File No. 811-620
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 9
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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
(Exact Name of Registrant as Specified in Charter)
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 573-9354
JAMES H. BLUCK, ESQ.
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
(Name and Address of Agent for Service)
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PART A. INFORMATION REQUIRED IN A PROSPECTUS
ITEM 1. COVER PAGE
Not applicable.
ITEM 2. SYNOPSIS
Not applicable.
ITEM 3. CONDENSED FINANCIAL INFORMATION
Not applicable.
ITEM 4. GENERAL DESCRIPTION OF THE REGISTRANT
(a) ORGANIZATION AND OPERATION. Institutional Investors Capital
Appreciation Fund, Inc. (the "Fund") was incorporated in New York as a
diversified, open-end management investment company on October 29, 1952. The
Fund provides Eligible Institutions, as defined below, with a vehicle for
pooling their investments in certain equity securities which are believed to
have potential for capital appreciation. Shares of the Fund may be purchased and
owned only by, and may be transferred only to, Eligible Institutions that are
resident in the State of New York. An Eligible Institution will be deemed to be
a resident of the State of New York only if it has its principal office within
the State of New York. An "Eligible Institution" means: (i) a savings bank or
savings and loan association which is organized under the laws of the State of
New York, (ii) a federal savings association organized under the laws of the
United States, (iii) a holding company owning a majority of the outstanding
shares of such a savings bank, savings and loan association or savings
association, (iv) a life insurance department of any such savings bank, savings
and loan association or savings association, (v) a wholly- or majority-owned
subsidiary of any such savings bank, savings and loan association or savings
association, including without limitation a life insurance subsidiary, or (vi) a
pension trust, fund, plan or agreement participated in by one or more such
savings banks, savings and loan associations, savings associations or holding
companies to provide retirement benefits, death benefits or disability benefits
for any or all of its or their active officers and employees.
Federal law may further restrict the ability of certain Eligible
Institutions to invest in the Fund. Each Eligible Institution should consult its
own advisers with respect to limitations, if any, imposed on its investments in
the Fund by applicable banking laws or regulations.
INVESTMENT OBJECTIVES. The primary investment objective of the Fund is
to achieve capital appreciation for its shareholders. The objective of income is
secondary. The Fund seeks to achieve these objectives by investing primarily in
equity securities of companies whose growth, earnings and dividend prospects are
promising and whose securities are reasonably priced, in the opinion of the
Fund's Investment Adviser. There is no assurance that the Fund will achieve
these objectives.
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Changes in these investment objectives may be made by the Board of
Directors of the Fund without shareholder approval whenever in its judgment
economic or market conditions warrant.
FUNDAMENTAL POLICIES. The following restrictions are fundamental
policies and cannot be changed without approval of a majority of the Fund's
outstanding voting securities.
The Fund may not:
(i) purchase securities of an issuer if such purchase would cause
more than 25% of the value of the Fund's total assets (taken at current value)
to be invested in the securities of any one issuer or group of issuers in the
same industry;
(ii) purchase securities of an issuer if such purchase would cause
more than 5% of any class of securities of such issuer to be held by the Fund;
(iii) purchase securities of an issuer (other than obligations of the
United States and its instrumentalities) if such purchase would cause more than
5% of the Fund's total assets, taken at market value, to be invested in the
securities of such issuer;
(iv) invest in any issuer for the purpose of exercising control of
management;
(v) underwrite securities of other issuers;
(vi) purchase or sell real estate or real estate mortgage loans;
(vii) deal in commodities or commodities contracts;
(viii) loan money, except that, subject to the restrictions, if any,
imposed by the New York Banking Law, the Fund may (A) purchase debt obligations
and (B) make sales of federal funds (loans maturing in fewer than seven days to
depository institutions and generally made through the Federal Reserve System);
(ix) purchase on margin or sell short any security, except that the
Fund may obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities;
(x) borrow money or mortgage or pledge any of its assets, except
that the Fund may borrow money from banks for temporary or emergency (but not
leveraging) purposes in an amount up to 5% of the Fund's total assets when the
borrowing is made, and may pledge up to 15% of its assets to secure such
borrowings;
(xi) purchase or retain securities of an issuer if any officer,
director or employee of, or counsel for, the Fund is an officer, director or
employee of such issuer; or
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(xii) write, purchase or sell puts, calls or combinations thereof,
except that the Fund may (A) write covered call options with respect to any or
all of its portfolio securities and (B) enter into closing purchase transactions
with respect to such options.
In addition to the foregoing, the Fund will not make any investment or
engage in any transaction which would cause the Fund's shares not to be eligible
for investment by savings banks under the laws of the State of New York. That
law effectively limits the types of investments which the Fund may make by
generally limiting savings banks to investing in investment companies which
invest in securities in which a savings bank may itself invest. As currently in
effect, the New York Banking Law and the Banking Department's regulations
thereunder and interpretations thereof operate to limit investment by the Fund
to "qualified equity securities" and "qualified debt securities" in which a
prudent person of discretion and intelligence in such matters who is seeking a
reasonable income and preservation of capital would invest. A "qualified equity
security" means an equity security which is, at the time of acquisition, listed
on the New York Stock Exchange or the American Stock Exchange or for which
representative high and low bid prices are regularly quoted on the National
Association of Securities Dealers Automated Quotation System. A "qualified debt
security" means a debt security which is not in default as to either principal
or interest when acquired. The Fund's investments under the "prudent man"
regulations of the Banking Department are subject to the further restriction
that the Fund may not invest in or otherwise acquire any equity security (or
security convertible into an equity security) issued by any bank, trust company,
savings bank, savings and loan association, bank holding company, banking
organization, life insurance company, or corporation engaged principally in the
issue, flotation, underwriting, public sale or distribution of securities except
to the extent otherwise permitted by the Banking Department.
Restrictions and policies of the Fund which are based on the laws of
the State of New York applicable to savings banks and savings and loan
associations may be changed by any amendments to or changes in such laws or the
regulations promulgated thereunder or official interpretations of such laws and
regulations, without action by the Fund's shareholders.
INVESTMENT POLICIES. In seeking to achieve its investment objectives,
it is expected that the Fund will invest at least 80% of its assets in common
stock, but it shall not be deemed inconsistent with this policy to invest part
of said assets in preferred stock and corporate debt securities convertible into
common stock. At most times, the Fund holds no more liquid reserves than it
believes necessary to provide for redemptions and does not invest in fixed
income securities to any substantial extent. However, the Fund may, subject to
restrictions, if any, imposed by the New York Banking Law, (i) hold reserves of
cash, (ii) invest temporarily in securities issued or guaranteed by the United
States government or its instrumentalities or agencies and commercial paper and
other obligations of U.S. domestic corporations maturing within 270 days, (iii)
write (sell) covered call options listed on organized securities exchanges, and
(iv) make sales of federal funds.
See Item 13(a) for additional information relating to writing of
covered call options. See Item 13(d) for the discussion relating to portfolio
turnover.
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OTHER INVESTMENT RESTRICTIONS. In addition to the restrictions
identified above as "Fundamental Policies", the Fund may not:
(i) invest in securities of any other investment company, except as
may be acquired as part of a merger, consolidation or other acquisition of
assets, and as may be consistent with applicable banking laws of the State of
New York;
(ii) purchase any security if, as a result of such transaction, more
than 10% in the aggregate of the Fund's total assets (at current value) would be
invested in (A) securities restricted as to disposition under federal securities
laws and (B) securities for which there are no readily available market
quotations; or
(iii) participate on a joint or joint and several basis in any trading
account in securities.
(b) Not applicable.
(c) RISK FACTORS. Investors should note that the value of the shares of
the Fund fluctuates in accordance with the value of the portfolio securities
held by the Fund. Accordingly, the value of an investment in the Fund will
fluctuate with changing market conditions so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Thus, one should
not invest in the Fund primarily for current income or short-term gain. Although
the Fund invests primarily in common stock, the Fund is not restricted in the
proportion of its assets which may be invested in non-equity securities, such as
investment grade corporate bonds, commercial paper and government securities.
When deemed beneficial in the opinion of the Fund's investment adviser for
defensive purposes the Fund may invest up to 100% of its asset value in
short-term investments.
ITEM 5. MANAGEMENT OF THE FUND
(a) The directors of the Fund, in addition to reviewing the actions of
the Fund's Investment Adviser and administrator, decide upon matters of general
policy at their regular meetings. The Fund's officers supervise the business
operations of the Fund.
(b) Since May 19, 1995, Shay Assets Management Co. (the "Investment
Adviser") has served as the Fund's investment adviser, PFPC Inc. ("PFPC") has
served as its administrator, transfer agent, dividend paying agent and
shareholder servicing agent and PNC Bank, N.A. ("PNC Bank") has served as its
custodian. In addition, Shay Financial Services Co., which is an affiliate of
the Investment Adviser, acts as the distributor of the Fund. See Item 7.
Investment decisions for the Fund are made by Shay Assets Management
Co., which was appointed as the Fund's investment adviser effective May 19,
1995. Subject to the general supervision of the Board of Directors of the Fund
and in conformity with the stated policies of the Fund, the Investment Adviser
manages the Fund's investment portfolio and is responsible for placing purchase
and sale orders for portfolio securities and other investments. Under the
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investment advisory agreement between the Fund and the Investment Adviser (the
"Investment Advisory Agreement"), the Investment Adviser receives a fee from the
Fund computed at the annual rate of 0.75% of the first $100,000,000 of the
Fund's average daily net assets and 0.50% of the Fund's average daily net assets
in excess of $100,000,000. The fee payable to the Investment Adviser is reduced
(but not below zero) to the extent the expenses of the Fund (exclusive of
professional fees, e.g., legal and audit fees, directors' fees and expenses and
distribution expenses, if any, payable under Rule 12b-1) exceed 1.10% of the
Fund's average daily net assets during any fiscal year during the term of the
Investment Advisory Agreement. This limitation did not result in any reduction
of the Investment Adviser's fee during 1996, and the total amount paid by the
Fund in 1996 in respect of investment advisory services was 0.75% of the Fund's
average daily net assets.
The Investment Adviser is a general partnership that consists of two
general partners, Shay Assets Management, Inc. and ACB Assets Management, Inc.,
each of which holds a fifty-percent interest in the Investment Adviser. Shay
Assets Management, Inc., which is the managing partner of the Investment
Adviser, is controlled by Rodger D. Shay, who is a Vice President of the Fund.
ACB Assets Management, Inc. is an indirect wholly-owned subsidiary of America's
Community Bankers ("ACB"), the trade association representing savings
institutions in the United States. The Investment Adviser, with its principal
office located at 111 East Wacker Drive, Chicago, Illinois 60601, is a
registered investment adviser under the Investment Advisers Act of 1940 and
serves as investment adviser to Asset Management Fund, Inc., a registered
investment company comprising five fixed-income portfolios with aggregate net
assets of approximately $1 billion at March 31, 1997. In addition, the
Investment Adviser has served since May 19, 1995 as investment adviser to M.S.B.
Fund, Inc., which had net assets of approximately $40 million at March 31, 1997.
(c) PORTFOLIO MANAGERS. The individuals with primary responsibility for
the day-to-day management of the Fund's portfolio are John J. McCabe and Mark F.
Trautman. Messrs. McCabe and Trautman have been primarily responsible for the
Fund's investments since August 1991, in the case of Mr. McCabe, and March 1993,
in the case of Mr. Trautman, initially as employees of the Fund's former
investment adviser, Nationar, and currently as Portfolio Managers of Shay Assets
Management Co.
Mr. McCabe is Senior Vice President of Shay Assets Management, Inc.,
the managing partner of the Investment Adviser. Mr. McCabe previously served as
Senior Vice President and Chief Investment Officer of Nationar, the former
investment adviser of the Fund, from August 1991 through May 1995, and in that
capacity had responsibility for the Fund's investments. Prior to joining
Nationar he served as Managing Director and Portfolio Manager at Sterling
Manhattan Corporation, an investment banking firm, for approximately three
years. Prior to that Mr. McCabe served in various positions at Bankers Trust
Company, including Director of Investment Research and Managing Director of the
Investment Management Group. Mr. McCabe is a director and past President of the
New York Society of Security Analysts, a past director of the Financial Analysts
Federation and a member and founding Governor of The Association for Investment
Management and Research.
Mr. Trautman is Vice President of Shay Assets Management, Inc. Prior to
May 20, 1995, Mr. Trautman served as Director of Mutual Funds Investment of
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Nationar, the Fund's former investment adviser, and in that capacity had
responsibility for the Fund's investments. He also has served as Portfolio
Manager of M.S.B. Fund, Inc. since March 1993. From January 1992 through March
1993 he served as Senior Equity Analyst for the two funds. From December 1988
through December 1991 Mr. Trautman was a Senior Associate with Sterling
Manhattan Corporation. From June 1987 through November 1988, Mr. Trautman held
the position of Treasury Analyst at Thomson McKinnon Securities, Inc., a
securities brokerage firm.
(d) PFPC, 103 Bellevue Parkway, Wilmington, Delaware 19809, serves as
the Fund's administrative agent. Pursuant to the terms of the Administration and
Accounting Services Agreement between the Fund and PFPC, which became effective
May 19, 1995, PFPC performs various administrative services for the Fund,
including (i) maintenance of books and records, (ii) preparation of various
filings, reports, statements and returns filed with governmental authorities or
distributed to shareholders of the Fund and (iii) computation of the Fund's net
asset value for purposes of sales and redemptions of shares.
PFPC also serves as the transfer agent, registrar and dividend paying
agent for the Fund and receives additional compensation in such capacities. PNC
Bank, Philadelphia, Pennsylvania, serves as custodian of the Fund's investments.
PFPC and PNC Bank are affiliates of PNC Bank Corp.
Subject to the fee waiver described below, the Fund pays PFPC for its
services as Administrator a fee computed at the annual rate of 0.10% of the
first $200 million of the Fund's average net assets, 0.075% of the next $200
million of average net assets, with further reductions in the applicable rate
for net assets in excess of $400 million, subject to a minimum annual charge of
$80,400. PFPC and PNC Bank agreed to waive 25% of the annual minimum charges
applicable under the Fund's administration, transfer agency and custody
agreements during the first year (which ended May 19, 1996) of their respective
agreements with the Fund.
(e) PFPC also serves as the transfer agent, registrar and dividend
paying agent for the Fund and receives compensation in that capacity in addition
to the compensation it receives as administrator. (See Item 5(d).)
(f) The Fund's operating expenses for the fiscal year ended December
31, 1996, which include advisory fees but not brokerage commissions, were 1.28%
of the Fund's average daily net assets. Absent the expense limitations and fee
reductions applicable under the Fund's administration, transfer agency and
custody agreements with PFPC and PNC Bank in 1996, the foregoing percentage
would have been 1.29% of average net assets.
(g) Not applicable.
ITEM 5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
Not applicable.
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ITEM 6. CAPITAL STOCK AND OTHER SECURITIES
(a) The capital stock of the Fund consists of a single class of common
shares with a par value of $1.00 per share. Each common share entitles the
holder to one vote for the election of directors and on all other matters. These
shares have non-cumulative voting rights which means that the holders of more
than 50% of the shares voting for the election of directors can elect 100% of
the directors if they choose to do so and, in such event, the holders of the
remaining shares voting for the election of directors will not be able to elect
any person or persons to the Board of Directors. All shares have equal rights to
participate in any dividends declared and, in the event of liquidation, in the
assets of the Fund. Upon issuance and payment in accordance with the terms
herein described, the shares will be fully paid and nonassessable. There are no
conversion rights, preemptive rights or sinking fund provisions with respect to
the Fund's shares. Fractional share credits entitle the holders thereof to
dividends and distributions but no voting rights.
Shares of stock of the Fund may not be sold or transferred to or be
owned by, any person other than an Eligible Institution.
(b) As of March 31, 1997, Staten Island Savings Bank owned
approximately 32.7% of the outstanding shares of the Fund. This holding, if it
were maintained on the record date of any meeting of shareholders of the Fund,
would enable Staten Island Savings Bank to exercise a substantial influence over
the outcome of each matter submitted to a vote of the shareholders of the Fund,
including election of directors, and depending on the number of shares present
in person or represented by proxy at a meeting of shareholders, may enable
Staten Island Savings Bank to determine the outcome of each such vote.
(c) Not applicable.
(d) Not applicable.
(e) Shareholder inquiries should be directed to the Fund c/o Shay
Financial Services Co., 111 East Wacker Drive, Suite 2600, Chicago, IL 60601 or
by telephone at 800-527-3713.
(f) It is the Fund's policy to distribute substantially all of its net
investment income (income from dividends and interest, less expenses) and net
short-term capital gain, if any, as dividends and to distribute substantially
all net long-term gain on sales of portfolio securities as capital gain
distributions. Dividends are paid quarterly. Distributions of net long-term
capital gains, if any, realized during the fiscal year, usually are distributed
in December of such fiscal year.
(g) FEDERAL INCOME TAX STATUS. The Fund has elected to qualify and
intends to remain qualified as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, the
Fund should not be subject to federal income taxes on its net investment income
and capital gains, if any, that it distributes to its shareholders.
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All dividends out of net investment income, together with distributions
of short-term capital gain, will be taxable as ordinary income to shareholders
whether or not reinvested. Any net long-term capital gain distributed to
shareholders will be taxable as long-term capital gains to shareholders, whether
or not reinvested and regardless of the length of time a shareholder has owned
its shares. A portion of dividends paid from net investment income may qualify
for the dividends-received deduction for corporate shareholders. Shareholders
that are tax exempt entities will not be taxed on amounts distributed to them by
the Fund.
