection with the performance of this Agreement, except
such as may arise from the Bank's own negligence or
willful misconduct; provided, however, that in case any
action shall be brought against the Bank in connection
with the performance of this Agreement and in respect of
which indemnity may be sought against the Company, the
Bank shall promptly notify the Company in writing, and
the Company shall be given reasonable opportunity to
defend against such claim or liability in its own name
or in the Bank's name. The Company shall not be liable
for any settlement of any such action effected without
its written consent, but if settled with the written
consent of the Company or if there be a final judgment
for the plaintiff in any such action, the Company agrees
to indemnify the Bank from and against any loss or
liability by reason of such settlement or judgment
10
<PAGE>
20. Notices. All notices or other
communications hereunder shall be in writing and shall
be deemed sufficient if mailed to either party hereto at
the addresses set forth in this Agreement, or at such
other addresses as the parties hereto may designate by
notice to each other.
21. Termination. Neither this Agreement nor
any provision hereof may be changed, waived, discharged
or terminated orally. Only an instrument in writing
which shall make specific reference to this Agreement and
which shall be signed by the party against which
enforcement of the change, waiver, discharge or
termination is sought shall be effective to amend or
modify this Agreement.
This Agreement may be terminated by 90 days
written notice from one party to the other and, in the
case of the Company, pursuant to a resolution of its
Board or Executive Committee. Upon the termination
hereof, the Company shall pay to the Bank such
compensation as may be due to the Bank, as of the date
of such termination. In the event that in connection
with termination, a successor, which may include the
Company or any affiliated person of the Company to any
of the Bank's duties or responsibilities hereunder is
designated by the Company by written notice to the Bank,
the Bank shall, promptly upon such termination and at the
expense of the Company transfer to such successor the
Computer Records, a certified list of outstanding Shares
(with each shareholder's share balance, name, address and
tax identification or Social Security number), a record
of the account of each shareholder and the status
thereof, and all other relevant books, records and data
established or maintained by the Bank under this
Agreement.
22. Assignment. This Agreement may not be
assigned by the Bank or Company without in any such case
the consent of the Boards of Directors of both the Bank
and the Company, respectively.
11
<PAGE>
23. Governing Law. This Agreement shall be
governed by, and cons rue in accordance with, the laws
of the State of New York.
THE CORPORATE FUND
ACCUMULATION PROGRAM, INC.
By: /S/WILLIAM W. HEWITT, JR.
William W. Hewitt, Jr.
Vice President
Attest:
/S/STEPHEN M. M. MILLER
Stephen M. M. Miller
Secretary
THE BANK OF NEW YORK
By: /S/JEROME P. ISOLDI
Jerome P. Isoldi
Vice President
Attest:
/S/NICKO J. MEXTORF
Nicko J. Mextorf
Vice President
12
Exhibit 16
The Corporate Fund
Investment Accumulation Program
Total Return
Annual
Total
1 Year 5 Years 10 Years. Return*
Initial Investment $1,000.00 $1,000.00 $1,000.00 $1,000.00
Divided by Net Asset Value. 19.97 18.83 22.80 19.97
Equal Shares Purchased 50.08 53.11 43.86 50.08
Plus Shares Acquired
through Dividend
Reinvestment 4.34 32.90 81.47 4.34
Equals Shares Held at
12/31/88 54.42 86.01 125.33 54.42
Multiplied by Net Asset ....
Value at 12/31/88 19.75 19.75 19.75 19.75
Equals Ending Redeemable
Value at $1,000 Investment
(ERV) at 12/31/88 $1,074.70 $1,698.60 $2,475.20 $1,074.70
Divided by $1,000 (P) 1.0747 1.6986 2.4752 1.0747
Subtract 1 0.0747 0.6986 1.4752 0.0747
Expressed as a percentage
equals the Aggregate Total
Return for the Period (T).. 7.47% 69.86% 147.52%
Expressed as a percentage
equals the Aggregate Total
Return for the Period 7.47%
ERV divided by P 1.0747 1.6986 2.4752
Raise to the power of 1 5 10
Equals 1.0747 1.1118 1.0949
Subtract 1 0.0747 0.1118 0.0949
Expressed as a percentage
equals the Average
Annualized Total Return.... 7.47% 11.18% 9.49%
Does not include sales charge for the period.
C-7
Exhibit 17
POWER OF ATTORNEY
Know all persons by these presents, that Cynthia A.
Montgomery hereby constitutes and appoints Arthur Zeikel and Gerald
M. Richard, and each of them, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, to
sign any and all Amendments (including pre-effective and post-
effective amendments) to the Registration Statement (File No. 2-
57060) of The Corporate Fund Accumulation Program, Inc. and to the
Registration Statement (File No. 2-57442) of The Municipal Fund
Accumulation Program, Inc., and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
Dated: April 1, 1994 /s/ Cynthia A. Montgomery
------------------------------
Cynthia A. Montgomery
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1995
SECURITIES ACT FILE NO. 2-57060
INVESTMENT COMPANY ACT FILE NO. 811-2642
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. 21 X
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 X
AMENDMENT NO. 17
(Check appropriate box or boxes) X
-------------------
THE CORPORATE FUND ACCUMULATION
PROGRAM, INC.
(Exact name of Registrant as specified in charter)
<TABLE>
<S> <C>
BOX 9011 08543-9011
PRINCETON, NEW JERSEY (Zip Code)
(Address of Principal Executive Offices)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (609) 282-2000
ARTHUR ZEIKEL
THE CORPORATE FUND ACCUMULATION PROGRAM, INC.
800 SCUDDERS MILL ROAD, PLAINSBORO, NEW JERSEY 08536
(Name and address of agent for service)
Copies to:
<TABLE>
<S> <C>
PHILIP L. KIRSTEIN, ESQ. LEONARD B. MACKEY, JR., ESQ.
FUND ASSET MANAGEMENT, L.P. ROGERS & WELLS
BOX 9011 200 PARK AVENUE
PRINCETON, NEW JERSEY 08543-9011 NEW YORK, N.Y. 10166
</TABLE>
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
X immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on (date) pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of rule 485
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
/ / this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
-------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
AMOUNT OF PROPOSED PROPOSED
SHARES MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Shares of Common Stock, par
value $0.01 per share....... 2,255,211 $ 19.98 $289,989* $ 100**
</TABLE>
*(1) The calculation of the maximum aggregate offering price is made as of
April 26, 1995 pursuant to Rule 24e-2 under the Investment Company Act of 1940.
(2) The total amount of securities redeemed or repurchased during Registrant's
previous fiscal year was 2,240,697 Shares of Common Stock.
*(3) None of the Shares described in (2) above have been used for reduction
pursuant to Rule 24e-2(a) or Rule 24f-2(c) under the Investment Company Act of
1940 in previous filings during Registrant's current fiscal year.
**(4) 2,240,697 Shares redeemed during Registrant's previous fiscal year are
being used for the reduction of the registration fee in this Post-Effective
Amendment.
-------------------
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT
OF 1940. THE NOTICE REQUIRED BY SUCH RULE FOR THE REGISTRANT'S MOST RECENT
FISCAL YEAR WAS FILED ON FEBRUARY 28, 1995.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE CORPORATE FUND ACCUMULATION PROGRAM, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A ITEM PROSPECTUS CAPTION
------------------------------------------- -------------------------------------------
<S> <C> <C>
PART A
1. Cover Page................................. Cover Page
2. Synopsis................................... Fee Table
3. Financial Highlights....................... Financial Highlights; Additional
Information-- Performance Data
4. General Description of Registrant.......... The Program; Investment Objectives and
Policies; Additional Information
5. Management of the Fund..................... Fee Table; Management of the Program;
Portfolio Transactions
5A. Management's Discussion of Fund
Performance................................ *
6. Capital Stock and Other Securities......... Taxes and Distributions; Additional
Information
7. Purchase of Securities Being Offered....... Fee Table; The Program; Additional
Information
8. Redemption or Repurchase................... Fee Table; Redemption of Shares and
Exchange Privilege
9. Pending Legal Proceedings.................. *
PART B
10. Cover Page................................. Cover Page
11. Table of Contents.......................... Index
12. General Information and History............ General Information
13. Investment Objectives and Policies......... Investment Objectives and Policies;
Investment Restrictions; Portfolio
Transactions
14. Management of the Fund..................... Directors and Officers
15. Control Persons and Principal Holders of
Securities................................. *
16. Investment Advisory and Other Services..... Investment Advisory Agreement
17. Brokerage Allocation and Other Practices... Portfolio Transactions
18. Capital Stock and Other Securities......... *
19. Purchase, Redemption and Pricing of
Securities Being Offered................. Net Asset Value; Redemption of Shares
20. Tax Status................................. Taxes and Distributions
21. Underwriters............................... *
22. Calculation of Performance Data............ Performance Data
23. Financial Statements....................... Financial Statements
PART C
</TABLE>
Information required to be included in Part C is set forth under the
appropriate Item, so numbered in Part C to this Registration Statement.
- ------------
* Item inapplicable or answer negative.
<PAGE>
THE CORPORATE FUND
INVESTMENT ACCUMULATION PROGRAM
- --------------------------------------------------------------------------------
Shares of
Common Stock Prospectus dated April 28, 1995
- --------------------------------------------------------------------------------
THE PROGRAM
The Corporate Fund Accumulation Program, Inc. (the "Program") is an open-end
management investment company whose primary investment objective is to obtain a
high level of current income through investment in a portfolio of long and
intermediate term corporate debt obligations (i) not less than 75% of which will
at the time of acquisition be rated "A" or better and all of which will at the
time of acquisition be rated "BBB" or better by Standard & Poor's Corporation or
Fitch Investors Service, Inc. or "Baa" or better by Moody's Investors Service,
Inc. or (ii) which will have, in the opinion of the investment adviser referred
to below, similar credit characteristics. For more information on the Program's
investment objectives and policies, please see "Investment Objectives and
Policies" on page 6. The Shares of the Program are redeemable at any time at the
net asset value next determined after the receipt of the redemption request,
which value may be more or less than the amount paid for the Shares. Shares in
any Shareholder's account which has a value of less than $500 may be
involuntarily redeemed if reinvestment of distributions on Units is
discontinued. See "Redemption of Shares and Exchange Privilege" below.
Shares of the Program are offered hereby without sales charge to the holders of
Units of certain series of Unit Investment Trusts described below in order to
provide a means for the automatic reinvestment of distributions of interest or
dividend income and capital gains and principal on such Units in Shares of the
Program on the Terms and Conditions of Participation set forth herein. The
address of the Program is Box 9011, Princeton, New Jersey 08543-9011, and its
telephone number is (609) 282-2000.
-------------------
INVESTMENT ADVISER
FUND ASSET MANAGEMENT, L.P.
ADMINISTRATORS
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
SMITH BARNEY INC.
-------------------
This Prospectus sets forth in concise form the information about the Program
that a prospective investor should know before investing in the Program.
Investors should read and retain this Prospectus for future reference.
Additional information about the Program has been filed with the Securities and
Exchange Commission in a Statement of Additional Information, dated April 28,
1995, and is available upon request and without charge, by calling or writing
the Program at the address and telephone number set forth above. The Statement
of Additional Information is hereby incorporated by reference into this
Prospectus.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURI-TIES 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>
FEE TABLE
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES:
- -------------------------------------------------------------------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases.................................... None
Deferred Sales Charge........................................................ None
Sales Charge Imposed on Dividend Reinvestments............................... None
Redemption Fee............................................................... None
Exchange Fee................................................................. None
<CAPTION>
ANNUAL PROGRAM OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
FOR THE YEAR ENDED DECEMBER 31, 1994:
- ---------------------------------------
<S> <C> <C>
Management Fees.............................................................. 0.50%(a)
12b-1 Fees................................................................... None
Other Expenses
Shareholder Servicing and Custodian Fees........................... 0.35%
Other Fees......................................................... 0.25%
Total Other Expenses................................................. 0.60%
-----
Total Program Operating Expenses............................................. 1.10%
-----
-----
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE:
----------------------------------
CUMULATIVE EXPENSES PAID FOR THE PERIOD OF:
--------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the
following expenses on a $1,000
investment, assuming an operating
expense ratio of 1.10% and a 5%
annual return throughout the
periods........................... $ 11.00 $ 35.00 $ 61.00 $ 134.00
</TABLE>
The foregoing Fee Table is intended to assist investors in understanding the
costs and expenses that a Shareholder in the Program will bear directly or
indirectly.
The Example set forth above assumes reinvestment of all dividends and
distributions and utilizes a 5% annual rate of return as mandated by Securities
and Exchange Commission regulations. The Example should not be considered a
representation of past or future expenses or annual rates of return and actual
expenses or annual rates of return may be more or less than those assumed for
purposes of the Example.
- ---------
(a) See "Management of the Program -- Advisory and Administration Arrangements"
on page 10.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The financial information in the table below has been examined in
conjunction with the annual audits of the financial statements of the Program by
Deloitte & Touche LLP, independent auditors. Financial statements for the year
ended December 31, 1994 and the independent auditors' report thereon are
included in the Statement of Additional Information.
The following per share data and ratios have been derived from information
provided in the financial statements:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSET VALUE:
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of year... $ 21.55 $ 21.22 $ 21.76 $ 20.24 $ 20.54 $ 19.75 $ 19.97 $ 21.71 $ 20.88 $ 19.10
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Investment
income--net.......... 1.18 1.31 1.46 1.52 1.67 1.64 1.67 1.66 1.85 2.04
Realized and
unrealized gain
(loss) on
investments--net..... (2.41) 1.24 (.03) 1.51 (.28) .81 (.22) (1.51) .83 1.78
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations........... (1.23) 2.55 1.43 3.03 1.39 2.45 1.45 .15 2.68 3.82
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND
DISTRIBUTIONS:
Investment
income--net.......... (1.18) (1.29) (1.47) (1.51) (1.69) (1.66) (1.67) (1.73) (1.85) (2.04)
Realized gain on
investments--net..... -- (.93) (.50) -- -- -- -- (.16) -- --
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Total dividends and
distributions........ (1.18) (2.22) (1.97) (1.51) (1.69) (1.66) (1.67) (1.89) (1.85) (2.04)
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end
of year.............. $ 19.14 $ 21.55 $ 21.22 $ 21.76 $ 20.24 $ 20.54 $ 19.75 $ 19.97 $ 21.71 $ 20.88
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL INVESTMENT
RETURN:
Based on net asset
value per share..... (5.78%) 12.20% 6.88% 15.60% 7.19% 12.87% 7.47% 0.85% 13.42% 21.21%
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
RATIOS TO AVERAGE NET
ASSETS:
Expenses, net of
reimbursement........ 1.10% 1.08% 1.12% 1.16% 1.29% 1.26% 1.24% 1.17% 1.17% 1.21%
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Expenses............. 1.10% 1.08% 1.12% 1.16% 1.29% 1.26% 1.35% 1.20% 1.22% 1.37%
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Investment
income--net.......... 5.80% 5.74% 6.72% 7.25% 8.18% 8.27% 8.13% 7.99% 8.59% 10.21%
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
SUPPLEMENTAL DATA:
Net assets, end of
year (in
thousands)........... $82,887 $115,367 $90,892 $82,663 $76,298 $82,738 $77,389 $87,482 $92,272 $76,349
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Portfolio turnover... 122% 132% 65% 87% 107% 126% 158% 107% 87% 133%
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
Further information about the Program's performance is contained in the
Program's Annual Report, which can be obtained, without charge, upon request.
3
<PAGE>
THE PROGRAM
IN GENERAL--The primary investment objective of the Program is to provide a
high level of current income to its shareholders through investment in a
diversified portfolio (the "Portfolio") of long-and intermediate-term
fixed-interest bearing debt obligations issued primarily by corporations (see
"Investment Objectives and Policies" and the discussion therein of concentration
of the portfolio). This investment objective is a fundamental policy of the
Program.
Defined Asset Funds--The Corporate Income Fund and the Corporate Investment
Trust Fund (the "Unit Trust Funds") consist of a number of different unit
investment trusts holding portfolios of fixed income securities issued primarily
by corporations. The Program has been formed to facilitate reinvestment of
distributions on units (the "Units") of the various series of the Unit Trust
Funds which hold long and intermediate term corporate debt securities and
corporate cumulative preferred stocks. Since the Program is an open-end
investment company, the shares of capital stock, $.01 par value, of the
Program (the "Shares") are redeemable by the holder at the net asset value
next determined after the receipt of the redemption request in proper form.
TERMS AND CONDITIONS OF PARTICIPATION--All persons who are or who become
registered holders of Units of series of the Unit Trust Funds offering a
reinvestment option are eligible to participate in the Program and are herein
called "Holders." Holders include brokers or nominees of banks and other
financial institutions which are or become registered holders of Units. Such
eligibility is subject to the terms and conditions of participation (the "Terms
and Conditions") set forth under this caption.
Distributions on Units of series of the Unit Trust Funds offering a
reinvestment option will be paid in cash unless Holders elect to reinvest such
distributions in the Program by sending a notice in writing to the Program
Agent. Each Holder participating in the Program will receive a copy of the
current Program prospectus (this "Prospectus") and a form of notice of election;
a Holder not participating in the Program may request a copy of the Prospectus.
The notice of election accompanying this Prospectus may be used by Holders of
Units to elect to participate in the Program or to change a previous election.
Notice of any change in the basis of participation or of election to participate
in the Program must be received by the Program Agent in writing at least ten
days prior to the Record Day for the first distribution to which such notice is
to apply.
Under these Terms and Conditions, both distributions of interest or dividend
income and distributions of capital gains, if any, and principal (or either such
type of distribution) on Units of Holders participating in the Program will be
invested without sales charge in Shares. Holders who are participating in the
Program and whose Units are therefore subject to these Terms and Conditions are
herein called "Shareholders." The Bank of New York (110 Washington Street, New
York, New York 10286) will act as the program agent (the "Agent") for the
Shareholders. All securities, cash and other similar assets of the Program will
be held by the Agent as custodian. The Agent also acts as the Program's dividend
disbursing agent, transfer agent and registrar and performs certain other
services for the Program.
Under these Terms and Conditions, each distribution of interest or dividend
income and capital gains, if any, and principal on a Shareholder's Units, will,
on the date of such distribution, automatically
4
<PAGE>
be received by the Agent on behalf of such Shareholder and applied to purchase
Shares at net asset value, without sales charge. In the case of Holders of Units
whose distributions of principal are being invested in the Program, the proceeds
of redemption or payment at maturity of securities held in the Unit Trust Funds
represented by the Holder's Units will be invested in Shares, rather than being
distributed in cash to the Holder. Net interest income, after expenses, received
by the Program on obligations in its portfolio will be distributed by the
Program monthly and net realized capital gains, if any, will be distributed at
least annually. Such distributions will be reinvested automatically in Shares of
the Program unless the Shareholder elects, by written notice to the Agent, not
to have such distributions reinvested in Shares (see "Taxes and Distributions").
In addition to their right to redeem their Shares and receive a payment
equal to the net asset value thereof (see "Redemption of Shares and Exchange
Privilege"), Shareholders may at any time, by so notifying the Agent in writing
(the Agent will deliver a copy of such notice to the trustee for the respective
series of the Unit Trust Funds), elect to (i) terminate their participation in
the Program and thereafter receive all distributions on their Units in cash,
(ii) terminate their participation in part as to distributions of capital gains
and principal on their Units and thereafter receive distributions in cash out of
the principal accounts for the respective series or (iii) terminate their
participation in part as to distributions of interest or dividends on their
Units and thereafter receive future distributions in cash out of the interest or
dividend accounts for the respective series.
