<PAGE> 1
As filed with the Securities and Exchange Commission on November 27, 1996
Registration No. 2-82278
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
POST-EFFECTIVE AMENDMENT NO. 15 /x/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
AMENDMENT NO. 16
/x/
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
(Exact Name of Registrant As Specified In Charter)
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, Delaware 19809
(Address of Principal Executive Offices)
Registrant's Telephone Number: (302) 792-2555
EDWARD J. ROACH
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, Delaware 19809
(Name and Address of Agent For Service)
Copies to:
MORGAN R. JONES, ESQ.
Drinker Biddle & Reath
1345 Chestnut Street, Suite 1100
Philadelphia, Pennsylvania 19107
It is proposed that this filing will become effective (check
appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/x/ on November 29, 1996 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
<PAGE> 2
/ / on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
The Registrant has registered an indefinite number of securities under
the Securities Act of 1933 pursuant to Rule 24f-2. The Rule 24f-2 Notice for the
Registrant's fiscal year ended July 31, 1996 was filed on September 25, 1996.
<PAGE> 3
CALCULATION OF REGISTRATION FEE UNDER
THE SECURITIES ACT OF 1933(1)(2)
Proposed
Proposed Maximum Proposed
Title of Maximum Offering Maximum Amount of
Securities Being Amount Being Price Per Offering Registration
Registered Registered (2) Unit Price (2) Fee
- --------------------------------------------------------------------------------
Class A Common
Stock, $.001 Par
Value 168,507,520 $1.00 $168,507,520 $100
(1) Registrant has also registered an indefinite number of shares of its
Class A Common Stock under the Securities Act of 1933 pursuant to Rule
24f-2 under the Investment Company Act of 1940. Registrant's Rule 24f-2
Notice for the fiscal year ended July 31, 1996 was filed on September
25, 1996 .
(2) Registrant had actual aggregate redemptions of 1,025,115,828 shares
for its fiscal year ended July 31, 1996. Registrant has used
856,938,308 shares thereof for reductions in the filing fee pursuant
to Rule 24f-2(c) under the Investment Company Act of 1940 and has
previously used no available redemptions for reductions pursuant to
Rule 24e-2(a) of the 1940 Act during the current year. Registrant
elects to use redemptions in the amount of 168,177,520 shares for
reductions in its current amendment. While no fee is required to
register the 168,177,520 shares, the Registrant has elected to
register, for $100, an additional $330,000 (330,000 shares at $1.00
per share).
<PAGE> 4
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
Cross Reference Sheet
<TABLE>
<CAPTION>
Form N-1A Item Prospectus Caption
- -------------- ------------------
<S> <C>
1. Cover Page................................ Cover Page
2. Synopsis.................................. Background and Expense
Information
3. Condensed Financial Information........... Financial Highlights
4. General Description of Registrant......... Certain Financial
Information; Investment
Objective and Policies
5. Management of the Fund.................... Management of the Fund
6. Capital Stock and Other Securities........ Cover Page; Certain
Financial Information;
Dividends; Taxes;
Description of Shares and
Miscellaneous; Yield
7. Purchase of Securities Being
Offered.................................. Management of the Fund;
Purchase of Shares;
Redemption of Shares
8. Redemption or Repurchase.................. Redemption of Shares
9. Legal Proceedings......................... Inapplicable
</TABLE>
<PAGE> 5
MUNICIPAL FUND FOR
NEW YORK INVESTORS, INC.
("New York Money Fund")
<TABLE>
<S> <C>
Bellevue Park Corporate Center For purchase and redemption orders call:
400 Bellevue Parkway 800-441-7450 (in Delaware: 302-478-6945);
Suite 100 For current yield information call:
Wilmington, Delaware 19809 800-821-6006
(Code: New York Money-53; New York Money
Dollar-55; New York Money Plus-56).
For other information call: 800-821-7432.
</TABLE>
Municipal Fund for New York Investors, Inc. (the "Fund") is designed
primarily to provide New York institutional investors and their customers with
as high a level of current interest income that is exempt from Federal income
tax and, to the extent possible, from New York State and New York City personal
income taxes as is consistent with the preservation of capital and relative
stability of principal. Portfolio securities held by the Fund will generally
have remaining maturities of 13 months or less and will be determined by the
Fund's investment adviser to have minimal credit risk. (See "Investment
Objective and Policies.")
PNC Institutional Management Corporation and PNC Bank, National Association
serve as the Fund's adviser and sub-adviser, respectively. PFPC Inc. ("PFPC")
and Provident Distributors, Inc. ("PDI") serve as the Fund's administrators. PDI
also serves as the Fund's distributor. Shares may not be purchased by
individuals directly but, as indicated above, institutional investors, such as
banks and broker-dealers, may purchase shares for accounts maintained by
individuals.
The Fund may invest a significant percentage of its assets in a single
issuer and therefore, investment in the Fund may be riskier than an investment
in other types of money market funds.
------------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED OR
ENDORSED BY, PNC BANK, NATIONAL ASSOCIATION OR ANY OTHER BANK AND SHARES
OF THE FUND ARE NOT FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF
OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENTAL AGENCY. INVESTMENTS IN SHARES OF THE FUND INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED. THERE CAN BE NO ASSURANCE
THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
------------------------
This Prospectus briefly sets forth certain information about the Fund that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about the
Fund, contained in a Statement of Additional Information bearing the same date,
has been filed with the Securities and Exchange Commission. The current
Statement of Additional Information is available to investors without charge by
calling the Fund at 800-821-7432. The Statement of Additional Information, as
may be amended from time to time, is incorporated by reference in its entirety
into this Prospectus.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------
December 1, 1996
<PAGE> 6
BACKGROUND AND EXPENSE INFORMATION
The Fund was organized as a Maryland corporation on March 4, 1983 and
currently offers three separate series of shares-New York Money ("Money"), New
York Money Dollar ("Dollar") and New York Money Plus ("Plus"). The public
offering of Money shares commenced on August 22, 1983, and the public offering
of Dollar and Plus shares commenced on October 8, 1985. Shares of each series
represent equal pro rata interests in a single portfolio of high quality,
short-term tax-exempt obligations maintained by the Fund (See "Investment
Objective and Policies"), except that Dollar and Plus shares bear service fees
payable by the Fund (at the rate of .25% per annum) to institutional investors
for distribution and/or support services they provide to the beneficial owners
of such shares. (See "Management of the Fund-Service Organizations.") Because of
the service fees borne by Dollar and Plus shares, the net yield on such shares
can be expected, at any given time, to be approximately .25% lower than the net
yield on Money shares.
EXPENSE SUMMARY
<TABLE>
<CAPTION>
MONEY DOLLAR PLUS
SHARES SHARES SHARES
------------- ------------- -------------
(ESTIMATED)
<S> <C> <C> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees After Fee Waivers............. .05% .05% .05%
12b-1 Fees.................................... -- -- .25%
Other Expenses................................ .15% .40% .15%
Administration Fees After Fee Waivers.... .05% .05% .05%
Non-12b-1 Fees........................... -- .25% --
Other Expenses........................... .10% .10% .10%
===== ===== =====
Total Fund Operating
Expenses After
Fee Waivers................................. .20% .45% .45%
</TABLE>
- ---------------
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) an hypothetical 5% annual return and (2)
redemption at the end of each time period with respect to the
following shares:
Money Shares.............................................. $ 2 $ 6 $11 $ 26
Plus Shares............................................... $ 5 $14 $25 $ 57
Dollar Shares............................................. $ 5 $14 $25 $ 57
</TABLE>
The foregoing tables are intended to assist investors in understanding the
expenses the Fund pays. Investors bear these expenses indirectly since they
reduce the amount of income paid by the Fund to investors as dividends. In
addition, institutional investors may charge their customers fees for providing
services in connection with investments in the Fund's Dollar and Plus shares.
(For more complete descriptions of the various costs and expenses, see
"Management of the Fund" in the Prospectus and Statement of Additional
Information.) For the fiscal year ended July 31, 1996, absent voluntary fee
waivers and expense reimbursements by the Fund's service providers, "Total Fund
Operating Expenses" for the Fund's Money, Dollar and Plus shares would have been
.50%, .75%
2
<PAGE> 7
(annualized), and .75% (estimated), respectively, of the Fund's average daily
net assets. The investment advisor and administrators may from time to time
waive the advisory and administration fees otherwise payable to them or may
reimburse the Fund for its operating expenses. The foregoing table has not been
audited by the Fund's independent accountants.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND
OPERATING EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
3
<PAGE> 8
FINANCIAL HIGHLIGHTS
The tables of "Financial Highlights" below, a part of the Fund's financial
statements, set forth certain information concerning the historic investment
results for Money, Dollar and Plus shares. The financial highlights for the
fiscal years ended July 31, 1996, 1995, 1994, 1993 and 1992 have been audited by
Coopers & Lybrand L.L.P., the Fund's independent accountants, whose report
therein is incorporated by reference into the Statement of Additional
Information along with the financial statements. This information should be read
in conjunction with the Fund's financial statements and notes for the year ended
July 31, 1996, incorporated by reference into the Statement of Additional
Information. More information about the performance of the Fund is also
contained in the Annual Report to Shareholders, which may be obtained without
charge by calling 800-821-7432.