The Fund expects to pay dividends quarterly and capital gain
distributions annually, but there can be no assurance that there will be such
dividends or distributions. Dividends or capital gains distributions declared in
October, November or December with a record date in such a month and paid during
the following January will be taxable as if received by shareholders on December
31 of the calendar year in which such dividends or distributions are declared.
The Fund will notify shareholders after the close of its fiscal year of the
dollar amount and the taxable status of that year's dividends and distributions.
Any gain or loss realized upon a sale or redemption of Fund shares held
as capital assets by a shareholder will generally be treated as long-term
capital gain or loss if the shares have been held for more than one year, and
otherwise will be treated as short-term capital gain or loss. However, any loss
realized on the sale or redemption of Fund shares that have been held for six
months or less will be treated as long-term capital loss to the extent of the
amount of any capital gains dividend received by the shareholder with respect to
such shares.
Under U.S. Treasury Regulations, the Fund is required to withhold and
remit to the U.S. Treasury 31% of dividends, capital gain distributions and
redemption proceeds paid to shareholders that have not provided certain
certified information to the Fund. In order to avoid this withholding
requirement, a shareholder must certify that the taxpayer identification number
provided is correct and that the shareholder is not currently subject to backup
withholding or is exempt from backup withholding.
Shareholders are urged to consult their own tax advisers with specific
questions about the federal, state or local income tax implications of an
investment in the Fund.
(h) Not applicable.
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED
(a) Shay Financial Services Co. (the "Distributor") acts as the
distributor of the Fund. The Distributor is a general partnership that consists
of two general partners, Shay Financial Services, Inc. and ACB Securities, Inc.,
each of which holds a fifty-percent interest in the Distributor. Shay Financial
Services, Inc. is controlled by Rodger D. Shay, a Vice President of the Fund.
ACB Securities, Inc. is an indirect wholly-owned subsidiary of ACB.
The Distributor is authorized to undertake certain activities in
connection with the sale of shares of the Fund, including informing potential
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investors about the Fund through written materials, seminars and personal
contacts. The Distributor does not receive any compensation from the Fund in
connection with such services.
Orders to purchase shares of the Fund and a request for an application
to open an account should be directed to the Fund by telephoning the Distributor
at 800-527-3713. Payment must be in the form of federal funds and should be
received by PNC Bank prior to 4:00 P.M. on the next Business Day, or the order
will be canceled. Wire transfer instructions for federal funds should be as
follows: PNC Bank, Philadelphia, PA, ABA 0310-0005-3; BNF Mutual Fund Services /
8529992181; From: (Name of Investor); Account Number: (Investor's account number
with the Fund); For purchase of Institutional Investors Capital Appreciation;
Amount: $ (Amount to be invested). The Fund reserves the right to reject any
purchase order.
Shareholders may elect to have dividends and capital gains
distributions of the Fund, when paid, reinvested in shares of the Fund at the
net asset value per share determined at the close of business on the ex-dividend
date. Dividends and capital gains distributions will be so reinvested unless a
contrary intention is stated by notice in writing to the Fund. An election may
be changed by the shareholder at any time prior to a record date for a dividend
or distribution by notice in writing to the Fund.
(b) Shares of the Fund will be sold at the net asset value per share
next determined after receipt of purchase orders by the Fund and are offered by
the Fund to Eligible Institutions on a continuous basis without sales charge.
The net asset value of the Fund fluctuates daily.
Net asset value per share of the Fund is determined as of 4:00 P.M.,
New York time, on each Business Day, except that net asset value need not be
determined on any day on which no purchase or redemption orders are received by
the Fund. (A "Business Day" is a day on which the New York Stock Exchange is
open for trading. The New York Stock Exchange is open Monday through Friday
except for the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.)
Purchase orders received prior to 4:00 P.M., New York time, on a Business Day
are executed at the net asset value per share computed as of 4:00 P.M., New York
time, on such day if payment by federal funds is received by PNC Bank by 4:00
P.M. on the next Business Day. Orders received after 4:00 P.M., New York time,
on a Business Day or on a day which is not a Business Day are executed at the
net asset value per share computed as of 4:00 P.M., New York time, of the next
Business Day.
The net asset value of the Fund fluctuates daily. The net asset value
per share of the Fund is computed by dividing the total value of all securities
and other assets of the Fund, less liabilities, by the total number of shares of
the Fund outstanding. For purposes of such computation a security listed on a
national securities exchange or traded on the NASDAQ National Market System is
valued at the last reported sale price thereof on the exchange or system where
the security is principally traded. If no trade occurs on such exchange or
system on the date of computation, such security is valued at the mean of the
last bid and asked prices on such day on such exchange or system. Securities not
listed on a national securities exchange or traded on the NASDAQ National Market
System but traded in an over-the-counter market are valued at the mean of the
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last bid and asked prices prior to the computation. Short-term interest-bearing
investments for which market quotations are not available are valued at cost
plus discount earned. Short-term investments (purchased without a discount or
premium) are valued at cost, which approximates market value. Other securities
are valued at their fair value as determined in good faith by the Board of
Directors of the Fund.
Securities underlying outstanding call options written by the Fund are
valued at their market price as determined above. Premiums received on the sale
of call options are included in the net asset value; however, the current market
value of outstanding options written by the Fund are deducted in computing net
asset value. The current market value of an option listed on an organized
securities exchange is based on the last sales price on such exchange prior to
4:00 P.M., New York time, or, if none, the mean of the last bid and asked prices
as of 4:00 P.M., New York time.
(c) Not applicable.
(d) The minimum initial investment in the shares of the Fund by an
investor is $20,000. There are no restrictions on the amount of subsequent
purchases of shares or on the dollar value of shares which must be owned by an
investor after its initial purchase. Each Eligible Institution, however, should
consult its own advisers with respect to limitations, if any, imposed on its
investments in the Fund by applicable banking laws or regulations. (See Item 8.)
(e) Not applicable.
(f) Not applicable.
ITEM 8. REDEMPTION OR REPURCHASE
(a) A shareholder is entitled, subject to the exceptions described in
this Item 8(a) and in Item 8(d), to redeem at any time all or any portion of the
shares credited to its account by submitting a request for redemption in proper
form on a Business Day and can be made by telephone or in writing. Redemption
requests should be directed to the Fund by telephoning the Distributor at
800-527-3713 or by sending a request to the Fund, c/o Shay Financial Services
Co., 111 East Wacker Drive, Suite 2600, Chicago, IL 60601. The Fund redeems
shares at their net asset value next determined after the Distributor receives
the redemption request.
Upon the receipt of such request in proper form as described below, the
shareholder will receive from the Fund the amount of the net asset value of the
redeemed shares which will be determined in accordance with the procedures
described in paragraph 1 below. The option to require the Fund to purchase all
or any part of the shares held by a shareholder may be exercised only in
accordance with the following:
1. The net asset value applicable to any such redemption will be
computed as of 4:00 P.M., New York time, on the day on which notice of
redemption is received, if received on a Business Day before 4:00 P.M.,
New York time; if the notice of redemption is not received on a
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Business Day, or if such notice is received after 4:00 P.M., New York
time, on a Business Day, then the net asset value will be computed as
of 4:00 P.M., New York time, on the next succeeding Business Day.
Proceeds will normally be wired in federal funds to the shareholder's
bank or other account shown on the Fund's records, the next Business
Day, but in no event more than seven days following a request in proper
form. Such computations will apply only to the extent of 2500 shares or
10% of the total number of shares owned on the date of giving such
notice by the holder presenting shares for redemption, whichever is
greater. The computation of net asset value of any excess number of
shares as to which notice is received from a shareholder will be made
at 4:00 P.M., New York time, on the Business Day next succeeding the
date of the first computation, subject to the maximum limitation of the
greater of 2500 shares or 10% of the total number of shares owned on
the date of giving such notice, with continuing like computations on
each succeeding Business Day, until the net asset value for all shares
for which notice has been received has been so determined. The
procedures for computation of redemption prices for large redemptions
contained in the second and third sentences of this paragraph 1 may be
waived by the Board of Directors in the event that it determines that
such restrictions are not in the best interests of the Fund and its
shareholders.
2. The redemption price will be paid by the Fund within seven
Business Days after receipt of the notice of redemption in good order
by the Distributor, provided that the certificates for the shares to be
redeemed, if any, have been surrendered duly endorsed for transfer,
guaranteed and delivered to PFPC. In the event that the net asset value
of any shares is computed on a day other than the day of delivery of
notice of redemption, then the redemption price of such shares will be
paid by the Fund within seven Business Days after such day of
computation. (See Item 8(d).)
Any such payment may be made in whole or in part in kind, in
securities or other assets of the Fund, if the Board of Directors
determines that, by reason of the closing of the New York Stock
Exchange or otherwise, the orderly liquidation of securities owned by
the Fund is impracticable, or payment in cash would be prejudicial to
the best interests of the remaining shareholders of the Fund, provided
that in making any such payment in kind, the Fund will, as nearly as
may be practicable, deliver securities or other assets of a market
value representing the same proportionate interest in the assets of the
Fund as is represented by the shares so to be paid for; whenever
delivery of securities or other assets is so to be made, such delivery
will be made as promptly as practicable after receipt by the
Distributor of a request for redemption in proper form accompanied by
such other documents as may be required by the Fund.
(b) Not applicable.
(c) Not applicable.
<PAGE>
(d) Redemptions may be suspended in the event that trading on the New
York Stock Exchange is suspended or restricted, in the event that an emergency
makes determination of net asset value or disposition of Fund portfolio
securities not reasonably practicable, both as determined under the rules of the
Securities and Exchange Commission, or in the event that the Securities and
Exchange Commission by order permits suspension for the protection of
shareholders.
The right of redemption may also be suspended or payment in
satisfaction of redemptions postponed for such other periods as may be
established by the Board of Directors if the Board of Directors determines that
it is contrary to the best interests of the Fund and its other shareholders to
commit the Fund to an earlier repurchase of any or all shares offered for
redemption, but such determination will be made only when a prior request for
redemption remains unaccepted or when the Board of Directors expressly concludes
that by reason of the number of shares offered or the condition of the
securities markets, there is doubt as to the ability of the Fund to liquidate
sufficient assets to raise the necessary funds within an earlier time without
undue sacrifice and that the existence of extraordinary conditions requires
adoption of an emergency measure. Requests for redemption received during a
period when the right to redeem is suspended may be withdrawn at any time until
redemptions are recommended.
Redemptions may also be limited, and the date of payment postponed, as
set forth in numbered paragraphs 1 and 2 of Item 8(a).
ITEM 9. PENDING LEGAL PROCEEDINGS
Not applicable.
<PAGE>
PART B. INFORMATION REQUIRED IN A STATEMENT
OF ADDITIONAL INFORMATION
ITEM 10. COVER PAGE
Not applicable.
ITEM 11. TABLE OF CONTENTS
Not applicable.
ITEM 12. GENERAL INFORMATION AND HISTORY
See Item 4(a).
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES
(a) The primary investment objective of the Fund is to achieve capital
appreciation for its shareholders. The objective of income is secondary. The
Fund seeks to achieve these objectives by investing primarily in common stocks
of companies whose growth, earnings and dividend prospects are promising and
whose securities are reasonably priced, in the opinion of its investment
adviser. Although the Fund invests primarily in common stocks, the Fund is not
restricted in the proportion of its assets that may be invested in non-equity
securities, such as investment grade corporate bonds, commercial paper and
government securities; and, when deemed beneficial in the opinion of the Fund's
Investment Adviser for defensive purposes, a substantial proportion of the
assets of the Fund may be invested temporarily in such securities. The Fund does
not have any present intention of investing in nonconvertible debt securities of
the lowest investment grade, which securities have some speculative
characteristics. The Fund does not invest in the securities of issuers which,
together with any predecessors, have a record of less than three years of
continuous operation.
COVERED CALL OPTIONS. The Fund may engage in writing (i.e., selling)
call options listed on organized securities exchanges with respect to securities
owned by the Fund (called "covered" options). Except in the circumstances
described below, the Fund will not sell any security subject to a call option
written by the Fund so long as that option is outstanding. Call options are
currently listed on the Chicago Board Options Exchange and the New York,
American, Midwest and Pacific Stock Exchanges. A call option gives the purchaser
the right to buy a security from the Fund at a fixed price (the "exercise
price") at any time prior to the expiration of the option contract regardless of
the market price of the security at that time. In return for such right, the
purchaser pays the Fund a premium which the Fund retains whether or not the
option is exercised. The premium represents consideration to the Fund for
undertaking the option obligation and thereby foregoing (during the period of
the option) the opportunity to profit from an increase in the market price of
the underlying security above the exercise price. For example, assume the Fund
owns 100 shares of XYZ and that, at a time when the market price of XYZ was $50
per share, the Fund wrote a six month call option on those shares at an exercise
price of $50 for a premium of $500 (less transaction costs). If the price of XYZ
declined to $40 per share the call would not likely be exercised. The 100 XYZ
<PAGE>
shares would have declined $1,000 in value and the Fund would have received
income in the amount of $500. On the other hand, should the price of XYZ rise to
$60 per share the call would likely be exercised with the result that, in
exchange for the $500 premium, the Fund would have foregone the $1,000
appreciation on the underlying shares.
When an option is written the securities subject to the option will be
segregated or otherwise held for delivery in accordance with the requirements of
any applicable securities exchange. The Fund may purchase call options only for
the purpose of closing out a previous option commitment (called a "closing
purchase transaction"). A closing purchase transaction is made by buying an
option with identical terms as an option previously written, resulting in the
cancellation of the Fund's previous option obligation. If the Fund wishes to
sell securities on which it has options outstanding it would execute a closing
purchase transaction prior to selling the securities. A profit or loss may be
realized on a closing purchase transaction if the amount paid to purchase a call
option previously written is less or more than the amount received from its
sale.
The writing of covered call options involves certain risks. An option
position may be closed out only on an exchange which provides a market for an
option of the same series. Although the Fund will generally write only those
call options for which there appears to be an active market, there is no
assurance that an active market on an exchange will exist for any particular
option at any particular time. If the Fund as a covered call option writer is
unable to effect a closing purchase transaction in a secondary market, it would,
as a result, be subject to any price decline in the underlying security. If such
a situation were to arise, the Fund's Investment Adviser would determine whether
to hold the underlying securities and risk depreciation in their market value or
to sell the securities and substitute cash or other securities as collateral for
the option obligation.
In general, premiums received on options which are not exercised and
gains or losses realized on closing purchase transactions are treated as
short-term capital gains or losses. When an option is exercised the premium is
added to the exercise price and the resulting gain or loss is characterized as a
short or long-term capital gain or loss depending on the holding period of the
underlying securities. In general, brokerage commissions associated with buying
and selling call options are higher than those associated with other securities
transactions.
As described in Item 6(g), it is the Fund's intention to qualify in
each year for treatment as a regulated investment company under Subchapter M of
the Code for federal income tax purposes. One of the requirements for such
qualifications is that income derived from gains from the sale or other
dispositions of securities, including options, held for less than three months
must be less than 30% of the Fund's gross income. This requirement may limit the
extent to which the Fund may sell call options. Accordingly, the Fund may limit
its writing of options on securities which have been held for less than three
months, its writing of options which expire in less than three months, and its
effecting of closing purchase transactions or closing sale transactions with
respect to options written within three months of such transactions. The Fund
may effect sales of securities that have been held for at least three months in
order to realize gains to maintain its tax qualification.
<PAGE>
The Board of Directors has directed the Fund's Investment Adviser to
write options only in situations where the exercise price plus the premium (less
transaction costs) would, at the time the option is written, equal a price at
which the Investment Adviser would recommend selling the underlying securities
because of fundamental investment considerations. Consequently, the Fund does
not believe that option writing has a material effect on the Fund's portfolio
turn-over rate and it is believed that option writing may contribute both to the
capital appreciation and income objectives of the Fund. In addition, the Board
of Directors has directed the Investment Adviser to restrict option writing so
that no more than 15% of the Fund's total assets may be subject to outstanding
options at any time. These restrictions may be changed by the Board of Directors
whenever such changes appear to be in the best interest of the Fund.
(b) Not applicable.
(c) Not applicable.
(d) PORTFOLIO TURNOVER. Although the Fund does not intend to engage in
substantial short-term trading, it may, in order to take advantage of new
investment opportunities or to preserve gains or limit losses, sell portfolio
securities without regard to the length of time that they have been held. The
Fund's annual portfolio turnover rate was 59%, 85% and 48% in 1994, 1995 and
1996, respectively. The portfolio turnover rate is determined by dividing the
amount of the lesser of the purchases or sales during the year by the average
value of the Fund's portfolio securities during such year. The portfolio
turnover rate of the Fund is not normally expected to exceed 75% but may do so
if the Fund's investment objectives and policies in the light of market
conditions require more frequent trades. The increase in the turnover rate in
1995 reflects primarily additional purchases and sales resulting from an
increase in the number of security holdings to improve diversification, sales of
securities to enable investment in securities which in the opinion of the Fund's
investment adviser at the time offered more attractive fundamentals and sales of
securities to satisfy redemptions.
ITEM 14. MANAGEMENT OF THE FUND
(a) The Fund has fifteen directors who are elected for staggered terms
of three years each. The directors and officers of the Fund, together with their
addresses and ages, the years of expiration of their terms as directors and
their principal occupations for the last five years (together with other
relevant experience), are set forth in the following table.