All the costs of establishing, administering and offering the Program and
these Terms and Conditions are borne by the Program subject to the limitation on
expenses referred to in the Statement of Additional Information under
"Investment Advisory Agreement." The administrators of the Program (the
"Administrators") are Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), Prudential Securities Incorporated ("Prudential"), Dean
Witter Reynolds Inc. ("Dean Witter"), and Smith Barney Inc. ("Smith Barney"),
which are current sponsors of The Corporate Income Fund and Liberty Street
Trust. Prudential is the sponsor of outstanding series of the Corporate
Investment Trust Fund. The investment adviser to the Program (the "Adviser") is
Fund Asset Management, L.P., Box 9011, Princeton, New Jersey 08543-9011, a
registered investment adviser and an affiliate of Merrill Lynch. The Adviser
receives as annual compensation, payable monthly, for its services in connection
with the Program a fee of 0.5% of the average net assets of the Program. The
Administrators receive from the Adviser as annual compensation, payable monthly,
for their services in connection with the Program a fee of 0.2% of the average
net assets of the Program (see "Management of the Program -- Advisory and
Administration Arrangements"). Reference is made to the Statement of Additional
Information, which contains a more complete description of the advisory and
administration arrangements of the Program.
The Agent will mail to each Shareholder a report of each transaction
undertaken for such Shareholder in receiving distributions on Units and
purchasing Shares. Distributions on Units which are applied to purchase Shares
are considered to have been distributed to Shareholders for federal income tax
purposes, and all taxes which are payable in respect to such distributions must
be paid by Shareholders regardless of participation in the Program.
On tender for redemption of any or all of his Shares, a Shareholder will be
entitled to receive within seven days a payment representing the net asset value
of the Shares (including fractional Shares),
5
<PAGE>
provided that such right of redemption may be suspended or postponed under
certain circumstances described under "Redemption of Shares and Exchange
Privilege."
If the Holder is a broker or a nominee of a bank or another financial
institution, the trustee and Agent will apply these Terms and Conditions on the
basis of the respective numbers of Units certified from time to time by such
Holder to be the total numbers of Units registered in such Holder's name and
held for the accounts of beneficial owners who are to participate in the
Program, upon the several bases of participation offered by the Program at the
time. It is anticipated, however that, due to administrative problems connected
with Units held in "street name," other than by Merrill Lynch, such Units will
be registered in the names of the beneficial owners thereof unless such owners
elect not to participate in the Program.
Merrill Lynch or its nominee holds in its name Program Shares for the
accounts of customers whose Unit Trust Series are held in Merrill Lynch accounts
and who elect to reinvest in the Program. These Shares may be transferred to an
account in the customer's name with the Agent upon request. Merrill Lynch
maintains records identifying the names and addresses of these customers and
their Share balances, and will be compensated for these services by the Agent at
the Agent's sole expense. During the year ended December 31, 1994, the Agent
paid Merrill Lynch $120,289.79 for these services.
Experience may indicate that changes in these Terms and Conditions are
desirable or that this offering should be terminated. Such changes may be made
or this offering may be terminated at the direction of the Board of Directors of
the Program (the "Board") without notice to any Shareholder. The Board may at
any time appoint a substitute Agent or an additional agent to act for the
Program.
INVESTMENT OBJECTIVES AND POLICIES
The primary investment objective of the Program is to provide a high level
of current income to its Shareholders through investment in the Portfolio, which
is comprised of long- and intermediate-term fixed-interest bearing debt
obligations issued primarily by corporations, considering the following factors,
among others:
(i) the quality of the debt obligations, (a) not less than 75% of which
(determined on the basis of current value) will at the time of acquisition
be rated "A" or better by Standard & Poor's Rating Group ("Standard &
Poor's"), Fitch Investors Service, Inc. ("Fitch") or Moody's Investors
Service, Inc. ("Moody's") and all of which will at such time be rated "BBB"
or better by Standard & Poor's or Fitch or "Baa" or better by Moody's, or
(b) which will have, in the opinion of the Adviser, similar credit
characteristics (under current market and other conditions, the Board has
determined that all of the debt obligations in which the Program invests
will at the time of acquisition be rated "A" or better by one or more of
such rating agencies or will have, in the opinion of the Adviser, similar
credit characteristics) (see "Ratings of Corporate Obligations" in the
Statement of Additional Information for a description of rating categories);
(ii) the yield and price of the debt obligations relative to other debt
securities of comparable quality and maturity; and
6
<PAGE>
(iii) the diversification of the debt obligations, subject to the
considerations as to concentration of the Portfolio discussed below, taking
into account the availability on the market of issues in various utility and
industry classifications which meet the Program's quality, rating, yield and
price criteria.
While the Program will invest the proceeds of the sale of its Shares (and
other cash proceeds such as those generated by redemptions, maturities or sales
of Portfolio securities) as promptly as possible, some short period of time may
elapse between the time the Program receives such proceeds and the time such
proceeds are invested by the Program. However, the Program reserves the right to
extend such period for defensive purposes. During such period such proceeds may
be held in cash or invested in temporary investments (short-term governmental
obligations, commercial paper, and other short-term obligations such as
short-term floating rate instruments, certificates of deposit, bankers'
acceptances and repurchase agreements) which have credit characteristics, in the
opinion of the Adviser, similar to those provided for other Portfolio
securities.
Other than the short-term obligations referred to in the preceding
paragraph, the debt obligations in the Portfolio will consist of bonds,
debentures, notes or other straight debt obligations (payable in United States
dollars and not having any equity conversion or other equity features) which may
be secured or unsecured, or may be subordinated to other indebtedness. The fact
that a debt obligation may cease to be rated or that its rating may be reduced
below the ratings referred to above will not require that it be eliminated from
the Portfolio but will be considered by the Adviser in determining whether it
should be retained or sold.
An investment in the Program should be made with an understanding of the
risks which an investment in fixed-rate long- and intermediate-term debt
obligations may entail, including the risk that the value of the Portfolio, and
hence the net asset value of the Shares, will decline with increases in interest
rates. Interest rates and, thus, the value of fixed-rate debt obligations have
fluctuated substantially in recent periods and may continue to do so in the
future.
A portion of the Program's assets may be invested in debt obligations rated
BBB by Standard & Poor's or Fitch or Baa by Moody's. Although debt obligations
rated BBB by Standard & Poor's or Fitch normally exhibit adequate protection
parameters, they entail a greater degree of risk and are of a more speculative
nature than obligations rated in the higher categories. Therefore, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt obligations in
this category than in higher rated categories. Debt obligations rated Baa by
Moody's are also speculative in nature and entail greater risks than those rated
in the higher categories. Although interest payments and principal security may
appear adequate for the present, certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. (See
"Ratings of Corporate Obligations" in the Statement of Additional Information
for a description of rating categories.)
The Program will not follow a policy of seeking to concentrate its
investments in any particular industry or industries but rather will attempt to
purchase for the Portfolio the most attractive investments available on the
market from time to time without regard to the industrial classification of the
issuers thereof. Such policy may not be changed without the vote of a majority
of the Shareholders.
7
<PAGE>
OTHER PORTFOLIO STRATEGIES
Repurchase Agreements. The Program may invest in obligations which are
subject to repurchase agreements with any member bank of the Federal Reserve
System or primary dealer in U.S. Treasury securities. Under such repurchase
agreements, the bank or primary dealer agrees, upon entering into the contract,
to repurchase the security at a mutually agreed upon time and price, thereby
determining the yield during the term of the agreement. This results in a fixed
rate of return insulated from market fluctuations during such periods. In the
event of default by a bank or dealer under a repurchase agreement, the Program
may suffer time delays and incur costs or possible losses in connection with
such transactions.
Forward Commitments. The Program may purchase U.S. Government securities
and corporate debt obligations on a forward commitment basis and may purchase or
sell such securities for delayed delivery. These transactions occur when
securities are purchased or sold by the Program with payment and delivery taking
place in the future to secure what is considered an advantageous yield and price
to the Program at the time of entering into the transaction. The Program will
maintain a segregated account with its custodian of cash or liquid, high-grade
securities in an aggregate equal at all times to the amount of its commitments
in connection with such delayed delivery and purchase transactions. The value of
the security on the delivery date may be more or less than its purchase price
due to fluctuating interest rates.
Foreign Securities. Up to 25% of the Program's total assets may be invested
in debt obligations of foreign obligors, which may involve certain investment
risks that are different from those of domestic issues. Such risks include
future political and economic developments, foreign governmental restrictions
and less publicly available information about a foreign obligor. Reference is
made to the Statement of Additional Information for a more complete description
of such risks.
Restricted Securities. Up to 10% of the Program's total assets may be
invested in "restricted securities." Investment in restricted securities may
involve certain risks associated with such securities' lack of marketability.
Sales of restricted securities may produce less favorable prices than the sale
of unrestricted securities due to greater costs associated with these sales.
Reference is made to the Statement of Additional Information for a more complete
description of restricted securities.
Portfolio Turnover Rate. The Program's investment adviser generally does
not anticipate that the portfolio turnover rate of the Program will exceed 200%.
For the year ended December 31, 1993 it was 132%. For the year ended December
31, 1994, the Program's portfolio turnover rate was 122%. As a consequence of a
higher portfolio turnover rate, the Program will have higher transactions costs.
INVESTMENT RESTRICTIONS
The Program has adopted a number of restrictions and policies related to the
investment of its assets and its activities which are fundamental policies and
may not be changed without the approval of the holders of a majority of the
Program's outstanding voting securities. Investors are referred to the Statement
of Additional Information for a complete description of such restrictions and
policies.
8
<PAGE>
MANAGEMENT OF THE PROGRAM
DIRECTORS
The Directors of the Program consist of six individuals, five of whom are
not "interested persons" of the Program as defined in the Investment Company Act
of 1940. The Directors of the Program are responsible for the overall
supervision of the operations of the Program and perform the various duties
imposed on the directors of investment companies by the Investment Company Act
of 1940. The Board of Directors elects officers of the Program annually.
The Directors of the Program and their principal employment are as follows:
ARTHUR ZEIKEL*--President of the Adviser; President and Director of
Princeton Services, Inc.; Executive Vice President of Merrill Lynch &
Co., Inc. ("ML & Co."); Executive Vice President of Merrill Lynch;
Director of the Distributor.
RONALD W. FORBES--Professor of Finance, School of Business, State
University of New York at Albany.
CYNTHIA A. MONTGOMERY--Professor of Finance, Harvard Business School.
CHARLES C. REILLY--Self-employed financial consultant; former President
and Chief Investment Officer of Verus Capital, Inc.; former Senior Vice
President of Arnhold and S. Bleichroeder, Inc.; Adjunct Professor,
Columbia University Graduate School
of Business.
KEVIN A. RYAN--Professor of Education, Boston University; Founder and
current Director of the Boston University Center for the Advancement of
Ethics and Character.
RICHARD R. WEST--Professor of Finance, and former Dean, New York
University Leonard N. Stern School of Business Administration.
- -------------------
* Interested person, as defined in the Investment Company Act of 1940, of the
Program.
CODE OF ETHICS
The Board of Directors of the Program has adopted a Code of Ethics under
Rule 17j-1 of the Investment Company Act of 1940 which incorporates the Code of
Ethics of the Adviser (together, the "Codes"). The Codes significantly restrict
the personal investing activities of all employees of the Adviser and, as
described below, impose additional, more onerous, restrictions on fund
investment personnel.
The Codes require that all employees of the Adviser preclear any personal
securities investments (with limited exceptions, such as government securities).
The preclearance requirement and associated procedures are designed to identify
any substantive prohibition or limitation applicable to the proposed investment.
The substantive restrictions applicable to all employees of the Adviser include
a ban on acquiring any securities in a "hot" initial public offering and a
prohibition from profiting on short-term trading in securities. In addition, no
employee may purchase or sell any security which at the time is being purchased
or sold (as the case may be), or to the knowledge of the employee is being
considered for purchase or sale, by any fund advised by the Adviser.
Furthermore, the Codes provide for trading "blackout periods" which prohibit
trading by investment personnel of the Program within periods of
9
<PAGE>
trading by the Program in the same (or equivalent) security (15 or 30 days
depending upon the transaction).
ADVISORY AND ADMINISTRATION ARRANGEMENTS
The investment adviser to the Program is Fund Asset Management, L.P. ("FAM"
or the "Adviser"). The address of FAM is Box 9011, Princeton, New Jersey
08543-9011. FAM or, its affiliate, Merrill Lynch Asset Management, L.P.
("MLAM"), acts as the investment adviser for more than 130 other registered
investment companies. FAM or MLAM also offers portfolio management and portfolio
analysis services to individuals and institutions. As of March 31, 1995, FAM and
MLAM had a total of approximately $170.3 billion in investment company and other
portfolio assets under management, including accounts of certain affiliates of
FAM.
FAM (the general partner of which is Princeton Services, Inc., a
wholly-owned subsidiary of Merrill Lynch & Co., Inc.) is itself a wholly-owned
affiliate of Merrill Lynch & Co., Inc. and has its principal place of business
at 800 Scudders Mill Road, Plainsboro, New Jersey 08536.
FAM, subject to the general supervision of the Program's Board of Directors,
manages the Portfolio of the Program in accordance with its investment
objectives and policies and furnishes to the Program investment advice. In
addition, FAM together with the Administrators of the Program are responsible
for the overall management of the Program's business affairs. The Administrators
are Merill Lynch, of which FAM is an affiliate, Prudential, Dean Witter and
Shearson Lehman. The Administrators perform certain management services
necessary for the operation of the Program and provide all the office space,
facilities and necessary personnel for such services. For the performance of
these services, FAM pays the Administrators an aggregate monthly fee at the
annual rate of 0.2% of the Program's average daily net assets. The fee so
payable by the Adviser will be allocated among the Administrators in the
following respective percentages: Merrill Lynch, 48%; Prudential, 21%; Dean
Witter, 21%; and Shearson Lehman, 10%. The Administrators have also undertaken
to reimburse the Adviser in proportion to such monthly fee for the purpose of
the Adviser's reimbursement of the Program. The Adviser's reimbursement
obligations are described more fully in the Statement of Additional Information.
For the year ended December 31, 1994, FAM received advisory fees from the
Program in the amount of $475,257 representing 0.50% of the Program's average
daily net assets.
The Program is obligated to pay certain expenses incurred in its operations,
including, among other things, the investment advisory fee, legal and auditing
fees, fees and expenses of unaffiliated Directors, custodian and transfer agency
fees, accounting and pricing costs, and certain of the costs of printing proxy
statements, shareholder reports, prospectuses and statements of additional
information. For the year ended December 31, 1994, the Program's total expenses
were $1,050,213 (representing 1.10% of its average net assets). None of the
Program's investment advisory fees were reimbursed by FAM.
Jay C. Harbeck has served as the Program's Portfolio Manager since January
1, 1992, and is primarily responsible for the Program's day-to-day management.
He has served as Vice President of MLAM since 1986.
10
<PAGE>
REDEMPTION OF SHARES AND EXCHANGE PRIVILEGE
Redemption. Shareholders have the right to redeem their Shares at net asset
value by surrendering the certificates therefor properly endorsed with the
signatures guaranteed by an "eligible guarantor institution" as such term is
defined by Rule 17Ad-15 of the Securities Exchange Act of 1934, the existence
and validity of which may be verified by the Agent through the use of industry
publications, together with a request for redemption at the office of the Agent,
The Bank of New York, 110 Washington Street, New York, New York 10286. If
certificates have not been issued, only delivery of the request for redemption
(with signature guaranteed as set forth above) is required. The Program has
arranged, however, for an exemption from the signature guarantee requirement for
redemptions involving less than $5,000 on the date of receipt by the Agent of
all the necessary documents where the proceeds are to be reinvested through one
of the Administrators in units of Municipal Investment Trust Fund, The
Government Securities Income Fund, The Corporate Income Fund, The Equity Income
Fund or The International Bond Fund (the "Unit Trusts") which are to be
registered in the names of the registered owners of the Shares. This exemption
may be reduced or eliminated without prior notice. A guarantee of each
Shareholder's signature is required for all redemptions, regardless of the
amount involved, where the proceeds are to be paid to Shareholders or where the
units of the Unit Trusts to be purchased are to be registered in names different
from those of the registered owners of the Shares.
The redemption price will be the net asset value next determined after
either (i) the certificates are tendered for redemption or (ii) if no
certificates have been issued, a request for redemption is received in good
order as set forth above. The price received upon redemption may be more or less
than the amount paid by the Shareholder depending on the net asset value of the
Shares at the time of redemption. Payment of the redemption price must be made
within seven days after proper tender unless further postponement is permissible
under the Investment Company Act of 1940, by reason of closing of or restriction
of trading on the New York Stock Exchange, or other emergency, as explained in
the Statement of Additional Information.
Any of the Administrators may accept orders from dealers with whom they have
satisfactory agreements for the repurchase of Shares held by Holders. Repurchase
orders received by the dealer prior to the close of business on the New York
Stock Exchange (generally 4:00 P.M. New York City time) on any business day and
transmitted by the Administrator prior to the close of its business day
(generally 4:00 P.M., New York City time) are redeemed at the price determined
as of the close of business on the New York Stock Exchange on such day.
Repurchase orders received after the close of business on the New York Stock
Exchange on any business day are redeemed at a price determined as of the close
of business on the New York Stock Exchange on the next business day. It is the
responsibility of the dealers to transmit orders so that they will be received
by the Administrator prior to its close of business. This repurchase arrangement
is discretionary and may be withdrawn. There is no additional charge by the
Program for repurchases.
Under certain circumstances, the Program reserves the right to redeem Shares
in accounts of less than $500 upon 30 days' notice. For further information, see
the Statement of Additional Information, "Redemption of Shares."
Exchange Privilege. Shareholders who have owned Shares for at least 60 days
have an exchange privilege (the "Exchange Privilege") with shares of The
Municipal Fund Accumulation Program, Inc. (the "Other Program"). Shares with an
aggregate net asset value of at least $1,000 are required to qualify for the
Exchange Privilege. Exchanges between the Program and the Other Program will be
at
11
<PAGE>
their respective net asset values. The investment objectives of the Other
Program differ from those of the Program, and Shareholders should obtain a
currently effective prospectus for the Other Program before effecting any
exchange.
Exercise of the Exchange Privilege is treated as a sale for federal income
tax purposes and, depending on the circumstances, a short- or long-term capital
gain or loss may be realized. The exchange privilege is available only to
Shareholders residing in states where the Other Program is qualified for sale. A
non-corporate Shareholder of the Program who exercises the Exchange Privilege
may be required to certify to the Other Program his Social Security Number or
Taxpayer Identification Number and that he is not subject to the backup
withholding tax if he wishes to avoid a 31% backup withholding tax on
distributions made to him by such other Program.
This Exchange Privilege may be modified or terminated at any time. The
Program reserves the right to limit the number of times an investor may exercise
the Exchange Privilege. To exercise the Exchange Privilege, a Shareholder should
contact one of the Administrators, who will advise the Program and the Other
Program of the exchange, or the Shareholder may write to the Agent requesting
that the exchange be effected. Such letter must be signed exactly as the account
is registered with signatures guaranteed by a member firm of a national or
regional stock exchange or any commercial bank or trust company. Shareholders
with Shares for which certificates have not been issued may exercise the
Exchange Privilege by wire through their securities dealers. The Program
reserves the right to require a properly completed Exchange Application.
TAXES AND DISTRIBUTIONS
The Program has qualified and intends to continue to qualify for the special
tax treatment applicable to "regulated investment companies" under the Internal
Revenue Code of 1986, as amended (the "Code"). If the Program qualifies as a
"regulated investment company" and distributes to Shareholders 90% or more of
its investment company taxable income (without regard to designated capital gain
dividends), it will not be subject to federal income tax on such part of its net
investment income or net realized capital gains, if any, as it distributes to
Shareholders. The Program expects to distribute monthly substantially all of its
net investment income, after expenses. Net realized capital gains, if any, will
be distributed at least annually. Such distributions of net investment income
and net realized capital gains will be reinvested in additional Shares in the
Program unless the Shareholder elects to receive such distributions in cash.