FINANCIAL HIGHLIGHTS
(For a Fund share outstanding throughout each period)
<TABLE>
<CAPTION>
MONEY SHARES
-----------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
7/31/96 7/31/95 7/31/94 7/31/93 7/31/92 7/31/91 7/31/90 7/31/89 7/31/88 7/31/87
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Year............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income From
Investment
Operations:
Net Investment
Income......... 0.0339 0.0338 0.0226 0.0230 0.0321 0.0441 0.0535 0.0548 0.0445 0.0385
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total From
Investment
Operations..... 0.0339 0.0338 0.0226 0.0230 0.0321 0.0441 0.0535 0.0548 0.0445 0.0385
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends From
Net Investment
Income......... (0.0339) (0.0338) (0.0226) (0.0230) (0.0321) (0.0441) (0.0535) (0.0548) (0.0445) (0.0385)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total
Distributions... (0.0339) (0.0338) (0.0226) (0.0230) (0.0321) (0.0441) (0.0535) (0.0548) (0.0445) (0.0385)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End
of Year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Total Returns....... 3.44% 3.43% 2.29% 2.33% 3.26% 4.50% 5.48% 5.62% 4.52% 3.92%
Ratios/Supplemental
Data:
Net Assets, End of
Year $(000)...... 272,145 246,650 279,483 204,670 267,655 284,834 310,289 287,641 315,111 347,173
Ratios of Expenses
to Average Net
Assets(1)........ 0.20% 0.20% 0.20% 0.25% 0.30% 0.30% 0.30% 0.30% 0.30% 0.31%
Ratios of Net
Investment Income
to Average Daily
Net Assets....... 3.37% 3.36% 2.28% 2.31% 3.20% 4.42% 5.35% 5.45% 4.46% 3.84%
</TABLE>
- ---------------
(1) Annualized operating expense ratios before waivers of fees by the Investment
Adviser and Administrator for Money shares for the years ended July 31,
1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989, 1988 and 1987 were .50%,
.49%, .48%, .51%, .49%, .49%, .49%, .49%, .49% and .50%, respectively.
4
<PAGE> 9
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
DOLLAR SHARES
-----------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
7/31/96(1) 7/31/95(1) 7/31/94(1) 7/31/93 7/31/92 7/31/91 7/31/90 7/31/89 7/31/88 7/31/87
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Year............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income From
Investment
Operations:
Net Investment
Income......... 0.0089 0.000 0.0127 0.0205 0.0296 0.0416 0.0510 0.0523 0.0420 0.0360
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total From
Investment
Operations..... 0.0089 0.000 0.0127 0.0205 0.0296 0.0416 0.0510 0.0523 0.0420 0.0360
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends From
Net Investment
Income......... (0.0089) 0.00 (0.0127) (0.0205) (0.0296) (0.0416) (0.0510) (0.0523) (0.0420) (0.0360)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total
Distributions... (0.0089) 0.00 (0.0127) (0.0205) (0.0296) (0.0416) (0.0510) (0.0523) (0.0420) (0.0360)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End
of Year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Total Returns....... 3.05%(2) -- 1.96%(2) 2.08% 3.01% 4.25% 5.23% 5.37% 4.27% 3.67%
Ratios/Supplemental
Data:
Net Assets, End of
Year $(000)...... 20 -- -- 46,509 50,094 54,613 69,705 70,839 82,618 87,715
Ratios of Expenses
to Average
Net Assets3...... 0.45%2 -- 0.45%2 0.50% 0.55% 0.55% 0.55% 0.55% 0.55% 0.56%
Ratios of Net
Investment Income
to Average Daily
Net Assets....... 3.07%2 -- 1.94%2 2.06% 2.95% 4.17% 5.10% 5.20% 4.21% 3.59%
</TABLE>
- ---------------
1 There were no Dollar shares outstanding during the period from March 28, 1994
to April 14, 1996.
2 Annualized.
3 Annualized operating expense ratios before waivers of fees by the Investment
Adviser and Administrator for Dollar shares for the years ended July 31, 1996,
1994, 1993, 1992, 1991, 1990, 1989, 1988 and 1987 were .75% (annualized), .73%
(annualized), .76%, .74%, .74%, .74%, .74%, .74% and .75%, respectively.
5
<PAGE> 10
<TABLE>
<CAPTION>
Plus Shares
-----------------------------------------------------------------------------------------------------------
YEAR YEAR Year Year Year Year Year Year Year Year
ENDED ENDED Ended Ended Ended Ended Ended Ended Ended Ended
7/31/961 7/31/95(1) 7/31/94 7/31/93 7/31/92 7/31/91 7/31/90 7/31/89 7/31/88 7/31/87
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Year............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income From
Investment
Operations:
Net Investment
Income......... 0.00 0.0090 0.0201 0.0205 0.0296 0.0416 0.0510 0.0523 0.0420 0.0360
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total From
Investment
Operations..... 0.00 0.0090 0.0201 0.0205 0.0296 0.0416 0.0510 0.0523 0.0420 0.0360
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends From
Net Investment
Income......... 0.00 (0.0090) (0.0201) (0.0205) (0.0296) (0.0416) (0.0510) (0.0523) (0.0420) (0.0360)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total
Distributions... 0.00 (0.0090) (0.0201) (0.0205) (0.0296) (0.0416) (0.0510) (0.0523) (0.0420) (0.0360)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End
of Year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Total Returns....... -- 2.69%2 2.04% 2.08% 3.01% 4.25% 5.23% 5.37% 4.27% 3.67%
Ratios/Supplemental
Data:
Net Assets, End of
Year $(000)...... -- -- 435 1,481 243 461 404 513 1,381 606
Ratios of Expenses
to Average
Net Assets3...... -- 0.45%2 0.45% 0.50% 0.55% 0.55% 0.55% 0.55% 0.55% 0.56%
Ratios of Net
Investment Income
to Average Daily
Net Assets....... -- 2.64%2 2.03% 2.06% 2.95% 4.17% 5.10% 5.20% 4.21% 3.59%
</TABLE>
- ---------------
1 There were no Plus shares outstanding during the period from December 2, 1994
to July 31, 1996.
2 Annualized.
3 Annualized operating expense ratios before waivers of fees by the Investment
Adviser and Administrator for Plus shares for the years ended July 31, 1995,
1994, 1993, 1992, 1991, 1990, 1989, 1988 and 1987 were .73% (annualized),
.73%, .76%, .74%, .74%, .74%, .74%, .74% and .75% respectively.
6
<PAGE> 11
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL
The Fund is a no-load, open-end, non-diversified investment company which
has an investment objective to provide investors with as high a level of current
interest income that is exempt from Federal income tax and, to the extent
possible, from New York State and New York City personal income taxes as is
consistent with the preservation of capital and relative stability of principal.
There can be, of course, no assurance that the Fund will achieve its investment
objective.
Substantially all of the Fund's assets are invested in debt obligations
issued by or on behalf of the State of New York and other states, territories,
and possessions of the United States, the District of Columbia, and their
respective authorities, agencies, instrumentalities and political subdivisions,
and tax-exempt derivative securities such as tender option bonds,
participations, beneficial interests in trusts and partnership interests
(collectively, "Municipal Obligations"). Dividends paid by the Fund that are
derived from interest on obligations that is exempt from taxation under the
Constitution or statutes of New York ("New York Municipal Obligations") are
exempt from regular Federal, New York State and New York City personal income
tax. New York Municipal Obligations include municipal securities issued by the
State of New York and its political sub-divisions, as well as certain other
governmental issuers such as the Commonwealth of Puerto Rico. Dividends derived
from interest on Municipal Obligations other than New York Municipal Obligations
are exempt from Federal income tax but may be subject to New York State and New
York City personal income tax. (See, however, "Taxes" below concerning treatment
of exempt-interest dividends paid by the Fund for purposes of the Federal
alternative minimum tax applicable to particular classes of investors.) The Fund
expects that, except during temporary defensive periods or when acceptable
securities are unavailable for investment by the Fund, the Fund's assets will be
invested primarily in New York Municipal Obligations, although the amount of the
Fund's assets invested in such securities will vary from time to time.
The Fund will not knowingly purchase securities the interest on which is
subject to Federal income tax; however, the Fund may hold uninvested cash
reserves pending investment during temporary defensive periods or, if in the
opinion of the Fund's investment adviser, suitable tax-exempt obligations are
unavailable. Uninvested cash reserves will not earn income.