POSITION(S) HELD WITH
NAME, AGE, ADDRESS REGISTRANT AND EXPIRATION
AND PRINCIPAL OCCUPATION OF TERM AS A DIRECTOR
- ------------------------ ----------------------------
HARRY P. DOHERTY (Age 54)*+ President, Director (2000)
15 Beach Street
Staten Island, NY 10304
Chairman of the Board and Chief Executive Officer, Staten Island Savings
Bank.
<PAGE>
TIMOTHY A. DEMPSEY (Age 63)* Executive Vice President,
18 Oakland Avenue Director (1998)
P.O. Box 591
Warwick, NY 10990-0591
President and Chief Executive Officer, The Warwick Savings Bank.
MICHAEL R. KALLET (Age 46)* Vice President, Director
182 Main Street (1999)
Oneida, NY 13421
President and Chief Executive Officer, Oneida Savings Bank.
RALPH F. BROUTY (Age 67) Director (2000)
111 Clinton Street
Watertown, NY 13601
President and Chief Executive Officer, Watertown Savings Bank.
ROBERT P. CAPONE (Age 42) Director (1999)
10 Bank Street
White Plains, NY 10606
Chairman of the Board, President and Chief Executive Officer, Community
Mutual Savings Bank.
CHRIS C. GAGAS (Age 66) Director (1999)
214 West First Street
Oswego, NY 13126
Chairman of the Board, President and Chief Executive Officer, Oswego City
Savings Bank.
EDWARD P. HENSON (Age 58) Director (1999)
303 Merrick Road
Lynbrook, NY 11563
President, Jamaica Savings Bank FSB.
<PAGE>
STEPHEN J. KELLY (Age 43) Director (2000)
23 Montgomery Street
Rhinebeck, NY 12572
President and Chief Executive Officer, Rhinebeck Savings Bank.
CLIFFORD E. KELSEY, JR. (Age 64) Director (1998)
1 South Church Street
Goshen, NY 10924
President and Chief Executive Officer, Goshen Savings Bank.
ROBERT E. KERNAN, JR. (Age 54) Director (1999)
19 Cayuga Street
Seneca Falls, NY 13148
President and Chief Executive Officer, The Seneca Falls Savings Bank.
JOSEPH L. MANCINO (Age 59) Director (1998)
1400 Old Northern Boulevard
Roslyn, NY 11576
Chairman, President and Chief Executive Officer, The Roslyn Savings Bank.
WILLIAM A. MCKENNA, JR. (Age 60) Director (2000)
71-02 Forest Avenue
Ridgewood, NY 11385
Chairman of the Board, President and Chief Executive Officer, Ridgewood
Savings Bank.
VINCENT F. PALAGIANO (Age 56) Director (2000)
209 Havemeyer Street
Brooklyn, NY 11211
Chairman and Chief Executive Officer, The Dime Savings Bank of
Williamsburgh.
CHARLES M. SPROCK (Age 57) Director (1998)
100 On the Mall
Rome, NY 13340
Chairman of the Board, President and Chief Executive Officer, The Rome
Savings Bank.
JOHN M. TSIMBINOS (Age 59)+ Director (1998)
1122 Franklin Avenue
Garden City, NY 11530
Chairman of the Board and Chief Executive Officer, Roosevelt Savings Bank
and TR Financial Corp.
<PAGE>
RODGER D. SHAY (Age 60) Vice President and Assistant
888 Brickell Avenue, 5th Floor Secretary
Miami, FL 33131
Mr. Shay has been President, Chief Executive Officer and member of the
Managing Board of Shay Assets Management Co. since 1990 and President and
Director of Shay Assets Management, Inc., the managing partner of Shay
Assets Management Co., the Fund's Investment Adviser, since 1990. Mr. Shay
also has served as President, Chief Executive Officer and member of the
Managing Board of Shay Financial Services Co., the Fund's Distributor,
since 1990 and President and Director of Shay Financial Services, Inc., the
managing partner of Shay Financial Services Co., since 1990. He also serves
or has previously served in the following capacities: President and a
Director, Asset Management Fund, Inc. and Vice President and Assistant
Secretary of M.S.B. Fund, Inc., each a registered investment company;
Director from 1986 to 1991 and President from 1986 to 1992, U.S. League
Securities, Inc.; Director from 1985 to 1991, and Executive Vice President
from 1989 to 1992, USL Assets Management, Inc. (previously Vice Chairman
from 1986 to 1989 and President, including of a predecessor, from 1981 to
1986). Director, First Home Savings Bank, S.L.A. since 1990; President of
Bolton Shay and Company and Director and officer of its affiliates from
1981 to 1985. He previously was employed by certain subsidiaries of Merrill
Lynch & Co. from 1955 to 1981, where he served in various executive
positions including Chairman of the Board of Merrill Lynch Government
Securities, Inc., Chairman of the Board of Merrill Lynch Money Market
Securities, Inc. and Managing Director of the Debt Trading Division of
Merrill Lynch, Pierce, Fenner & Smith Inc. Mr. Shay has served as Vice
President and Assistant Secretary of the Fund since May 1995.
EDWARD E. SAMMONS, JR. (Age 57) Vice President and Secretary
111 East Wacker Drive
Chicago, IL 60601
Mr. Sammons has been Executive Vice President and member of the Managing
Board of Shay Assets Management Co. since 1990 and Executive Vice President
of Shay Assets Management, Inc., the managing partner of Shay Assets
Management Co., since 1990. Mr. Sammons also has served as Executive Vice
President and member of the Managing Board of Shay Financial Services Co.
since 1990 and Executive Vice President of Shay Financial Services, Inc.
since 1990. He also serves or has previously served in the following
capacities: Vice President, Treasurer and Secretary of Asset Management
Fund, Inc. and Vice President and Secretary of M.S.B Fund, Inc., each a
registered investment company; President, USL Assets Management, Inc. from
1986 to 1992 (previously Senior Vice President, including of a predecessor,
from 1983 to 1986) and a Director from 1989 to 1991. Executive Vice
President from 1990 to 1992 and a Director from 1990 to 1991 of U.S. League
Securities, Inc.; Vice President, from 1987 to 1990, Advance America Funds,
Inc.; and Senior Vice President and Manager of Fixed Income Securities,
Republic National Bank in Dallas from 1962 to 1983. Mr. Sammons has served
as Vice President and Secretary of the Fund since May 1995.
<PAGE>
JOHN J. McCABE (Age 53) Vice President
200 Park Avenue, 45th Floor
New York, New York 10166
Mr. McCabe has been a Senior Vice President of Shay Assets Management,
Inc., the managing partner of Shay Assets Management Co., since June 1995.
From August 1991 to May 1995, Mr. McCabe was Senior Vice President and
Chief Investment Officer of Nationar, a trust company which served as the
Fund's investment adviser prior to May 1995. Prior to joining Nationar he
served as Managing Director and Portfolio Manager at Sterling Manhattan
Corporation, an investment banking firm, for approximately three years and
in various positions at Bankers Trust Company, including Director of
Investment Research and Managing Director of the Investment Management
Group. Mr. McCabe is a director and past President of the New York Society
of Security Analysts, a past director of the Financial Analysts Federation
and a member and founding Governor of The Association for Investment
Management and Research. He also serves as a Vice President of M.S.B. Fund,
Inc. Mr. McCabe has served as a Vice President of the Fund since May 1995.
MARK F. TRAUTMAN (Age 31) Vice President
200 Park Avenue, 45th Floor
New York, New York 10166
Mr. Trautman has been a Vice President of Shay Assets Management, Inc.
since June 1995 and has been Portfolio Manager of the Fund since March
1993. From March 1993 through May 1995, he served as Director of Mutual
Funds Investment of Nationar. He also serves as a Vice President and
Portfolio Manager of M.S.B. Fund, Inc. From January 1992 through March 1993
he served as Senior Equity Analyst for the two funds. From December 1988
through December 1991, Mr. Trautman was a Senior Associate with Sterling
Manhattan Corporation, an investment banking firm. From June 1987 through
November 1988, Mr. Trautman held the position of Treasury Analyst at
Thomson McKinnon Securities, Inc., a securities brokerage firm.
JAY F. NUSBLATT (Age 36) Treasurer
103 Bellevue Parkway
Wilmington, Delaware 19809
Mr. Nusblatt has been Vice President and Director of Fund Accounting and
Administration of PFPC Inc., the Fund's administrator, since March 1993. He
was previously employed as an Assistant Vice President of Fund/Plan
Services, Inc., with responsibility for financial reporting and fund
administration, 1989 to 1993. Mr. Nusblatt also serves as Treasurer of
M.S.B. Fund, Inc.
_____________________
* These directors are regarded as interested persons under the Investment
Company Act of 1940 by virtue of their positions as officers of the Fund.
+ These directors are regarded as interested persons under the Investment
Company Act of 1940 because they are affiliated persons of the Investment
Adviser.
<PAGE>
Messrs. Doherty and Tsimbinos are directors of America's Community
Bankers, which owns through subsidiaries a 50% interest in the Fund's Investment
Adviser and Distributor. See Items 5 and 16 for additional information
concerning the organizations with which Messrs. Shay, Sammons, McCabe, Trautman
and Nusblatt are affiliated.
Harry P. Doherty, Timothy A. Dempsey and William A. McKenna are
directors of M.S.B. Fund, Inc., a registered investment company affiliated with
the Fund by virtue of having a common investment adviser. Messrs. Shay, Sammons,
McCabe, Trautman and Nusblatt also are officers of M.S.B. Fund, Inc.
The Fund has an Executive Committee, composed of Messrs. Doherty,
Dempsey, Kallet and McKenna, which meets from time to time, as necessary,
between meetings of the Board to consider matters concerning the Fund. Subject
to limitations provided by law and the Fund's by-laws, the Executive Committee
is authorized to exercise the power and authority of the Board of Directors as
may be necessary during the intervals between meetings of the Board of
Directors.
Each of the directors of the Fund is an officer or director of an
Eligible Institution or of a holding company which controls one or more Eligible
Institutions. (See Item 15(b).) Any of such Eligible Institutions may from time
to time purchase at its discretion sufficient shares of the Fund so that its
holding may exceed 5% of the then outstanding shares of the Fund. Eligible
Institutions are not restricted by the Fund as to the number of shares of the
Fund that they may purchase or hold. Each Eligible Institution, however, should
consult its own advisers with respect to limitations, if any, imposed on its
investments in the Fund by applicable banking laws or regulations.
(b) See Item 14(a)
(c) Directors receive an annual retainer of $3,000, payable at the end
of each quarter, and an additional $500 for each meeting of the Board of
Directors attended. Directors serving on a committee of the Board of Directors
receive additional compensation of $250 for each committee meeting attended in
person if the meeting is held on a date on which a meeting of the Board of
Directors is not held. No additional fee is paid for telephonic meetings. The
Board of Directors meets quarterly. In recognition of the additional
responsibilities and duties performed by the President of the Fund, the Board of
Directors has authorized an additional annual retainer of $2,000 for the
President of the Fund, payable at the end of each quarter, which is in addition
to compensation the President receives as a director. The other officers of the
Fund do not receive any compensation from the Fund other than the compensation
they may receive as directors. The total amount of such compensation paid to the
directors and officers for 1996 was $70,125. The Fund also reimburses directors
and officers for their reasonable expenses incurred in attending meetings or
otherwise in connection with their attention to the affairs of the Fund. In 1996
the total amount of such reimbursed expenses was $12,473. The Fund does not
provide officers and directors directly or indirectly with any pension or
retirement benefits for their services to the Fund.
<PAGE>
The following table sets forth the aggregate compensation received
during 1996 by each director of the Fund from the Fund and any other investment
company having the same investment adviser. Such compensation does not include
reimbursements to the directors for their expenses incurred in connection with
their activities as directors.
<TABLE>
<CAPTION>
Total Compensation from
Aggregate Compensation Fund and Fund Complex
Name of Director from Fund Paid to Directors
- ---------------- ---------------------- -----------------------
<S> <C> <C> <C>
Ralph F. Brouty $4,625 $5,500 (1)
Robert P. Capone $4,625 $5,500 (1)
Timothy A. Dempsey $4,375 $5,250 (1)
Harry P. Doherty $6,375 $9,600 (2)
Chris C. Gagas $4,625 $5,500 (1)
Edward P. Henson $4,125 $4,500
Michael R. Kallet $4,625 $5,500 (1)
Stephen J. Kelly $4,625 $5,500 (1)
Clifford E. Kelsey, Jr. $4,875 $5,750 (1)
Robert E. Kernan, Jr. $4,875 $5,750 (1)
Joseph L. Mancino $4,125 $4,500
William A. McKenna, Jr. $4,625 $8,500 (2)
Vincent F. Palagiano $4,125 $4,500
Nicholas J. Scali $500 $1,000 (1)
Charles M. Sprock $4,625 $5,500 (1)
John M. Tsimbinos $4,375 $5,000 (1)
<FN>
(1) Includes compensation received as a director or officer of one other
investment company having the same investment adviser as the Fund.
(2) Includes compensation received as a director or officer of two other
investment companies having the same investment adviser as the Fund.
</FN>
</TABLE>
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
(a) As of March 31, 1997, Staten Island Savings Bank, 15 Beach Street,
Staten Island, New York, owned approximately 32.7% of the outstanding shares of
the Fund. As a result of such ownership, Staten Island Savings Bank, which is
organized as a New York mutual savings bank, is deemed to be a controlling
person of the Fund. See Item 6(b) for a discussion of the effect of such
ownership on the rights of other shareholders.
(b) As of March 31, 1997, the following persons owned of record and, to
the best of the Fund's knowledge, beneficially more than 5% of the Fund's
outstanding securities:
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE OWNERSHIP
---------------- --------------------
<S> <C>
Ridgewood Savings Bank 15.8%
71-02 Forest Avenue
Ridgewood, New York 11385
Staten Island Savings Bank 32.7%
15 Beach Street
Staten Island, New York 10304
The Warwick Savings Bank 5.7%
18 Oakland Avenue
P.O. Box 591
Warwick, NY 10990-0591
Watertown Savings Bank 14.2%
111 Clinton Street
Watertown, New York 13601
</TABLE>
(c) Although no officer or director of the Fund owns any equity
securities of the Fund, each director of the Fund is an officer or director of
an Eligible Institution or of a holding company which controls one or more
Eligible Institutions, and it is expected that such Eligible Institutions may,
from time to time, purchase shares of the Fund. All such directors disclaim
beneficial ownership of any such shares.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES
(a) Investment decisions for the Fund are made by the Fund's Investment
Adviser, Shay Assets Management Co. The Investment Adviser is responsible for
placing purchase and sale orders for portfolio securities and other investments.
Under the Investment Advisory Agreement, the Investment Adviser receives for its
investment management services a fee from the Fund computed at the annual rate
of 0.75% of the first $100,000,000 of the Fund's average daily net assets and
0.50% of the Fund's average daily net assets in excess of $100,000,000. The fee
payable to the Investment Adviser is reduced (but not below zero) to the extent
the expenses of the Fund (exclusive of professional fees, e.g., legal and audit
fees, directors' fees and expenses and distribution expenses, if any, payable
under Rule 12b-1) exceed 1.10% of the Fund's average daily net assets during any
fiscal year during the term of the Fund's agreement with the Investment Adviser.
The Investment Advisory Agreement also provides for a reduction in the fee
payable to the Investment Adviser to the extent the expenses of the Fund would
exceed any applicable limit established pursuant to the statutes or regulations
of any jurisdictions in which the Fund's shares are qualified for offer and
sale. However, the Fund's shares are not offered or sold in any jurisdiction
that imposes such a limitation. These limitations did not result in any
reduction of the Investment Adviser's fee in 1996, and the total amount paid by
the Fund in 1996 in respect of investment advisory services was 0.75% of the
Fund's average daily net assets. See Item 5(b).
<PAGE>
Shay Assets Management Co. is an Illinois general partnership that
consists of two general partners, Shay Assets Management, Inc. and ACB Assets
Management, Inc., each of which holds a fifty-percent interest in the
partnership. Shay Assets Management, Inc., which is the managing partner of the
Investment Adviser, is controlled by Rodger D. Shay, who is a Vice President of
the Fund. ACB Assets Management, Inc. is a wholly-owned subsidiary of ACB
Investment Services, Inc., which is a wholly-owned subsidiary of America's
Community Banking Partners, Inc., which in turn is a wholly-owned subsidiary of
America's Community Bankers ("ACB"), the trade association representing savings
institutions in the United States. The Investment Adviser is a registered
investment adviser under the Investment Advisers Act of 1940 and serves as
investment adviser to Asset Management Fund, Inc., a registered investment
company comprising five fixed-income portfolios with aggregate net assets of
approximately $1 billion at March 31, 1997, and as investment adviser to M.S.B.
Fund, Inc. which had net assets of approximately $40 million at March 31, 1997.
The Investment Adviser's principal office is located at 111 East Wacker Drive,
Chicago, Illinois 60601.
Certain directors and officers of the Fund are affiliated persons of
the Investment Adviser. See Item 14 for a list of the capacities in which such
persons are affiliated with the Fund and the Investment Adviser.
Under the Investment Advisory Agreement, the Investment Adviser is not
liable to the Fund for any error of judgment or mistake of law or for any loss
suffered by the Fund, except a loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services or a loss resulting
from willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under the agreement.
The Investment Advisory Agreement will continue in effect from year to
year, subject to termination by the Fund or the Investment Adviser as described
below, if such continuance is approved at least annually by the vote of the
Fund's Board of Directors and a majority of the directors of the Fund who are
not "interested persons" of the Fund or of the Investment Adviser.