Distributions of net investment income to be reinvested in additional Shares, or
to be received in cash if elected, will be made on the 15th day of the month, or
the next succeeding business day if the 15th falls on a weekend or holiday, for
the accounts of Shareholders of record on the preceding business day of such
month.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company, such as the Program, if its does not distribute to its shareholders an
amount equal to at least 98% of the investment company's ordinary income for the
calendar year, plus at least 98% of the company's capital gain net income for
the one-year period ending on October 31 of such calendar year. In addition, an
amount equal to any of the investment company's undistributed ordinary income or
capital gain net income from the previous calendar year must also be distributed
to avoid the excise tax. The excise tax is imposed on the amount by which a
regulated investment company does not meet the foregoing distribution
requirements.
12
<PAGE>
Distributions to Shareholders of net investment income and net short-term
capital gains, if any, including distributions which are reinvested in
additional Shares in the Program will generally be taxable as ordinary income.
Distributions reflecting net long-term capital gains (designated as such by the
Program) will be taxable to Shareholders as long-term capital gains.
Some Shareholders may be subject to a 31% withholding on reportable
dividends, capital gains distributions and redemption payments ("backup
withholding"). Generally, Shareholders subject to backup withholding will be
those for whom a certified Taxpayer Identification Number ("TIN") is not on file
with the Program, or who, to the Program's knowledge, have furnished an
incorrect TIN or with respect to whom the Internal Revenue Service has advised
the Program that there must be backup withholding. When establishing an account,
an investor must certify under penalties of perjury that the TIN is correct and
that he is not subject to backup withholding.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury Regulations currently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury Regulations promulgated thereunder. The Code and these Regulations
are subject to change by legislative or administrative action. The Statement of
Additional Information sets forth additional information regarding other tax
aspects of an investment in the Program.
Dividends and capital gain distributions may also be subject to state and
local taxes.
Shareholders are urged to consult their own tax counsel or other tax
advisers regarding specific questions as to federal, state or local taxes.
PORTFOLIO TRANSACTIONS
The Program will follow a policy that it will place securities transactions
with a broker or dealer only if it expects to obtain the most favorable prices
and executions of orders. Transactions in debt securities are generally made
through securities dealers acting as principals, although the Program may
purchase or sell such securities in brokerage transactions and the affiliates of
the Adviser may act as brokers therein if the Program expects thereby to obtain
the most favorable price and execution. However, since, as outlined in the
Statement of Additional Information, the Program is prohibited from engaging in
securities transactions with the affiliates of the Adviser acting as principal,
it is not expected that any substantial amount of the Program's transactions
will be effected through such affiliates. The Adviser is responsible for making
Portfolio investment decisions on behalf of the Program and effecting Portfolio
transactions with or through securities dealers, subject to the general
supervision of the officers and directors of the Program.
13
<PAGE>
ADDITIONAL INFORMATION
NET ASSET VALUE
The net asset value per Share of the Program is determined by dividing the
net assets of the Program by the number of its outstanding Shares. The net
assets of the Program are its gross assets less its liabilities as determined in
accordance with generally accepted accounting principles. The Program's
securities (other than short-term obligations but including listed issues) may
be valued on the basis of prices furnished by one or more pricing services which
determine prices for normal institutional-size trading units of such securities.
The Program has made arrangements with Merrill Lynch Securities Pricing Service
("MLSPS") to furnish to the Program and the Agent, on each day that the New York
Stock Exchange is open for trading immediately after the declaration of
dividends, estimated values (as of 15 minutes after the close of business on
the New York Stock Exchange, generally 4:00 P.M., New York City time) of
Portfolio securities for purposes of computation of net asset value of Shares.
The Board has examined the methods to be used by MLSPS in estimating the value
of Portfolio securities and believes that such methods will reasonably and
fairly approximate the price at which Portfolio securities may be sold and
will result in a good faith determination of the fair value of such securities;
however, there is no assurance that the Portfolio securities can be sold at the
prices at which they are valued. During the period of May 13, 1994 to December
31, 1994, the Fund made payments of $300.00 to MLSPS for such service. For
information concerning the method used by MLSPS to value Portfolio securities,
see "Net Asset Value" in the Statement of Additional Information.
PERFORMANCE DATA
The Program may from time to time include its average annual total return
and yield in advertisements or information furnished to present or prospective
shareholders. Both total return and yield figures are based on the Program's
historical performance and are not intended to indicate future performance.
Average annual total return and yield are determined in accordance with formulas
specified by the Securities and Exchange Commission.
Average annual total return quotations for the specified periods will be
computed by finding the average annual compounded rates of return (based upon
net investment income and any capital gains or losses on portfolio investments
over such periods) that would equate the initial amount invested to the
redeemable value of such investment at the end of each period. Average annual
total return will be computed assuming all dividends and distributions are
reinvested and taking into account all applicable recurring and nonrecurring
expenses.
Yield quotations will be computed based on a 30-day period by dividing the
net income earned during the period based on the yield to maturity of each
security held by the Program by the average daily number of shares outstanding
during the period that were entitled to receive dividends times the maximum
offering price per share on the last day of the period.
The Program's average annual total return and yield will vary depending upon
market conditions, the securities comprising the Program's Portfolio, the
Program's operating expenses and the amount of net capital gains or losses
realized by the Program during the period. An investment in the Program will
fluctuate and an investor's shares, when redeemed, may be worth more or less
than their original cost.
14
<PAGE>
On occasion, the Program may compare its performance to that of the Standard
& Poor's 500 Composite Stock Price Index, the Value Line Composite Index, the
Dow Jones Industrial Average, or performance data published by Lipper Analytical
Services, Inc., Morningstar Publications, Inc., Money Magazine, U.S. News &
World Report, Business Week, CDA Investment Technology, Inc., Forbes Magazine
and Fortune Magazine. From time to time, the Program may include the Program's
Morningstar risk-adjusted performance ratings in advertisements or supplemental
sales literature. As with other performance data, performance comparisons should
not be considered indicative of the Program's relative performance for any
future period.
ORGANIZATION OF THE PROGRAM
The Program, an open-end diversified management investment company
registered under the Investment Company Act of 1940, was incorporated in
Maryland on June 9, 1976. When issued, the Shares of the Program will be fully
paid and non-assessable, have no preference, pre-emptive, conversion, exchange
or similar rights and will be freely transferable.
The Program does not intend to hold meetings of shareholders unless under
the Investment Company Act of 1940 shareholders are required to act on any of
the following matters: (i) election of directors; (ii) approval of an investment
advisory agreement; (iii) approval of a distribution agreement; and (iv)
ratification of selection of independent auditors. Shares do not have cumulative
voting rights and the holders of more than 50% of the Shares of the Program
voting for the election of directors can elect all of the directors of the
Program if they choose to do so and in such event the holders of the remaining
Shares would not be able to elect any directors.
For further information concerning the organization of the Program, see the
Statement of Additional Information.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, Princeton, New Jersey, has been selected as the
independent auditors of the Program and is responsible for auditing the annual
financial statements of the Program.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
The Bank of New York, New York, New York, acts as Custodian of the Program's
assets and as its Transfer Agent and Dividend Disbursing Agent.
LEGAL COUNSEL
Rogers & Wells, New York, New York, is counsel for the Program and passes
upon legal matters for the Program in connection with the Shares offered by this
Prospectus.
REPORTS TO SHAREHOLDERS
The fiscal year of the Program ends on December 31 of each year. The Program
will send to its Shareholders at least semi-annually reports showing the
Program's Portfolio and other information. An
15
<PAGE>
annual report containing financial statements, audited by independent auditors,
will be sent to Shareholders each year.
ADDITIONAL INFORMATION
This Prospectus does not contain all the information included in the
Registration Statement filed with the Securities and Exchange Commission under
the Securities Act of 1933 and the Investment Company Act of 1940, with respect
to the securities offered hereby, certain portions of which have been omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
The Statement of Additional Information, dated April 26, 1995, which forms a
part of the Registration Statement, is incorporated by reference into this
Prospectus. The Statement of Additional Information may be obtained without
charge as provided on the cover page of this Prospectus. The Registration
Statement, including the exhibits filed therewith, may be examined at the office
of the Securities and Exchange Commission in Washington, D. C.
16
<PAGE>
THE CORPORATE INCOME FUND
AUTHORIZATION FOR INVESTMENT IN THE CORPORATE FUND ACCUMULATION PROGRAM, INC.
/ / Monthly Payment / / Intermediate Term / / Preferred Stock
Series Number Series Number Series Number
I hereby acknowledge receipt of the prospectus of The Corporate Fund
Accumulation Program, Inc. (the "Program") and authorize the Trustee of the
Series designated above to pay distributions on my Units as indicated below
(distributions to be reinvested in the Program will be paid for my account to
The Bank of New York as Program Agent):
<TABLE>
<S> <C> <C>
Interest distributions (check one): / / in cash / / reinvested in the Program
Program distributions (including
capital gains) (check one): / / in cash / / reinvested in the Program
</TABLE>
<TABLE>
<S> <C>
My name (please print)
Registered Holder
My address, including
Zip Code (please print)
Registered Holder
(Two signatures if joint tenancy)
My account number
Date , 19
----------------------- --
</TABLE>
YOU MUST COMPLETE AND RETURN THIS CARD IN ORDER TO PARTICIPATE IN THE
CORPORATE FUND ACCUMULATION PROGRAM.
This page is a self-mailer. Please complete the information above, cut
along the dotted line, fold along the line on the reverse side, tape, and
mail with the Trustee's address displayed on the outside.
<PAGE>
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
-----------------
-----------------
-----------------
-----------------
BUSINESS REPLY MAIL
FIRST CLASS PERMIT NO. 1313 NEW YORK, N.Y.
POSTAGE WILL BE PAID BY ADDRESSEE
INVESTMENT ACCUMULATION PROGRAM (CIF)
THE BANK OF NEW YORK
UNIT INVESTMENT DEPARTMENT
P.O. BOX 974
WALL STREET STATION
NEW YORK, N.Y. 10268-0974
- --------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
THE CORPORATE FUND INVESTMENT ACCUMULATION PROGRAM
PRINCIPAL OFFICE OF THE FUND
Box 9011
Princeton, New Jersey 08543-9011
(609) 282-2000
INVESTMENT ADVISER
Fund Asset Management, L.P.
Box 9011
Princeton, New Jersey 08543-9011
(609) 282-2000
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
The Bank of New York
90 Washington Street
New York, New York 10286
LEGAL COUNSEL
Rogers & Wells
200 Park Avenue
New York, New York 10166
INDEPENDENT AUDITORS
Deloitte & Touche LLP
117 Campus Drive
Princeton, New Jersey 08540
<PAGE>
- ------------------------------------------
PROSPECTUS
- ------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS
NOT CONTAINED IN THIS PROSPECTUS, AND
ANY INFORMATION OR REPRESENTATION NOT
CONTAINED HEREIN MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE PRO-
GRAM. THIS PROSPECTUS DOES NOT CONSTI-
TUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, SECURITIES IN ANY STATE TO ANY
PERSON TO WHOM IT IS NOT LAWFUL TO MAKE
SUCH OFFER IN SUCH STATE.
- ------------------------------------------
INDEX
- ------------------------------------------
PAGE
----
FEE TABLE............................. 2
FINANCIAL HIGHLIGHTS.................. 3
THE PROGRAM........................... 4
INVESTMENT OBJECTIVES AND POLICIES.... 6
MANAGEMENT OF THE PROGRAM............. 9
REDEMPTION OF SHARES AND EXCHANGE
PRIVILEGE............................. 11
TAXES AND DISTRIBUTIONS............... 12
PORTFOLIO TRANSACTIONS................ 13
ADDITIONAL INFORMATION................ 14
- --------------------------------------
THE
CORPORATE
FUND
INVESTMENT
ACCUMULATION
PROGRAM
- ------------------------------------------
PROSPECTUS DATED APRIL 28, 1995
- ------------------------------------------
BOX 9011
PRINCETON, NEW JERSEY 08543-9011
(609) 282-2000
<PAGE>
THE CORPORATE FUND
INVESTMENT ACCUMULATION PROGRAM
- --------------------------------------------------------------------------------
Shares of Statement of Additional Information
Common Stock Dated April 28, 1995
- --------------------------------------------------------------------------------
The Corporate Fund Accumulation Program, Inc. (the "Program") is an open-end
management investment company whose primary objective is to obtain a high level
of current income through investment in a portfolio (the "Portfolio") of long-
and intermediate-term corporate debt obligations. Shares of the Program are
offered without sales charge to the holders of Units of certain series of Unit
Investment Trusts described in the Prospectus in order to provide a means for
the automatic reinvestment of distributions of interest or dividend income and
capital gains and principal on such Units in Shares of the Program on the Terms
and Conditions of Participation set forth in the Prospectus. The address of the
Program is Box 9011, Princeton, New Jersey 08543-9011, and its telephone number
is (609) 282-2000.
-------------------
INVESTMENT ADVISER
FUND ASSET MANAGEMENT, L.P.
ADMINISTRATORS
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
SMITH BARNEY INC.
-------------------
This Statement of Additional Information of the Program is not a prospectus
and should be read in conjunction with the Prospectus of the Program (the
"Prospectus") dated April 28, 1995, which has been filed with the Securities and
Exchange Commission and can be obtained without charge by calling or by writing
the Program at the above telephone number or address. This Statement of
Additional Information has been incorporated by reference into the Prospectus.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The primary investment objective of the Program is to provide a high level
of current income to its Shareholders through investment in the Portfolio which
is comprised of long- and intermediate-term fixed-interest bearing debt
obligations issued primarily by corporations. Reference is made to "Investment
Objectives and Policies" in the Prospectus for a discussion of the investment
objectives and policies of the Program.
OTHER PORTFOLIO STRATEGIES
Foreign Securities. Up to 25% of the Program's total assets (taken at
current value) may be invested in debt obligations of foreign obligors, which
may involve investment risks that are different from those of domestic issues,
including future political and economic developments and the possible imposition
of withholding taxes on interest income, exchange controls or other foreign
governmental restrictions. In addition, it may be more difficult to enforce a
judgment against a foreign obligor, there may be less publicly available
information about a foreign obligor than about a domestic issuer, and foreign
obligors are not generally subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those applicable
to domestic issuers. The foregoing percentage limitation shall not be considered
to be violated unless a violation occurs immediately after and as a result of an
acquisition of securities.
Restricted Securities. Up to 10% of the Program's total assets (taken at
current value) may be invested in "restricted securities." Such securities are
acquired in private placement transactions, directly from the issuer or from
security holders, frequently at higher yields than comparable publicly traded
securities. Privately placed securities are not readily marketable and
ordinarily can be sold by the Program only in privately negotiated transactions
to a limited number of purchasers or in public offerings made pursuant to an
effective registration statement under the Securities Act of 1933. Private sales
require negotiations with one or more purchasers and may produce less favorable
prices than the sale of comparable unrestricted securities. Public sales
generally involve the time and expense of preparing and processing a
registration statement under the Securities Act of 1933 and may involve the
payment of underwriting commissions. Accordingly, the proceeds from the sale of
restricted securities may be less than the proceeds from the sale of securities
of the same class which are freely marketable. The foregoing percentage
limitation shall not be considered to be violated unless a violation occurs
immediately after and as a result of such acquisition of securities.
Repurchase Agreements. The Program may invest in obligations which are
subject to repurchase agreements with any member bank of the Federal Reserve
System or primary dealer in U.S. Treasury securities. A repurchase agreement is
an instrument under which the purchaser (i.e., the Program) acquires the
obligation (debt security) and the seller agrees, at the time of the sale, to
repurchase the obligation at a mutually agreed upon time and price, thereby
determining the yield during the purchaser's holding period. This results in a
fixed rate of return insulated from market fluctuations during such period.
Repurchase agreements usually are for short periods, such as under one week.
Repurchase agreements are considered to be collateralized loans by the Program
under the Investment Company Act of 1940, and the Program will require the
seller to provide additional collateral if the market value of the securities
falls below the repurchase price at any time during the term of the repurchase
agreement. If a repurchase agreement is construed to be a collateralized loan,
the underlying securities will not be considered to be owned by the Program but
only to constitute collateral for the seller's obligation to pay the repurchase
price and in the event of a default by the seller, the Program
2
<PAGE>
may suffer time delays and incur costs or losses in connection with the
disposition of the collateral. Repurchase agreements will be entered into for
periods not to exceed 30 days and only with respect to obligations in which the
Program may otherwise invest. Management of the Program does not intend to enter
into repurchase agreements with greater than seven days maturity, if, at the
time of such investment, more than 10% of the total assets of the Program would
be so invested.
Forward Commitments. U.S. Government securities and corporate debt
obligations may be purchased or sold on a delayed delivery basis or may be
purchased on a forward commitment basis at fixed-purchase terms with periods of
up to 45 days between the commitment and settlement dates. The purchase will be
recorded on the date the Program enters into the commitment and the value of the
security will thereafter be reflected in the calculation of the Program's net
asset value. The value of the security on the delivery date may be more or less
than its purchase price. A separate account of the Program will be established
with The Bank of New York (110 Washington Street, New York, New York 10286), the
custodian (the "Custodian") and agent (the "Agent") for the Program, consisting
of cash or liquid, high-grade securities having a market value at all times
until the delivery date at least equal to the amount of its commitment in
connection with such delayed delivery and purchase transactions. Although the
Program will generally enter into forward commitments with the intention of
acquiring securities for its portfolio, the Program may dispose of a commitment
prior to settlement if the investment adviser to the Program, Fund Asset
Management, L.P. (the "Adviser") deems it appropriate to do so. There can, of
course, be no assurance that the judgments upon which these techniques are based
will be accurate or that such techniques when applied will be effective. The
Program will enter into forward commitment or delayed delivery arrangements only
with respect to securities in which it may otherwise invest as described under
"Investment Objectives and Policies" in the Prospectus.
The Program may invest in collateralized mortgage obligations ("CMOs"),
which are mortgage pass-through securities collateralized by mortgage pools.
CMOs are issued in several classes with different maturities by governmental or
non-governmental entities such as banks and other mortgage lenders. Many issuers
or servicers of CMOs guarantee timely payment of interest and principal on the
securities, whether or not payments are made when due on the underlying
mortgages. This kind of guarantee generally increases the quality of a security,
but does not mean that the security's market value and yield will not change.
Although certain CMOs technically may be regarded as investment companies under
the Investment Company Act of 1940, they will not be regarded as investment
companies for purposes of the investment restriction set forth in clause (7)
below.
PORTFOLIO MANAGEMENT AND TURNOVER RATE--The Program will attempt to attain
its investment objectives by careful initial selection of obligations with a
view to holding them for investment. However, the Program reserves the right to
sell Portfolio obligations whenever it deems such action advisable to maintain
competitive yields or to protect capital in the event the business of an issuer
has deteriorated or, in the opinion of the Adviser, is likely to deteriorate or
when the period of time to maturity on Portfolio securities has shortened to
such an extent as to make it undesirable, in the opinion of the Adviser, to
retain such securities in the Portfolio or when it believes that it is desirable
for defensive purposes and in anticipation of a rise in interest rates to sell
Portfolio securities and invest the proceeds temporarily in short-term
obligations which have credit characteristics, in the opinion of the Adviser,
similar to those provided for other Portfolio securities. Portfolio turnover
rate is calculated by dividing the lesser of purchases or sales (not including
purchases or sales of short-term obligations and subsequent reinvestments in
long- or intermediate-term Portfolio securities as described above) of
3
<PAGE>
Portfolio securities for the year by the monthly average value of Portfolio
securities. For the years ended December 31, 1994 and 1993, the Portfolio
turnover rates were 122% and 132%, respectively.