The Fund invests in Municipal Obligations which are determined by the
Fund's investment adviser to present minimal credit risks pursuant to guidelines
approved by the Fund's Board of Directors pursuant to Rule 2a-7 under the
Investment Company Act of 1940, as amended (the "1940 Act"). Pursuant to these
guidelines, the Fund is authorized to purchase instruments that are determined
to have minimum credit risk and which are "Eligible Securities" under the Rule.
"Eligible securities" are (i) instruments which are rated at the time of
purchase in one of the top two rating categories by two unaffiliated nationally
recognized statistical rating organizations ("NRSROs"), (ii) instruments rated
in one of the top two rating categories by one such NRSRO (if only one such
organization rates the instrument), (iii) instruments issued by issuers with
short-term debt having such ratings, and (iv) unrated instruments determined by
the investment adviser, pursuant to procedures approved by the Board of
Directors, to be of comparable quality to such instruments. (See the Appendix to
the Statement of Additional Information for a description of applicable NRSRO
ratings.)
The Fund intends to use its best efforts to maintain its net asset value at
$1.00 per share, and computes its net asset value using the amortized cost
method. In connection with its use of this
7
<PAGE> 12
valuation method, the Fund limits the dollar-weighted average maturity of its
portfolio to not more than 90 days and the remaining maturity of each portfolio
security to not more than 13 months (with certain exceptions).
The Fund's investment objective and the policies described herein may be
changed by its Board of Directors without the affirmative vote of the holders of
a majority of the Fund's outstanding shares, except that the Fund may not change
the following investment limitations without such a vote of shareholders. The
Fund may not:
1. Invest less than 80% of its assets in securities the interest on
which is exempt from Federal income tax, except during defensive periods or
during periods of unusual market conditions.
2. Purchase the securities of any issuer if as a result more than 5%
of the value of the Fund's total assets would be invested in the securities
of such issuer, except that (a) up to 50% of the value of the Fund's total
assets may be invested without regard to this 5% limitation provided that
no more than 25% of the value of the Fund's total assets are invested in
the securities of any one issuer and (b) this 5% limitation does not apply
to securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. For purposes of this limitation, a security is
considered to be issued by the governmental entity (or entities) whose
assets and revenues back the security, or, with respect to a private
activity bond that is backed only by the assets and revenues of a
non-governmental user, by such non-governmental user. In certain
circumstances, the guarantor of a guaranteed security may also be
considered to be an issuer in connection with such guarantee, except that a
guarantee of a security shall not be deemed to be a security issued by the
guarantor when the value of all securities issued and guaranteed by the
guarantor, and owned by the Fund, does not exceed 10% of the value of the
Fund's total assets.
3. Borrow money except from banks for temporary purposes and then in
amounts not in excess of 10% of the value of the Fund's assets at the time
of such borrowing; or mortgage, pledge or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the value of the Fund's
assets at the time of such borrowing. (This borrowing provision is not
intended for investment leverage, but solely to facilitate management of
the Fund's portfolio by enabling the Fund to meet redemption requests when
the liquidation of portfolio securities is deemed to be disadvantageous or
inconvenient, and hence the Fund may not purchase any portfolio securities
while its borrowings are outstanding.)
4. Invest more than 10% of the value of the Fund's total assets in
illiquid securities which may be illiquid in light of legal or contractual
restrictions on resale or the absence of readily available market
quotations.
5. Purchase any securities, except securities issued by the United
States, any state, territory or possession of the United States, the
District of Columbia or any of their authorities, agencies,
instrumentalities or political subdivisions, which would cause more than
25% of the value of the Fund's total assets at the time of purchase to be
invested in the securities of issuers conducting their principal business
activities in the same industry.
Opinions relating to validity of Municipal Obligations and to the exemption
of interest thereon from Federal income tax (and, with respect to New York
Municipal Obligations, to the exemption of interest thereon from New York State
and New York City personal income taxes) are rendered by bond counsel to the
respective issuers at the time of issuance, and opinions relating to the
validity of
8
<PAGE> 13
and the tax-exempt status of payments received by the Fund from tax-exempt
derivatives are rendered by counsel to the respective sponsors of such
derivatives. The Fund and its investment adviser will rely on such opinions and
will not review independently the underlying proceedings relating to the
issuance of Municipal Obligations, the creation of any tax-exempt derivative
securities, or the bases for such opinions.
TYPES OF MUNICIPAL OBLIGATIONS
The two principal classifications of Municipal Obligations that may be held
by the Fund are "general obligation" securities and "revenue" securities.
General obligation securities are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue securities are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source such as the user of the
facility being financed. Revenue securities may include private activity bonds.
Such bonds may be issued by or on behalf of public authorities to finance
various privately operated facilities and are not payable from the unrestricted
revenues of the issuer. As a result, the credit quality of private activity
bonds is frequently related directly to the credit standing of private
corporations or other entities.
The Fund's portfolio may also include "moral obligation" securities, which
are normally issued by special purpose public authorities. If the issuer of
moral obligation securities is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality that
created the issuer.
OTHER INVESTMENT PRACTICES
Municipal Obligations purchased by the Fund may include variable and
floating rate demand instruments issued by industrial development authorities
and other governmental entities and which provide for adjustments in the
interest rate on certain reset dates or whenever a specified interest rate index
changes, respectively. Variable and floating rate instruments are subject to the
credit quality standards described above. In some cases the Fund may require
that the obligation to pay the principal of the instrument be backed by a letter
or line of credit or guarantee. Adverse developments affecting the banking
industry generally or a particular bank or financial institution that has
provided its credit or guarantee with respect to a Municipal Obligation held by
the Fund, including a change in the credit quality of any such bank or financial
institution, could result in a loss to the Fund and adversely affect the value
of its shares. Such instruments may carry stated maturities in excess of 397
days provided that the maturity-shortening provisions stated in Rule 2a-7 are
satisfied. Although a particular variable or floating rate demand instrument may
not be actively traded in a secondary market, in some cases, the Fund may be
entitled to principal on demand and may be able to resell such instruments in
the dealer market.
The Fund may also purchase Municipal Obligations on a "when-issued" basis.
When-issued securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield. The Fund generally will not pay for
such securities or start earning interest on them until they are received.
Securities purchased on a when-issued basis are recorded as an asset and are
subject to changes in value based upon changes in the general level of interest
rates. The Fund expects that commitments to purchase when-issued securities will
not exceed 25% of the value of its total assets absent unusual market
conditions, and that a commitment by the Fund to purchase when-issued
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<PAGE> 14
securities will not exceed 45 days. The Fund does not intend to purchase
when-issued securities for speculative purposes but only in furtherance of its
investment objective.
In addition, the Fund may acquire "stand-by commitments" with respect to
Municipal Obligations held in its portfolio. Under a stand-by commitment, a
dealer agrees to purchase at the Fund's option specified Municipal Obligations
at a price equal to their amortized cost value plus accrued interest. The Fund
will acquire stand-by commitments solely to facilitate portfolio liquidity and
does not intend to exercise its rights thereunder for trading purposes.
RISK FACTORS
The Fund is concentrated in securities issued by the State of New York or
entities within the State of New York and therefore, investment in the Fund may
be riskier than an investment in other types of money market funds.
The Fund intends to follow the diversification standards set forth in the
1940 Act except to the extent, in the investment adviser's judgment, that
non-diversification is appropriate in order to maximize the percentage of the
Fund's assets that are New York Municipal Obligations. The investment return on
a non-diversified portfolio typically is dependent upon the performance of a
smaller number of issuers relative to the number of issuers held in a
diversified portfolio. In the event of changes in the financial condition of or
in the market's assessment of certain issuers, the Fund's maintenance of large
positions in the obligations of a small number of issuers may affect the value
of the Fund's portfolio to a greater extent than that of a diversified
portfolio.
Although the Fund does not presently intend to do so on a regular basis, it
may invest more than 25% of its assets in Municipal Obligations the interest on
which is paid solely from revenues of similar projects if such investment is
deemed necessary or appropriate by the Fund's investment adviser. To the extent
that the Fund's assets are concentrated in Municipal Obligations payable from
revenues on similar projects, the Fund will be subject to the peculiar risks
presented by such projects to a greater extent than it would be if the Fund's
assets were not so concentrated.
Certain other risks with respect to portfolio securities which may be held
by the Fund from time to time are discussed herein and in the Statement of
Additional Information.
SPECIAL CONSIDERATIONS AFFECTING THE FUND
The Fund's ability to achieve its investment objective is dependent upon
the ability of the issuers of New York Municipal Obligations to meet their
continuing obligations for the payment of principal and interest. New York State
and New York City face long-term economic problems that could seriously affect
their ability and that of other issuers of New York Municipal Obligations to
meet their financial obligations.