The Investment Adviser may terminate the Investment Advisory Agreement
only after the third anniversary of the date of the Agreement (i.e. after May
19, 1998) upon 90 days' written notice to the Fund. The Investment Advisory
Agreement can be terminated at any time without penalty by the Fund upon 30
days' written notice to the Investment Adviser. The Investment Advisory
Agreement will terminate automatically in the event of its assignment.
(b) Subject to the general supervision of the Board of Directors, the
Investment Adviser manages the investment operations of the Fund and the
composition of the Fund's portfolio of securities and investments (including
cash) belonging to the Fund. The Investment Adviser also provides such office
and other facilities as may be required by the Fund and is responsible for the
costs of preparing and keeping minutes of meetings of the Board of Directors.
See Item 16(a).
<PAGE>
(c) The Fund is responsible for the payment of its expenses. Such
expenses include, without limitation, the fees payable to the Fund's Investment
Adviser, administrator, transfer agent, shareholder servicing agent, dividend
paying agent and custodian, brokerage fees and expenses, filing fees for the
registration or qualification of the Fund's shares under federal or state
securities laws, taxes, interest, the cost of liability insurance, fidelity
bonds, indemnification expenses, legal and auditing fees and expenses, any
costs, expenses or losses arising out of any liability of, or claim for damages
or other relief asserted against, the Fund for violation of any law, expenses of
preparing and printing prospectuses, proxy materials, reports and notices and of
mailing the same to shareholders and regulatory authorities, the compensation
and expenses of the Fund's directors and officers who are not affiliated with
the Fund's Investment Adviser or administrator and any extraordinary expenses
incurred by the Fund. See also Item 16(a).
A statement of operational expenses is included in each annual and
semi-annual report to shareholders.
Any expenses incurred in promoting the sale of shares of the Fund are
borne by the Fund's distributor, Shay Financial Services Co. ("Distributor"), an
affiliate of the Investment Adviser. The Distributor does not receive any
compensation from the Fund.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) Not applicable.
(h) PNC Bank, 17th and Chestnut Streets, Philadelphia, Pennsylvania, is
the custodian of the Fund and in that capacity maintains custody of the
investments (including cash) of the Fund. PNC Bank and PFPC are affiliates of
PNC Bank Corp. See Item 5(d).
Arthur Andersen LLP, 1601 Market Street, Philadelphia, Pennsylvania has
been appointed to serve as the Fund's independent auditors for fiscal year 1997
and in that capacity audits the Fund's annual financial statements.
(i) Not applicable.
ITEM 17. BROKERAGE ALLOCATION
(a) Transactions in portfolio securities were effected during the
calendar year 1996 through a total of three brokers, drawn from a list of
brokers selected by the Investment Adviser on the basis of their ability to
provide efficient execution of portfolio transactions and investment research
and statistical information. A majority of the Fund's portfolio transactions are
executed on national securities exchanges through member firms. However, when
the Investment Adviser believes that a better price can be obtained for the
<PAGE>
Fund, portfolio transactions may be executed in the third market. Portfolio
transactions in unlisted securities are executed in the over-the-counter market
through principal market makers. The brokerage list is reviewed continually in
an effort to obtain maximum advantage from investment research and statistical
information made available by brokers, and allocation among the brokers is made
on the basis of best price and execution consistent with obtaining research and
statistical information at reasonable cost. The Investment Adviser is thus
authorized to pay a brokerage commission in excess of that which another broker
might have charged for effecting the same transaction in recognition of the
value of efficient execution and research and statistical information provided
by the selected broker. In 1996, 71% of the Fund's brokerage (attributable to
purchases of $31,873,753 and proceeds from sales of $28,269,716) was placed with
brokers who provided investment research and statistical information to the
Fund's investment adviser. The total amount of brokerage commissions paid in
1994, 1995 and 1996 was approximately $96,758, $101,024 and $70,147,
respectively.
(b) Not applicable.
(c) The primary aim of the Fund in allocation of portfolio transactions
to various brokers is the attainment of the best price and execution. Consistent
with this primary aim, the Fund's Investment Adviser will give principal
consideration to attainment of the best price and to the execution efficiency,
settlement capability, and financial condition of the broker. The Investment
Adviser may also consider various additional criteria, including the size and
type of transaction, the nature and character of the markets for the security to
be purchased or sold, the broker's ability to provide quality research and
statistical services, and the reasonableness of any spread or commissions under
the circumstances and in light of the brokerage and research services provided.
The research and statistical information provided to the Investment
Adviser consists primarily of written and electronic reports and presentations
analyzing specific companies, industry sectors, the stock market and the
economy. To the extent that such research and information are used by the
Investment Adviser in rendering investment advice to the Fund, they tend to
reduce the Investment Adviser's expenses.
The Investment Adviser monitors the reasonableness of the commissions
paid by the Fund based on its experience in the market, and information as to
brokerage commissions paid by the Fund is reviewed periodically by the Board of
Directors.
Research, statistical and other services furnished by brokers through
whom the Fund executes securities transactions may be used by the Investment
Adviser in servicing all of its accounts, and not all such services may be
useful in connection with the Fund.
Neither the Fund nor any of its officers or directors nor its
Investment Adviser is affiliated with any broker employed by the Fund in
connection with the purchase or sale of portfolio securities or other
investments.
(d) Not applicable.
<PAGE>
(e) Not applicable.
ITEM 18. STOCK AND OTHER SECURITIES
(a) See Item 6(a).
(b) Not applicable.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
(a) See Item 7.
(b) Shares of the Fund may be purchased or redeemed at the Fund's net
asset value per share next determined after receipt of an order for purchase or
redemption as described in Items 7 and 8, subject to the exceptions described in
Item 8. See Item 7(b) for a description of the methods used to value the Fund's
assets. The following computation demonstrates by way of example the manner in
which the net asset value of the Fund was determined as of 4:00 P.M., New York
time, on December 31, 1996.
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
DECEMBER 31, 1996 VALUATION SHEET
<TABLE>
<CAPTION>
<S> <C>
Investment in securities, at value........................ $70,016,969
Cash...................................................... 199
Dividends and interest receivable......................... 162,242
Prepaid expenses.......................................... 21,036
-----------
Total assets..................................... $70,200,446
-----------
Less:
Accrued expenses payable.................................. 51,127
-----------
Net assets....................................... $70,149,319
===========
Number of shares outstanding.............................. 517,169
Net asset value, offering and redemption price per share.. $135.64
===========
</TABLE>
(c) Not applicable.
ITEM 20. TAX STATUS
It is the Fund's policy to distribute to shareholders substantially all
of its net investment income (income from dividends and interest, less expenses)
and net short-term capital gain, if any, as dividends and to distribute
substantially all net long-term capital gain (net of short-term capital loss) on
sales of portfolio securities as capital gain distributions. In the event the
Fund fails to distribute to shareholders in a calendar year an amount equal to
the sum of (i) 98% of its ordinary income (excluding capital gain), (ii) 98% of
<PAGE>
its capital gain net income (determined for the applicable twelve-month test
period), and (iii) the amount, if any, of ordinary income and capital gain not
distributed in the preceding calendar year, it would be subject to a
nondeductible 4% excise tax on the amounts not distributed. Because the Fund
expects to distribute all of its net investment income and net capital gain, it
does not expect to incur a liability for this tax.
In general, the portion of the dividends paid by the Fund out of
qualifying dividends received by the Fund from domestic corporations with
respect to shares which are held by the Fund for at least 46 days (excluding
certain periods during which the Fund's risk of loss is diminished), other than
with respect to certain cumulative dividends on preferred stock and designated
as such by the Fund will be eligible, whether paid in cash or in additional
shares, for the federal income tax 70% dividends-received deduction that is
available to certain corporate taxpayers. Because a portion of the dividends
paid by the Fund will be paid out of, in addition to such qualifying dividends,
other income such as interest income and net short-term capital gains realized
by the Fund, less than 100% of the dividends will be eligible for the 70%
dividends-received deduction. Dividends paid on shares of the Fund will not be
eligible for the dividends-received deduction if the corporate shareholder holds
such shares less than 46 days.
Other Code provisions may also limit the availability of the
dividends-received deduction to shareholders. For example, the 70%
dividends-received deduction cannot, in general, exceed 70% of a corporation's
taxable income (determined without regard to the 70% dividends-received
deduction). In addition, the Code reduces the 70% dividends-received deduction
with respect to portfolio stock where debt is attributable to the investment in
such stock. In addition, the 70% dividends-received deduction is not permitted
for purposes of calculating a shareholder's alternative minimum tax.
Shareholders should consult their own tax advisers concerning these and
other matters that may be applicable to their specific tax situation, including
the effects of any changes in the tax law.
ITEM 21. UNDERWRITERS
See Item 7(a).
ITEM 22. CALCULATION OF PERFORMANCE DATA
(a) Not applicable.
(b) From time to time, the Fund may advertise the total return and the
average annual total return of the Fund over specified periods. Such information
is based on historical results and is not intended to indicate or predict future
performance of the Fund. Total return shows the percentage change in the value
of an investment in the Fund over a specified period of time, assuming (i) a
hypothetical investment of $1,000 at the beginning of the period, (ii)
reinvestment of all dividends and distributions and (iii) deduction of all
applicable charges and expenses. The Fund's average annual total return
<PAGE>
represents the annual compounded growth rate that would produce the total return
achieved over the applicable period. Comparisons of total returns on a
year-to-year basis may facilitate an understanding of how the Fund is affected
by changing market conditions. The average annual total return permits an
investor to identify the overall rate of return achieved by the Fund during a
multi-year period without regard to year-to-year variations. The performance
information reported by the Fund does not take into account any federal or state
income taxes that may be payable by an investor. The Fund may also include
comparative performance information in advertising or marketing the Fund's
shares as described below.
The following table sets forth the total return on an investment in the
Fund for the one- , three-, five- and ten-year periods ended December 31, 1996,
and the average annual total return for such periods.
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
<TABLE>
<CAPTION>
TOTAL RETURN DATA
PERIODS ENDED DECEMBER 31, 1996
----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Total Return....................... 20.82% 49.72% 98.84% 207.79%
Average Annual Total Return........ 20.82% 14.40% 14.74% 11.90%
</TABLE>
The foregoing information is a statement of the past record of the Fund
and should not be construed as a representation or prediction of future results.
The investment return and principal value of an investment in the Fund will
fluctuate with changing market conditions so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
From time to time the Fund's performance may be compared to the Dow
Jones Industrial Average and the Standard & Poor's 500 Composite Price Index,
which are groups of unmanaged securities, and other published indices and to the
Lipper All Equity Funds Average and the Lipper Growth and Income Funds Average.
The Fund's performance also may be compared to the returns payable on U.S.
Treasury securities, to the Federal Funds Rate and to the advance rates quoted
by a Federal Home Loan Bank. The Fund's performance also may be compared to that
of other mutual funds through ratings or rankings or appropriate averages based
on specified factors over specified periods of time reported or published by
such entities as AMG Data, Barron's, Business Week, CDA Investment Technologies,
Inc., Changing Times, Chicago Tribune, Consumer Reports, Crain's New York
Business, the Donoghue Organization, The Economist, Financial Times, Forbes,
Fortune, Futures, Income Opportunities, Investment Advisor, Investment Company
Data, Inc., Kiplinger's Personal Finance, Lipper Analytical Services, Inc.,
Media General Financial Services, Money, Morningstar, Inc., Mutual Fund Market
News, Newsweek, The New York Times, No-Load Fund Investor, Smart Money, Standard
& Poor's, Strategic Data, Success, Time, U.S. News and World Report, USA Today,
Value Line, The Wall Street Journal and Worth Magazine.
<PAGE>
ITEM 23. FINANCIAL STATEMENTS
The audited financial statements of the Fund for the fiscal year ended
December 31, 1996, including the notes thereto and the report of Arthur Andersen
LLP, contained in the Fund's Annual Report to shareholders for the year ended
December 31, 1996 (the "Annual Report") are incorporated herein by reference to
the Annual Report. Such financial statements have been audited by Arthur
Andersen LLP and have been incorporated by reference herein in reliance on the
report of Arthur Andersen LLP and the authority of such firm as experts in
accounting and auditing. Except as set forth above, no other portion of the
Annual Report is incorporated herein.
The Fund will provide a copy of the Annual Report without charge to
each person to whom this Registration Statement is delivered. Requests should be
directed to the Fund c/o Shay Financial Services, Co., 111 East Wacker Drive,
Suite 2600, Chicago, IL 60601 or by telephone at 800-527-3713.
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
The following financial statements, including the notes thereto and the
report of Arthur Andersen LLP, contained in the Fund's Annual Report to
Shareholders for the fiscal year ended December 31, 1996 are incorporated by
reference into Part B of this Amendment to the Registration Statement:
(1) Schedule of Investments as of December 31, 1996
(2) Statement of Assets and Liabilities as of December 31, 1996
(3) Statement of Operations for the year ended December 31, 1996
(4) Statements of Changes in Net Assets for each of the years in
the two-year period ended December 31, 1996
(5) Financial Highlights, Selected Data for Each Share of Capital
Stock Outstanding Throughout Each Year for each of the years
in the five-year period ended December 31, 1996
(6) Notes to Financial Statements
(7) Report of Independent Auditors (Arthur Andersen LLP, dated
January 22, 1997)
(b) Exhibits:
(1) Restated Certificate of Incorporation of the registrant
(2) By-Laws
(3) Not applicable
(4) Instruments defining rights of security holders
(a) Form of Certificate for Common Stock. Previously filed
with Amendment No. 2.
(b) Articles Third, Fourth, Ninth, Tenth and Eleventh of
Certificate of Incorporation (See Exhibit 1.)
(c) Articles II, VIII, IX and XVI of By-Laws (See Exhibit 2.)
<PAGE>
(5) Investment Advisory Agreement between the Registrant and Shay
Assets Management Co. Previously filed with Amendment No. 8.
(6) Not applicable
(7) Not applicable
(8) Custody Agreement
(a) Custodian Services Agreement dated as of May 19, 1995
between the Registrant and PNC Bank, National Association.
Previously filed with Amendment No. 8.
(b) Custodian Services Fees Agreement dated as of May 19, 1995
between the Registrant and PNC Bank, National Association.
Previously filed with Amendment No. 8.
(c) Administration and Accounting, Transfer Agency and
Custodian Services Fee Waivers Agreement dated as of
May 19, 1995 between the Registrant, PNC Bank, National
Association and PFPC Inc. Previously filed with Amendment
No. 8.
(9) Other Material Contracts
(a) Administration and Accounting Services Agreement dated as
of May 19, 1995 between the Registrant and PFPC Inc.
Previously filed with Amendment No. 8.
(b) Transfer Agency Services Agreement dated as of May 19,
1995 between the Registrant and PFPC Inc. Previously filed
with Amendment No. 8.
(c) Distribution Agreement dated as of September 20, 1995
between the Registrant and Shay Financial Services Co.
Previously filed with Amendment No. 8.
(10) Not applicable
(11) Not applicable
(12) Not applicable
(13) Not applicable
(14) Not applicable
<PAGE>
(15) Not applicable
(16) Not applicable
(17) Financial Data Schedule
(18) Not applicable
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
SIVCO Corp., a New York corporation and a wholly-owned subsidiary of
Staten Island Savings Bank, is deemed to be under common control with the
Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of March 31, 1997, there were 24 record holders of common stock of
the Fund.
ITEM 27. INDEMNIFICATION
Sections 721-726 of the New York Business Corporation Law provide that
a New York corporation shall have the power and, in certain cases, the
obligation to indemnify officers or directors against certain liabilities.
Article XVII of the by-laws of the Registrant provides that the Registrant shall
indemnify directors or officers to the full extent permitted by New York law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted against the Registrant by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
In addition, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, indemnification by the Registrant of its
directors and officers against liabilities arising out of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of their respective offices is against public policy and, therefore,
unenforceable. In the event that any questions arise as to the lawfulness of
indemnification under the Investment Company Act of 1940 or the advancement of
legal fees or other expenses incurred by its officers and directors, the
Registrant will not advance such expenses or provide such indemnification unless
<PAGE>
there has been a determination by a court, by a vote of a majority of a quorum
consisting of disinterested, non-party directors, or by independent legal
counsel in a written opinion or by other reasonable and fair means that such
indemnification or advancement would not violate Section 17 of the Investment
Company Act of 1940 and the rules and regulations thereunder.
In addition, the Registrant has entered into a Directors and Officers
Liability Insurance Policy covering the period August 1, 1996 to July 31, 1997.
Such policy insures against loss which any directors or officers of the
Registrant are obligated to pay by reason of claims based on actual or alleged
breach of duty, neglect, error, misstatement, misleading statement, omission or
other act done or wrongfully attempted or any matter claimed against them solely
by reason of their being directors or officers. The policy does not protect or
purport to protect any director or officer against any loss arising from fines
or penalties imposed by law or matters which may be deemed uninsurable under the
law.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Incorporated herein by reference from Items 5 and 16 are the following:
the description of the business of Shay Assets Management Co. (the "Investment
Adviser"), the information concerning the organization and general partners of
Shay Financial Services Co. (the "Distributor") and the biographical information
pertaining to Messrs. Shay, Sammons, McCabe and Trautman.
From its formation on September 1, 1990 until June 1994, the Investment
Adviser was engaged in business only in connection with rendering services to
Asset Management Fund, Inc., a registered investment company. From June 1994 to
February 1995, the Investment Adviser was the Sub-Adviser providing portfolio
management services for the U.S. Mortgage Securities Portfolio of Nationar
Funds, Inc. Since May 19, 1995, the Investment Adviser has served as investment
adviser to the Fund and M.S.B. Fund, Inc. The Investment Adviser also acted as
investment adviser to Institutional Investors Tax-Advantaged Income Fund, Inc.
from May 19, 1995 to March 15, 1996. In addition, Investment Adviser acts as
investment adviser to several savings banks located in New York State on a
non-discretionary basis.