INVESTMENT RESTRICTIONS
The following investment restrictions are deemed fundamental policies of the
Program and may be changed only by the vote of the lesser of (1) the holders of
67% of the Program's outstanding voting securities present at a meeting if the
holders of more than 50% of such outstanding voting securities are present in
person or by proxy or (2) the holders of more than 50% of the Program's
outstanding voting securities.
The Program will not:
(1) invest in securities or other investments other than long- and
intermediate-term fixed interest bearing debt obligations and temporary
investments (see "Investment Objectives and Policies" in the Program's
Prospectus);
(2) purchase securities on margin (but the Program may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities), make short sales of securities, maintain a short
position or write or purchase put or call options;
(3) borrow money, except from banks as a temporary measure for
emergency purposes, where such borrowings would not exceed 5% of its total
assets (taken at current value);
(4) pledge assets except to secure indebtedness permitted by (3) above,
with pledged assets to be no more than 10% of its total net assets (taken at
current value);
(5) purchase any security if as a result (a) more than 25% of the
Program's total assets (taken at market value at the time of each
investment) would be invested in a single industry, (utilities will be
divided according to their services; for example, gas, gas transmission,
electric and telephone each will be considered a separate industry for
purposes of this restriction; also, banking and finance will be considered
two different industries for purposes of this restriction), (b) more than 5%
of the Program's total assets (taken at current value) would be invested in
securities of the issuer thereof (other than securities issued or guaranteed
by the United States government), (c) the Program would hold more than 10%
of any class of securities of the issuer thereof (taking all debt issues as
a single class) or more than 10% of the voting securities of the issuer
thereof or (d) more than 20% of the Program's total assets (taken at current
value) would be invested in securities of other than corporate issuers (for
purposes of this restriction, securities issued by supra-national
organizations and agencies of foreign governments, in each case if organized
as a corporation, will be considered securities offered by corporate
issuers);
(6) invest for the purpose of exercising control over or management of
any company;
(7) invest in securities of other investment companies, except as part
of a merger, consolidation, purchase of assets or similar transaction
approved by the Program's Shareholders;
(8) make investments in oil, gas or other mineral exploration programs,
commodities, commodity contracts or real estate, although the Program may
invest in securities secured by real estate or interests therein or issued
by companies, including real estate investment trusts, which deal in real
estate or interests therein;
(9) act as an underwriter except as it may be deemed such in a sale of
restricted securities;
4
<PAGE>
(10) purchase a restricted security if as a result more than 10% of the
Program's total assets (taken at current value) would be invested in
restricted securities;
(11) purchase a security issued by an obligor which is not incorporated
in the United States or any state thereof if as a result more than 25% of
the Program's total assets (taken at current value) would be invested in
such securities;
(12) participate on a joint (or a joint and several) basis in any
trading account in securities (the "bunching" of orders for the sale or
purchase of Portfolio securities with other funds or accounts advised or
sponsored by the Adviser or any of its affiliates to reduce brokerage
commissions or otherwise to achieve best overall execution not being
considered participation in a trading account in securities);
(13) purchase or retain securities of an issuer if, to the knowledge of
the Program, an officer or director of the Program or the Adviser owns
beneficially more than 1/2 of 1% of the shares or securities of such issuer
and all such directors and officers owning more than 1/2 of 1% of such
shares or securities together own more than 5% of such shares or securities;
(14) purchase securities of any company which has (with predecessors) a
record of less than three years' continuing operations if as a result more
than 5% of the total assets of the Program (taken at current value) would be
invested in such securities; or
(15) make loans, except that the Program may (a) purchase obligations in
private placements (the purchase of obligations in other situations not
being considered the making of a loan), and (b) make loans of up to 33 1/3%
of its portfolio securities.
Except in the case of the restriction set forth in clause (13), the
foregoing percentages will apply at the time of the purchase of a security and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of a purchase of such security.
For purposes of the investment restrictions set forth in clause (8), the
term "exploration programs" includes oil, gas or other mineral leases, as well
as exploration programs.
Lending of Program Securities. Subject to investment restriction (15)
above, the Program may from time to time lend securities from its portfolio to
brokers, dealers and financial institutions and receive as collateral cash or
United States Treasury securities which at all times while the loan is
outstanding will be maintained in amounts equal to at least 100% of the current
market value of the loaned securities. Any cash collateral will be invested in
short-term securities, which will increase the current income of the Program.
Such loans, which will not have terms longer than 30 days, will be terminable at
any time. The Program will have the right to regain record ownership of loaned
securities to exercise beneficial rights such as voting rights, subscription
rights and rights of dividends, interest or other distributions. The Program may
pay reasonable fees to persons unaffiliated with the Program for services in
arranging such loans. In the event of a default by the borrower, the Program may
suffer time delays and incur costs or possible losses in connection with the
disposition of the collateral.
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT--Pursuant to an Investment Advisory Agreement
(the "Agreement"), the Adviser has agreed, subject at all times to the Board, to
(1) manage the Portfolio of the Program in accordance with its investment
objectives and policies and furnish to the Program investment advice and (2) (a)
assist in supervising all aspects of the Program's operations including
5
<PAGE>
coordinating all matters relating to the functions of the Agent, custodian and
other parties performing operational functions for the Program; (b) provide the
Program, at the Adviser's expense, with the services of such persons competent
to perform such administrative and clerical functions as are necessary in order
to provide effective administration of the Program, including duties in
connection with Shareholder relations, reports, redemption requests and account
adjustments and the maintenance of certain non-accounting Program books and
records; (c) provide the Program, at the Adviser's expense, with adequate office
space and related services; (d) supervise and administer the operation of the
Exchange Privilege referred to in "Redemption of Shares and Exchange Privilege"
in the Program's Prospectus; and (e) to the extent required by then current
federal securities laws, regulations thereunder or interpretations thereof, pay
for the printing of all Program prospectuses used in connection with the
distribution and sale of the Shares (a regulation permits investment companies
to pay such expenses only when an agreement to that effect has been approved by
shareholders and subject to various other conditions). In return the Program has
agreed to pay a fee each month to the Adviser at the annual rate of 0.5% of the
value of the Program's average daily net assets from the beginning of the year
to the end of such month.
The Program pays all the other costs and expenses incurred in connection
with its organization and operations, including: fees of the program agent,
transfer agent, custodian and dividend disbursing agent; costs of printing and
mailing stock certificates, shareholder reports, proxy materials and (except to
the extent borne by the Adviser or the Administrators) prospectuses and
statements of additional information; legal and auditing fees; costs and
expenses of the sale, issue and redemption of its Shares (including fees and
expenses of registering the Shares under federal and state securities laws);
fees and expenses of unaffiliated directors; costs of accounting and pricing
services (including the daily calculation net asset value); interest, brokerage
costs, insurance and taxes. Accounting services are provided for the Program by
the Adviser, and the Program reimburses the Adviser for its costs in connection
with such services. For the year ended December 31, 1994, such reimbursement
amounted to $52,515. Under current requirements of certain states in which the
Shares were registered for sale in this offering, the Adviser must reimburse the
Program for advisory fees received by it from the Program to the extent that the
Program's expenses (including the advisory fee but excluding interest, taxes,
brokerage fees and extraordinary expenses) exceed in any fiscal year 2.5% of the
Program's first $30,000,000 of average daily net assets, 2.0% of average daily
net assets in excess of $30,000,000 but not exceeding $100,000,000 and 1.5% of
average daily net assets above $100,000,000 for such fiscal year. No fee payment
will be made to the Adviser during any fiscal year which would cause such
expenses to exceed the foregoing expense limitations applicable at the time of
such payment, and any required reimbursements will be made promptly at the end
of such fiscal year. For the years ended December 31, 1992, 1993, and 1994, the
advisory fees paid by the Program to the Adviser aggregated $429,287, $515,901,
and $475,257, respectively, none of which was reimbursed by the Adviser.
The Agreement provides that the use of the name "The Corporate Fund
Investment Accumulation Program" by the Program is non-exclusive and that the
Adviser may allow other persons, including other investment companies, to use
the name. The name may also be withdrawn by the Adviser, in which event the
Adviser has agreed to present the question of continuing the Agreement to a vote
of the Shareholders.
The Agreement will continue from year to year if approved at least annually
either (i) by a vote of a majority of the Program's Shares or (ii) by the Board
and, in each case, by the vote of a majority of those directors who are not
parties to the Agreement or interested persons of any such party cast in
6
<PAGE>
person at a meeting called for the purpose of voting on such approval. It was
most recently approved by Shareholders on June 5, 1987 and by the Board
(including all of the non-interested directors) on March 15, 1995. The Agreement
provides that the Adviser shall have no liability to the Program or any
Shareholder for any error of judgment, mistake of law or any loss arising out of
any investment, or for any other act or omission in the performance by the
Adviser of its duties under the Agreement, except for liability resulting from
willful misfeasance, bad faith or gross negligence on the Adviser's part or from
reckless disregard by the Adviser of its obligations and duties under the
Agreement. The Agreement automatically terminates upon its assignment, is
terminable, without penalty, by the Board or by vote of the holders of a
majority of the Shares on 60 days' notice to the Adviser and by the Adviser on
90 days' notice to the Program. The Adviser's right to terminate could operate
to the disadvantage of or work a hardship on the Program.
THE ADVISER-- The Adviser to the Program is FAM (the general partner of
which is Princeton Services Inc., a wholly-owned subsidiary of Merrill Lynch &
Co., Inc.), which is itself a wholly-owned subsidiary of Merrill Lynch & Co.,
Inc. and has its principal place of business at 800 Scudders Mill Road,
Plainsboro, New Jersey 08536. Merrill Lynch & Co., Inc. has its principal place
of business at 250 Vesey Street, New York, New York 10281.
The Agreement is non-exclusive, and the Adviser, as well as certain of its
affiliates, is in the business of furnishing investment advice to individuals,
institutional clients and other investment companies, including other investment
accumulation programs. The fees charged to these clients vary in accordance with
the type of client and services rendered. Merrill Lynch, an affiliate of the
Adviser, is engaged in the underwriting, securities and commodities brokerage
business and is a member organization of the New York Stock Exchange, Inc.,
other major securities exchanges and commodity exchanges, and the National
Association of Securities Dealers, Inc. Merrill Lynch Asset Management, L.P.
("MLAM"), an affiliate of the Adviser, is an indirect wholly-owned affiliate of
Merrill Lynch & Co., Inc. and is engaged in the investment advisory business.
Securities held by the Program may also be held by other funds or accounts
for which the Adviser acts as adviser or by its investment advisory clients. If
purchases or sales of securities for the Program or other funds or accounts for
which it acts or for their clients arise for consideration at or about the same
time, the Adviser will attempt, subject to applicable laws and regulations, to
allocate equitably portfolio transactions among the Program and the portfolios
of its other investment funds or accounts whenever decisions are made to
purchase or sell securities for the Program and one or more of such other funds
or accounts simultaneously. In making such allocations, the main factors to be
considered will be the respective investment objectives of the Program and such
other funds and accounts, the relative size of the portfolio holdings of the
same or comparable securities, the availability of cash for investment by the
Program and such other funds and accounts, the size of investments held by the
Program and such other funds and accounts, and opinions of the persons
responsible for recommending investments to the Program and such other funds and
accounts. While this procedure could have a detrimental effect on the price and
amount of the securities available to the Program from time to time, it is the
opinion of the Board that the benefits available from the Adviser's organization
will outweigh any disadvantage that may arise from exposure to simultaneous
transactions. To the extent that transactions on behalf of more than one client
of the Adviser during the same period may increase the demand for securities
being purchased or the supply of securities being sold, there may be an adverse
effect on price.
7
<PAGE>
ADMINISTRATION AGREEMENT--The Adviser has entered into an agreement (the
"Administration Agreement") with the Administrators for the performance by them,
at their expense, on behalf of the Adviser of the administrative functions
described in clause (2) of the first paragraph under "Investment Advisory
Agreement" which the Adviser is obligated to perform and has agreed to pay to
the Administrators an aggregate monthly fee at the annual rate of 0.2% of the
value of the Program's average daily net assets from the beginning of the year
to the end of such month. The fee so payable by the Adviser will be allocated
among the Administrators in the following respective percentages: Merrill Lynch,
48%; Prudential, 21%; Dean Witter, 21%; and Smith Barney, 10%. In order to
comply with the expense limitation requirements described above under the
caption "Investment Advisory Agreement," the Administrators have undertaken to
reimburse the Adviser in proportion to such monthly fee for the purpose of the
Adviser's reimbursement of the Program in the manner described under such
caption.
Merrill Lynch has been appointed by the other Administrators as agent for
purposes of taking any action under the Administration Agreement with respect to
the Program by power of attorney executed by such Administrators and filed with
the Program and the Agent. Provision is also made under the Administration
Agreement that if the Administrators are unable to agree in respect to action to
be taken jointly by them thereunder and cannot agree as to which Administrators
shall continue to act as Administrators, then Merrill Lynch shall continue to
act as sole Administrator. Similarly, if one or more of the Administrators fail
to perform their duties under the Administration Agreement or become incapable
of acting or become bankrupt or if their affairs are taken over by public
authorities, then each such Administrator shall be automatically discharged
under the Administration Agreement, and the remaining Administrators shall act
as sole Administrators. In addition, the Administration Agreement is terminable,
without penalty, by the Adviser on 60 days' notice to the Administrators and by
the Administrators, acting as a group, on 90 days' notice to the Adviser. The
Administrators' right to terminate could operate to the disadvantage of or work
a hardship on the Program.
The Administration Agreement is non-exclusive, and the Administrators, as
well as their affiliates, may furnish similar administrative services to other
clients, including other investment accumulation programs. The fees charged to
these clients may vary in accordance with the type of client and services
rendered. Each of the Administrators has acted as sponsor of a number of series
of the Corporate Income Fund, the Municipal Income Fund, the Municipal
Investment Trust Fund, Liberty Street Trust (Corporate Monthly Payment Series or
Municipal Monthly Payment Series) or the International Bond Fund and other
series of these unit investment trust investment companies and proposes to act
in the future as a sponsor of new series thereof. Each of the Administrators has
also acted as principal underwriter and managing underwriter of other investment
companies. Each Administrator, in addition to participating as a member of
various selling groups or as an agent of other investment companies, executes
orders on behalf of investment companies for the purchase and sale of securities
of such companies and sells securities to such companies in its capacity as
broker or dealer in securities.
8
<PAGE>
DIRECTORS AND OFFICERS
Responsibility for the Program's management rests with the Board, which
meets at least quarterly to oversee the implementation of the Program's
investment policies and which must approve the renewal of the Agreement. The
Directors and Officers of the Program, their ages, and their principal
occupations for at least the last five years are set forth below. Unless
otherwise noted, the address of each executive Officer and Director is P.O. Box
9011, Princeton, New Jersey 08543-9011.
<TABLE>
<CAPTION>
NAME CAPACITY ADDRESS
- ----------------------------- ----------------------------- --------------------------------
<S> <C> <C>
Arthur Zeikel* (62) President and Director(1)(2) 800 Scudders Mill Road
Plainsboro, New Jersey 08536
Occupation: President of the Investment Adviser (which term as used herein includes its
corporate predecessors) since 1977; President of Fund Asset Management, L.P. ("FAM")
(which term as used herein includes its corporate predecessors) since 1977; President and
Director of Princeton Services, Inc. ("Princeton Services") since 1993; Executive Vice
President of Merrill Lynch since 1990 and a Senior Vice President thereof from 1985 to
1990; Executive Vice President of Merrill Lynch & Co., Inc. ("ML & Co.") since 1990;
Director of the Distributor.
Ronald W. Forbes (54) Director(1) 1400 Washington Avenue
Albany, New York 12222
Occupation: Associate Professor of Finance, School of Business, State University of New York
at Albany since 1989 and Associate Professor prior thereto; Member, Task Force on
Municipal Securities Markets, Twentieth Century Fund; Consultant, Public Finance Banking,
Lehman Brothers, Inc.
Cynthia A. Montgomery (42) Director(1) Harvard Business School
Soldiers Field Road
Boston, Massachusetts 02163
Occupation: Professor, Harvard Business School, since 1989; Associate Professor, J.L. Kellog
Graduate School of Management, Northwestern University from 1985 to 1989; Assistant
Professor, Graduate School of Business Administration, The University of Michigan, from
1979 to 1985; Director, UNUM Corporation.
Charles C. Reilly (63) Director(1) 9 Hampton Harbor Road
Hampton Bays, New York 11946
Occupation: Adjunct Professor, Columbia University Graduate School of Business since 1990;
Adjunct Professor, Wharton School, University of Pennsylvania during 1990; President and
Chief Investment Officer of Verus Capital Inc. from 1979 to 1990; Senior Vice President of
Arnhold and S. Bleichroeder, Inc. from 1973 to 1990; Director, Harvard Business School
Alumni Association; Director, Small Cities Cablevision.
Kevin A. Ryan (62) Director(1) 127 Commonwealth Avenue
Chestnut Hill, Massachusetts
02167
Occupation: Founder and current Director and Professor of The Boston University Center for
Advancement of Ethics and Character. Professor of Education at Boston University from 1982
to 1994. Formerly taught on the faculties of the University of Chicago, Stanford
University and The Ohio State University.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
NAME CAPACITY ADDRESS
- ----------------------------- ----------------------------- --------------------------------
<S> <C> <C>
Richard R. West (57) Director(1) 482 Tepi Drive
Southbury, Connecticut 06488
Occupation: Professor of Finance, and Dean from 1984 to 1993 at New York University Leonard
N. Stern School of Business Administration; Professor of Finance from 1976 to 1984 and
Dean from 1976 to 1983, the Amos Tuck School of Business Administration, from 1984 to
1993; Director of Re Capital Corp. (reinsurance holding company), Vornado Realty Trust
(real estate holding company), Bowne & Co., Inc. (printer), Alexanders, Inc. (department
stores), and Smith Corona Corporation (manufacturer of typewriters and word processors).
Terry K. Glenn (54) Executive Vice President(1) 800 Scudders Mill Road
Plainsboro, New Jersey 08536
Occupation: Executive Vice President of the Adviser and MLAM since 1983 and Director since
1992; President of Merrill Lynch Funds Distributor, Inc. since 1986 and Director thereof
since 1991; President of Princeton Administrators, Inc. since 1988; Director of Financial
Data Services, Inc. since 1985; Executive Vice President and Director of Princeton
Services since 1993.
N. John Hewitt (60) Senior Vice President(1)(2) 800 Scudders Mill Road
Plainsboro, New Jersey 08536
Occupation: Senior Vice President of the Adviser and MLAM since 1981.
Jay C. Harbeck 60) Vice President(1)(2) 800 Scudders Mill Road
Plainsboro, New Jersey 08536
Occupation: Vice President of MLAM since 1986 and Fixed Income Portfolio Manager since 1986.
Donald C. Burke (34) Vice President(1)(2) 800 Scudders Mill Road
Plainsboro, New Jersey 08536
Occupation: Vice President of MLAM since 1990; employee of Deloitte & Touche from 1982 to
1990.
Gerald M. Richard (45) Treasurer(1)(2) 800 Scudders Mill Road
Plainsboro, New Jersey 08536
Occupation: Senior Vice President and Treasurer of MLAM and the Adviser since 1984; Vice
President of Merrill Lynch Funds Distributor, Inc. since 1981 and Treasurer since 1984;
Senior Vice President and Treasurer of Princeton Services since 1993.
Susan B. Baker (37) Secretary(1)(2) 800 Scudders Mill Road
Plainsboro, New Jersey 08536
Occupation: Vice President of MLAM since 1993; attorney associated with the Adviser and MLAM
since 1987; attorney in private practice from 1985 to 1987.