Certain substantial issuers of New York Municipal Obligations (including
issuers whose obligations may be acquired by the Fund) have experienced serious
financial difficulties in recent years. These difficulties have at times
jeopardized the credit standing and impaired the borrowings abilities of all New
York issuers and have generally contributed to higher interest costs for their
borrowing and fewer markets for their outstanding debt obligations. In recent
years, several different issues of municipal securities of New York State and
its agencies and instrumentalities and of New York City have been downgraded by
Standard & Poor's Ratings Group ("S&P") and Moody's Investors Service, Inc.
("Moody's"). On the other hand, strong demand for New York Municipal Obligations
has at times
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<PAGE> 15
had the effect of permitting New York Municipal Obligations to be issued with
yields relatively lower, and after issuance, to trade in the market at prices
relatively higher, than comparably rated municipal obligations issued by other
jurisdictions. A recurrence of the financial difficulties previously experienced
by certain issuers of New York Municipal Obligations could result in defaults or
declines in the market values of those issuers' existing obligations and,
possibly, in the obligations of other issuers of New York Municipal Obligations.
Although as of the date of this Prospectus, no issuers of New York Municipal
Obligations are in default with respect to the payment of their Municipal
Obligations, the occurrence of any such default could affect adversely the
market values and marketability of all New York Municipal Obligations and,
consequently, the net asset value of the Fund's portfolio.
Other considerations affecting the Fund's investments in New York Municipal
Obligations are summarized in the Statement of Additional Information.
PURCHASE OF SHARES
The Fund's shares are sold to institutional investors at the net asset
value per share next determined after receipt of a purchase order by PFPC, the
Fund's transfer agent.
Purchase orders for shares will be accepted by the Fund only on a day on
which both the New York Stock Exchange and the Federal Reserve Bank of
Philadelphia are open for business (a "Business Day"), and must be transmitted
to PFPC by telephone at 800-441-7450 (in Delaware: 302-478-6945). Orders
accepted by PFPC by Noon, Eastern Time, will be executed the same day if PNC
Bank, National Association ("PNC Bank"), the Fund's Custodian, has received
payment by 4:00 P.M., Eastern Time, that day. Orders received after Noon,
Eastern Time, and orders for which payment has not been received by 4:00 P.M.,
Eastern Time, will not be accepted and notice thereof will be given to the
institution placing the order. Payment for shares may be made only in Federal
funds or other funds immediately available to PNC Bank. Payment for orders which
are not received or accepted will be returned after prompt inquiry by PNC Bank
to the sending institution.
The minimum initial investment is $5,000; however, broker-dealers and other
institutional investors may set a higher minimum for their customers. There is
no minimum subsequent investment. The Fund may in its discretion limit or reject
any order for shares.
Conflict of interest restrictions may apply to an institution's receipt of
compensation paid by the Fund in connection with the investment of fiduciary
funds in Dollar or Plus shares. Institutions, including banks regulated by the
Comptroller of the Currency and investment advisers and other money managers
subject to the jurisdiction of the Securities and Exchange Commission, the
Department of Labor or state securities commissions, should consult legal
counsel before investing in Dollar or Plus shares. (See also "Management of the
Fund -- Banking Laws.")
REDEMPTION OF SHARES
REDEMPTION PROCEDURES
Redemption orders must be transmitted to PFPC by telephone in the manner
described under "Purchase of Shares." Shares are redeemed at the net asset value
per share next determined after receipt of the redemption order by PFPC. While
the Fund intends to use its best efforts to maintain the net asset value per
share of each of its series at $1.00, the proceeds paid upon redemption may be
more or less than the amount invested depending upon a share's net asset value
at the time of redemption.
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<PAGE> 16
Payment for redeemed shares for which a redemption order is received by
PFPC prior to Noon, Eastern Time, on a Business Day is normally made in Federal
funds wired to the redeeming shareholder on the same business day. Payment for
redeemed shares for which a redemption order is received by PFPC after Noon,
Eastern Time, on such a business day or on a day that PNC Bank is closed is
normally made in Federal funds wired to the redeeming shareholder on the next
day that PNC Bank is open. The Fund reserves the right to wire redemption
proceeds within 7 days after receiving the redemption order if, in the judgment
of the Fund's administrator, an earlier payment could adversely affect the Fund.
The Fund may suspend the right of redemption or postpone the date of
payment upon redemption (as well as suspend or postpone the recordation of the
transfer of its shares) for such periods as are permitted under the 1940 Act.
The Fund reserves the right to redeem the shares of the Fund owned by a
shareholder at their net asset value if the value of such shares is less than
$4,000. Any such shareholder will first be notified in writing that its shares
have a value of less than $4,000 and be allowed 60 days to make an additional
investment before the redemption is processed by the Fund. The Fund may also
redeem shares involuntarily (and restrict the transfer of the shares) under
certain special circumstances described in the Statement of Additional
Information under "Additional Purchase and Redemption Information."
OTHER MATTERS
The Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined by PNC Institutional Management Corporation
("PIMC") as of Noon and 4:00 P.M., Eastern Time, on each Business Day (excluding
those holidays on which the Federal Reserve Bank of Philadelphia or the New York
Stock Exchange is closed). Currently, one or both of these institutions are
closed on the customary national business holidays. The net asset value per
share of each of the Fund's series is the same and is calculated by adding the
value of all of the Fund's portfolio securities and other assets, subtracting
liabilities (including the liability for the expenses of each series and
dividends declared with respect to each series) and dividing the result by the
number of the Fund's outstanding shares of such series. Portfolio securities are
valued on the basis of amortized cost. Under this method, the Fund values a
portfolio security at cost on the date of purchase and thereafter assumes a
constant amortization of any discount or premium until maturity of the security.
As a result, the value of the security for purposes of determining net asset
value normally does not change in response to fluctuating interest rates. While
the amortized cost method seems to provide certainty in portfolio valuation, it
may result in periods during which values, as determined by amortized cost, are
higher or lower than the amount the Fund would receive if it sold the
securities.
Shares of each of the Fund's series are sold and redeemed without charge by
the Fund, although Service Organizations (see below) and other institutional
investors purchasing or holding Fund shares for their customers' accounts may
charge customers for cash management and other services provided in connection
with their accounts including, for example, account maintenance fees,
compensating balance requirements or fees based upon account transactions,
assets or income. Such charges will reduce the yield of the Fund to such
customers. A customer should therefore read this Prospectus in light of the
terms governing its account with a Service Organization (or other institution)
before purchasing Fund shares. An institution purchasing or redeeming Fund
shares on behalf of its customers is responsible for transmitting orders to the
Fund in accordance with its agreements with the customers.
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<PAGE> 17
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
The business and affairs of the Fund are managed under the direction of its
Board of Directors.
The directors of the Fund are as follows:
Francis E. Drake, Jr. is the retired Chairman of the Board and Chief
Executive Officer of Rochester Gas and Electric Corp.
Rodney D. Johnson is President of Fairmount Capital Advisors, Inc.
Thomas A. Melfe is a Partner of the law firm of Donovan Leisure Newton
& Irvine.
Anthony M. Santomero is the Richard K. Mellon Professor of Finance at
The Wharton School, University of Pennsylvania.
INVESTMENT ADVISER AND SUB-ADVISER
PIMC, a wholly-owned indirect subsidiary of PNC Bank, serves as the Fund's
investment adviser. It is one of the largest bank managers of mutual funds with
assets currently under management in excess of $30 billion. PIMC was organized
in 1977 by PNC Bank to perform advisory services for investment companies and
has its principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809.
PNC Bank serves as the Fund's sub-adviser. PNC Bank is one of the largest bank
managers of investments for individuals in the United States, and together with
its predecessors has been in the business of managing the investments of
fiduciary and other accounts since 1847. PNC Bank is a wholly-owned, indirect
subsidiary of PNC Bank Corp. and its principal offices are at 1600 Market
Street, Philadelphia, Pennsylvania 19103. In 1973, Provident National Bank
(predecessor to PNC Bank) commenced advising the first institutional money
market mutual fund -- a U.S. dollar-denominated constant net asset value
fund -- offered in the United States.
PNC Bank Corp., a multi-bank holding company headquartered in Pittsburgh,
Pennsylvania, is one of the largest financial services organizations in the
United States, with banking subsidiaries in Pennsylvania, New Jersey, Delaware,
Ohio, Kentucky, Indiana, Massachusetts and Florida. Its major businesses include
corporate banking, consumer banking, real estate banking, mortgage banking and
asset management.
PNC Financial Services Group is PNC Bank Corp.'s mutual fund complex,
headquartered in Wilmington, Delaware. This group includes PFPC and PNC Bank.
The group, through PFPC and PFPC International Ltd. is a leading mutual fund
service provider, having contractual relationships with approximately 360 mutual
funds with 3.8 million shareholders and in excess of $115 billion in assets,
including some $3 billion in non-U.S. assets. In addition, the group, through
its PNC Institutional Investment Service, provides investment research to some
250 financial institutions located in the United States and abroad. PNC Bank
provides custodial services for approximately $310 billion in assets, including
approximately $185 billion in mutual fund assets.