The Investment Adviser is a general partnership that consists of two
general partners, Shay Assets Management, Inc. ("S.A.M.") and ACB Assets
Management, Inc. ("ACBAM"), each of which holds a fifty-percent interest in the
partnership. S.A.M. is the managing partner of the Investment Adviser. S.A.M. is
controlled by Rodger D. Shay, who is a Vice President of the Fund. ACB Assets
Management, Inc. is a wholly-owned subsidiary of ACB Investment Services, Inc.,
which is a wholly-owned subsidiary of America's Community Banking Partners,
Inc., which in turn is a wholly-owned subsidiary of America's Community Bankers
("ACB"), the trade association representing savings institutions in the United
States, formerly Savings & Community Bankers of America. The Investment Adviser,
with its principal office located at 111 East Wacker Drive, Chicago, Illinois
60601, is a registered investment adviser under the Investment Advisers Act of
1940. The principal executive office of ACB Assets Management, Inc. and of its
<PAGE>
parent companies (other than ACB, which is located in Washington, D.C.) is
located at 111 East Wacker Drive, Chicago, Illinois 60601.
The Managing Board of the Investment Adviser consists of Rodger D.
Shay, Edward E. Sammons, Jr., Brian Patrick Smith and James F. McKenna. See the
Statement of Additional Information for information concerning the business and
professional activities of Messrs. Shay and Sammons. Brian Patrick Smith and
James F. McKenna are affiliates of ACBAM and are members of the Managing Board
of the Investment Adviser and the Managing Board of the Distributor. Mr. Smith
is the President and a Director of America's Community Banking Partners, Inc.
and holds other executive positions with ACB. Mr. McKenna is a member of the
Board of Directors of ACB, America's Community Banking Partners, Inc. and other
ACB affiliates. His principal occupation is Chief Executive Officer of a federal
savings bank, North Shore Bank, F.S.B., located at 15700 West Blue Mound Road,
Brookfield, Wisconsin. America's Community Banking Partners, Inc. owns a
majority of the outstanding shares of First Financial Trust Company.
S.A.M., the managing partner of the Investment Adviser, is located at
111 E. Wacker Drive, Chicago, Illinois 60601 and at 888 Brickell Avenue, 5th
Floor, Miami, FL 33131. S.A.M. also has offices in New York City and Summit, New
Jersey. S.A.M. is owned by Rodger D. Shay, Arthur M. Berardelli, Barbara M.
Quesep and Rodger D. Shay, Jr. Each such person is also a shareholder and a Vice
President of Shay Financial Services, Inc. ("S.F.S.") and of Shay Government
Securities, Inc. ("S.G.S."). Rodger D. Shay, Jr. is also a Senior Vice President
of S.A.M. Roy R. Hingston and Robert T. Podraza are also Vice Presidents of
S.A.M., S.F.S. and S.G.S.
S.G.S. is the managing partner of Shay Government Securities Co. ("Shay
Government"), a registered government securities dealer with its principal place
of business at 5605 North MacArthur Blvd., Irving, Texas that is under common
control with the Investment Adviser and the Distributor by virtue of the
substantially identical ownership of the general partners. Rodger D. Shay is
President, Chief Executive Officer and a member of the Managing Board of Shay
Government and the controlling shareholder of S.G.S. Edward E. Sammons, Jr. is
Executive Vice President of Shay Government and a member of its Managing Board
and is Executive Vice President of S.G.S.
Rodger D. Shay is a shareholder of First Home Savings Bank, S.L.A., 48
West Main Street, Pennsville, New Jersey 08070 and has been a member of its
Board of Directors since December 1990. Additionally, Mr. Shay indirectly owns
24 percent of the outstanding shares of the Trust Co. by virtue of his status as
controlling shareholder of Shay Investment Services, Inc.
ITEM 29. PRINCIPAL UNDERWRITERS
Not applicable.
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The books and other documents required to be maintained pursuant to
Rule 31a-1(b) (4) and (b) (10) are in the physical possession of the Fund's
Secretary, 111 East Wacker Drive, Chicago, Illinois 60601; accounts, books and
other documents required by Rule 31a-1(b) (5) through (7) and (b) (11) and Rule
31a-1(f) are in the physical possession of Shay Assets Management Co., 111 East
Wacker Drive, Chicago, Illinois 60601; all other books, accounts and other
documents required to be maintained under Section 31(a) of the Investment
Company Act of 1940 and the Rules promulgated thereunder are in the physical
possession of PFPC Inc., 103 Bellevue Parkway, Wilmington, Delaware 19809.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of New York and
State of New York on the 30th day of April, 1997.
INSTITUTIONAL INVESTORS CAPITAL
APPRECIATION FUND, INC.
By: /s/ MARK F. TRAUTMAN
---------------------------------
Mark F. Trautman
Vice President
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
1 Restated Certificate of Incorporation
2 By-laws
17 Financial Data Schedule
</TABLE>
EXHIBIT 1
RESTATED CERTIFICATE OF INCORPORATION
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
of
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
Under Section 807 of the Business Corporation Law
We the undersigned, being officers of Institutional Investors Capital
Appreciation Fund, Inc., do hereby certify:
1. The name of the Corporation is Institutional Investors Capital
Appreciation Fund, Inc. The Corporation was incorporated under the name
Institutional Investors Mutual Fund, Inc.
2. The Certificate of Incorporation of the Corporation was filed by the
Department of State on October 29, 1952.
3. The Certificate of Incorporation is hereby amended as follows:
a. to change the description of the securities and investments in
which the Corporation may invest by modifying paragraph A of Article
Second;
b. to delete the last sentence of Article Third relating to the
minimum amount of capital with which the Corporation will commence
business;
c. to modify restrictions on the ownership and transfer of shares of
stock of the Corporation by modifying the last paragraph of Article
Fourth;
d. to delete from Article Fifth the designation of the address to
which the Secretary of State shall mail copies of process in any action
or proceeding against the Corporation;
e. to amend the first paragraph of Article Seventh to clarify the
manner in which the number of directors of the Corporation may be fixed
and to delete the second paragraph of Article Seventh relating to the
qualifications of directors;
f. to delete Article Eighth, relating to the initial directors of
the Corporation, Articles Ninth and Tenth, relating to the initial
subscribers of the Corporation, and Article Eleventh, relating to the
designation of the Secretary of State as the agent of the Corporation
upon whom process may be served;
g. to correct a typographical error in clause 8 of paragraph A of
Article Twelfth and to delete paragraphs D and E of Article Twelfth,
relating to certain transactions in which a director of the Corporation
may have an interest and to indemnification of directors by the
Corporation;
<PAGE>
h. to renumber Articles Sixth, Seventh, Twelfth and Thirteenth as
Articles Eighth, Ninth, Tenth and Eleventh, respectively;
i. to add a new Article Sixth designating the Secretary of State as
the agent of the Corporation upon whom process may be served and
designating the address to which the Secretary of State shall mail
copies of process in any action or proceeding against the Corporation;
j. to add a new Article Seventh specifying the name and address of
the Corporation's registered agent;
4. The amendments referred to herein were duly authorized by the vote
of the Board of Directors of the Corporation, followed by the affirmative vote
of the holders of a majority of all outstanding shares entitled to vote thereon
at the Corporation's Annual Meeting of Shareholders duly called and held on
April 16, 1997, and the restatement of the Certificate of Incorporation, as so
amended, was authorized by the vote of the Board of Directors of the
Corporation.
The text of the Certificate of Incorporation, as so amended, is hereby
restated to read in full as follows:
FIRST: The name of the corporation (hereinafter called the
"Corporation") is Institutional Investors Capital Appreciation Fund, Inc.
SECOND: The purposes for which the Corporation is to be formed are:
A. To engage in the business of investing in, acquiring,
owning, holding, selling, pledging, hypothecating, exchanging or
otherwise disposing of or realizing upon, and generally dealing in and
with securities, whether shares of stocks, bonds, debentures, notes,
warrants, rights, scrip, rights to receive, purchase or subscribe for
any interests, mortgages, evidences of indebtedness or obligations,
secured or unsecured, or other securities of any description, whether
in, of or made, created or issued by any corporation, company,
association, partnership, trust, syndicate, individual, government,
state, municipality or other political subdivision, but only if such
securities or investments would not cause the Corporation to cease to
be an eligible investment for savings banks under the Banking Law of
the State of New York; to exercise any and all rights, powers and
privileges with reference to such business and in respect to any and
all funds, property and securities owned by the Corporation including,
without limitation, the right to vote thereon, to consent and otherwise
act with respect thereto, to pay assessments, subscriptions and other
sums of money in connection therewith, to deposit securities, to
exercise any option appertaining to securities and to do any and all
acts and things the Corporation may deem expedient for the protection
of its interest as owner or holder of such securities.
<PAGE>
B. To issue and sell shares of stock of the Corporation in
such amounts, on such terms and conditions, for such purposes and for
such consideration, now or hereafter permitted by the laws of New York
and by this Certificate, as its board of directors may determine and
without the vote or consent of the holders of stock of the Corporation.
C. To acquire through purchase, exchange or otherwise, to
hold, dispose of, transfer, reissue or cancel, its own shares in any
manner and to the extent now or hereinafter permitted by the laws of
New York and by this Certificate.
D. To borrow from any person or corporation for proper
corporate purposes, including the acquisition of funds for investment
in securities, and to issue and deliver notes, drafts, warrants, bonds,
debentures or other obligations of the Corporation to evidence such
borrowings, containing such terms and conditions and bearing such
interest rates and having such maturities as the board of directors
from time to time may determine, and to secure the same and the
interest thereon by mortgage of, conveyance of, deed of trust of,
pledge of or through lien upon, property, franchises, rights and
privileges of every kind or nature, or any part thereof, then owned or
thereafter acquired by the Corporation.
E. To have one or more offices within or without the State of
New York, to carry on all or any of its operations, and to conduct its
business, so far as permitted by law, in any and all states,
territories, dependencies and colonies of the United States, its
possessions and in the District of Columbia and in foreign countries.
F. To do any and all such further acts and things and to
exercise any and all such further powers as may be necessary,
appropriate or desirable for, or in connection with, or incidental to,
the accomplishment, carrying out or attainment of all or any of the
foregoing purposes and objects. The amount of stock of any corporation
which may be held by the Corporation shall not exceed 5% of the number
of shares of stock of such corporation outstanding at the time of
investment by the Corporation.
The foregoing clauses shall be construed as powers as well as objects
and purposes and the matters expressed in each of the foregoing paragraphs,
unless otherwise expressly provided, shall not be limited by inference from the
terms of any other provision of this Certificate, but shall be regarded as
independent objects, purposes and powers and the enumeration of the specific
shall not be deemed to restrict the meaning of the general terms and powers, nor
shall the expression of one thing be deemed to exclude another not expressed
although of like nature.
THIRD: The amount of the capital stock of the Corporation shall be
$2,000,000. The total number of shares which the Corporation shall have
authority to issue is 2,000,000 shares of the par value of $1 per share, all of
one class.
FOURTH: No holder of shares shall have any preferential, preemptive or
other right to subscribe for or to purchase any securities of the Corporation,
whether now or hereafter authorized, other than such rights, if any, as the
<PAGE>
board of directors may from time to time determine to offer to holders of shares
at the time outstanding, and the board of directors may sell or otherwise
dispose of securities of the Corporation, except as herein otherwise required,
to any person and upon such terms and conditions, as the board of directors may
deem advisable.
Each holder of stock of the Corporation entitled to vote at a meeting
of stockholders shall (except as otherwise provided in this Certificate) be
entitled to one vote, in person or by proxy, for each share standing in his name
on the books of the Corporation.
At any meeting of the stockholders, the presence in person or by proxy,
of the holders of a majority in amount of the outstanding shares of stock of the
Corporation shall be necessary to constitute a quorum for the transaction of
business.
Shares of stock of the Corporation shall not be sold or be transferable
to or be owned by, any person other than a person resident within the State of
New York. A corporation, partnership, trust or other form of business
organization shall be deemed to be a resident of the State of New York if it has
its principal office within the State of New York. An individual shall be deemed
to be a resident of the State of New York if such individual has his principal
residence in the State of New York. A corporation, partnership, trust or other
form of business organization which is organized for the specific purpose of
acquiring shares of the Corporation shall be deemed not to be a resident of the
State of New York unless all of the beneficial owners of such organization are
residents of the State of New York.
FIFTH: The principal office of the Corporation shall be located in
the Borough of Manhattan, City, County and State of New York.
SIXTH: The Secretary of State of the State of New York is designated
as the agent of the Corporation upon whom process in any action or proceeding
against it may be served. The address within the State to which the Secretary of
State shall mail a copy of process in any action or proceeding against the
Corporation, which may be served upon him, is c/o CT Corporation System, 1633
Broadway, New York, NY 10019.
SEVENTH: The name and address of the registered agent of the
Corporation, which is to be the agent of the Corporation upon whom process
against the Corporation may be served, are CT Corporation System, 1633 Broadway,
New York, New York 10019.
EIGHTH: The duration of the Corporation shall be perpetual.
NINTH: The number of directors of the Corporation shall be as fixed
from time to time by or in accordance with the By-Laws, but in no event shall
the number be less than five nor more than twenty-five. Directors need not be
stockholders.
<PAGE>
TENTH: In furtherance and not in limitation of powers conferred by
statute, the following provisions are inserted for the regulation of the
business and the conduct of the affairs of the Corporation:
A. The board of directors of the Corporation shall have the
entire management and control of the property, business and affairs of
the Corporation and, in furtherance thereof, is expressly authorized
from time to time:
1. To make, alter, amend or repeal the By-Laws of the
Corporation, except as the stockholders in any instance
otherwise provide and any By-Laws made by the board of
directors may be altered, amended or repealed by the
stockholders at any annual meeting or at any special meeting,
the notice of which shall have included notice of the
substance of such proposed alteration, amendment or repeal.
2. To authorize the issue and sale from time to time of
shares of stock of the Corporation (now or hereafter
authorized) for such consideration, not less than the asset
value per share of such stock outstanding at the time as of
which the last preceding computation of asset value shall have
been made, and upon such other terms and conditions as may be
fixed from time to time by the board of directors but in no
event at less than par value. All shares so issued for which
the full consideration so fixed shall have been paid shall be
deemed to be fully paid and not liable for any further call or
assessment thereon.
3. To authorize the purchase, either directly or through an
agent, of shares of stock of the Corporation, upon tender
thereof by the holder, upon such terms as the board of
directors shall deem expedient, not in excess of the asset
value of such shares as of a time reasonably proximate to such
purchase, and to pay for such shares in cash, securities or
other assets owned by the Corporation, but only to the extent
of assets legally available for such purpose.
4. To determine, in accordance with sound accounting
practice, what constitutes annual or other net profits, and
net assets; to fix and vary from time to time the amount to be
reserved as working capital; to set apart out of any surplus
of the Corporation such reserves in such amount and for such
purposes as it shall determine and to abolish any such reserve
or any part thereof.
5. By affirmative action of a majority of the whole board
of directors to designate one or more committees, each
consisting of three or more directors, which except as
otherwise limited by such action or by the By-Laws of the
Corporation, shall have and may exercise the powers of the
board of directors in the management of the business and the
affairs of the Corporation, and by like action to terminate
the existence of any committee so created. Whenever in this
Certificate it is provided that any action may be taken or
<PAGE>
omitted by the board of directors, the term "board of
directors" shall be deemed to include any committee thereof
constituted as provided in this sub-paragraph 5 to the extent
that such matters may be legally delegated.
6. To distribute dividends in such amounts and in such
manner and to the stockholders of record on such dates as the
board of directors may from time to time determine, but only
out of net profits and surplus, including surplus arising from
net realized gains from the sale or other disposition of
assets, or out of any other funds legally available for the
purpose; it being intended to give to the board of directors
the power to distribute as ordinary dividends and as capital
gains distributions, amounts sufficient to enable the
Corporation to avoid or minimize liability for federal income
tax.
7. To authorize the execution of a contract or contracts
(which may be exclusive) whereby, subject to the supervision
and control of the board of directors the other person to such
contract or contracts shall
(a) render managerial, investment advisory, statistical,
research and clerical and bookkeeping services, or related
services to the Corporation, upon such terms and conditions
as may be provided therein;
(b) render such other services as may be determined by
the board of directors of the Corporation and agreed upon
in said contract or contracts;
(c) provide for the sale and repurchase of shares of
stock of the Corporation under such terms as may be
provided in said contract or contracts;
(d) act as custodian of all or a part of the funds and
securities owned by the Corporation upon such terms as
shall be fixed by the board of directors;
(e) act as transfer agent and registrar of the shares of
stock of the Corporation.
8. To eliminate from the authorized capital stock or number
of shares of the Corporation or to restore to the status of
authorized but unissued shares any shares of stock of the
Corporation theretofore redeemed, purchased or otherwise
reacquired.
B. Each holder of shares of stock shall be entitled at his
option, exercisable in accordance with the provisions hereof and of the
By-Laws of the Corporation, to require the Corporation to purchase, out
of funds legally available for that purpose, all or any part of the
<PAGE>
shares of its stock owned by such holder for an amount equal to the
asset value of such shares of stock so purchased by the Corporation.