</TABLE>
- ---------
(1) Interested person, as defined in the Investment Company Act of 1940, of the
Program.
(2) The officers of the Program are officers of certain other investment
companies for which the Adviser or MLAM acts as investment adviser.
10
<PAGE>
Set forth below is a chart showing the aggregate compensation paid by the
Program to each of its Directors for the fiscal year ended December 31, 1994
and, for the calendar year ended December 31, 1994, the total compensation paid
to each Director of the Program by the Program and by other investment companies
advised by the Adviser or MLAM (collectively, the "Fund Complex") for their
services as Directors or Trustees of such investment companies.
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM PROGRAM AND
RETIREMENT BENEFITS FUND COMPLEX
AGGREGATE COMPENSATION ACCRUED AS PART PAID TO
NAME OF DIRECTOR FROM THE PROGRAM OF PROGRAM EXPENSES DIRECTORS
- ------------------------------------- ---------------------- ------------------- ----------------
<S> <C> <C> <C>
Ronald W. Forbes(1).................. $2,900 None $154,400
Cynthia A. Montgomery(1)............. $2,900 None $133,817
Charles C. Reilly(1)................. $2,900 None $276,900
Kevin A. Ryan(1)..................... $2,900 None $154,400
Richard R. West(1)................... $3,900 None $300,900
</TABLE>
- ---------
(1) The Directors serve on the boards of other Funds in the Fund Complex as
follows: Ronald W. Forbes (23 boards), Cynthia A. Montgomery (23 boards),
Charles C. Reilly (40 boards), Kevin A. Ryan (23 boards) and Richard R. West
(40 boards).
The Program has an Audit Committee consisting of all the directors of the
Program who are not interested persons of the Program.
REMUNERATION OF OFFICERS AND DIRECTORS--On March 31, 1995, shares of the
Program owned by all officers and directors of the Program as a group aggregated
less than 1/4 of 1% of the total of such shares then outstanding. The Program
pays each unaffiliated director an annual fee of $800 plus $400 per quarterly
meeting attended and an annual fee of $500 for serving on the Program's Audit
Committee, except for the Chairman of the Audit Committee who receives an annual
fee of $1,000. The Program will also pay the out-of-pocket expenses of such
directors relating to attendance at Meetings. For the year ended December 31,
1994, such fees and expenses to the five unaffiliated directors of the Program
aggregated $14,831.
NET ASSET VALUE
The net asset value per Share of the Program is determined by dividing the
net assets of the Program by the number of its outstanding Shares. The net
assets of the Program are its gross assets less its liabilities as determined in
accordance with generally accepted accounting principles. It is the ultimate
responsibility of the Board to establish standards for the valuation of the
Portfolio securities for purposes of determining net asset value of the Program.
The Program has made arrangements with Merrill Lynch Securities Pricing Service
("MLSPS") to furnish to the Program and the Agent, on each day that the New York
Stock Exchange is open for trading immediately after the declaration of
dividends, estimated values (as of 15 minutes after the close of business on
the New York Stock Exchange, generally 4:00 P.M., New York City time) of
Portfolio securities for purposes of computation of net asset value of the
Shares. The New York Stock Exchange is not open for trading on the following
holidays: New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. The Board
has examined the methods to be used by the
11
<PAGE>
pricing services in estimating the value of Portfolio securities and believes
that such methods will reasonably and fairly approximate the price at which
Portfolio securities may be sold and will result in a good faith determination
of the fair value of such securities; however, there is no assurance that the
Portfolio securities can be sold at the prices at which they are valued.
Portfolio securities (other than short-term obligations but including listed
issues) may be valued on the basis of prices furnished by one or more pricing
services, which determine prices for normal, institutional-size trading units of
such securities using market information, transactions for comparable securities
and various relationships between securities which are generally recognized by
institutional traders. In certain circumstances, portfolio securities are valued
at the last sale price on the exchange that is the primary market for such
securities, or the last quoted bid price for those securities for which the
over-the-counter market is the primary market or for listed securities in which
there were no sales during the day. The value of interest rate swaps, caps and
floors is determined in accordance with a formula and then confirmed
periodically by obtaining a bank quotation. Positions in options are valued at
the last sale price on the market where any such option is principally traded.
Obligations with remaining maturities of 60 days or less are valued at amortized
cost unless this method no longer produces fair valuations. Repurchase
agreements are valued at cost plus accrued interest. Securities for which there
exist no price quotations or valuations and all other assets are valued at fair
value as determined in good faith by or on behalf of the Board of Directors of
the Program.
REDEMPTION OF SHARES
The right of redemption may be suspended during any period when the New York
Stock Exchange is closed, other than customary weekend and holiday closings;
when trading on such Exchange is restricted or an emergency exists, in each case
as determined by rules and regulations of the Securities and Exchange
Commission; or during any period when the Securities and Exchange Commission has
by order permitted such suspension.
The Program has elected to be obligated to pay in cash redemptions during
any 90-day period for any one Shareholder up to the lesser of $250,000 or 1% of
the Program's net asset value. Payments in excess of such amount will normally
be made in cash. If, however, the Board determines that liquidation of the
Program's holdings is impracticable or that such payment in cash would be
adverse to the interests of the remaining Shareholders, such payment may be made
in whole or in part in Portfolio securities. The value of any Portfolio
securities distributed in payment for tendered Shares will be deemed to be their
value used in determining the net asset value of the Shares at the time they
were tendered for redemption. If securities rather than cash are distributed,
the Shareholder will incur brokerage charges or their equivalent in dealer
markdowns in liquidating these securities.
Due to the high cost of maintaining Shareholder accounts of less than $500,
the Program reserves the right to redeem Shares in any account for their then
current net asset value (which will be paid promptly to the Shareholder), if at
any time the total investment of such Shareholder does not have a net asset
value of at least $500 due to Shareholder redemptions and the Shareholder owns
no Units or has elected that no distributions on any Units owned by such
Shareholder be invested in Shares. Before any such redemption is effected, the
Shareholder will be given 30 days' notice, during which period he will be
entitled to elect to have distributions on Units owned by such Shareholder
invested in Shares or
12
<PAGE>
to purchase Shares to bring his account up to a net asset value of $500 and
thereby avoid such redemption.
TAXES AND DISTRIBUTIONS
Reference is made to "Taxes and Distributions" on page 12 of the Prospectus.
Distributions to Shareholders of net investment income and net short-term
capital gains, if any, including distributions which are reinvested in
additional Shares of the Program will be taxable as ordinary income to such
Shareholders. To the extent that such distributions of interest and net short-
term capital gains, if any, to a Shareholder during any year are in excess of
that Shareholder's share of the Program's current and accumulated earnings and
profits, the amount of such distributions will be treated as a return of capital
and will reduce the Shareholder's basis in his Shares. To the extent such
distributions exceed the Shareholder's basis, they will be taxed as gain on the
sale or exchange of the Shares (generally, capital gain), long-term if the
Shareholder has held his Shares as a capital asset for more than twelve months.
Distributions which are taxable as ordinary income to Shareholders will
constitute dividends for federal income tax purposes; however, it is anticipated
that most if not all of such distributions will not qualify for the 70%
dividends-received deduction for corporations.
Distributions reflecting net long-term capital gains (designated as such by
the Program) will be taxable to Shareholders as long-term capital gains at a
maximum rate of 28% for non-corporate Shareholders and a maximum rate of 35% for
corporate Shareholders, regardless of the length of time a Shareholder has held
his Shares. In the event of the redemption of Shares, gain, if any, reflecting
accrued but undistributed net interest income thereon may be subject to taxation
as (depending on the length of time the Shareholder has held the redeemed
Shares) long- or short-term capital gains. The federal tax status of each year's
distributions will be reported to Shareholders.
Dividends declared by the Fund in October, November or December of any year
and made payable to Shareholders of record in such month will be deemed to be
received on December 31 of such year if actually paid during the following
January.
If a Shareholder's holding period in his Shares is six months or less, any
capital loss realized from a sale or exchange of such Shares must be treated as
long-term capital loss to the extent of capital gains dividends received with
respect to such Shares.
Dividends may be subject to a 30% United States withholding tax under the
existing provisions of the Code applicable to foreign individuals and trusts,
estates, partnerships and corporations unless a reduced rate of withholding or a
withholding exemption is provided under applicable treaty. Shareholders who are
nonresident aliens or foreign entities are urged to consult their own tax
advisers concerning the applicability of the United States withholding tax.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury Regulations currently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury Regulations promulgated thereunder. The Code and these Regulations
are subject to change by legislative or administrative action.
13
<PAGE>
STATE AND LOCAL TAXES --Distributions by the Program may also be subject to
state and local taxation.
State and local taxing authorities may enact legislation which may require
the Program to withhold a portion of dividends paid or credited to Shareholders.
PORTFOLIO TRANSACTIONS
While there is no undertaking or agreement to do so, the Adviser may
allocate securities transactions among various dealers on the basis of
supplementary statistical and research information and price quotation and other
services furnished to the Program or the Adviser. Such statistical and research
information may be used by the Adviser in providing investment advice for all of
the accounts which it manages, and it is not possible to relate the benefits of
such information to any particular account. The Adviser is able to fulfill its
obligations to furnish a continuous investment program to the Program without
such information from dealers. However, the Adviser considers access to such
information to be an important element of financial management. While such
information is considered useful, its value is not determinable and the Adviser
does not feel that such information reduces its expenses. In implementing the
above policies, the Program will not offset brokerage commissions paid to the
affiliates of the Adviser, if any, against advisory fees payable to the Adviser,
nor will it attempt to offset brokerage commissions payable to other brokers
which effect Portfolio transactions for the Program. The Board has considered
the propriety of seeking such offsets and has determined that it is in the best
interest of the Program not to seek such offsets at this time and that it will
reconsider this determination in the future at least annually. The Program may
effect Portfolio transactions conducted on an agency basis through affiliates of
the Adviser provided that, in the judgment of the Adviser, more favorable prices
or executions are not obtainable elsewhere. During its fiscal years ended
December 31, 1992, 1993, and 1994, the Program did not pay any brokerage
commissions.
The Program is prohibited from engaging in certain transactions involving
the Adviser or any of its affiliates. Prohibited transactions include portfolio
transactions with affiliates of the Adviser acting as principal. In underwritten
offerings in which such affiliates participate as an underwriter, the Program
may only purchase securities from a member of the underwriting or selling group
not affiliated with the Program or the Adviser, and subject to various other
conditions. An affiliate of the Adviser acts as an underwriter in a substantial
number of underwritten offerings of obligations. While the Program's inability
to purchase obligations from affiliates of the Adviser acting as principal or,
except in the limited circumstances permitted by the applicable Securities and
Exchange Commission rules, in underwritten offerings in which such affiliates
are involved, will limit the number of underwritten offerings in which the
Program can purchase obligations and may have an adverse effect upon the ability
of the Program to obtain best price in the purchase of obligations, the Program
does not anticipate that this will materially interfere with its ability to
purchase obligations in accordance with the investment objectives and policies
referred to above.
14
<PAGE>
PERFORMANCE DATA
The Program may from time to time include its average annual total return
and yield in advertisements or information furnished to present or prospective
shareholders. Set forth below is the Program's average annual total return
information for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED 5-YEAR PERIOD ENDED 10-YEAR PERIOD ENDED
DECEMBER 31, 1994 DECEMBER 31, 1994 DECEMBER 31, 1994
----------------- ------------------- --------------------
<S> <C> <C> <C>
Average Annual Total
Return(a).................... -5.78% 6.96% 8.94%
</TABLE>
- ---------
<TABLE>
<C> <S>
(a) Average annual total return quotations for the specified periods are computed by
finding the average annual compounded rates of return (based upon net investment income
and any capital gains or losses on portfolio investments over such periods) that would
equate the initial amount invested to the redeemable value of such investment at the
end of each period. Average annual total return is computed assuming all dividends and
distributions are reinvested and taking into account all applicable recurring and
nonrecurring expenses.
</TABLE>
The Program may supplement this Statement of Additional Information with
yield quotations to comply with certain regulations issued by the Securities and
Exchange Commission with respect to the advertisement of performance. Yield
quotations will be computed based on a 30-day period by dividing the net income
earned during the period based on the yield to maturity of each security held by
the Program by the average daily number of shares outstanding during the period
that were entitled to receive dividends times the maximum offering price per
share on the last day of the period.
GENERAL INFORMATION
DESCRIPTION OF SHARES--The Program is authorized to issue a total of
50,000,000 Shares of $.01 par value each. There is no limitation on the sales
charge, if any, at which the Shares may be offered or the types of investors to
whom offerings may be made. Shares are fully paid and non-assessable when
issued, have no pre-emptive, conversion or exchange rights and are transferable
without restriction. Each Share entitles the holder to one vote at all meetings
of shareholders. Cumulative voting is not permitted. Thus the holders of more
than 50% of the Shares voting for the election of the Directors can elect all of
the Directors of the Program if they choose to do so and in such event the
holders of the remaining Shares would not be able to elect any Directors.
Holders of Shares are entitled to participate equally in dividends and
distributions, and, in addition, in the event of the distribution or liquidation
of the Program the holders of Shares will be entitled to participate equally in
any assets of the Program. Unless requested to do so by a Shareholder, the
Program will not ordinarily issue certificates representing Shares but will
instead establish for each Shareholder through the Agent an account under which
such Shares are held for safekeeping.
AUDITORS AND FINANCIAL STATEMENTS--Deloitte & Touche LLP, independent
auditors for the Program, have audited the statement of assets and liabilities,
including the schedule of investments, of the Program as of December 31, 1994
and the related statements of operations for the year then ended and of changes
in net assets for the years ended December 31, 1994 and 1993 and the financial
highlights for each of the years in the five year period ended December 31, 1994
as stated in their report
15
<PAGE>
appearing herein, and such financial statements have been included herein in
reliance upon such report given upon the authority of that firm as experts in
accounting and auditing. The Program will issue to Shareholders semi-annual and
annual reports containing financial statements including information relating to
net asset value per share and income and expense.
LEGAL COUNSEL--Rogers & Wells, New York, New York, is counsel for the
Program.
RATINGS OF CORPORATE OBLIGATIONS*
STANDARD & POOR'S--AAA-- Bonds rated AAA have the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.
BB--B--CCC--CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
C--The rating C is reserved for income bonds on which no interest is being
paid.
D--Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
NR--Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of bond as a matter of policy.
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
FITCH--AAA rated bonds are considered to be investment grade and of the
highest quality. The obligor has an extraordinary ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
- ---------
*As described by the rating companies themselves.
16
<PAGE>
AA rated bonds are considered to be investment grade and of high quality.
The obligor's ability to pay interest and repay principal, while very strong, is
somewhat less than for AAA rated securities or more subject to possible change
over the term of the issue.
A rated bonds are considered to be investment grade and of good quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB rated bonds are considered to be investment grade and of satisfactory
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to weaken this ability than bonds with higher ratings.
BB rated bonds are considered speculative and of low investment grade. The
obligor's ability to pay interest and repay principal is not strong and is
considered likely to be affected over time by adverse economic changes.
B rated bonds are considered highly speculative. Bonds in this class are
lightly protected as to the obligor's ability to pay interest over the life of
the issue and repay principal when due.
CCC rated bonds may have certain characteristics which, with the passing of
time, could lead to the possibility of default on either principal or interest
payments.
CC rated bonds are minimally protected. Default in payment of interest
and/or principal seems probable.
C rated bonds are in actual or imminent default in payment of interest or
principal.
DDD, DD, D rated bonds are in default and in arrears in interest and/or
principal payments. Such bonds are extremely speculative and should be valued
only on the basis of their value in liquidation or reorganization of the
obligor.
+ (Plus) or - (Minus) signs after bond and preferred stock rating symbols
(from "AA" to "B") indicate relative standing within a rating category. They are
refinements more closely reflecting strengths and weaknesses and are not to be
used as trend indicators.
MOODY'S--Aaa--Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered
17
<PAGE>
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa--Bonds which are rated Baa are considered medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the bond ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
18
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
THE CORPORATE FUND ACCUMULATION PROGRAM, INC.