In its advisory agreement with the Fund, PIMC has agreed to manage the
Fund's portfolio and to be responsible for, make decisions with respect to and
place orders for all purchases and sales of the Fund's portfolio securities.
PIMC also computes the Fund's net asset value and net income, and maintains
certain of the Fund's financial accounts and records. For the services provided
and expenses assumed pursuant to the advisory agreement, PIMC is entitled to
receive a fee, computed daily and
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<PAGE> 18
payable monthly, at the annual rate of .20% of the Fund's average daily net
assets. For the fiscal year ended July 31, 1996, the Fund paid advisory fees to
PIMC (after fee waivers) of .05% of the Fund's average daily net assets. PIMC
and the administrators may from time to time reduce the advisory and
administration fees otherwise payable to them or may reimburse the Fund for its
operating expenses. Any fees waived and any expenses reimbursed by PIMC and the
administrators with respect to a particular fiscal year are not recoverable.
As sub-adviser, PNC Bank has agreed to: (i) provide investment research and
credit analysis concerning the Fund's investments; (ii) make recommendations
with respect to the Fund's continuous investment program; (iii) supply PIMC with
computer facilities and operating personnel; and (iv) provide PIMC with such
statistical services as PIMC may from time to time reasonably request. As
compensation therefore, PIMC has agreed to pay PNC Bank an amount equal to 75%
of the advisory fee paid by the Fund to PIMC (subject to adjustment in certain
circumstances).
ADMINISTRATORS
PFPC whose principal business address is 400 Bellevue Parkway, Wilmington,
Delaware 19809 and PDI, whose principal business address is 259 Radnor-Chester
Road, Suite 120, Radnor, Pennsylvania 19087, serve as co-administrators. PFPC is
an indirect wholly-owned subsidiary of PNC Bank Corp. A majority of the
outstanding stock of PDI is owned by its officers.
As co-administrators, PFPC and PDI have agreed, among other things, to:
assist in maintaining office facilities for the Fund; furnish the Fund with
statistical and research data; perform administrative services in connection
with the Fund's computer access program maintained to facilitate shareholder
access to the Fund; monitor the arrangements pertaining to the Fund's agreements
with Service Organizations; prepare or assist in preparation of semi-annual
reports to the Securities and Exchange Commission, Federal and state tax returns
and filings with state securities commissions.
For their administrative services, the administrators are entitled jointly
to receive a fee, computed daily and payable monthly. (For information regarding
the administrators' administrative fee waivers and expense reimbursements, see
"Investment Adviser and Sub-Adviser" above.) For the fiscal year ended July 31,
1996, the Fund paid PFPC and PDI administrative fees (after fee waivers)
aggregating .05% of its average daily net assets. The Fund expects to reimburse
the administrators for reasonable out-of-pocket expenses incurred in connection
with the Fund's computer access program.
DISTRIBUTOR
PDI serves as distributor of the Fund's shares. Its principal offices are
located at 259 Radnor-Chester Road, Suite 120, Radnor, Pennsylvania 19087. Fund
shares are sold on a continuous basis by the Distributor as agent. The
Distributor pays the cost of printing and distributing prospectuses to persons
who are not shareholders of the Fund (excluding preparation and printing
expenses necessary for the continued registration of the Fund's shares) and of
printing and distributing all sales literature. No compensation is payable by
the Fund to the distributor for its distribution services.
CUSTODIAN AND TRANSFER AGENT
PNC Bank serves as the custodian of the Fund's assets, and PFPC, an
indirect, wholly-owned subsidiary of PNC Bank Corp., serves as the Fund's
transfer and dividend disbursing agent. The Fund compensates PNC Bank and PFPC
for their services, and reimburses PFPC for its out-of-pocket expenses incurred
in connection with its transfer agency and dividend disbursing services.
Communi-
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<PAGE> 19
cations to PFPC, including any election to reinvest dividends in additional
shares of the Fund, should be directed to PFPC Inc., P.O. Box 8950, Wilmington,
Delaware 19899.
SERVICE ORGANIZATIONS
As stated above, institutional investors ("Service Organizations") may
purchase Dollar or Plus shares offered by the Fund. Dollar shares are sold to
institutions other than broker/dealers, and Plus shares are sold to
broker/dealers, both of which enter into servicing agreements with the Fund
requiring them to provide support services to their customers who are the
beneficial owners of such shares in consideration for .25% (on an annualized
basis) of the average daily net asset value of the Dollar or Plus shares held by
the Service Organizations for the benefit of their customers. Such services,
which are described more fully in the Statement of Additional Information under
"Management of the Fund--Service Organizations," include aggregating and
processing purchase and redemption requests from customers and placing net
purchase and redemption orders with PFPC; processing dividend payments from the
Fund on behalf of customers; providing information periodically to customers
showing their positions in Dollar or Plus shares; and providing sub-accounting
with respect to shares beneficially owned by customers or the information
necessary for sub-accounting. In addition, broker/dealers purchasing Plus shares
may be requested to provide from time to time assistance (such as the forwarding
of sales literature and advertising to their customers) in connection with the
distribution of Plus shares. Under the terms of the agreements, Service
Organizations are required to provide to their customers a schedule of any fees
that they may charge such customers relating to the investment of such
customers' assets in Dollar or Plus shares. Money shares offered by the Fund may
be purchased by any type of institutional investor (including banks and
broker/dealers) which do not wish to enter into such servicing agreements with
the Fund in connection with their investments.
EXPENSES
Except as noted above, the Fund's service contractors bear all expenses in
connection with the performance of their services. The Fund bears the expenses
incurred in its operations. The ratios of the Fund's expenses to its average
annual net assets for the fiscal year ended July 31, 1996 were .20% for the
Fund's Money shares, and .45% (annualized) for the Dollar shares. The estimated
ratio of the Fund's expenses to its average annual net assets for the fiscal
year ended July 31, 1996 for Plus Shares was .45%. The Dollar shares were
reopened during the year. No Plus shares were outstanding after December 1,
1994. Without the waiver of advisory and administrative fees described above,
such ratios would have been .50%, .75% (annualized) and .75% (estimated) for the
Fund's Money, Dollar and Plus shares, respectively.
BANKING LAWS
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting, selling or distributing securities, but such banking
laws and regulations do not prohibit such a holding company or affiliate or
banks generally from acting as the investment adviser, transfer agent or
custodian to such an investment company, or from purchasing shares of such a
company as
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<PAGE> 20
agent for and upon the order of customers. PNC Bank, PIMC, PFPC, as well as
certain Service Organizations (i.e., banks), are subject to such banking laws
and regulations.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of bank Service Organizations in connection with the
provision of support services to their customers, the Fund might be required to
alter or discontinue its arrangements with Service Organizations generally and
change its method of operations. It is not anticipated, however, that any
change in the Fund's method of operations would affect its net asset value per
share or result in a financial loss to any customer.
DIVIDENDS
The Fund's net income is declared daily as a dividend to the holders of
record of each of the Fund's series of shares at the close of business on the
day of declaration. Dividends on each share of each Series are determined in the
same manner. Dollar shares bear all the expense of fees paid to Service
Organizations for their services with respect to Dollar shares, and Plus shares
bear all the expense of fees paid to Service Organizations with respect to Plus
shares. (See "Management of the Fund-Service Organizations.") Shares of each
series begin accruing dividends on the day the purchase order for the shares is
executed and continue to accrue dividends through, and including, the day before
the redemption order for the shares is executed. Dividends are paid monthly by
check, or by wire transfer if requested in writing by the shareholder, within 5
business days after the end of the month or within 5 business days of the
redemption of all of a shareholder's shares of a series. The Fund does not
expect to realize net long-term capital gains.
Institutional shareholders may elect to have their dividends reinvested in
additional full and fractional shares of the same series with respect to which
dividends are declared valued at their net asset value on the payment date.
Reinvested dividends receive the same tax treatment as dividends paid in cash.
Such election, or any revocation thereof, must be made in writing to PFPC, and
will become effective with respect to dividends paid after its receipt by PFPC.
TAXES
The Fund qualified in its last taxable year and intends to qualify in
future years as a "regulated investment company" under the Internal Revenue Code
of 1986, as amended (the "Code"). Such qualification generally relieves the Fund
of liability for Federal income taxes to the extent its earnings are distributed
in accordance with the Code. Qualification as a regulated investment company for
a taxable year requires, among other things, that the Fund distribute an amount
equal to at least the sum of 90% of its exempt-interest income net of certain
deductions and 90% of its investment company taxable income for such year, which
the Fund intends to do. Federal exempt-interest dividends may be treated by the
Fund's shareholders as items of interest excludable from their gross income
under Section 103(a) of the Code, unless under the circumstances applicable to
the particular shareholder exclusion would be disallowed. (See Statement of
Additional Information under "Additional Information Concerning Taxes").