C. For the purposes hereof, the asset value of shares of the
stock of the Corporation shall mean the proportionate interest in the
net assets of the Corporation determined by or pursuant to the
direction of the board of directors, in accordance with such methods as
shall be set forth in the By-Laws and such regulations as the board of
directors may from time to time adopt in order to enable the
Corporation to comply with any provision of applicable law, state or
federal.
ELEVENTH: The Corporation reserves the right, from time to time when
authorized by vote of holders of a majority of the shares of stock then
outstanding, to amend, alter, change or repeal any provision contained herein or
in any amendment hereto in the manner now or hereafter prescribed by statute and
all rights herein conferred on stockholders are granted subject to this
reservation.
IN WITNESS WHEREOF, we have signed this Certificate on the 16th day of
April, 1997, and we affirm that the statements contained herein are true and
under penalties of perjury.
/s/ HARRY P. DOHERTY
------------------------------------
Harry P. Doherty
President
/s/ EDWARD E. SAMMONS, JR.
------------------------------------
Edward E. Sammons, Jr.
Secretary
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 16th day of April, 1997, before me personally came Harry P.
Doherty and Edward E. Sammons, Jr., to me known, and known to me to be the
persons described in and who executed the foregoing certificate, and they
severally acknowledged to me that they had executed the same.
/s/ JAMES H. BLUCK
------------------------------------
Notary Public
(NOTARIAL SEAL)
EXHIBIT 2
BY-LAWS
<PAGE>
BY-LAWS
OF
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
(As Amended to April 16, 1997)
<PAGE>
BY-LAWS
OF
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
TABLE OF CONTENTS
Page
----
ARTICLE I. Offices................................................. 1
Section 1. Location............................................... 1
ARTICLE II. Meetings of Stockholders................................ 1
Section 1. Place of Meeting....................................... 1
Section 2. Annual Meeting......................................... 1
Section 3. Special Meetings....................................... 1
Section 4. Notice of Meetings..................................... 1
Section 5. Quorum................................................. 2
Section 6. Organization........................................... 2
Section 7. Voting................................................. 2
Section 8. Inspectors............................................. 3
Section 9. List of Stockholders at Meeting........................ 3
ARTICLE III. Board of Directors...................................... 3
Section 1. Number, Qualifications and Term of Office.............. 3
Section 2. Vacancies.............................................. 4
Section 3. Resignations........................................... 5
Section 4. Increase or Decrease in Size of Board.................. 5
Section 5. Place of Meeting....................................... 5
Section 6. Annual Meeting......................................... 5
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
Section 7. Regular Meetings....................................... 5
Section 8. Special Meetings....................................... 5
Section 9. Notice of Special Meetings............................. 5
Section 10. Organization........................................... 6
Section 11. Contracts.............................................. 6
Section 12. Supervision by New York State Banking Department....... 6
Section 13. Compensation and Reimbursement of Expenses............. 6
Section 14. Presumption of Concurrence............................. 6
Section 15. Action of Directors or Committees without Meeting...... 7
Section 16. Telephonic Meetings of the Board or Committees......... 7
ARTICLE IV. Committees.............................................. 7
ARTICLE V. Officers................................................ 8
Section 1. Number and Description................................. 8
Section 2. Term of Office......................................... 8
Section 3. Resignation............................................ 8
Section 4. Vacancies.............................................. 8
Section 5. The President.......................................... 9
Section 6. The Executive Vice President........................... 9
Section 7. The Vice President..................................... 9
Section 8. The Secretary.......................................... 9
Section 9. Assistant Secretaries.................................. 10
Section 10. Treasurer.............................................. 10
Section 11. Assistant Treasurers................................... 10
Section 12. Compensation........................................... 10
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
ARTICLE VI. Stock................................................... 11
Section 1. Representation of Shares of Stock...................... 11
Section 2. Open Accounts.......................................... 11
Section 3. Certificates of Stock.................................. 11
Section 4. Lost, Destroyed or Wrongfully Taken Certificates....... 11
Section 5. Record Date............................................ 12
Section 6. Record of Stockholders................................. 12
Section 7. Transfer of Stock...................................... 12
ARTICLE VII. Determination of Net Asset Value........................ 12
ARTICLE VIII. Repurchase of Stock..................................... 13
ARTICLE IX. Restrictions on Sale and Transfer of Shares............. 15
ARTICLE X. Investments............................................. 16
ARTICLE XI. Custodian............................................... 17
ARTICLE XII. Investment Adviser...................................... 18
Section 1. Appointment of Investment Adviser...................... 18
Section 2. Agreement with Investment Adviser...................... 18
ARTICLE XIII. Bonding of Officers and Employees....................... 18
ARTICLE XIV. Seal.................................................... 18
ARTICLE XV. Miscellaneous........................................... 19
Section 1. Fiscal Year............................................ 19
Section 2. Reports to Stockholders................................ 19
ARTICLE XVI. Amendments.............................................. 19
ARTICLE XVII. Indemnification of Directors and Officers............... 19
Section 1. Actions by or in the Right of the Corporation to
Procure a Judgment in its Favor........................ 19
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
Section 2. Other Actions or Proceedings........................... 20
Section 3. Payment of Indemnification Other Than by Court Award... 20
Section 4. Indemnification by a Court............................. 21
Section 5. Limitations on Advancement of Expenses and
Indemnification........................................ 21
Section 6. Other Limitations and Restrictions of Indemnification.. 23
<PAGE>
BY-LAWS
OF
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
ARTICLE I.
Offices.
SECTION 1. LOCATION. The principal office of the Corporation shall be
in the City of New York, County and State of New York. The Corporation shall
also have offices or agencies at such other places, either within or without the
State of New York, as the Board of Directors from time to time may designate, or
as the business of the Corporation may require.
ARTICLE II.
Meetings of Stockholders.
SECTION 1. PLACE OF MEETING. All meetings of the stockholders shall be
held at the principal office of the Corporation in the City of New York, New
York, or at such other place as may be fixed by the Board of Directors.
SECTION 2. ANNUAL MEETING. The annual meeting of the stockholders, for
the purposes of electing directors and transacting such other business as may
properly come before it, shall be held on such date and at such time and place,
as may be specified by the Board of Directors.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders for
any purpose may be called to be held at any time by a majority of the members of
the Board of Directors then in office. Special meetings shall be called upon the
written request, addressed to the President or the Secretary of the Corporation,
of the holders of not less than 25 per cent in amount of the stock of the
Corporation outstanding and entitled to vote. Such call and written request
shall state the purpose or purposes of the proposed meeting, and the business
transacted at any special meeting shall be confined to such stated purpose or
purposes.
SECTION 4. NOTICE OF MEETINGS. Written notice of the place, date, hour
and purpose or purposes of each annual meeting of the stockholders and each
special meeting of the stockholders shall be given by the Secretary, either
personally or by mail, not less than ten nor more than fifty days before the
date of the meeting. Said written notice, unless it is for the annual meeting,
shall indicate that it is being issued by or at the direction of the person or
persons calling the meeting.
If mailed, the notice of an annual or special meeting of the
stockholders shall be deemed to be given when deposited in the United States
mail, postage prepaid, addressed to each stockholder at his address as it
appears on the record of stockholders, or, if a stockholder shall have filed
1
<PAGE>
with the Secretary of the Corporation a written request that notices to him be
mailed to some other address, then directed to him at such other address.
If any meeting of the stockholders is adjourned to another time or
place, no notice of such adjourned meeting need be given other than by
announcement at the meeting at which such adjournment is taken.
Notice of the place, date, hour and purpose of any meeting of the
stockholders may be waived in writing by any stockholder either before or after
the meeting, and any such waiver shall be filed with the Secretary and by him
entered upon the records of the meeting. The attendance of any stockholder at a
meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice to him. Whenever all of the stockholders shall consent in writing to the
holding of a meeting, such meeting shall be valid without call or notice.
SECTION 5. QUORUM. At any meeting of the stockholders the holders of a
majority in amount of the outstanding shares of stock entitled to vote, present
in person or represented by proxy, shall constitute a quorum for the transaction
of any business. When a quorum is once present to organize a meeting, it shall
not be broken by the subsequent withdrawal of any stockholders.
If a quorum is present, directors shall, except as otherwise required
by law, be elected by a plurality of the votes cast at the meeting of the
stockholders. Any other corporate action by vote of the stockholders, except as
otherwise required by law, shall be authorized by a majority of the votes cast
at the meeting of the stockholders.
In the absence of a quorum at any meeting, the holders of a majority in
amount of the outstanding shares of stock entitled to vote, present in person or
represented by proxy at the meeting may adjourn the meeting from time to time
until the holders of the number of shares requisite to constitute a quorum is
present in person or represented by proxy at the meeting. At any adjourned
meeting at which a quorum is present, any business may be transacted that might
have been transacted at the meeting as originally convened.
SECTION 6. ORGANIZATION. The President, or in his absence the Executive
Vice President, or in the absence of the President and the Executive Vice
President, the Vice President, or in the absence of each of the foregoing, a
person chosen by a majority in number of the holders of stock entitled to vote
and present in person or represented by proxy, shall act as chairman of the
meeting. The Secretary, or in his absence, the Assistant Secretary, or in the
absence of both the Secretary and the Assistant Secretary, any person designated
by the Chairman, shall act as Secretary of the meeting.
SECTION 7. VOTING. Each outstanding share of stock shall be entitled to
one vote on each matter submitted to a vote at a meeting of the stockholders. A
stockholder may vote either in person or by proxy executed in writing by the
stockholder or by his duly authorized attorney-in-fact. Every proxy shall be
revocable at the pleasure of the stockholder executing it, except in those cases
where an irrevocable proxy is provided by law.
2
<PAGE>
Whenever stockholders are required or permitted to take any action by
vote, such action may be taken without a meeting on written consent, setting
forth the action so taken, signed by the holders of all outstanding shares
entitled to vote thereon.
SECTION 8. INSPECTORS. The Board of Directors, in advance of any
stockholders' meeting, shall appoint one or more inspectors to act at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at a stockholders' meeting, may, and on the request of any
stockholder entitled to vote thereat shall, appoint one or more inspectors. In
case any person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board of Directors in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector at such meeting with strict impartiality and according
to the best of his ability. The inspectors shall determine the number of shares
outstanding, the 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 results, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting or any stockholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, question or matter determined by them
and execute a certificate of any fact found by them. A report or certificate
made by them shall be prima facie evidence of the facts stated and of the vote
as certified by them.
SECTION 9. LIST OF STOCKHOLDERS AT MEETING. A list of stockholders as
of the record date, certified by the Secretary of the Corporation or by the
transfer agent, shall be produced at any meeting of the stockholders upon the
request thereat or prior thereto of any stockholder. If the right to vote at any
meeting is challenged, the inspectors of election or person presiding thereat,
shall require such list of stockholders to be produced as evidence of the right
of the persons challenged to vote at such meeting, and all persons who appear
from such list to be shareholders entitled to vote thereat may vote at such
meeting.
ARTICLE III.
Board of Directors.
SECTION 1. NUMBER, QUALIFICATIONS AND TERM OF OFFICE. The business of
the Corporation shall be managed by a Board of Directors, each member of which
shall:
(a) be at least twenty-one years of age;
(b) throughout his term of office, be a director, trustee or senior
officer of an institution which is qualified to be a stockholder
of the Corporation or a director, trustee or senior officer of a
holding company owning a majority of the outstanding stock of such
an institution or an officer of the Corporation;
3
<PAGE>
(c) not have been convicted within ten years of any felony or
misdemeanor involving the purchase or sale of any security or
arising out of conduct as an underwriter, broker, dealer, or
investment adviser, or as an affiliated person, salesman, or
employee of any investment company, bank, or insurance company;
(d) not be, by reason of any misconduct, permanently or temporarily
enjoined by order, judgment, or decree of any court of competent
jurisdiction from acting as an underwriter, broker, dealer, or
investment adviser, or as an affiliated person, salesman, or
employee of any investment company, bank, or insurance company, or
from engaging in or continuing any conduct or practice in
connection with any such activity or in connection with the
purchase or sale of any security;
(e) not remain in office for a period in excess of three months from
the date such director no longer qualifies as a director pursuant
to paragraph (b) above; and
(f) not remain in office if he fails to attend at least sixty percent
of the regular meetings of the Board of Directors between March
and February held in each such twelve-month period; provided,
however, that the Board of Directors may waive such attendance
requirement as to any director for any such twelve-month period
for good cause shown.
In the nomination and election of directors, appropriate consideration
shall be given to the geographical distribution of the stockholders of the
Corporation, but representation from each of the groups established by the
Savings Banks Association of New York State shall not be required.
Such directors shall be divided into three classes, which shall be as
nearly equal in number as possible, and no class shall include less than three
directors. The terms of office of the directors shall be as follows: That of the
first class shall expire at the next annual meeting of stockholders, the second
class at the second annual meeting and the third class at the third succeeding
annual meeting. At each annual meeting after such initial classification,
directors replacing those whose terms expire at such annual meeting shall be
elected to hold office until the third succeeding annual meeting. Each director
shall serve for the term for which he is elected and until his successor is
elected and shall qualify.
SECTION 2. VACANCIES. Newly created directorships resulting from an
increase in the number of directors and all vacancies occurring in the Board of
Directors may be filled by the affirmative vote of a majority of the remaining
directors, though less than a quorum of the Board of Directors, if immediately
after filling any such vacancy at least two-thirds of the directors then holding
office shall have been elected by the holders of the outstanding stock of the
Corporation at an annual or special meeting. In the event that at any time less
than a majority of the directors of the Corporation holding office were so
elected by the holders of the outstanding stock, the Board of Directors shall
forthwith cause to be held as promptly as possible, and in any event within
4
<PAGE>
sixty days, a meeting of such holders for the purpose of electing directors to
fill any existing vacancies in the Board of Directors. Any director elected by
the Board of Directors shall fill such vacancy until the next annual meeting of
stockholders, and until his successor is elected and shall qualify. Any director
elected by the holders of the outstanding stock shall fill such vacancy for the
unexpired portion of the term of his predecessor in office, and until his
successor is elected and shall qualify.
SECTION 3. RESIGNATIONS. Any director may resign at any time by giving
written notice to the President or to the Secretary of the Corporation; such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation by the Board of Directors shall not be necessary
to make it effective.
SECTION 4. INCREASE OR DECREASE IN SIZE OF BOARD. The number of
directors may be established by the vote of a majority of the entire Board of
Directors from time to time but shall not be more than twenty-five nor less than
nine. When the number of directors is increased by the Board of Directors and
any newly created directorships are filled by the Board of Directors, there
shall be no classification of the additional directors until the next annual
meeting of stockholders. No decrease in the number of directors shall shorten
the term of any incumbent director.
SECTION 5. PLACE OF MEETING. The Board of Directors may hold its
meetings at such place or places within or without the State of New York as it
may from time to time determine.
SECTION 6. ANNUAL MEETING. A meeting of the Board of Directors, to be
known as the annual meeting, shall be held without notice immediately after, and
at the same place as, the meeting of the stockholders at which such Board of
Directors is elected, for the purpose of electing the officers and appointing an
Executive Committee of the Corporation.
SECTION 7. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at least quarterly at such time and place as the Board of
Directors may from time to time determine, without call and without notice.
SECTION 8. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called at any time by the President, and shall be called by the Secretary
on the written request of any two directors. Any such special meetings may be
held at such place as shall be specified in the call, but if no place is
specified, then at the principal office of the Corporation in the City of New
York, New York.
SECTION 9. NOTICE OF SPECIAL MEETINGS. Notice of the time and place,
date and hour, of each special meeting stating the person or persons calling the
meeting shall be given by the Secretary to each director at least twenty-four
hours prior to such meeting. Such notice may be given verbally, in person or by
telephone, in writing by personal delivery, by mail, by facsimile or by
telegraph and shall specify the purpose or purposes of such meeting. Any
director may waive notice of any meeting, and the attendance of a director at
any meeting shall constitute a waiver of notice of such meeting. No business
shall be transacted at any special meeting except such as shall have been
specified in the notice or waiver of notice thereof.
5
<PAGE>
SECTION 10. ORGANIZATION. Unless the Board of Directors shall by
resolution otherwise provide, the President, or in his absence the Executive
Vice President, or in the absence of both the President and Executive Vice
President, the Vice President, shall act as chairman at all meetings of the
Board of Directors; and the Secretary, or in his absence the Assistant
Secretary, or in the absence of both the Secretary and the Assistant Secretary,
such person as may be designated by the chairman, shall act as secretary at all
such meetings.
A majority of the entire Board of Directors shall constitute a quorum
necessary for the transaction of business or of any specified item of business,
and, except as otherwise provided by law, the vote of a majority of directors
present at any meeting at which a quorum is present, shall be the act of the
Board of Directors. If at any meeting of the Board of Directors a quorum is not
present, a majority of the directors present may adjourn the meeting from time
to time.
SECTION 11. CONTRACTS. The Corporation shall not deal or contract with
any vendor, purchaser or supplier if any director of the Corporation is either
the owner of such vendor, purchaser or supplier or is a partner in, a principal
officer or the owner of 15% or more of the outstanding stock of such vendor,
purchaser or supplier, or if two or more directors of the Corporation own in the
aggregate 25% or more of the outstanding stock of such vendor, purchaser or
supplier; provided, however, that the provisions of this section shall not apply
to any savings bank organized under the laws of the State of New York or to a
corporation all of the stock of which shall be owned by savings banks organized
under the laws of the State of New York.