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of The Corporate Fund Accumulation Program, Inc. as
of December 31, 1994, the related statements of operations for the year then
ended and changes in net assets for each of the years in the two year period
then ended, and financial highlights for each of the years in the five-year
period then ended. These financial statements and the financial highlights are
the responsibility of the Program's management. Our responsibility is to express
an opinion on these financial statements and the financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1994 by correspondence with the custodian and broker. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The Corporate Fund
Accumulation Program, Inc. as of December 31, 1994, the results of its
operations, the changes in its net assets, and the financial highlights for the
respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
February 15, 1995
19
<PAGE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Schedule of Investments December 31, 1994
<CAPTION>
S&P Moody's Face Value
Industry Rating Rating Amount Issue Cost (Note 1a)
<S> <C> <C> <C> <C> <C> <C>
US Government Obligations
US Government AAA Aaa $ 500,000 Federal National Mortgage Association,
Obligations-- 5.20% due 7/10/1998 $ 456,475 $ 483,460
11.5% AAA Aaa 2,500,000 US Treasury Bonds, 7.50% due 11/15/2024 2,447,687 2,391,400
US Treasury Notes:
AAA Aaa 2,500,000 8.75% due 8/15/2000 2,905,278 2,602,350
AAA Aaa 500,000 8.50% due 11/15/2000 535,109 515,390
AAA Aaa 3,500,000 7.875% due 11/15/2004 3,481,160 3,509,835
----------- -----------
9,825,709 9,502,435
Total US Government Obligations--11.5% 9,825,709 9,502,435
Corporate Bonds & Notes
Banks & A+ Aa3 2,000,000 Boatmen's Bancshares, Inc., 5.68% due
Thrifts--12.2% 6/14/1995 2,000,000 1,997,844
A- A3 465,000 First Union Corporation, 8.125% due
6/24/2002 517,523 452,138
A- A3 3,000,000 Huntington Bancshares, 7.625% due 1/15/2003 3,054,135 2,836,680
A+ A1 2,000,000 Norwest Corp., 6.625% due 3/15/2003 2,012,146 1,789,940
A Aa3 1,000,000 Society National Bank, 6.00% due 4/25/1996 977,442 982,060
AA+ Aa2 1,000,000 Wachovia Bank, 6.55% due 6/09/1997 999,402 967,930
A A2 1,000,000 World Savings & Loan Association, 9.90% due
7/01/2000 1,025,405 1,046,990
----------- -----------
10,586,053 10,073,582
Financial-- A A2 1,000,000 Dean Witter & Discover Co., 6.50% due
Other--6.0% 11/01/2005 989,311 849,260
AAA Aaa 1,000,000 General Electric Capital Corp., 14.00% due
7/01/1996 1,104,655 1,085,340
BBB+ A3 2,000,000 PaineWebber Group Inc., 9.25% due 12/15/2001 2,292,400 2,020,680
A+ A3 1,000,000 Torchmark Corp., 9.625% due 5/01/1998 992,133 1,026,250
----------- -----------
5,378,499 4,981,530
Financial Chrysler Finance Corporation:
Services-- A A3 1,000,000 7.13% due 9/30/1996 985,646 984,340
Captive--3.7% BBB+ A3 1,000,000 10.95% due 8/01/2017 1,101,211 1,097,970
A A2 1,000,000 Ford Motor Credit Co., 8.00% due 6/15/2002 971,808 965,620
----------- -----------
3,058,665 3,047,930
Financial A+ A1 1,000,000 American General Finance Corp., 7.70% due
Services-- 11/15/1997 989,150 982,670
Consumer-- AA- A1 1,000,000 Associates Corp. of North America, 8.80% due
8.4% 8/01/1998 1,101,527 1,009,040
2,000,000 Beneficial Corp., 6.68% due 10/14/1997 2,000,000 1,998,800
A+ A1 2,000,000 CIT Group Holdings, Inc., 6.225% due
2/28/1997 1,998,914 2,008,060
A+ A2 1,000,000 Transamerica Finance Corp., 6.80% due
3/15/1999 999,771 941,660
----------- -----------
7,089,362 6,940,230
</TABLE>
20
<PAGE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Schedule of Investments (continued) December 31, 1994
<CAPTION>
S&P Moody's Face Value
Industry Rating Rating Amount Issue Cost (Note 1a)
<S> <C> <C> <C> <C> <C> <C>
Corporate Bonds & Notes (continued)
Foreign*--9.7% AA- A1 $1,000,000 Aegon N.V., 8.00% due 8/15/2006 (b) $ 991,155 $ 958,170
A+ A2 1,500,000 CRA Finance Ltd., 6.50% due 12/01/2003 (b) 1,336,041 1,313,145
A- A2 2,000,000 Kingdom of Thailand, 8.25% due 3/15/2002 (a) 1,972,149 1,963,240
AA Aa2 1,000,000 Province of Ontario (Canada), 8.00% due
10/17/2001 (a) 1,067,053 985,780
A+ A1 2,500,000 Province of Quebec, 7.125% due 2/09/2024 (a) 2,054,285 2,008,850
AA A1 1,000,000 Republic of Italy, 6.875% due 9/27/2023 (a) 972,929 787,720
----------- -----------
8,393,612 8,016,905
Industrial-- A+ A1 2,000,000 Bass America, Inc., 8.125% due 3/31/2002 2,062,486 1,966,600
Consumer A+ A2 1,000,000 Dillard Department Stores, Inc., 7.375% due
Goods--11.8% 6/15/1999 1,022,799 965,040
A+ A2 2,000,000 Grand Metropolitan Investment Corp., 8.625%
due 8/15/2001 2,059,530 2,013,280
AAA Aaa 2,000,000 Johnson & Johnson Co., 8.72% due 11/01/2024 2,019,136 2,023,420
Philip Morris Companies, Inc.:
A A2 1,000,000 9.00% due 1/01/2001 1,020,665 1,012,090
A A2 2,000,000 7.25% due 1/15/2003 1,867,912 1,828,720
----------- -----------
10,052,528 9,809,150
Industrial-- BP America Inc.:
Energy--5.1% A+ Aa3 1,000,000 9.375% due 11/01/2000 1,084,467 1,049,250
AA- A1 1,000,000 7.875% due 5/15/2002 1,045,494 977,620
AA+ Aa1 1,000,000 10.00% due 7/01/2018 1,078,327 1,084,730
A- A3 1,000,000 Burlington Resources, Inc., 9.875% due
6/15/2010 1,271,442 1,107,500
----------- -----------
4,479,730 4,219,100
Industrial-- AA- Aa2 1,000,000 Archer-Daniels-Midland Co., 8.875% due
Other--3.8% 4/15/2011 1,074,870 1,039,840
Ford Capital B.V.:
A Aa2 1,000,000 9.875% due 5/15/2002 1,019,385 1,066,270
AA+ Aa1 1,000,000 9.50% due 6/01/2010 1,107,746 1,056,660
----------- -----------
3,202,001 3,162,770
Supranational-- AAA Aaa 2,000,000 International Bank for Reconstruction &
3.0% Development, 12.375% due 10/15/2002 2,017,002 2,461,900
Transportation-- Southwest Airlines Co.:
4.2% A- Baa1 2,500,000 9.40% due 7/01/2001 2,945,231 2,592,850
A- Baa1 1,000,000 7.875% due 9/01/2007 993,739 935,530
----------- -----------
3,938,970 3,528,380
</TABLE>
21
<PAGE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Schedule of Investments (concluded) December 31, 1994
<CAPTION>
S&P Moody's Face Value
Industry Rating Rating Amount Issue Cost (Note 1a)
<S> <C> <C> <C> <C> <C> <C>
Corporate Bonds & Notes (concluded)
Utilities-- BBB+ Baa1 $ 500,000 GTE Corporation, 9.10% due 6/01/2003 $ 560,728 $ 512,425
Communica- AA- Aa3 1,000,000 Pacific Bell, Inc., 8.70% due 6/15/2001 1,046,319 1,019,600
tions--4.0% A+ A1 2,000,000 Southwestern Bell Telecommunications, Inc.,
6.125% due 3/01/2000 2,007,771 1,827,780
----------- -----------
3,614,818 3,359,805
Utilities-- A- A3 3,000,000 Georgia Power Co., 6.125% due 9/01/1999 2,972,997 2,767,770
Electric--7.2% A A2 1,000,000 Pennsylvania Power & Light Co., 7.75% due
5/01/2002 1,035,737 960,400
Virginia Electric & Power Co.:
A A2 1,250,000 8.00% due 3/01/2004 1,407,930 1,220,288
A A2 1,000,000 8.625% due 10/01/2024 980,846 986,137
----------- -----------
6,397,510 5,934,595
Utilities-- AA- A1 2,000,000 Consolidated Natural Gas Co., 8.75% due
Gas--2.4% 6/01/1999 2,113,023 2,025,680
Total Corporate Bonds & Notes--81.5% 70,321,773 67,561,557
Short-Term Securities
Commercial 1,000,000 American Express Credit Corp., 5.65% due
Paper**--1.2% 1/06/1995 999,058 999,058
Repurchase 3,591,000 UBS Securities Funding Inc., purchased on
Agreement***--4.3% 12/30/1994 to yield 5.75% to 1/03/1995 3,591,000 3,591,000
Total Short-Term Securities--5.5% 4,590,058 4,590,058
Total Investments--98.5% $84,737,540 81,654,050
===========
Other Assets Less Liabilities--1.5% 1,233,223
-----------
Net Assets--100.0% $82,887,273
===========
<FN>
*Corresponding industry groups for foreign bonds which are
denominated in US dollars:
(a)Government entity.
(b)Financial institution: Government-owned and guaranteed.
**Commercial Paper is traded on a discount basis; the interest
rates shown are the discount rates paid at the time of purchase
by the Program.
***Repurchase Agreements are fully collateralized by US Government
Obligations.
Ratings of issues shown have not been audited by Deloitte &
Touche LLP.
</FN>
See Notes to Financial Statements.
</TABLE>
22
<PAGE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Statement of Assets and Liabilities as of December 31, 1994
<CAPTION>
<S> <C> <C>
Assets:
Investments, at value (identified cost--$84,737,540) (Note 1a) $ 81,654,050
Cash 4,957
Receivables:
Interest $ 1,554,829
Capital shares sold 287 1,555,116
------------
Prepaid registration fees and other assets (Note 1d) 17,449
------------
Total assets 83,231,572
------------
Liabilities:
Payables:
Capital shares redeemed 104,066
Investment adviser (Note 2) 34,309
Dividends to shareholders (Note 1e) 7,778 146,153
------------
Accrued expenses and other liabilities 198,146
------------
Total liabilities 344,299
------------
Net Assets $ 82,887,273
============
Net Assets Consist of:
Common Stock, $.01 par value, 50,000,000 shares authorized $ 43,309
Paid-in capital in excess of par 90,146,956
Accumulated realized capital losses--net (4,219,502)
Unrealized depreciation on investments--net (3,083,490)
------------
Net Assets--Equivalent to $19.14 per share based on 4,330,853 shares outstanding $ 82,887,273
============
</TABLE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Statement of Operations for the Year Ended December 31, 1994
<CAPTION>
<S> <C> <C>
Investment Income (Note 1c):
Interest and premium and discount earned $ 6,560,280
Expenses:
Investment advisory fees (Note 2) $ 475,257
Transfer agent fees 323,673
Printing and shareholder reports 76,719
Accounting services (Note 2) 52,515
Professional fees 51,688
Registration fees (Note 1d) 34,729
Custodian fees 15,732
Directors' fees and expenses 14,831
Pricing services 3,280
Other 1,789
------------
Total expenses 1,050,213
------------
Investment income--net 5,510,067
Realized & Unrealized Loss on Investments--Net (Notes 1c & 3):
Realized loss on investments--net (4,218,614)
Change in unrealized appreciation/depreciation on investments--net (7,424,128)
------------
Net Decrease in Net Assets Resulting from Operations $ (6,132,675)
============
See Notes to Financial Statements.
</TABLE>
23
<PAGE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended Dec. 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <C> <C>
Operations:
Investment income--net $ 5,510,067 $ 5,922,490
Realized gain (loss) on investments--net (4,218,614) 4,633,533
Change in unrealized appreciation/depreciation on investments--net (7,424,128) 915,986
------------ ------------
Net increase (decrease) in net assets resulting from operations (6,132,675) 11,472,009
------------ ------------
Dividends & Distributions to Shareholders (Note 1e):
Investment income--net (5,527,763) (5,905,595)
Realized gain on investments--net -- (4,763,714)
------------ ------------
Net decrease in net assets resulting from dividends and distributions to shareholders (5,527,763) (10,669,309)
------------ ------------
Capital Share Transactions (Note 4):
Net increase (decrease) in net assets derived from capital share transactions (20,819,404) 23,672,843
------------ ------------
Net Assets:
Total increase (decrease) in net assets (32,479,842) 24,475,543
Beginning of year 115,367,115 90,891,572
------------ ------------
End of year $ 82,887,273 $115,367,115
============ ============
</TABLE>
<TABLE>
The Corporate Fund Accumulation Program, Inc.
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended December 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year $ 21.55 $ 21.22 $ 21.76 $ 20.24 $ 20.54
--------- --------- --------- --------- ---------
Investment income--net 1.18 1.31 1.46 1.52 1.67
Realized and unrealized gain (loss) on investments--net (2.41) 1.24 (.03) 1.51 (.28)
--------- --------- --------- --------- ---------
Total from investment operations (1.23) 2.55 1.43 3.03 1.39
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (1.18) (1.29) (1.47) (1.51) (1.69)
Realized gain on investments--net -- (.93) (.50) -- --
--------- --------- --------- --------- ---------
Total dividends and distributions (1.18) (2.22) (1.97) (1.51) (1.69)
--------- --------- --------- --------- ---------
Net asset value, end of year $ 19.14 $ 21.55 $ 21.22 $ 21.76 $ 20.24
========= ========= ========= ========= =========
Total Investment Return:
Based on net asset value per share (5.78%) 12.20% 6.88% 15.60% 7.19%
========= ========= ========= ========= =========
Ratios to Average Net Assets:
Expenses 1.10% 1.08% 1.12% 1.16% 1.29%
========= ========= ========= ========= =========
Investment income--net 5.80% 5.74% 6.72% 7.25% 8.18%
========= ========= ========= ========= =========
Supplemental Data:
Net assets, end of year (in thousands) $ 82,887 $115,367 $ 90,892 $ 82,663 $ 76,298
========= ========= ========= ========= =========
Portfolio turnover 122% 132% 65% 87% 107%
========= ========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
24
<PAGE>
The Corporate Fund Accumulation Program, Inc.
Notes to Financial Statements
1. Significant Accounting Policies:
The Corporate Fund Accumulation Program, Inc. (the "Program") is
registered under the Investment Company Act of 1940 as a
diversified, open-end investment management company. The following
is a summary of significant accounting policies followed by the
Program.
(a) Valuation of securities--Portfolio securities are valued on the
basis of prices furnished by one or more pricing services which
determine prices for normal, institutional-size trading units.
Obligations with remaining maturities of sixty days or less are
valued at amortized cost unless this method no longer produces fair
valuations. Securities for which there exist no price quotations or
valuations and all other assets are valued at fair value as
determined in good faith by or on behalf of the Board of Directors
of the Program.
(b) Income taxes--It is the Program's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(c) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income (including amortization of
premium and discount) is recognized on the accrual basis. Realized
gains and losses on security transactions are determined on the
identified cost basis.
(d) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(e) Dividends to shareholders--Dividends from net investment income
are declared and paid monthly. Distributions of capital gains are
recorded on the ex-dividend dates.
2. Investment Advisory Agreement
and Transactions with Affiliates:
The Program has entered into an Investment Advisory Agreement with
Fund Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Program's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Program. For such
services, the Program pays a monthly fee of 0.50%, on an annual
basis, of the value of the Program's average daily net assets. The
Investment Advisory Agreement obligates FAM to reimburse the Program
to the extent the Program's expenses (excluding interest, taxes,
brokerage fees and extraordinary items) exceed 2.5% of the Program's
first $30 million of average daily net assets, 2.0% in excess of $30
million but not exceeding $100 million of average daily net assets,
and 1.5% of the average daily net assets in above $100 million. No
fee payment will be made to the Adviser during any fiscal year which
would cause such expenses to exceed the foregoing expense
limitations applicable at the time of such payment.
FAM has entered into an Administrative Agreement with Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), Prudential Securities, Inc.,
25
<PAGE>
Dean Witter Reynolds Inc., and Shearson Lehman Brothers Inc. (the
"Administrators"), whereby the Administrators perform certain
administrative duties on behalf of FAM.
The Corporate Fund Accumulation Program, Inc.
Notes to Financial Statements (concluded)
The Administrators receive a monthly fee from FAM equal to 0.20%, on
an annual basis, of the Program's average daily net assets and have
agreed to reimburse FAM for a portion of the reimbursement of
expenses to the Program as described above, required to be made by
FAM.
During the period May 13, 1994 to December 31, 1994, the Program
paid Merrill Lynch Security Pricing Service, an affiliate of MLPF&S,
$300 for security price quotations to compute the net asset value of
the Program.
Accounting services are provided to the Program by FAM at cost.
Certain officers and/or directors of the Program are officers and/or
directors of FAM, PSI, MLPF&S, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended December 31, 1994 were $107,560,742 and
$121,044,593, respectively.
Net realized and unrealized losses as of December 31, 1994 were as
follows:
Realized Unrealized
Losses Losses
Long-term investments $ (4,218,614) $ (3,083,490)
------------ ------------
Total $ (4,218,614) $ (3,083,490)
============ ============
As of December 31, 1994, net unrealized depreciation for Federal
income tax purposes aggregated $3,083,490, of which $632,887 related
to appreciated securities and $3,716,377 related to depreciated
securities. The aggregate cost of investments at December 31, 1994
for Federal income tax purposes was $84,737,540.
4. Capital Share Transactions:
Transactions in capital shares were as follows:
For the Year Ended Dollar
December 31, 1994 Shares Amount
Shares sold 941,678 $ 19,087,306
Shares issued to shareholders
in reinvestment of dividends. 276,909 5,541,513
------------ ------------
Total issued 1,218,587 24,628,819
Shares redeemed (2,240,697) (45,448,223)
------------ ------------
Net decrease (1,022,110) $(20,819,404)
============ ============
For the Year Ended Dollar
December 31, 1993 Shares Amount
Shares sold 3,558,780 $ 79,734,098
Shares issued to shareholders
in reinvestment of dividends
and distributions 458,843 10,088,643
------------ ------------
Total issued 4,017,623 89,822,741
Shares redeemed (2,948,852) (66,149,898)
------------ ------------
Net increase 1,068,771 $ 23,672,843
============ ============
5. Capital Loss Carryforward:
At December 31, 1994, the Program had a net capital loss
carryforward of approximately $3,363,000, all of which expires in 2002.
This amount will be available to offset like amounts of any future
taxable gains.
26
<PAGE>
- ------------------------------------------
STATEMENT OF ADDITIONAL
INFORMATION
- ------------------------------------------
- ------------------------------------------
INDEX
- ------------------------------------------
PAGE
----
Investment Objectives and Policies.... 2
Investment Restrictions............... 4
Investment Advisory Agreement......... 5
Directors and Officers................ 9
Net Asset Value....................... 11
Redemption of Shares.................. 12
Taxes and Distributions............... 13
Portfolio Transactions................ 14
Performance Data...................... 15
General Information................... 15
Ratings of Corporate Obligations...... 16
Independent Auditors' Report.......... 19
Financial Statements.................. 20
- --------------------------------------
THE
CORPORATE
FUND
INVESTMENT
ACCUMULATION
PROGRAM
- ------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 28, 1995
- ------------------------------------------
BOX 9011
PRINCETON, NEW JERSEY 08543-9011
(609) 282-2000
<PAGE>
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Contained in Part A:
Financial Highlights for each of the years in the ten year period
ended December 31, 1994
Contained in Part B:
Schedule of Investments, December 31, 1994
Statement of Assets and Liabilities as of December 31, 1994
Statement of Operations for the year ended December 31, 1994
Statements of Changes in Net Assets for the years ended December 31,
1994 and 1993
Financial Highlights for each of the years in the five year period
ended December 31, 1994
(b) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------------------------------------------------------------------------
<C> <S>
(1)(a) --Amended and Restated Articles of Incorporation of Registrant (incorporated by
reference to Exhibit 1 to Amendment No. 3 to Form N-8B-1 of Registrant, 1940 Act
File No. 811-2642).
(b) --Articles Supplementary to the Articles of Incorporation of Registrant, dated
October 12, 1994 (filed herewith).
(2) --By-Laws of the Registrant (incorporated by reference to Exhibit 2 to
Post-Effective Amendment No. 13 to Form N-1A of Registrant, 1933 Act File No.
2-57060).
(3) --Not applicable.
(4) --Stock Certificate (incorporated by reference to Exhibit 4(a) to
Amendment No. 3 to Form N-8B-1 of Registrant, 1940 Act File No. 811-2642).
(5) --Investment Advisory Agreement (incorporated by reference to Exhibit 5 to
Amendment No. 3 to Form N-8B-1 of Registrant, 1940 Act File No. 811-2642).
(6) --Not applicable.
(7) --Not applicable.
(8) --Custody Agreement between The Bank of New York and Registrant
(incorporated by reference to Exhibit 8 to Amendment No. 3 to Form N-8B-1 of
Registrant, 1940 Act File No. 811-2642).
(9)(a) --Administration Agreement by and among the Registrant, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Prudential-Bache Securities, Inc. and Dean
Witter Reynolds Inc. (incorporated by reference to Exhibit (9)a to
Post-Effective Amendment No. 4 to Form N-1 of the Registrant, 1933 Act File No.
2-57060).
(b) --Agency Agreement between The Bank of New York and Registrant
(incorporated by reference to Exhibit (9) to Amendment No. 3 to Form N-8B-1 of
Registrant, 1940 Act File No. 811-2642).
</TABLE>
C-1
<PAGE>
<TABLE>
<C> <S>
(10) --Opinion of Rogers & Wells (incorporated by reference to Registrant's Rule 24f-2
Notice).
(11) --Consent of Deloitte & Touche LLP, independent auditors for the Registrant (filed
herewith).
(12) --Not applicable.
(13) --Not applicable.
(14) --Not applicable.
(15) --Not applicable.
(16) --Schedule of Computation of Performance Data in Response to Item 22 (incorporated
by reference to Exhibit 16 to Post-Effective Amendment No. 15 to Registrant's
Registration Statement on Form N-1A (file No. 2-57060)).
(27) --Financial Data Schedule (filed herewith).
</TABLE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
NUMBER OF RECORD HOLDERS
TITLE OF CLASS AT MARCH 31, 1995
- ----------------------------------------------- ------------------------
Capital Stock, $.01 par value.................. 10,569
ITEM 27. INDEMNIFICATION
Article VI of the By-Laws of Registrant is incorporated by reference to
Exhibit (2) to this Post-Effective Amendment No. 21 to Form N-1A of Registrant
(1940 Act File No. 811-2642).
The Maryland statutory indemnification provision is incorporated by
reference to Exhibit (14) to Amendment No. 4 to Form N-8B-1 of Registrant (1940
Act File No. 811-2642).