If the Fund should hold certain "private activity bonds" issued after
August 7, 1986, the portion of dividends attributable to interest on such bonds
must be included in a shareholder's Federal alternative minimum taxable income,
as an item of tax preference, for the purpose of determining liability, if any,
for the 26% to 28% alternative minimum tax for individuals and the 20%
alternative minimum tax and the environmental tax applicable to corporations.
Corporate shareholders also must take all exempt-interest dividends into account
in determining certain adjustments for Federal alternative minimum and
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<PAGE> 21
environmental tax purposes. The environmental tax applicable to corporations is
imposed at the rate of .12% on the excess of the corporation's modified Federal
alternative minimum taxable income over $2 million. Shareholders receiving
Social Security benefits should note that all exempt-interest dividends will be
taken into account in determining the taxability of such benefits.
Exempt-interest dividends derived from interest on New York Municipal
Obligations will be exempt from New York State and New York City personal income
taxes (but not corporate franchise taxes), provided the interest on such
obligations is and continues to be excluded or exempt from applicable Federal
income taxation and New York State and New York City income taxation. Dividends
and distributions derived from taxable income and capital gains, if any, are not
exempt from Federal income tax or from New York State and New York City taxes.
Interest on indebtedness incurred or continued by a shareholder to purchase or
carry shares of the Fund is not deductible for Federal, New York State or New
York City personal income tax purposes. Except as noted with respect to New York
State and New York City personal income taxes, dividends and distributions paid
to shareholders that are derived from income on Municipal Obligations may be
taxable income under state or local law even though all or a portion of such
dividends or distributions may be derived from interest on tax-exempt
obligations that, if paid directly to shareholders, would be tax-exempt income.
Shareholders will be advised at least annually as to the Federal income
tax, as well as the New York State and New York City personal income tax, status
and consequences of dividends and distributions made each year.
The foregoing is only a brief summary of some of the important tax
considerations generally affecting the Fund and its shareholders. No attempt is
made to present a detailed explanation of the Federal, state or local income tax
treatment of the Fund or its shareholders, and this discussion is not intended
as a substitute for careful tax planning. Accordingly, potential investors in
the Fund should consult their tax advisers with specific reference to their own
tax situations.
DESCRIPTION OF SHARES AND MISCELLANEOUS
The Fund's Charter authorizes the Board of Directors to issue up to 2
billion full and fractional shares of capital stock, $.001 par value per share,
and to classify or reclassify any unissued shares of the Fund into one or more
classes or series by setting or changing in any one or more respects their
respective preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption. Pursuant to such authority, the Board of Directors has classified
1.4 billion of its shares as Money shares (Class A Common Stock), 300 million of
its shares as Dollar shares (Class A Common Stock-Special Series 1) and 300
million of its shares as Plus shares (Class A Common Stock-Special Series 2).
Each New York Money, Dollar and Plus share represents an equal
proportionate interest in the assets of the Fund. Shareholders of each series
are entitled to participate equally in any dividend or distribution declared by
the Fund's Board of Directors except as provided under "Dividends" and in the
net distributable assets of the Fund on liquidation. Fund shares have no
pre-emptive rights and only such conversion and exchange rights as the Board may
grant in its discretion. When issued for payment as described in this
Prospectus, the Fund's shares will be fully paid and non-assessable. Further,
shareholders of each series are entitled to one vote for each full share held
and proportionate fractional votes for fractional shares held, and will vote in
the aggregate and not by series, except where otherwise required by law and
except that only Dollar shares will be entitled to vote on matters submitted to
a vote of shareholders pertaining to the Fund's arrangements with Service
Organizations with respect to Dollar shares, and Plus shares will enjoy similar
voting rights on matters pertaining to
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<PAGE> 22
the Fund's arrangements with Service Organizations with respect to Plus shares.
(See "Management of the Fund-Service Organizations.") Shares of the Fund have
non-cumulative voting rights and, accordingly, the holders of more than 50% of
the Fund's outstanding shares (irrespective of series) may elect all of the
directors.
For information concerning the redemption of Fund shares and possible
restrictions on their transferability, see "Redemption of Shares."
YIELD
From time to time the Fund may advertise the "yields," "effective yields"
and "tax-equivalent yields" of its Money, Dollar and Plus shares. Yield figures
are based on historical earnings and are not intended to indicate future
performances. The "yield" for each series of Fund shares refers to the income
generated by an investment in the shares of such series over a seven-day period
(which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
the week is assumed to be generated each week over a 52-week period and is shown
as a percentage of the investment. The "effective yield" is calculated similarly
but, when annualized, the income earned by an investment in a series of Fund
shares is assumed to be reinvested in shares of that series. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment. The "tax-equivalent yield" shows the level
of taxable yield necessary to produce an after-tax yield equivalent to the
Fund's tax-free yield. It is calculated by increasing the Fund's yield
(calculated as above) by the amount necessary to reflect the payment of Federal
and New York income taxes at a stated tax rate. The "tax-equivalent yield" will
always be higher than the "yield."
For the seven-day period ended July 31, 1996, the yields on Money and
Dollar shares were 3.30% and 3.05%, respectively, the compounded effective
yields on Money and Dollar shares were 3.35% and 3.10%, respectively, and the
tax-equivalent yields on Money and Dollar shares were 5.23% and 4.83%,
respectively. These tax-equivalent yields assume a Federal income tax rate of
28% and a combined New York State and New York City income tax rate of 12.332%.
During this seven-day period, the Fund's investment adviser and administrators
voluntarily waived approximately 75% of the advisory and administration fees
payable by the Fund. Without such waivers, such yields on Money and Dollar
shares would have been 2.48% and 2.23%, respectively, the compounded effective
yields on Money and Dollar shares would have been 2.51% and 2.25%, respectively,
and the tax-equivalent yields on Money and Dollar shares would have been 3.93%
and 3.53%, respectively. The yield of any investment is generally a function of
portfolio quality and maturity, type of investment and operating expenses. The
yield on Money, as well as Dollar and Plus shares, will fluctuate and is not
necessarily representative of future results. Any fees charged by
broker-dealers, banks or others directly to their customers in connection with
investments in the Fund are not reflected in the yields on the Fund's shares,
and such fees, if charged, will reduce the actual return received by customers
on their investments. There were no Plus shares outstanding during the period
from December 1, 1994 through July 31, 1996. Investors may call 800-821-6006 to
obtain the current yields on each series of the Fund's shares.
18
<PAGE> 23
[THIS PAGE INTENTIONALLY LEFT BLANK.]
19
<PAGE> 24
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS,
OR THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION
INCORPORATED HEREIN BY
REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS
PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND OR ITS
DISTRIBUTOR. THIS PROSPECTUS
DOES NOT CONSTITUTE AN
OFFERING BY THE FUND OR BY
THE DISTRIBUTOR IN ANY
JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE
MADE.
---------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Background and Expense
Information.................. 2
Financial Highlights........... 4
Investment Objective and
Policies..................... 7
Purchase of Shares............. 11
Redemption of Shares........... 11
Management of the Fund......... 13
Dividends...................... 16
Taxes.......................... 16
Description of Shares and
Miscellaneous................ 17
Yield.......................... 18
</TABLE>
PIF-P-012-02
- --------------------------------------------------------------------------------
NEW YORK
MONEY FUND
AN INVESTMENT PORTFOLIO OFFERED BY
MUNICIPAL FUND FOR
NEW YORK INVESTORS, INC.
PROSPECTUS
DECEMBER 1, 1996 [LOGO]
<PAGE> 25
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
(the "Fund")
Statement of Additional Information
December 1, 1996
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Investment Objective and Policies............................ 1
Municipal Obligations........................................ 5
Additional Purchase and Redemption Information............... 22
Management of the Fund....................................... 23
Additional Information Concerning Taxes...................... 30
Dividends.................................................... 33
Counsel...................................................... 36
Independent Accountants...................................... 36
Miscellaneous................................................ 36
Financial Statements......................................... 38
Appendix..................................................... A-1
</TABLE>
This Statement of Additional Information is meant to be read
in conjunction with the Fund's Prospectus dated December 1, 1996 and is
incorporated by reference in its entirety into that Prospectus. Because this
Statement of Additional Information is not itself a prospectus, no investment in
shares of the Fund should be made solely upon the information contained herein.
Copies of the Fund's Prospectus may be obtained by calling 800-821-7432.
Capitalized terms used but not defined herein have the same meanings as in the
Prospectus.
<PAGE> 26
INVESTMENT OBJECTIVE AND POLICIES
As stated in the Fund's Prospectus, the investment objective
of the Fund is to provide investors with as high a level of current interest
income that is exempt from Federal income tax and, to the extent possible, from
New York State and New York City personal income taxes as is consistent with the
preservation of capital and relative stability of principal. The following
policies supplement the description of the Fund's investment objective and
policies in the Prospectus.
Additional Information on Investment Practices.