SECTION 12. SUPERVISION BY NEW YORK STATE BANKING DEPARTMENT. The
Corporation makes itself subject to the supervision of the New York State
Banking Department and, pursuant to such supervision, submits itself to periodic
examinations by the New York State Banking Department at such times and in such
manner as the Superintendent of Banks shall provide, and will pay the charges
for such examinations assessed against it by the Superintendent of Banks in the
same manner as if it were a banking organization organized under the laws of the
State of New York.
SECTION 13. COMPENSATION AND REIMBURSEMENT OF EXPENSES. The Board of
Directors, by resolution, may authorize the Corporation to compensate each
director for his services as a director of the Corporation, and each director,
as such, shall be entitled to reimbursement for his reasonable expenses incurred
in attending meetings or otherwise in connection with his attention to the
affairs of the Corporation.
SECTION 14. PRESUMPTION OF CONCURRENCE. A director who is present at a
meeting of the Board of Directors, or any committee thereof, at which action is
taken on the declaration of any dividend or other distribution in cash or
property, the purchase of the shares of the Corporation, the distribution of
assets to stockholders after dissolution of the Corporation without paying or
adequately providing for all known liabilities of the Corporation, excluding any
claims not filed by creditors within the time limit set in a notice given to
creditors under law, or the making of any loan to any director unless authorized
by vote of the stockholders, shall be presumed to have concurred in the action
unless his dissent thereto shall be entered in the minutes of the meeting, or
unless he shall submit his written dissent to the person acting as secretary of
the meeting before the adjournment thereof, or shall deliver or send by
registered mail such dissent to the Secretary of the Corporation promptly after
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the adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action. A director who is absent from the
meeting of the board or any committee thereof, at which such action is taken,
shall be presumed to have concurred in the action unless he shall deliver or
send by registered mail his dissent thereto to the Secretary of the Corporation
or shall cause such dissent to be filed with the minutes of the proceedings of
the Board of Directors or committee within a reasonable time after learning of
such action.
SECTION 15. ACTION OF DIRECTORS OR COMMITTEES WITHOUT MEETING. Whenever
the Board of Directors or any committee thereof is required or permitted to take
action, such action may be taken without a meeting if all members of the Board
or the committee consent in writing to the adoption of a resolution authorizing
the action. The resolution and the written consents by the members of the Board
or committee shall be filed with the minutes of the proceedings thereof.
SECTION 16. TELEPHONIC MEETINGS OF THE BOARD OR COMMITTEES. Whenever
permitted by the President or, in his absence, by the Executive Vice President,
any one or more members of the Board of Directors or any committee thereof may
participate in a meeting of the Board or such committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting, except that any action with
respect to the entry into, renewal or performance by the Corporation of any
contract or agreement whereby a person undertakes regularly to act or serve as
investment advisor of or principal underwriter for the Corporation shall be
taken only at a meeting where the requisite directors are physically present.
ARTICLE IV.
Committees.
The Board of Directors of the Corporation, by resolution adopted by a
majority of the entire Board of Directors, may designate from among its members
an executive committee and other committees, each consisting of three or more
directors, and each of which, to the extent provided in the resolution, shall
have all the authority of the Board of Directors, except that no such committee
shall have authority as to the following matters:
(1) the submission to stockholders of any action that needs
stockholder authorization;
(2) the filling of vacancies in the Board of Directors or in any
committee;
(3) the fixing of compensation of the directors for serving on the
Board of Directors or on any committee;
(4) the amendment or repeal of any resolution of the Board of
Directors which by its terms shall not be so amendable or
repealable; and
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(5) the amendment or repeal of these By-laws, or the adoption of new
By-laws.
Each such committee shall serve at the pleasure of the Board of
Directors and may adopt its own rules of procedure and shall keep regular
minutes of its proceedings and report the same to the Board of Directors.
ARTICLE V.
Officers.
SECTION 1. NUMBER AND DESCRIPTION. The officers of the Corporation, all
of whom shall be elected by the Board of Directors, shall be a President, an
Executive Vice President, a Vice President, a Secretary, one or more Assistant
Secretaries, a Treasurer, and, at the option of the Board of Directors, one or
more Assistant Treasurers.
The Board of Directors may elect or appoint such other officers and
agents as it shall deem necessary or as the business of the Corporation may
require, each of whom shall hold office for such period, have such authority and
perform such duties as the Board of Directors may prescribe from time to time.
The President shall have authority to appoint any agents or employees, other
than those elected or appointed by the Board of Directors, and to prescribe
their authority and duties, which may include the authority to appoint
subordinate officers, agents or employees.
Any two or more offices, except the office of President and Secretary,
may be held by the same person, but no officer shall execute, acknowledge or
certify any instrument in more than one capacity.
SECTION 2. TERM OF OFFICE. Each officer elected or appointed by the
Board of Directors shall hold office until the next annual meeting of the Board
of Directors and until his successor has been elected or appointed and
qualified. Any officer may be removed at any time, with or without cause, by the
affirmative vote of a majority of the whole Board of Directors. Any officer,
agent or employee not elected or appointed by the Board of Directors shall hold
office at the discretion of the President or of the officer appointing him.
SECTION 3. RESIGNATION. Any officer may resign at any time by giving
written notice to the Board of Directors, or to the President, or Secretary, or
to the officer appointing him. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein; and
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 4. VACANCIES. A vacancy in any office caused by the death,
resignation, removal or disqualification of the person elected or appointed
thereto, or by any other cause, shall be filled for the unexpired portion of the
term in the same manner as prescribed in these By-laws for regular election or
appointment to such office. In case of the absence or disability or refusal to
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act of any officer of the Corporation, or for any other reason that the Board of
Directors deems sufficient, the Board of Directors may delegate, for the time
being, the powers and duties or any of them, of such officer, to any other
officer or to any director.
SECTION 5. THE PRESIDENT. The President shall be a director and the
principal executive officer of the Corporation. He shall have general charge,
control and supervision of the management and direction of the business,
property and affairs of the Corporation subject to the control and direction of
the Board of Directors.
The President is authorized to sign, execute and acknowledge in the
name and on behalf of the Corporation, all deeds, mortgages, bonds, notes,
debentures, stock certificates, contracts, leases, reports, and other documents
and instruments, except where the signing and execution thereof by some other
officer, agent or representative of the Corporation shall be expressly
authorized and directed by law or by the Board of Directors or by these By-laws.
Unless otherwise provided by law or by the Board of Directors, the President may
authorize any officer, employee or agent of the Corporation to sign, execute and
acknowledge, in the name and on behalf of the Corporation and in his place and
stead, all such documents and instruments. The President shall have such other
powers and perform such other duties as are incident to the office of president
and as from time to time may be prescribed by the Board of Directors.
SECTION 6. THE EXECUTIVE VICE PRESIDENT. In the absence or inability to
act of the President, or if the office of President be vacant, the powers and
duties of the President shall temporarily devolve upon the Executive Vice
President, who shall be a director.
The Executive Vice President shall have such other powers and perform
such other duties as from time to time may be assigned to him by the Board of
Directors or be delegated to him by the President, including, unless otherwise
ordered by the Board of Directors, the power to sign, execute and acknowledge
all documents and instruments.
SECTION 7. THE VICE PRESIDENT. In the absence or inability to act of
the Executive Vice President, or if that office be vacant, the powers and duties
of the Executive Vice President shall temporarily devolve upon the Vice
President.
The Vice President shall have such other powers and perform such other
duties as from time to time may be assigned to him by the Board of Directors or
be delegated to him by the President or Executive Vice President, including,
unless otherwise ordered by the Board of Directors, the power to sign, execute
and acknowledge all documents and instruments.
SECTION 8. THE SECRETARY. The Secretary shall: (1) keep the minutes of
the proceedings of the stockholders, Board of Directors and executive committee
and other committees, if any, in one or more books provided for that purpose;
(2) see that all notices are duly given in accordance with the provisions of
these By-laws or as required by law; (3) be custodian of the corporate records
and of the seal of the Corporation and see that the seal of the Corporation is
affixed to all documents the execution of which on behalf of the Corporation
under its seal is duly authorized; (4) file each written request by a
stockholder that notice to him be mailed to some address other than the address
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which appears on the record of stockholders; (5) sign with the President, or a
Vice President, certificates representing shares of stock of the Corporation,
the issuance of which shall have been authorized by resolution of the Board of
Directors; (6) have general charge of the record of stockholders of the
Corporation; and (7) in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
SECTION 9. ASSISTANT SECRETARIES. In the absence of the Secretary, or
during his disability or refusal to act, his powers and duties shall temporarily
devolve upon such one of the Assistant Secretaries as the President or the Board
of Directors may direct, or, if there be but one Assistant Secretary, then upon
such Assistant Secretary. The Assistant Secretaries shall have such other powers
and perform such other duties as from time to time may be assigned to them,
respectively, by the Board of Directors or be delegated to them by the President
or the Secretary.
SECTION 10. TREASURER. The Treasurer, subject to the provisions
hereinafter set forth respecting a custodian or custodians, and any agreements
entered into by the Corporation pursuant thereto, shall have responsibility for
the custody and safekeeping of all funds of the Corporation and shall have
charge of their collection, receipt and disbursement; shall have responsibility
for the custody and safekeeping of all securities of the Corporation; shall
receive and have authority to sign receipts for all moneys paid to the
Corporation and shall deposit the same in the name and to the credit of the
Corporation in such banks or depositaries as the Board of Directors shall
approve; shall endorse for collection on behalf of the Corporation all checks,
drafts, notes and other obligations payable to the Corporation; shall disburse
the funds of the Corporation only in such manner as the Board of Directors may
require; shall sign or countersign all notes, endorsements, guarantees and
acceptances made on behalf of the Corporation when and as directed by the Board
of Directors; shall keep full and accurate accounts of the transactions of his
office in books belonging to the Corporation and render to the Board of
Directors, whenever they may require, an account of his transactions as
Treasurer; and in general shall have such other powers and perform such other
duties as are incident to the office of Treasurer and as from time to time may
be prescribed by the Board of Directors.
SECTION 11. ASSISTANT TREASURERS. In the absence of the Treasurer, or
during his disability or refusal to act, his powers and duties shall temporarily
devolve upon such one of the Assistant Treasurers as the President or the Board
of Directors may direct, or, if there be but one Assistant Treasurer, then upon
such Assistant Treasurer. The Assistant Treasurers shall have such other powers
and perform such other duties as shall from time to time be assigned to them,
respectively, by the Board of Directors or be delegated to them by the President
or the Treasurer.
SECTION 12. COMPENSATION. The salaries or other compensation of all
officers elected or appointed by the Board of Directors shall be fixed from time
to time by the Board of Directors. The salaries or other compensation of all
other officers, agents and employees of the Corporation shall be fixed from time
to time by the President, but only within such limits as to amount, and in
accordance with such other conditions, if any, as from time to time may be
prescribed by the Board of Directors.
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ARTICLE VI.
Stock.
SECTION 1. REPRESENTATION OF SHARES OF STOCK. The shares of stock of
the Corporation shall be held in open accounts or represented by certificates
for shares of stock. Certificates shall be issued if a stockholder shall request
such issuance.
SECTION 2. OPEN ACCOUNTS. Open accounts shall be maintained and
recorded by the Transfer Agent or the Registrar of the Corporation. Each open
account shall bear the name and address of the record owner of the shares held
in the open account and such other information as the Board of Directors may
deem appropriate for complete and accurate identification. Upon any change in
the number of shares held in an open account, written notice of such change
shall be mailed to the record owner.
SECTION 3. CERTIFICATES OF STOCK. Certificates representing shares of
stock of the Corporation shall be in such form as may be determined by the Board
of Directors. All such certificates shall be consecutively numbered and shall be
signed by the President or a Vice President and the Secretary or an Assistant
Secretary or the Treasurer of the Corporation and may, but need not be, sealed
with the seal of the Corporation or a facsimile thereof. The signatures of the
officers upon a certificate may be facsimiles if the certificate is
countersigned by a Transfer Agent or registered by a Registrar other than the
Corporation itself or its employee. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of
issue.
Each certificate representing shares of stock of the Corporation shall
when issued state upon the face thereof: that the Corporation is formed under
the laws of the State of New York; the name of the person or persons to whom
issued; the number and class of shares which such certificate represents; and
the par value of each share represented by such certificate. Each certificate
shall also on its face have noted conspicuously the restrictions on transfer set
forth in Article IX of these By-laws.
The name and address of the persons to whom certificates for shares of
stock are issued and the number of shares represented by and the date of issue
and transfer of each certificate, shall be entered on books of the Corporation
kept for that purpose. The stock record and transfer books and the blank stock
certificates shall be kept by such Transfer Agent or by the Secretary or such
other officer as shall be designated by the Board of Directors for that purpose.
Every certificate surrendered to the Corporation for redemption, transfer,
exchange, or credit to an open account shall be cancelled and shall show thereon
the date of cancellation.
SECTION 4. LOST, DESTROYED OR WRONGFULLY TAKEN CERTIFICATES. The Board
of Directors of the Corporation may direct a new certificate to be issued in
place of any certificate theretofore issued by the Corporation alleged to have
been lost, apparently destroyed or wrongfully taken. When authorizing such issue
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of a new certificate the Board of Directors, in its discretion and as a
condition precedent to the issuance thereof, may prescribe such terms and
conditions as it deems expedient, and may require such indemnities as it deems
adequate, to protect the Corporation from any claim that may be made against it
with respect to any such certificate alleged to have been lost, destroyed or
wrongfully taken.
SECTION 5. RECORD DATE. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of determining the stockholders entitled
to receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Board of Directors may fix, in advance, a date
as the record date for any such determination of stockholders. Such date shall
not be more than fifty nor less than ten days before the date of any meeting,
nor more than fifty days prior to any other action. When a determination of
stockholders of record entitled to notice of or to vote at any meeting of
stockholders has been made as provided herein, such determination shall apply to
any adjournment thereof, unless the Board of Directors fixes a new record date
for the adjourned meeting.
SECTION 6. RECORD OF STOCKHOLDERS. The Corporation shall keep at its
principal office, or at the office of its transfer agent or registrar in the
State of New York, a record containing the names and addresses of all
stockholders, the number of shares held by each, and the dates when they
respectively became the owners of record thereof. Except as otherwise provided
by law, the Corporation shall be entitled to recognize the exclusive right of a
record owner to receive dividends and other distributions and to vote the shares
held in his name, and the Corporation shall not be bound to recognize any other
person's equitable or legal claim to or interest in such shares.
SECTION 7. TRANSFER OF STOCK. Shares of stock of the Corporation, to
the extent transferable, shall be transferred on the books of the Corporation
only upon surrender of a certificate or certificates therefor, if any, to the
Corporation or its Transfer Agent properly endorsed or accompanied by or, if no
certificates therefor have been issued, by delivery of proper assignments duly
executed by the registered holder thereof in person or by his attorney duly
authorized in writing.
ARTICLE VII.
Determination of Net Asset Value.
The net asset value of each share of stock shall be determined in
accordance with generally accepted accounting principles as of such time as may
be specified by the Board of Directors and, unless the Corporation shall be
exempted therefrom, in accordance with the applicable provisions of the
Investment Company Act of 1940 and the rules and regulations promulgated
thereunder.
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ARTICLE VIII.
Repurchase of Stock.
The option granted to each holder of shares of stock requiring the
Corporation to purchase all or any part of such shares may be exercised only in
accordance with the following:
1. Such right shall be exercised in each instance by a notice of
redemption given to the Corporation or its Transfer Agent during
usual business hours. Such notice shall consist of an irrevocable
offer to sell each of such shares to the Corporation at the
redemption price per share and may be made orally or in writing in
form acceptable to the Corporation or its Transfer Agent. Prior to
payment of the redemption price by the Corporation,
(a) all oral notices shall be confirmed in writing; and
(b) certificates, if any, for the shares to be redeemed by the
Corporation in proper form for transfer, together with such
proof of the authenticity of signatures as may be required by
the Corporation or its Transfer Agent shall be surrendered to
the Corporation or its Transfer Agent; provided that in any
case where a certificate has been issued for part or all of
the shares to be redeemed, a duly executed stock power or
other instrument of assignment covering such shares, together
with such proof of authenticity of signatures on such stock
power or other instrument of assignment as may be required by
the Corporation or its Transfer Agent shall be delivered, if
required, to the Corporation or its Transfer Agent.
2. The redemption price applicable to any such redemption shall be
computed as of the close of the New York Stock Exchange on the day
on which notice of redemption is received by the transfer agent of
the Corporation, if received on a business day before the close of
the New York Stock Exchange; if the notice of redemption is not
received on a business day, or if such notice is received after
the close of the New York Stock Exchange on a business day, then
the redemption price shall be computed as of the close of the next
succeeding business day. Such computation shall apply only to the
extent of 2500 shares or 10% of the total number of shares owned
on the date of giving such notice by the holder presenting shares
for redemption, whichever is greater. The computation of the
redemption price of any excess number of shares as to which notice
is received from a shareholder shall be made at the close of the
New York Stock Exchange on the business day next succeeding the
date of the first computation, subject to the same maximum
limitation of the greater of 2500 shares or 10% of the total
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number of shares owned on the date of giving such notice, with
continuing like computations on each succeeding business day,
until the redemption price for all shares for which notice has
been received shall have been so determined. A business day is a
day, other than a public holiday in the State of New York, on
which the New York Stock Exchange is open for trading. The
procedures for computation of redemption prices for large
redemptions contained in the second and third sentences of this
paragraph 2 may be waived by the Board of Directors in the event
that it determines that such restrictions are not in the best
interests of the Corporation and its stockholders.