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Fund Asset Management, L.P. (the "Investment Adviser") acts as the
investment adviser for the following registered investment companies: Merrill
Lynch Basic Value Fund, Inc., Merrill Lynch California Municipal Series Trust,
CBA Money Fund, CMA Government Securities Fund, CMA Money Fund, CMA Multi-State
Municipal Series Trust, CMA Tax-Exempt Fund, CMA Treasury Fund, The Corporate
Fund Accumulation Program, Inc., Corporate High Yield Fund, Inc., Corporate High
Yield Fund II, Inc., Financial Institutions Series Trust, Income Opportunities
Fund 1999, Inc., Income Opportunities Fund 2000, Inc., Merrill Lynch Corporate
Bond Fund, Inc., Merrill Lynch Federal Securities Trust, Inc., Merrill Lynch
Institutional Tax-Exempt Fund, Merrill Lynch Funds for Institutions Series,
Merrill Lynch Multi-State Ltd. Maturity Municipal Series Trust, Merrill Lynch
Multi-State Municipal Series Trust, Merrill Lynch Municipal Bond Fund, Inc.,
Merrill Lynch Phoenix Fund, Inc., Merrill Lynch Special Value Fund, Inc., The
Municipal Fund Accumulation Program, Inc., MuniAssets Fund, Inc., MuniBond
Income Fund, Inc., MuniEnhanced Fund, Inc., MuniInsured Fund, Inc., MuniVest
California Insured Fund, Inc., MuniVest Florida Fund, Inc., MuniVest Fund, Inc.,
MuniVest Fund II, Inc., MuniVest Michigan Insured Fund, Inc., MuniVest New
Jersey Fund, Inc., MuniVest New York Insured Fund, Inc., MuniVest Pennsylvania
Insured Fund, Inc., Apex Municipal Fund, Inc., Taurus MuniCalifornia Holdings,
Inc., Taurus MuniNew York Holdings, Inc., MuniYield Arizona Fund, Inc.,
MuniYield Arizona Fund II, Inc., MuniYield California Fund, Inc., MuniYield
California Insured Fund, Inc., MuniYield California Insured Fund II, Inc.
MuniYield Florida Fund, Inc., MuniYield Florida Insured Fund, Inc., MuniYield
Insured Fund, Inc., MuniYield Insured
C-2
<PAGE>
Fund II, Inc., MuniYield Michigan Fund, Inc., MuniYield Michigan Insured Fund,
Inc., MuniYield New York Insured Fund, Inc., MuniYield New York Insured Fund II,
MuniYield New York Insured Fund III, Inc., MuniYield Pennsylvania Fund, Inc.,
MuniYield Fund, Inc., MuniYield Quality Fund, Inc., MuniYield Quality Fund II,
Inc., Merrill Lynch World Income Fund, Inc., Senior High Income Portfolio, Inc.,
Senior High Income Portfolio, II Inc., Worldwide Dollar Vest Fund, Inc. and
Emerging Tigers Fund, Inc. Merrill Lynch Asset Management acts as investment
adviser for the following registered investment companies: Merrill Lynch
Adjustable Rate Securities Fund, Inc., Merrill Lynch American Income Fund, Inc.,
Merrill Lynch Asset Income Fund, Inc., Merrill Lynch Asset Growth Fund, Inc.,
Merrill Lynch Balanced Fund for Investment and Retirement, Convertible Holdings,
Inc., Merrill Lynch Capital Fund, Inc., Merrill Lynch Developing Capital Markets
Fund, Inc., Merrill Lynch Dragon Fund, Inc., Merrill Lynch EuroFund, Merrill
Lynch Fund For Tomorrow, Inc., Merrill Lynch Fundamental Growth Fund, Inc.,
Merrill Lynch Global Allocation Fund, Inc., Merrill Lynch Global Convertible
Fund, Inc., Merrill Lynch Global Utility Fund, Inc., Merrill Lynch High Income
Municipal Bond Fund, Inc., Merrill Lynch Growth Fund for Investment and
Retirement, Merrill Lynch HealthCare Fund, Inc. (residents of Wisconsin must
meet investor suitability requirements), Merrill Lynch Institutional
Intermediate Fund, Merrill Lynch International Equity Fund, Inc., Merrill Lynch
Global Holdings, Inc., Merrill Lynch Latin America Fund, Inc., Merrill Lynch
Middle East/Africa Fund, Inc., Merrill Lynch Senior Floating Rate Fund, Inc.,
Merrill Lynch Municipal Series Trust, Merrill Lynch Global Resources Trust,
Merrill Lynch Pacific Fund, Inc., Merrill Lynch Ready Assets Trust, Merrill
Lynch Retirement Asset Builder Program, Inc., Merrill Lynch Global Bond Fund for
Investment and Retirement, Merrill Lynch Retirement Series Trust, Merrill
Lynch Series Fund, Inc., Merrill Lynch Short-Term Global Income Fund, Inc.,
Merrill Lynch Strategic Dividend Fund, Merrill Lynch Technology Fund, Inc.,
Merrill Lynch Utility Income Fund, Inc., Merrill Lynch Variable Series Fund,
Inc., Merrill Lynch, U.S.A. Government Reserves and Merrill Lynch U.S.
Treasury Money Fund. The address of each of these investment companies is Box
9011, Princeton, New Jersey 08543-9011. The address of Merrill Lynch Funds for
Institutions Series, Merrill Lynch Institutional Intermediate Fund, and Merrill
Lynch Institutional Tax-Exempt Fund is One Financial Center, 15th Floor,
Boston, Massachusetts 02111-2665. The address of the Investment Adviser is
also Box 9011, Princeton, New Jersey 08543-9011. The address of Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Merrill Lynch & Co.,
Inc. is World Financial Center, North Tower, 250 Vesey Street, New York, New
York, 10281.
Set forth below is a list of each officer and director of FAM indicating
each business, profession, vocation or employment of a substantial nature in
which each such person has been engaged since December 31, 1990 for his own
account or in the capacity of director, officer, partner or trustee. In
addition, Messrs. Zeikel, Glenn and Richard hold the same positions with
substantially all of the investment companies described in the preceding
paragraph. Messrs. Durnin, Giordano, Harvey, Hewitt and Monagle are directors or
officers of one or more of such companies. Mr. Zeikel is president
C-3
<PAGE>
and a director, and Mr. Richard is treasurer of FAM and MLAM as well as all or
substantially all of the investment companies advised by FAM or MLAM.
<TABLE>
<CAPTION>
POSITION WITH OTHER SUBSTANTIAL BUSINESS,
NAME INVESTMENT ADVISER PROFESSION, VOCATION OR EMPLOYMENT
- ---------------------- ----------------------------- ------------------------------------
<S> <C> <C>
Arthur Zeikel......... President and Director President and Director of MLAM;
Executive Vice President of
Merrill Lynch & Co. and Merrill
Lynch since 1990 and Director of
MLFD.
Terry K. Glenn........ Executive Vice President Executive Vice President of MLAM;
and Director President and Director of MLFD;
President of Princeton
Administrators, Inc. and Director
of Financial Data Services, Inc.
Robert W. Crook....... Senior Vice President Senior Vice President of MLFD since
1990; Vice President of MLFD from
1978 to 1990 and Vice President of
FAM from 1981 to 1990
Bernard J. Durnin..... Senior Vice President Senior Vice President of MLAM.
Vincent R. Giordano... Senior Vice President Senior Vice President of MLAM.
Elizabeth Griffin..... Senior Vice President Senior Vice President of MLAM since
1993; Vice President of MLAM prior
thereto.
Norman R. Harvey...... Senior Vice President Senior Vice President of MLAM.
N. John Hewitt........ Senior Vice President Senior Vice President of MLAM.
Philip L. Kirstein.... Senior Vice President, Senior Vice President, General
General Counsel, Director Counsel, Director and Secretary of
and Secretary MLAM.
Ronald M. Kloss....... Senior Vice President Senior Vice President and Controller
of MLAM.
Stephen M. M. Miller.. Senior Vice President Executive Vice President of
Princeton Administrators, Inc. since
1989; Vice President and Secretary
of Merrill Lynch from 1982 to
1989; Secretary of Merrill Lynch &
Co. from 1982 to 1989.
Joseph T. Monagle..... Senior Vice President Senior Vice President of MLAM since
1990; Vice President of MLAM from
1978 to 1990.
Gerald M. Richard..... Senior Vice President and Senior Vice President and Treasurer
Treasurer of MLAM since 1984 and Vice
President and Treasurer of MLFD.
Ronald L. Welburn..... Senior Vice President Senior Vice President of MLAM.
Anthony Wiseman....... Senior Vice President Senior Vice President of MLAM since
1991; Vice President from 1989 to
1991.
</TABLE>
C-4
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
Inapplicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained at the offices of Registrant and The Bank of New York.
ITEM 31. MANAGEMENT SERVICES
Other than as set forth under "Investment Advisory Agreement" in the
Statement of Additional Information constituting Part B of the Registration
Statement, Registrant is not a party to any management-related service contract.
ITEM 32. UNDERTAKINGS
The Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request, and without charge.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Township of Plainsboro, and State of New
Jersey, on the 25th day of April, 1995.
THE CORPORATE FUND ACCUMULATION
PROGRAM, INC.
(Registrant)
By /s/ ARTHUR ZEIKEL
...................................
(Arthur Zeikel)
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registrant's Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------------------------- --------------------------------- ---------------
<S> <C> <C>
/s/ ARTHUR ZEIKEL President and Director (Principal April 25, 1995
.................................................. Executive Officer)
(Arthur Zeikel)
/s/ GERALD M. RICHARD Treasurer (Principal Financial April 25, 1995
.................................................. and Accounting Officer)
(Gerald M. Richard)
* Director
..................................................
(Ronald W. Forbes)
* Director
..................................................
(Cynthia A. Montgomery)
* Director
..................................................
(Charles C. Reilly)
* Director
..................................................
(Kevin A. Ryan)
* Director
..................................................
(Richard R. West)
*By /s/ GERALD M. RICHARD
.............................................. April 25, 1995
(Gerald M. Richard)
Attorney-in-Fact
</TABLE>
C-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS PAGE
- --------- -----
<C> <S> <C>
2 --By-Laws....................................................................
11 --Consent of Deloitte & Touche LLP...........................................
27 --Financial Data Schedule....................................................
</TABLE>
BY-LAWS
OF
THE CORPORATE FUND ACCUMULATION PROGRAM, INC.
ARTICLE I
Offices
-------
Section 1. Principal Office. The principal office of the
----------------
Corporation shall be in the City of Baltimore, State of Maryland.
Section 2. Principal Executive Office. The principal executive
--------------------------
office of the Corporation shall be at 800 Scudders Mill Road, Plainsboro,
New Jersey 08536.
Section 3. 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
------------------------
Section 1. Annual Meeting. 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. In the event that the Corporation shall be
required to hold an annual meeting of stockholders to elect directors by
the Investment Company Act of 1940, as amended, such meeting shall be held
no later than 120 days after the occurrence of the event requiring the
meeting. Any stockholders' meeting held in accordance with
<PAGE>
this Section shall for all purposes constitute the annual meeting of
stockholders for the year in which the meeting is held.
Section 2. Special Meetings. Special meetings of the
----------------
stockholders, unless otherwise provided by law, may be called for any
purpose or purposes by a majority of the Board of Directors, the President,
or on the written request of the holders of at least 10% of the outstanding
shares of capital stock of the Corporation entitled to vote at such meeting
if they comply with Section 2-502(b) or (c) of the Maryland General
Corporation Law.
Section 3. Place of Meetings. Meetings of the stockholders
-----------------
shall be held at such place within the United States as the Board of
Directors may from time to time determine.
Section 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 special
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 address as it appears on the records of the Corporation, with postage
thereon prepaid.
Notice of any meeting of stockholders shall be deemed waived by
any stockholder who shall attend such meeting in person or by proxy, or who
shall, either before or after the meeting, submit a signed waiver of notice
which is filed with the records
2
<PAGE>
of the meeting. When a meeting is adjourned to another time and place,
unless the Board of Directors, after the adjournment, shall fix a new
record date for an adjourned meeting, or the adjournment is for more than
one hundred and twenty days after the original record date, notice of such
adjourned meeting need not be given if the time and place to which the
meeting shall be adjourned were announced at the meeting at which the
adjournment is taken.
Section 5. Quorum. At all meetings of the stockholders, the
------
holders of shares of stock of the Corporation entitled to cast a majority
of the votes entitled to be cast, present in person or by proxy, shall
constitute a quorum for the transaction of any business, except with
respect to any matter which requires approval by a separate vote of one or
more classes of stock, in which case the presence in person or by proxy of
the holders of shares entitled to cast a majority of the votes entitled to
be cast by each class entitled to vote as a separate class shall constitute
a quorum. In the absence of a quorum no business may be transacted, except
that the holders of a majority of the shares of stock present in person or
by proxy and entitled to vote may adjourn the meeting from time to time,
without notice other than announcement thereat except as otherwise required
by these By-Laws, until the holders of the requisite amount of shares of
stock shall be so present. At any such adjourned meeting at which a quorum
may be present any business may be transacted which might have been
transacted at the meeting as originally called. The absence from any
meeting, in person or by
3
<PAGE>
proxy, of holders of the number of shares of stock of the Corporation in
excess of a majority thereof which may be required by the laws of the State
of Maryland, the Investment Company Act of 1940, as amended, or other
applicable statute, the Articles of Incorporation, or these By-Laws, for
action upon any given matter shall not prevent action at such meeting upon
any other matter or matters which may properly come before the meeting, if
there shall be present thereat, in person or by proxy, holders of the
number of shares of stock of the Corporation required for action in respect
of such other matter or matters.
Section 6. Organization. At each meeting of the stockholders,
------------
the Chairman of the Board (if one has been designated by the Board), or in
his absence or inability to act, the President, or in the absence or
inability to act of the Chairman of the Board and the President, a Vice
President, shall act as chairman of the meeting. The Secretary, or in his
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.
Section 7. Order of Business. The order of business at all
-----------------
meetings of the stockholders shall be as determined by the chairman of the
meeting.
Section 8. Voting. Except as otherwise provided by statute or
------
the Articles of Incorporation, each holder of record of shares of stock of
the Corporation having voting power shall be entitled at each meeting of
the stockholders to one vote for every share of such stock standing in his
name on the record of
4
<PAGE>
stockholders of the Corporation as of the record date determined pursuant
to Section 9 of this Article or if such record date shall not have been so
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 by a proxy signed by
such stockholder or his 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 an irrevocable proxy is permitted by law.
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
(other than the election of directors, which shall be by plurality vote)
shall be authorized by a majority of the total votes cast at a meeting of
stockholders by the holders of shares present in person or represented by
proxy and entitled to vote on such action.
If a vote shall be taken on any question other than the election
of directors, which shall be by written ballot, then unless required by
statute or these By-Laws, or determined by the chairman of the meeting to
be advisable, any such vote need not be by ballot. On a vote by ballot,
each ballot shall be signed by the stockholder voting, or by his proxy, if
there be such proxy, and shall state the number of shares voted.
5
<PAGE>
Section 9. Fixing of Record Date. The Board of Directors may
---------------------
set a record date for the purpose of determining stockholders entitled to
vote at any meeting of the stockholders. The record date, which may not be
prior to the close of business on the day the record date is fixed, shall
be not more than ninety nor less than ten days before the date of the
meeting of the stockholders. All persons who were holders of record of
shares at such time, and not others, shall be entitled to vote at such
meeting and any adjournment thereof.
Section 10. Inspectors. The Board may, in advance of any
----------
meeting of stockholders, appoint one or more inspectors to act at such
meeting or any adjournment thereof. If the inspectors shall not be so
appointed or if any of them shall fail to appear or act, the chairman of
the meeting may, and on the request of any stockholder entitled to vote
thereat shall, appoint inspectors. Each inspector, before entering upon
the discharge of his duties, may be required to take and sign an oath to
execute faithfully the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors may
be empowered to determine the number of shares outstanding and the voting
powers of each, the number of shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate
all votes, ballots or consents, determine the result, and do such acts as
are proper to conduct the election or vote
6
<PAGE>
with fairness to all stockholders. On request of the chairman of the
meeting or any stockholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, request or matter determined by
them and shall execute a certificate of any fact found by them. No
director or candidate for the office of director shall act as inspector of
an election of directors. Inspectors need not be stockholders.
Section 11. 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
stockholder 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
------------------
Section 1. General Powers. Except as otherwise provided in the
--------------
Articles of Incorporation, the business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. All powers
of the Corporation may be exercised by or under authority of the Board of
Directors except
7
<PAGE>
as conferred on or reserved to the stockholders by law or by the Articles
of Incorporation or these By-Laws.
Section 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 entire Board of Directors; provided, however, that the
number of directors shall in no event be less than three nor more than
fifteen. Any vacancy created by an increase in Directors may be filled in
accordance with Section 6 of this Article III. No reduction in the number
of directors shall have the effect of removing any director from office
prior to the expiration of his term unless such director is specifically
removed pursuant to Section 5 of this Article III at the time of such
decrease. Directors need not be stockholders.
Section 3. Election and Term of Directors. Directors shall be
------------------------------
elected annually by written ballot at a meeting of stockholders held for
that purpose; provided, however, that if no meeting of the stockholders of
the Corporation is required to be held in a particular year pursuant to
Section 1 of Article II of these By-Laws, directors shall be elected at the
next meeting held. The term of office of each director shall be from the
time of his election and qualification until the election of directors next
succeeding his election and until his successor shall have been elected and
shall have qualified, or until his death, or until he shall have resigned,
or until December 31 of the year in which he shall have reached seventy-two
years of age, or until he shall have been removed as hereinafter provided
in these By-Laws,
8
<PAGE>
or as otherwise provided by statute or the Articles of Incorporation.
Section 4. Resignation. A director of the Corporation may
-----------
resign at any time by giving written notice of his resignation to the Board
or the Chairman of the Board or 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; and, unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
Section 5. Removal of Directors. Any director of the
--------------------
Corporation may be removed by the stockholders by a vote of a majority of
the votes entitled to be cast for the election of directors.
Section 6. Vacancies. Any vacancies in the Board, whether
---------
arising from death, resignation, removal, an increase in the number of
directors or any other cause, may be filled by a vote of the majority of
the Board of Directors then in office even though such majority is less
than a quorum, provided that no vacancies shall be filled by action of the
remaining directors, if after the filling of said vacancy or vacancies,
less than two-thirds of the directors then holding office shall have been
elected by the stockholders of the Corporation. In the event that at any
time there is a vacancy in any office of a director which vacancy may not
be filled by the remaining directors, a special meeting of the stockholders
-----------------
shall be held as promptly as
9
<PAGE>
possible and in any event within sixty days, for the purpose of filling
said vacancy or vacancies.
Section 7. Place of Meetings. Meetings of the Board may be
-----------------
held at such place as the Board may from time to time determine or as shall
be specified in the notice of such meeting.
Section 8. Regular Meetings. Regular meetings of the Board may
----------------
be held without notice at such time and place as may be determined by the
Board of Directors.
Section 9. Special Meetings. Special meetings of the Board may
----------------
be called by two or more directors of the Corporation or by the Chairman of
the Board or the President.
Section 10. Telephone Meetings. Members of the Board of
------------------
Directors or of any committee thereof may participate in a meeting by means
of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Subject to the provisions of the Investment Company Act of 1940, as
amended, participation in a meeting by these means constitutes presence in
person at the meeting.
Section 11. Notice of Special Meetings. Notice of each special
--------------------------
meeting of the Board shall be given by the Secretary as hereinafter
provided, in which notice shall be stated the time and place of the
meeting. Notice of each such meeting shall be delivered to each director,
either personally or by telephone or any standard form of
telecommunication, at least twenty-four hours before the time at which such
meeting is to be held, or by first-class mail, postage prepaid, addressed
to him at his
10
<PAGE>
residence or usual place of business, at least three days before the day on
which such meeting is to be held.