Variable and Floating Rate Demand Instruments. Variable and
floating rate demand instruments held by the Fund may have maturities of more
than 13 months provided: (i) the Fund is entitled to the payment of principal at
any time or during specified intervals not exceeding 13 months, subject to
notice of no more than 30 days, and (ii) the rate of interest on such
instruments is adjusted (based upon a pre-selected market sensitive index such
as the prime rate of a major commercial bank) at periodic intervals not
exceeding 13 months. In determining the Fund's average weighted portfolio
maturity and whether a variable or floating rate demand instrument has a
remaining maturity of 13 months or less, the maturity of each instrument will be
computed in accordance with guidelines established by the Securities and
Exchange Commission (the "SEC"). In determining whether an unrated variable or
floating rate demand instrument is of comparable quality at the time of purchase
to instruments with minimal credit risks, the Fund's investment adviser will
consider the earning power, cash flow and other liquidity ratios of the issuer
of the instrument and will continuously monitor its financial condition. In
addition, the Fund will sometimes require that the issuer's obligation to pay
the principal of the instrument be backed by an unconditional bank letter or
line of credit, guarantee or commitment to lend.
Variable and floating rate notes that do not provide for
payment within seven days may be deemed illiquid and subject to the 10%
limitation on such investments.
When-Issued Securities. As stated in the Prospectus, the Fund
may purchase Municipal Obligations on a "when-issued" basis (i.e., for delivery
beyond the normal settlement date at a stated price and yield). When the Fund
agrees to purchase when-issued securities, its custodian will set aside cash or
liquid portfolio securities equal to the amount of the commitment in a separate
account. Normally, the custodian will set aside portfolio securities to satisfy
a purchase commitment, and in such a case the Fund may be required subsequently
to place additional assets in the separate account in order to ensure that
<PAGE> 27
the value of the account remains equal to the amount of the Fund's commitment.
It may be expected that the Fund's net assets will fluctuate to a greater degree
when it sets aside portfolio securities to cover such purchase commitments than
when it sets aside cash. Because the Fund will set aside cash or liquid assets
to satisfy its purchase commitments in the manner described, the Fund's
liquidity and ability to manage its portfolio might be affected in the event its
commitments to purchase when-issued securities ever exceeded 25% of the value of
its assets.
When the Fund engages in when-issued transactions, it relies
on the seller to consummate the trade. Failure of the seller to do so may result
in the Fund's incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.
Stand-By Commitments. The Fund may acquire "stand-by
commitments" with respect to Municipal Obligations held in its portfolio. Under
a stand-by commitment, a dealer agrees to purchase, at the Fund's option,
specified Municipal Obligations at their amortized cost value to the Fund plus
accrued interest, if any. (Stand-by commitments acquired by the Fund may also be
referred to as "put" options.) Stand-by commitments may be sold, transferred or
assigned only with the underlying instruments.
The Fund expects that stand-by commitments will generally be
available without the payment of any direct or indirect consideration. However,
if necessary or advisable, the Fund may pay for a stand-by commitment either
separately in cash or by paying a higher price for portfolio securities which
are acquired subject to the commitment (thus reducing the yield to maturity
otherwise available for the same securities). The total amount paid in either
manner for outstanding stand-by commitments held in the Fund's portfolio is not
expected to exceed 1/2 of 1% of the value of the Fund's total assets calculated
immediately after each stand-by commitment is acquired.
The Fund intends to enter into stand-by commitments only with
dealers, banks and broker-dealers which, in the investment adviser's opinion,
present minimal credit risks. In evaluating the creditworthiness of the issuer
of a stand-by commitment, the investment adviser will review periodically the
issuer's assets, liabilities, contingent claims and other relevant financial
information.
The Fund would acquire stand-by commitments solely to
facilitate portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes. Stand-by commitments acquired by the Fund would
be valued at zero in determining net asset value. Where the Fund paid any
consideration directly or indirectly for a stand-by commitment, its cost would
be reflected
-2-
<PAGE> 28
as unrealized depreciation for the period during which the commitment was held
by the Fund.
Portfolio Transactions.
Subject to the general control of the Fund's Board of
Directors, PNC Institutional Management Corporation ("PIMC"), the Fund's
investment adviser, is responsible for, makes decisions with respect to and
places orders for all purchases and sales of portfolio securities. Purchases and
sales of portfolio securities are usually principal transactions without
brokerage commissions. Purchases, if any, from underwriters may include a
commission or concession paid by the issuer to the underwriter and purchases
from dealers serving as market markers may include the spread between the bid
and asked prices. In transactions with dealers, PIMC seeks to obtain the best
net price and the most favorable execution of orders. To the extent that the
execution and price offered by more than one dealer are comparable, PIMC may, in
its discretion, effect transactions in portfolio securities with dealers who
provide the Fund with research advice or other services such as information
relating to the price of portfolio securities.
Investment decisions for the Fund are made independently from
those for other investment company portfolios advised by PIMC. Such other
investment company portfolios may invest in the same securities as the Fund.
When purchases or sales of the same security are made at substantially the same
time on behalf of such other investment company portfolios, transactions are
averaged as to price, and available investments allocated as to amount, in a
manner which PIMC believes to be equitable to each investment company portfolio,
including the Fund. In some instances, this investment procedure may adversely
affect the price paid or received by the Fund or the size of the position
obtained for the Fund. To the extent permitted by law, PIMC may aggregate the
securities to be sold or purchased for the Fund with those to be sold or
purchased for such other investment companies in order to obtain best execution.
Portfolio securities will not be purchased from or sold to
PIMC, PNC Bank, National Association ("PNC Bank"), PFPC Inc. ("PFPC"), Provident
Distributors, Inc. ("PDI"), or any affiliated person of any of them (as such
term is defined in the 1940 Act) except to the extent permitted by the SEC. In
addition, the Fund will not purchase Municipal Obligations during the existence
of any underwriting or selling group relating thereto of which PNC Bank is a
member, except to the extent permitted by the SEC. Under certain circumstances,
the Fund may be at a disadvantage because of these limitations in comparison
with other investment company portfolios which have a similar investment
objective but are not subject to such limitations. Furthermore, with respect to
such transactions, securities and deposits, the Fund will not
-3-
<PAGE> 29
give preference to Service Organizations with whom the Fund enters into
agreements concerning the provision of support services to customers who
beneficially own shares of New York Money Dollar ("Dollar shares") or New York
Money Plus ("Plus shares"). (See the Prospectus, "Management of the Fund -
Service Organizations.")
The Fund may participate, if and when practicable, in bidding
for the purchase of Municipal Obligations directly from an issuer in order to
take advantage of the lower purchase price available to members of such a group.
The Fund will engage in this practice, however, only when PIMC, in its sole
discretion, believes such practice to be otherwise in the Fund's interest.
The Fund does not intend to seek profits through short-term
trading. The Fund's annual portfolio turnover will be relatively high because of
the short-term nature of the instruments in which it invests, but the Fund's
portfolio turnover is not expected to have a material effect on its net income.
The Fund's portfolio turnover is expected to be zero for regulatory reporting
purposes.
Additional Investment Limitations.
In addition to the investment limitations disclosed in the
Prospectus, the Fund is subject to the following investment limitations, which
may only be changed by a vote of the holders of a majority of the Fund's
outstanding shares (as defined below under "Miscellaneous").
The Fund may not:
1. Make loans except that the Fund may purchase or hold debt
obligations in accordance with its investment objective, policies and
limitations.
2. Underwrite any issue of securities except to the extent
that the purchase of debt obligations directly from the issuer thereof in
accordance with the Fund's investment objective, policies and limitations may be
deemed to be underwriting.
3. Purchase or sell real estate except that the Fund may
invest in debt obligations secured by real estate or interests therein.
4. Purchase securities on margin, make short sales of
securities or maintain a short position.
5. Write or sell puts, calls, straddles, spreads or
combinations thereof.
-4-
<PAGE> 30
6. Purchase or sell commodities or commodity contracts,
or invest in oil, gas or mineral exploration or development programs.
7. Purchase securities of other investment companies
except in connection with a merger, consolidation, acquisition or
reorganization.
Portfolio Valuation.
The Fund's portfolio securities are valued on the basis of
amortized cost. In connection with its use of amortized cost valuation, the Fund
limits the dollar-weighted average maturity of its portfolio to not more than 90
days and does not purchase any instrument with a remaining maturity of more than
13 months (with certain exceptions). The Fund's Board of Directors has also
established procedures that are intended to stabilize the net asset value per
share of each of the Fund's series of shares for purposes of sales and
redemptions at $1.00. Such procedures include the determination, at such
intervals as the Board deems appropriate, of the extent, if any, to which the
Fund's net asset value per share calculated by using available market quotations
deviates from $1.00 per share. In the event such deviation exceeds 1/2 of 1%,
the Board will promptly consider what action, if any, should be initiated. If
the Board believes that the amount of any deviation from the Fund's $1.00
amortized cost price per share may result in material dilution or other unfair
results to investors or existing shareholders, it will take such steps as it
considers appropriate to eliminate or reduce to the extent reasonably
practicable any such dilution or unfair results. These steps may include selling
portfolio instruments prior to maturity; shortening the Fund's average portfolio
maturity; withholding or reducing dividends; redeeming shares in kind; reducing
the number of the Fund's outstanding shares without monetary consideration; or
utilizing a net asset value per share determined by using available market
quotations.