3. The redemption price shall be paid by the Corporation in cash
within seven business days after receipt of the notice of
redemption by the Corporation or its Transfer Agent, provided the
certificates for the shares to be redeemed, if any, have been
surrendered or any documentation required has been delivered to
the Corporation or its Transfer Agent; except that
(a) in the event that the redemption price of any share shall be
computed pursuant to this article on a day other than the day
of delivery of notice of redemption, then the redemption
price of such share shall be paid by the Corporation within
seven business days after such day of computation;
(b) any such payment may be postponed or the right of redemption
suspended,
(i) for any period during which the New York Stock Exchange
is closed other than customary weekend and holiday
closings or during which trading on the New York Stock
Exchange is restricted;
(ii) for any period during which the Board of Directors
determines that an emergency exists as the result of
which disposal by the Corporation of securities owned
by it is not reasonably practicable or it is not
reasonably practicable for the Corporation fairly to
determine the value of its net assets;
(iii) for such other period as the Securities and Exchange
Commission may by order permit for the protection of
security holders of the Corporation; provided that
applicable rules and regulations of the Securities and
Exchange Commission (or any succeeding governmental
authority) shall govern as to the existence of
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restricted trading under (i) above or the emergency
under (ii) above; or
(iv) for such other period as may be fixed by the Board of
Directors, if the Board of Directors shall determine
that it is contrary to the best interests of the
Corporation and to its other stockholders to commit the
Corporation to an earlier repurchase of any or all of
the shares so offered, but such determination shall be
made only when a prior offer remains unaccepted or when
the Board of Directors expressly concludes that by
reason of the number of shares offered or the condition
of the securities markets there is doubt as to the
ability of the Corporation to liquidate assets
sufficient to raise the necessary funds within an
earlier time without undue sacrifice and that the
existence of extraordinary conditions requires adoption
of an emergency measure; and
(c) any such payment may be made in whole or in part in kind, in
securities or other assets of the Corporation, if the Board
of Directors shall determine that, by reason of the closing
of the New York Stock Exchange or otherwise, the orderly
liquidation of securities owned by the Corporation is
impracticable, or payment in cash would be prejudicial to the
best interests of the remaining stockholders of the
Corporation, provided that in making any such payment in
kind, the Corporation shall, as nearly as may be practicable,
deliver securities or other assets of a market value
representing the same proportionate interest in the assets of
the Corporation as is represented by the shares so to be paid
for; whenever delivery of securities or other assets is so to
be made, such delivery shall be made as promptly as
practicable after receipt by the Corporation or its Transfer
Agent of a request for redemption in proper form accompanied
by such other documents as may be required by the Corporation
pursuant to these By-laws.
ARTICLE IX.
Restrictions on Sale and Transfer of Shares.
In addition to such restrictions as may be set forth in Article Fourth
of the Corporation's certificate of incorporation, shares of stock of the
Corporation shall not be sold or be transferable to or be owned by, any person
other than (i) a savings bank or savings and loan association which is organized
under the laws of the State of New York, (ii) a federal savings association
organized under the laws of the United States, (iii) a holding company owning a
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majority of the outstanding shares of such a savings bank, savings and loan
association or savings association, (iv) a life insurance department of any such
savings bank, savings and loan association or savings association, (v) a wholly-
or majority-owned subsidiary of any such savings bank, savings and loan
association or savings association, including without limitation a life
insurance subsidiary, or (vi) a pension trust, fund, plan or agreement
participated in by one or more such savings banks, savings and loan
associations, savings associations or holding companies to provide retirement
benefits, death benefits or disability benefits for any or all of its or their
active officers and employees.
ARTICLE X.
Investments.
As a general policy it shall be the objective of the Corporation to the
fullest extent reasonably possible to keep at least 80% of the assets (at market
value) of the Corporation invested in common stocks but it shall not be deemed
inconsistent with such general policy to invest part of said assets from time to
time in preferred stocks and obligations that are convertible into such common
stocks, or to write (sell) call options, which are listed on an organized
securities exchange, on securities which are owned by the Corporation.
All investments shall also be subject to the following restrictions and
limitations:
1. All investments shall meet the requirements of the New York
Banking Law, the requirements of the Investment Company Act of
1940 for a "diversified company" and the requirements of the
Internal Revenue Code for qualification as a "regulated investment
company".
2. The Corporation may not:
(i) purchase securities of an issuer if such purchase would
cause more than 25% of the value of the Corporation's
total assets (taken at current value) to be invested in
the securities of any one issuer or group of issuers in
the same industry;
(ii) purchase securities of an issuer if such purchase would
cause more than 5% of any class of securities of such
issuer to be held by the Corporation;
(iii) purchase securities of an issuer (other than
obligations of the United States and its
instrumentalities) if such purchase would cause more
than 5% of the Corporation's total assets, taken at
market value, to be invested in the securities of such
issuer;
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(iv) invest in any issuer for the purpose of exercising
control of management;
(v) underwrite securities of other issuers;
(vi) purchase or sell real estate, or real estate mortgage
loans;
(vii) deal in commodities or commodities contracts;
(viii)loan money, except that the Corporation may (A)
purchase debt obligations and (B) make sales of Federal
funds;
(ix) purchase on margin or sell short any security (but the
Corporation may obtain such short-term credits as may
be necessary for the clearance of purchases and sales
of securities);
(x) borrow money or mortgage or pledge any of its assets,
except that the Corporation may borrow money from banks
for temporary or emergency (but not leveraging)
purposes in an amount up to 5% of the Corporation's
total assets when the borrowing is made, and may pledge
up to 15% of its assets to secure such borrowings;
(xi) purchase or retain securities of an issuer if any
officer, director or employee of or counsel for the
Corporation is an officer, director or employee of such
issuer; and
(xii) write, purchase or sell puts, calls or combinations
thereof, except that the Corporation may (A) write
covered call options with respect to any or all of its
portfolio securities and (B) enter into closing
purchase transactions with respect to such options.
ARTICLE XI.
Custodian.
All securities and funds owned by the Corporation shall at all times be
held in the custody of one or more custodians or sub-custodians appointed by the
Board of Directors upon such terms and conditions as the Board of Directors may
fix. Each such custodian or sub-custodian shall be a bank (as defined in the
Investment Company Act of 1940, as amended) which shall have at all times an
aggregate capital, surplus and undivided profits of not less than $500,000. The
Corporation or any such custodian or sub-custodian may deposit all or any part
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of the securities owned by the Corporation in a securities depository or
clearing agency or the federal bookentry system in accordance with the
requirements of the Investment Company Act of 1940, as amended.
ARTICLE XII.
Investment Adviser.
SECTION 1. APPOINTMENT OF INVESTMENT ADVISER. The Board of Directors
may appoint an investment adviser to furnish to the Corporation investment
management services and other facilities and services upon such terms and
conditions as the Board of Directors may authorize.
SECTION 2. AGREEMENT WITH INVESTMENT ADVISER. The appointment of an
investment adviser shall be by written agreement, which agreement shall be in
compliance with the Investment Company Act of 1940.
ARTICLE XIII.
Bonding of Officers and Employees.
All officers and employees of the Corporation who may singly or jointly
with others have access to securities or funds of the Corporation, either
directly or through authority to draw upon such funds or to direct generally the
disposition of such securities, shall be bonded by a reputable fidelity
insurance company against larceny and embezzlement in such reasonable amounts as
a majority of the Board of Directors of the Corporation who are not such
officers and employees shall determine with due consideration to the value of
the aggregate assets of the Corporation to which such persons shall have access,
the type and terms of the arrangements made for the custody and safekeeping of
such assets, and the nature of securities in the Corporation's portfolio. Such
determination shall be made at least once a year.
The Secretary of the Corporation shall make all the filings and give
all the notices required by Rule 17g-1 promulgated under the Investment Company
Act of 1940.
ARTICLE XIV.
Seal.
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal, New
York". The seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any manner reproduced.
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ARTICLE XV.
Miscellaneous.
SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall be the
calendar year.
SECTION 2. REPORTS TO STOCKHOLDERS. The Board of Directors shall at
least semi-annually submit to the stockholders a written financial report of the
transactions of the Corporation including financial statements which shall at
least annually be reported on by independent public accountants.
ARTICLE XVI.
Amendments.
These By-laws, except as otherwise provided by law, may be amended or
repealed or new By-laws may be adopted by the affirmative vote of the Board of
Directors at any regular or special meeting of the Board, except that Section 11
or Section 12 of Article III shall not be altered, amended or repealed without
the prior written approval of the Superintendent of Banks of the State of New
York and Article X may not be altered, amended or repealed except upon a
majority vote of the Corporation's outstanding shares. If any By-law regulating
an impending election of directors is adopted, amended or repealed by the Board
there shall be set forth in the notice of the next meeting of stockholders for
the election of directors the By-law so adopted, amended or repealed, together
with a precise statement of changes made. By-laws adopted by the Board of
Directors may be amended or repealed by the stockholders.
ARTICLE XVII.
Indemnification of Directors and Officers.
SECTION 1. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION TO PROCURE A
JUDGMENT IN ITS FAVOR. The Corporation shall indemnify any person made, or
threatened to be made, a party to an action by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he,
his testator or intestate, is or was a director or officer of the Corporation,
or is or was serving at the request of the Corporation as a director or officer
of any other corporation of any type or kind, domestic or foreign, of any
partnership, joint venture, trust, employee benefit plan or other enterprise,
against amounts paid in settlement and reasonable expenses, including attorneys'
fees, actually and necessarily incurred by him in connection with the defense or
settlement of such action, or in connection with an appeal therein, if such
director or officer acted, in good faith, for a purpose which he reasonably
believed to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the corporation, except that no
indemnification under this Section shall be made in respect of (1) a threatened
19
<PAGE>
action, or a pending action which is settled or otherwise disposed of, or (2)
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation, unless and only to the extent that the court in
which the action was brought, or, if no action was brought, any court of
competent jurisdiction, determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such portion of the settlement amount and expenses as the court
deems proper.
SECTION 2. OTHER ACTIONS OR PROCEEDINGS. The Corporation shall
indemnify any person made, or threatened to be made, a party to an action or
proceeding (other than one by or in the right of the Corporation to procure a
judgment in its favor), whether civil (including administrative) or criminal,
including an action by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or officer of the
Corporation served in any capacity at the request of the Corporation, by reason
of the fact that he, his testator or intestate, was a director or officer of the
Corporation, or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests of
the Corporation and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.
The termination of any such civil or criminal action or proceeding by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that any such director or
officer did not act, in good faith, for a purpose which he reasonably believed
to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the Corporation or that he had reasonable
cause to believe that his conduct was unlawful.
SECTION 3. PAYMENT OF INDEMNIFICATION OTHER THAN BY COURT AWARD. A
person who has been successful, on the merits or otherwise, in the defense of a
civil (including administrative) or criminal action or proceeding of the
character described in Section 1 and Section 2 above shall be entitled to
indemnification as authorized in such Sections.
Except as provided in the paragraph above, any indemnification under
Section 1 or Section 2 of this Article, unless ordered by a court under Section
4 of this Article, shall be made by the Corporation, only if authorized in the
specific case:
(i) By the Board acting by a quorum consisting of directors who are not
parties to such action or proceeding upon a finding that the director or
officer has met the standard of conduct set forth in Section 1 or Section 2,
as the case may be; or
(ii) If such a quorum is not obtainable with due diligence or even if
obtainable, a quorum of disinterested directors so directs:
20
<PAGE>
(a) By the Board upon the opinion in writing of independent legal
counsel that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in such Sections has been met
by such director or officer; or
(b) By the stockholders upon a finding that the director or
officer has met the applicable standard of conduct set forth in such
Sections.
Expenses incurred in defending a civil or criminal action or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount as, and to the extent, required by
Section 5(a) of this Article, subject to Section 5(b).
SECTION 4. INDEMNIFICATION BY A COURT. Notwithstanding any failure of
the Corporation to provide indemnification, and despite any contrary resolution
of the Board or of the stockholders in the specific case under Section 3,
indemnification shall be awarded by a court to the extent authorized under
Section 1, Section 2 and the first paragraph of Section 3.
Where indemnification is sought by judicial action, the court may allow
a person such reasonable expenses, including attorneys' fees, during the
pendency of the litigation as are necessary in connection with his defense
therein, if the court shall find that the defendant has by his pleadings or
during the course of the litigation raised genuine issues of fact or law.
SECTION 5. LIMITATIONS ON ADVANCEMENT OF EXPENSES AND INDEMNIFICATION.
(a) All expenses incurred in defending a civil or criminal action or
proceeding which are advanced by the Corporation under the last paragraph of
Section 3, or allowed by a court under the last paragraph of Section 4, shall be
repaid in case the person receiving such advancement or allowance is ultimately
found, under the procedure set forth in this Article of the bylaws not to be
entitled to indemnification or, where indemnification is granted, to the extent
the expenses so advanced by the Corporation or allowed by the court exceed the
indemnification to which he is entitled.
(b) No advancement of expenses shall be made pursuant to this Article
unless:
(i) the indemnitee, or someone on behalf of the indemnitee,
undertakes to repay the advance unless it is ultimately determined that
the indemnitee is entitled to indemnification; and
(ii) one of the following conditions has been met:
(a) the indemnitee provides security for his undertaking,
(b) the Corporation is insured against losses arising by
reason of any lawful advance, or
21
<PAGE>
(c) a majority of a quorum of the disinterested non-party
directors, or an independent legal counsel in a written
opinion, determines, based on a review of readily
available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the
indemnitee ultimately will be found entitled to
indemnification.
(c) The Corporation shall indemnify any officer or director
("indemnitee") only after the occurrence of any one of the following events:
(i) a final decision on the merits by a court or other body before
whom a proceeding was brought that the indemnitee was not liable by
reason of "Disabling Conduct," i.e., willful misfeasance, bad faith,
gross negligence or reckless disregard of duty,
(ii) a dismissal of a court action or administrative proceeding
against the indemnitee for insufficient evidence of any Disabling
Conduct with which he has been charged,
(iii) a determination, made in good faith and upon a review of the
facts, by the vote of a majority of those directors who are neither
interested persons of the Corporation or parties to the action or
proceeding, that the indemnitee was not liable by reason of Disabling
Conduct,
(iv) the receipt by the Board of Directors of a written opinion by
legal counsel not representing the indemnitee determining, upon a
review of the facts, that the indemnitee was not liable by reason of
Disabling Conduct, or
(v) under other circumstances in which indemnification may lawfully
be given.
(d) No indemnification, advancement or allowance shall be made under
this Article in any circumstance where:
(i) that the indemnification, advancement or allowance would be
inconsistent with a provision of the certificate of incorporation , a
by-law, a resolution of the board or of the stockholders, an agreement
or other proper corporate action, in effect at the time of the accrual
of the alleged cause of action asserted in the threatened or pending
action or proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification;
or
(ii) if there has been a settlement approved by the court, the
indemnification would be inconsistent with any condition with respect
to indemnification expressly imposed by the court in approving the
settlement.
22
<PAGE>
(e) If, under this Article of the by-laws any expenses or other amounts
are paid by way of indemnification, otherwise than by court order or action by
the stockholders, the Corporation shall, not later than the next annual meeting
of stockholders unless such meeting is held within three months from the date of
such payment, and in any event, within fifteen months from the date of such
payment, mail to its stockholders of record at the time entitled to vote for the
election of directors a statement specifying the persons paid, the amounts paid,
and the nature and status at the time of such payment of the litigation or
threatened litigation.
SECTION 6. OTHER LIMITATIONS AND RESTRICTIONS OF INDEMNIFICATION.
Notwithstanding anything contained in Sections 1 through 5 above of this Article
to the contrary, this Article does not protect or purport to protect any
director or officer of the Corporation against any liability to the Corporation
or to its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
23
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
AUDITED FINANCIAL STATEMENTS OF THE FUND CONTAINED IN THE FUND'S ANNUAL
REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
(INCLUDING THE NOTES THERETO).
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 56230738
<INVESTMENTS-AT-VALUE> 70016969
<RECEIVABLES> 162242
<ASSETS-OTHER> 21235
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 70200446
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51127
<TOTAL-LIABILITIES> 51127
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56362087
<SHARES-COMMON-STOCK> 517169
<SHARES-COMMON-PRIOR> 453657
<ACCUMULATED-NII-CURRENT> 538886
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5034088
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13786231
<NET-ASSETS> 70149319
<DIVIDEND-INCOME> 1060193
<INTEREST-INCOME> 318627
<OTHER-INCOME> 0
<EXPENSES-NET> 839934
<NET-INVESTMENT-INCOME> 538886
<REALIZED-GAINS-CURRENT> 5034088
<APPREC-INCREASE-CURRENT> 6807219
<NET-CHANGE-FROM-OPS> 12380193
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 539544
<DISTRIBUTIONS-OF-GAINS> 5034088
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 68268
<NUMBER-OF-SHARES-REDEEMED> 40589
<SHARES-REINVESTED> 35833
<NET-CHANGE-IN-ASSETS> 14915340
<ACCUMULATED-NII-PRIOR> 451742
<ACCUMULATED-GAINS-PRIOR> 6328622
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 492702
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 848505
<AVERAGE-NET-ASSETS> 65693664
<PER-SHARE-NAV-BEGIN> 121.75
<PER-SHARE-NII> 1.09
<PER-SHARE-GAIN-APPREC> 24.39
<PER-SHARE-DIVIDEND> 1.09
<PER-SHARE-DISTRIBUTIONS> 10.50
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 135.64
<EXPENSE-RATIO> 1.28
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