Section 12. Waiver of Notice of Meetings. Notice of any special
----------------------------
meeting need not be given to any director who shall, either before or after
the meeting, sign a written waiver of notice which is filed with the
records of the meeting or who shall attend such meeting. Except as
otherwise specifically required by these By-Laws, a notice or waiver or
notice of any meeting need not state the purposes of such meeting.
Section 13. Quorum and Voting. One-third, but not less than
-----------------
two, of the members of the entire Board shall be present in person at any
meeting of the Board in order to constitute a quorum for the transaction of
business at such meeting, and except as otherwise expressly required by
statute, the Articles of Incorporation, these By-Laws, the Investment
Company Act of 1940, as amended, or other applicable statute, the act of a
majority of the directors present at any meeting at which a quorum is
present shall be the act of the Board. In the absence of a quorum at any
meeting of the Board, a majority of the directors present thereat may
adjourn such meeting to another time and place until a quorum shall be
present thereat. Notice of the time and place of any such adjourned
meeting shall be given to the directors who were not present at the time of
the adjournment and, unless such time and place were announced at the
meeting at which the adjournment was taken, to the other directors. At any
adjourned meeting at which a quorum is
11
<PAGE>
present, any business may be transacted which might have been transacted at
the meeting as originally called.
Section 14. Organization. The Board may, by resolution adopted
------------
by a majority of the entire Board, designate a Chairman of the Board, who
shall preside at each meeting of the Board. In the absence or inability of
the Chairman of the Board to preside at a meeting, the President or, in his
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 absence or inability to act, any person
appointed by the Chairman) shall act as secretary of the meeting and keep
the minutes thereof.
Section 15. Written Consent of Directors in Lieu of a Meeting.
-------------------------------------------------
Subject to the provisions of the Investment Company Act of 1940, as
amended, 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 or committee, as the case may be,
consent thereto in writing, and the writings or writing are filed with the
minutes of the proceedings of the Board or committee.
Section 16. 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.
Section 17. Investment Policies. It shall be the duty of the
-------------------
Board of Directors to direct that the purchase, sale, retention and
disposal of portfolio securities and the other
12
<PAGE>
investment practices of the Corporation are at all times consistent with
the investment policies and restrictions with respect to securities
investments and otherwise of the Corporation, as recited in the current
Prospectus and Statement of Additional Information of the Corporation, as
filed from time to time with the Securities and Exchange Commission and as
required by the Investment Company Act of 1940, as amended. The Board
however, may delegate the duty of management of the assets and the
administration of its day to day operations to an individual or corporate
management company and/or investment adviser pursuant to a written contract
or contracts which have obtained the requisite approvals, including the
requisite approvals of renewals thereof, of the Board of Directors and/or
the stockholders of the Corporation in accordance with the provisions of
the Investment Company Act of 1940, as amended.
ARTICLE IV
Committees
----------
Section 1. Executive Committee. The Board may, by resolution
-------------------
adopted by a majority of the entire Board, designate an Executive Committee
consisting of two or more of the directors of the Corporation, which
committee shall have and may exercise all the powers and authority of the
Board with respect to all matters other than:
(a) the submission to stockholders of any action requiring
authorization of stockholders pursuant to statute or the Articles of
Incorporation;
13
<PAGE>
(b) the filling of vacancies on the Board of Directors;
(c) the fixing of compensation of the directors for serving on
the Board or on any committee of the Board, including the Executive
Committee;
(d) the approval or termination of any contract with an
investment adviser or principal underwriter, as such terms are defined in
the Investment Company Act of 1940, as amended, or the taking of any other
action required to be taken by the Board of Directors by the Investment
Company Act of 1940, as amended;
(e) the amendment or repeal of these By-Laws or the adoption of
new By-Laws;
(f) the amendment or repeal of any resolution of the Board which
by its terms may be amended or repealed only by the Board;
(g) the declaration of dividends and the issuance of capital
stock of the Corporation; and
(h) the approval of any merger or share exchange which does not
require stockholder approval.
The Executive Committee shall keep written minutes of its
proceedings and shall report such minutes to the Board. All such
proceedings shall be subject to revision or alteration by the Board;
provided, however, that third parties shall not be prejudiced by such
revision or alteration.
Section 2. Other Committees of the Board. The Board of
-----------------------------
Directors may from time to time, by resolution adopted by a majority of the
whole Board, designate one or more other
14
<PAGE>
committees of the Board, each such committee to consist of two or more
directors and to have such powers and duties as the Board of Directors may,
by resolution, prescribe.
Section 3. General. One-third, but not less than two, of the
-------
members of any committee shall be present in person at any meeting of such
committee in order to constitute a quorum for the transaction of business
at such meeting, and the act of a majority present shall be the act of such
committee. The Board may designate a chairman of any committee and such
chairman or any two members of any committee may fix the time and place of
its meetings unless the Board shall otherwise provide. In the absence or
disqualification of any member of any committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or
not he or they constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member. The Board shall have the power at any time
to change the membership of any committee, to fill all vacancies, to
designate alternate members to replace any absent or disqualified member,
or to dissolve any such committee. Nothing herein shall be deemed to
prevent the Board from appointing one or more committees consisting in
whole or in part of persons who are not directors of the Corporation;
provided, however, that no such committee shall have or may exercise any
authority or power of the Board in the management of the business or
affairs of the Corporation.
15
<PAGE>
ARTICLE V
Officers, Agents and Employees
------------------------------
Section 1. Number and Qualifications. The officers of the
-------------------------
Corporation shall be a President, a Secretary and a Treasurer, each of whom
shall be elected by the Board of Directors. The Board of Directors may
elect or appoint one or more Vice Presidents and may also appoint such
other officers, agents and employees as it may deem necessary or proper.
Any two or more offices may be held by the same person, except the offices
of President and Vice President, but no officer shall execute, acknowledge
or verify any instrument in more than one capacity. Such officers shall be
elected by the Board of Directors each year at a meeting of the Board of
Directors, each to hold office for the ensuing year and until his successor
shall have been duly elected and shall have qualified, or until his death,
or until he shall have resigned, or have been removed, as hereinafter
provided in these By-Laws. The Board may from time to time elect, or
delegate to the President the power to appoint, such officers (including
one or more Assistant Vice Presidents, one or more Assistant Treasurers and
one or more Assistant Secretaries) and such agents, as may be necessary or
desirable for the business of the Corporation. Such officers and agents
shall have such duties and shall hold their offices for such terms as may
be prescribed by the Board or by the appointing authority.
Section 2. Resignations. Any officer of the Corporation may
------------
resign at any time by giving written notice of
16
<PAGE>
resignation to the Board, the Chairman of the Board, 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; and, unless otherwise
specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 3. Removal of Officer, Agent or Employee. Any officer,
-------------------------------------
agent or employee of the Corporation may be removed by the Board of
Directors with or without cause at any time, and the Board may delegate
such power of removal as to agents and employees not elected or appointed
by the Board of Directors. Such removal shall be without prejudice to such
person's contract rights, if any, but the appointment of any person as an
officer, agent or employee of the Corporation shall not of itself create
contract rights.
Section 4. Vacancies. A vacancy in any office, whether arising
---------
from death, resignation, removal or any other cause, may be filled for the
unexpired portion of the term of the office which shall be vacant, in the
manner prescribed in these By-Laws for the regular election or appointment
to such office.
Section 5. Compensation. The compensation of the officers of
------------
the Corporation shall be fixed by the Board of Directors, but this power
may be delegated to any officer in respect of other officers under his
control.
Section 6. Bonds or Other Security. If required by the Board,
-----------------------
any officer, agent or employee of the Corporation shall give a bond or
other security for the faithful performance
17
<PAGE>
of his duties, in such amount and with such surety or sureties as the Board
may require.
Section 7. President. The President shall be the chief
---------
executive officer of the Corporation. In the absence of the Chairman of
the Board (or if there be none), he shall preside at all meetings of the
stockholders and of the Board Directors. He shall have, subject to the
control of the Board of Directors, general charge of the business and
affairs of the Corporation. He may employ and discharge employees and
agents of the Corporation, except such as shall be appointed by the Board,
and he may delegate these powers.
Section 8. Vice President. Each Vice President shall have such
--------------
powers and perform such duties as the Board of Directors or the President
may from time to time prescribe.
Section 9. Treasurer. The Treasurer shall:
---------
(a) have charge and custody of, and be responsible for, all the
funds and securities of the Corporation, except those which the Corporation
has placed in the custody of a bank or trust company or member of a
national securities exchange (as that term is defined in the Securities
Exchange Act of 1934, as amended) pursuant to a written agreement
designating such bank or trust company or member of a national securities
exchange as custodian of the property of the Corporation;
(b) keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation;
(c) cause all moneys and other valuables to be deposited to the
credit of the Corporation;
18
<PAGE>
(d) receive, and give receipts for, moneys due and payable, to
the Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investment of its funds as ordered or authorized by the Board, taking
proper vouchers therefor; and
(f) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him
by the Board or the President.
Section 10. Secretary. The Secretary shall:
---------
(a) keep or cause to be kept in one or more books provided for
the purpose, the minutes of all meetings of the Board, the committees of
the Board and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation
and affix and attest the seal to all stock certificates of the Corporation
(unless the seal of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and affix and attest the seal to all
other documents to be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and
other documents and records required by law to be kept and filed are
properly kept and filed; and
(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him
by the Board or the President.
19
<PAGE>
Section 11. Delegation of Duties. In case of the absence of any
--------------------
officer of the Corporation, or for any other reason that the Board may deem
sufficient, the Board may confer for the time being the powers or duties,
or any of them, of such officer upon any other officer or upon any
director.
ARTICLE VI
Indemnification
---------------
Each officer and director of the Corporation shall be indemnified
by the Corporation to the full extent permitted under the Maryland General
Corporation Law, except that such indemnity shall not protect any such
person against any liability to the Corporation or any stockholder thereof
to which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office. Absent a court determination
that an officer or director seeking indemnification was not liable on the
merits or guilty of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office, the
decision by the Corporation to indemnify such person must be based upon the
reasonable determination of independent legal counsel in a written opinion
or the vote of a majority of a quorum of the directors who are neither
"interested persons," as defined in Section 2(a)(19) of the Investment
Company Act of 1940, as amended, nor parties to the proceeding ("non-party
independent directors"), after review of the facts, that such officer or
director is not guilty of
20
<PAGE>
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
Each officer and director of the Corporation claiming
indemnification within the scope of this Article VI shall be entitled to
advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with proceedings to which he is a party in
the manner and to the full extent permitted under the Maryland General
Corporation Law without a preliminary determination as to his or her
ultimate entitlement to indemnification (except as set forth below);
provided, however, that the person seeking indemnification shall provide to
the Corporation a written affirmation of his good faith belief that the
standard of conduct necessary for indemnification by the Corporation has
been met and a written undertaking to repay any such advance, if it should
ultimately be determined that the standard of conduct has not been met, and
provided further that at least one of the following additional conditions
is met: (a) the person seeking indemnification shall provide a security in
form and amount acceptable to the Corporation for his undertaking; (b) the
Corporation is insured against losses arising by reason of the advance;
(c) a majority of a quorum of non-party independent directors, or
independent legal counsel in a written opinion, shall determine, based on a
review of facts readily available to the Corporation at the time the
advance is proposed to be made, that there is reason to believe that the
person seeking indemnification will ultimately be found to be entitled to
indemnification.
21
<PAGE>
The Corporation may purchase insurance on behalf of an officer or
director protecting such person to the full extent permitted under the
General Laws of the State of Maryland, from liability arising from his
activities as officer or director of the Corporation. The Corporation,
however, may not purchase insurance on behalf of any officer or director of
the Corporation that protects or purports to protect such person from
liability to the Corporation or to its stockholders to which such officer
or director would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved
in the conduct of his office.
The Corporation may indemnify, make advances or purchase
insurance to the extent provided in this Article VI on behalf of an
employee or agent who is not an officer or director of the Corporation.
ARTICLE VII
Capital Stock
-------------
Section 1. Stock Certificates. Each holder of stock of the
------------------
Corporation shall be entitled upon request to have a certificate or
certificates, in such form as shall be approved by the Board, representing
the number of shares of stock of the Corporation owned by him, provided,
however, that certificates for fractional shares will not be delivered in
any case. The certificates representing shares of stock shall be signed by
or in the name of the Corporation by the Chairman, President or a Vice
President and by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer and sealed with the seal
22
<PAGE>
of the Corporation. Any or all of the signatures or the seal on the
certificate may be 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.
Section 2. Books of Account and Record of Stockholders. There
-------------------------------------------
shall be kept at the principal executive office of the Corporation correct
and complete books and records of account of all the business and
transactions of the Corporation. There shall be made available upon
request of any stockholder, in accordance with Maryland law, a record
containing the number of shares of stock issued during a specified period
not to exceed twelve months and the consideration received by the
Corporation for each such share.
Section 3. Transfers of Shares. Transfers of shares of stock
-------------------
of the Corporation shall be made on the stock records of the Corporation
only by the registered holder thereof, or by his 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 certificates, if issued, for such shares properly endorsed
or accompanied by a duly executed stock transfer power 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
23
<PAGE>
whose name any share or shares 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 on the
part of any other person.
Section 4. Regulations. The Board 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 stock of the Corporation. It may appoint, or authorize any
officer or officers to appoint, one or more transfer agents or one or more
transfer clerks and one or more registrars and may require all certificates
for shares of stock to bear the signature or signatures of any of them.
Section 5. Lost, Destroyed or Mutilated Certificates. The
-----------------------------------------
holder of any certificates representing shares of 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 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 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
24
<PAGE>
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.
Section 6. Fixing of a Record Date for Dividends and
-----------------------------------------
Distributions. The Board may fix, in advance, a date not more than ninety
- -------------
days preceding the date fixed for the payment of any dividend or the making
of any distribution or the allotment of rights to subscribe for securities
of the Corporation, or for the delivery of evidences of rights or evidences
of interests arising out of any change, conversion or exchange of common
stock or other securities, as the record date for the determination of the
stockholders entitled to receive any such dividend, distribution,
allotment, rights or interests, and in such case only the stockholders of
record at the time so fixed shall be entitled to receive such dividend,
distribution, allotment, rights or interests.
Section 7. Information to Stockholders and Others. Any
--------------------------------------
stockholder of the Corporation or his agent may inspect and copy during
usual business hours the Corporation's By-Laws, minutes of the proceedings
of its stockholders, annual statements of its affairs, and voting trust
agreements on file at its principal office.
25
<PAGE>
ARTICLE VIII
Seal
----
The seal of the Corporation shall be circular in form and shall
bear, in addition to any other emblem or device approved by a the Board of
Directors, the name of the Corporation, the year of its incorporation and
the words "Corporate Seal" and "Maryland." Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.
ARTICLE IX
Fiscal Year
-----------
Unless otherwise determined by the Board, the fiscal year of the
Corporation shall end on the 31st day of December.
ARTICLE X
Additional Provisions
---------------------
SECTION 1. The books of account of the Corporation shall be
examined by an independent firm of public accountants at the close of each
fiscal year of the Corporation and at such other times as may be directed
by the Board. The President shall prepare annually a full and correct
statement of the affairs of the Corporation, to include a balance sheet and
a financial statement of operations for the preceding fiscal year. The
statement of affairs shall be submitted at the annual meeting of the
stockholders, if any, and, within 20 days after the meeting (or in the
absence of an annual meeting within 20 days after the end of the month of
June following the end of the fiscal year),
26
<PAGE>
placed on file at the Corporation's principal office. The statement of
affairs shall be mailed to each stockholder of the Corporation of record on
such date as may be determined by the Board, at his address as the same
appears on the books of the Corporation.
Section 2. In any case where an officer or director of the
Corporation or of any investment adviser of the Corporation, or a member of
any committee of the Corporation, is also an officer or director of another
corporation and the purchase or sale of the securities issued by such other
corporation is under consideration, the officer, director or committee
member concerned will abstain from participating in any decision made on
behalf of the Corporation to purchase or sell any securities issued by such
other corporation.
ARTICLE XI
Amendments
----------
The By-Laws of the Corporation may be altered, amended, added to,
rescinded or repealed at any meeting of the stockholders, or by vote of a
majority of the directors then in office at any meeting of the Board of
Directors, provided notice of the substance of the proposed change is
contained in the notice of the meeting or any waiver thereof; except that
after the initial issue of any shares of capital stock of the Corporation,
the provisions of Article X hereof and this Article XI, may be altered,
amended or repealed only upon the affirmative vote of the holders of a
majority of the capital stock of the Corporation at the time outstanding
and entitled to vote.
27
<PAGE>
ARTICLE XII
Depositories and Custodians
---------------------------
Section 1. Depositories. The funds of the Corporation shall be
------------
deposited with such banks or other depositories as the Board of Directors
of the Corporation may from time to time determine.
Section 2. Custodians. All securities and other investments
----------
shall be deposited in the safekeeping of such banks or other companies as
the Board of Directors of the Corporation may from time to time determine.
Every arrangement entered into with any bank or other company for the
safekeeping of the securities and investments of the Corporation shall
contain provisions complying with the Investment Company Act of 1940, as
amended, and the general rules and regulations thereunder.
ARTICLE XIII
Execution of Instruments
------------------------
Section 1. Checks, Notes, Drafts, etc. Checks, notes, drafts,
---------------------------
acceptances, bills of exchange and other orders or 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.
Section 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
28
<PAGE>
Board 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 or a Vice
President or the Treasurer or pursuant to any procedure approved by the
Board of Directors, subject to applicable law.
ARTICLE XIV
Independent Public Accountants
------------------------------
The firm of independent public accountants which shall sign or
certify the financial statements of the Corporation which are filed with
the Securities and Exchange Commission shall be selected annually by the
Board of Directors and, if required by the provisions of the Investment
Company Act of 1940, as amended, ratified by the stockholders.
29
EXHIBIT 11
<PAGE>
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
THE CORPORATE FUND ACCUMULATION PROGRAM, INC.:
We consent to the use in Post-Effective Amendment No. 21 to Registration
Statement No. 2-57060 of our report dated February 15, 1995 appearing in the
Statement of Additional Information, which is a part of such Registration
Statement, and to the references to us under the captions "Financial Highlights"
appearing in the Prospectus, which also is a part of such Registration Statement
and "General Information--Auditors and Financial Statements" appearing in the
Statement of Additional Information.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
April 24, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
EXHIBIT 27
</LEGEND>
<CIK> 0000024858
<NAME> THE CORPORATE FUND ACCUMULATION PROGRAM, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 84737540
<INVESTMENTS-AT-VALUE> 81654050
<RECEIVABLES> 1555116
<ASSETS-OTHER> 22406
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 83231572
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 344299
<TOTAL-LIABILITIES> 344299
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 90190265
<SHARES-COMMON-STOCK> 4330853
<SHARES-COMMON-PRIOR> 5352963
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4219502)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3083490)
<NET-ASSETS> 82887273
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6560280
<OTHER-INCOME> 0
<EXPENSES-NET> 1050213
<NET-INVESTMENT-INCOME> 5510067
<REALIZED-GAINS-CURRENT> (4218614)
<APPREC-INCREASE-CURRENT> (7424128)
<NET-CHANGE-FROM-OPS> (6132675)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5527763
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 941678
<NUMBER-OF-SHARES-REDEEMED> 2240697
<SHARES-REINVESTED> 276909
<NET-CHANGE-IN-ASSETS> 32479842
<ACCUMULATED-NII-PRIOR> 17696
<ACCUMULATED-GAINS-PRIOR> (887)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 475257
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1050213
<AVERAGE-NET-ASSETS> 95312464
<PER-SHARE-NAV-BEGIN> 21.55
<PER-SHARE-NII> 1.18
<PER-SHARE-GAIN-APPREC> (2.41)
<PER-SHARE-DIVIDEND> 1.18
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.14
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