MUNICIPAL OBLIGATIONS
In General.
Municipal Obligations include debt obligations issued by
governmental entities to obtain funds for various public purposes, including the
construction of a wide range of public facilities, the refunding of outstanding
obligations, the payment of general operating expenses and the extension of
loans to public institutions and facilities. Private activity bonds that are
issued by or on behalf of public authorities to finance various
privately-operated facilities are included within the term Municipal Obligations
if the interest paid thereon is
-5-
<PAGE> 31
(subject to the Federal alternative minimum tax) exempt from regular Federal
income tax.
The Fund may hold tax-exempt derivatives which may be in the
form of tender option bonds, participations, beneficial interests in a trust,
partnership interests or other forms. A number of different structures have been
used. For example, interests in long-term fixed-rate Municipal Obligations, held
by a bank as trustee or custodian, are coupled with tender option, demand and
other features when the tax-exempt derivatives are created. Together, these
features entitle the holder of the interest to tender (or put) the underlying
Municipal Obligation to a third party at periodic intervals and to receive the
principal amount thereof. In some cases, Municipal Obligations are represented
by custodial receipts evidencing rights to receive specific future interest
payments, principal payments, or both, on the underlying municipal securities
held by the custodian. Under such arrangements, the holder of the custodial
receipt has the option to tender the underlying municipal security at its face
value to the sponsor (usually a bank or broker dealer or other financial
institution), which is paid periodic fees equal to the difference between the
bond's fixed coupon rate and the rate that would cause the bond, coupled with
the tender option, to trade at par on the date of a rate adjustment. The Fund
may hold tax-exempt derivatives, such as participation interests and custodial
receipts, for Municipal Obligations which give the holder the right to receive
payment of principal subject to the conditions described above. The Internal
Revenue Service has not ruled on whether the interest received on tax-exempt
derivatives in the form of participation interests or custodial receipts is
tax-exempt, and accordingly, purchases of any such interests or receipts are
based on the opinion of counsel to the sponsors of such derivative securities.
Neither the Fund nor its investment adviser will independently review the
underlying proceedings related to the creation of any tax-exempt derivatives or
the bases for such opinion.
Before purchasing a tax-exempt derivative for the Fund, the Adviser is
required by the Fund's procedures to conclude that the tax-exempt security and
the supporting short-term obligation involve minimal credit risks and are
Eligible Securities under the Fund's Rule 2a-7 procedures. In evaluating the
creditworthiness of the entity obligated to purchase the tax-exempt security,
the investment adviser will review periodically the entity's relevant financial
information. Currently, the Directors have authorized the purchase of tax-exempt
derivatives by the Fund so long as after any purchase not more than 10% of the
Fund's assets are invested in such securities.
As described in the Fund's Prospectus, the two principal
classifications of Municipal Obligations consist of
-6-
<PAGE> 32
"general obligation" and "revenue" issues, and the Fund's portfolio may include
"moral obligation" issues, which are normally issued by special purpose
authorities. There are, of course, variations in the quality of Municipal
Obligations, both within a particular classification and between
classifications, and the yields on Municipal Obligations depend upon a variety
of factors, including general money market conditions, the financial condition
of the issuer, general conditions of the municipal bond market, the size of a
particular offering, the maturity of the obligation and the rating of the issue.
The ratings of Moody's and S&P represent their opinions as to the quality of
Municipal Obligations. It should be emphasized, however, that ratings are
general and are not absolute standards of quality, and Municipal Obligations
with the same maturity, interest rate and rating may have different yields while
Municipal Obligations of the same maturity and interest rate with different
ratings may have the same yield. Subsequent to its purchase by the Fund, an
issue of Municipal Obligations may cease to be rated or its rating may be
reduced below the minimum rating required for purchase by the Fund. The Fund's
investment adviser will consider such an event in determining whether the Fund
should continue to hold the obligation.
An issuer's obligations under its Municipal Obligations are
subject to the provisions of bankruptcy, insolvency and other laws affecting the
rights and remedies of creditors, such as the Federal Bankruptcy Code, and laws,
if any, which may be enacted by Federal or state legislatures extending the time
for payment of principal or interest, or both, or imposing other constraints
upon enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its Municipal Obligations may be
materially adversely affected by litigation or other conditions.
Among other types of Municipal Obligations, the Fund may
purchase short-term General Obligation Notes, Tax Anticipation Notes, Bond
Anticipation Notes, Revenue Anticipation Notes, Tax-Exempt Commercial Paper,
Construction Loan Notes and other forms of short-term loans. Such instruments
are issued with a short-term maturity in anticipation of the receipt of tax
funds, the proceeds of bond placements or other revenues. In addition, the Fund
may invest in other types of tax-exempt instruments, including general
obligation and private activity bonds, provided they have remaining maturities
of 13 months or less at the time of purchase.
-7-
<PAGE> 33
Special Considerations Relating to New York Municipal Obligations.
Some of the significant financial considerations relating to
the Fund's investments in New York Municipal Obligations are summarized below.
This summary information is not intended to be a complete description and is
principally derived from official statements relating to issues of New York
Municipal Obligations that were available prior to the date of this Statement of
Additional Information. The accuracy and completeness of the information
contained in those official statements have not been independently verified.
STATE ECONOMY. New York is the third most populous state in the nation and has a
relatively high level of personal wealth. The State's economy is diverse with a
comparatively large share of the nation's finance, insurance, transportation,
communications and services employment, and a very small share of the nation's
farming and mining activity. The State has a declining proportion of its
workforce engaged in manufacturing, and an increasing proportion engaged in
service industries. New York City (the "City"), which is the most populous city
in the State and nation and is the center of the nation's largest metropolitan
area, accounts for a large portion of the State's population and personal
income.
The State has historically been one of the wealthiest states
in the nation. For decades, however, the State has grown more slowly than the
nation as a whole, gradually eroding its relative economic position.
There can be no assurance that the State economy will not
experience worse-than-predicted results in the 1996-97 fiscal year, with
corresponding material and adverse effects on the State's projections of
receipts and disbursements.
State per capita personal income has historically been
significantly higher than the national average, although the ratio has varied
substantially. State per capita income for 1994 was estimated at $25,999, which
was 19.2% above the 1994 estimated national average of $21,809. Between 1975
and 1990 total employment grew by 21.3 percent while the labor force grew only
by 15.7 percent, unemployment fell from 9.5 percent to 5.2 percent of the labor
force. In 1991 and 1992, however, total employment in the State fell by 5.5
percent. As a result, the unemployment rate rose to 8.5 percent reflecting a
recession that has had a particularly strong impact on the entire Northeast.
Calendar years 1993 and 1994 saw only a partial recovery.
STATE BUDGET. The State Constitution requires the governor (the Governor) to
submit to the State legislature (the "Legislature") a balanced executive budget
which contains a
-8-
<PAGE> 34
complete plan of expenditures for the ensuing fiscal year and all moneys and
revenues estimated to be available therefor, accompanied by bills containing all
proposed appropriations or reappropriations and any new or modified revenue
measures to be enacted in connection with the executive budget. The entire plan
constitutes the proposed State financial plan for that fiscal year. The Governor
is required to submit to the Legislature quarterly budget updates which include
a revised cash-basis state financial plan, and an explanation of any changes
from the previous state financial plan.
The Governor presented his 1996-97 Executive Budget to the
Legislature on December 15, 1995, and subsequently amended it.
The Governor's Executive Budget projected balance on a cash
basis in the General Fund. It reflected a continuing strategy of substantially
reduced State spending, including program restructurings, reductions in social
welfare spending, and efficiency and productivity initiatives.
On March 15, 1996, the Governor presented amendments to the
1996-97 Executive Budget to provide for balancing the 1996-97 state financial
plan if the federal government failed to adopt entitlement changes assumed to
produce savings in the State's 1996-97 Executive Budget.
The State's budget for the 1996-97 fiscal year was enacted by
the Legislature on July 13, 1996, more than three months after the start of the
fiscal year. Prior to adoption of the budget, the Legislature enacted
appropriations for disbursements considered to be necessary for State operations
and other purposes, including necessary appropriations for all State-supported
debt service. The State Financial Plan for the 1996-97 fiscal year was
formulated on July 25, 1996 and is based on the State's budget as enacted by the
Legislature and signed into law by the Governor, as well as actual results for
the first quarter of the current fiscal year (the "1996-97 State Financial
Plan").
The 1996-97 State Financial Plan is projected to be balanced
on a cash basis. As compared to the Governor's proposed budget as revised on
March 20, 1996, the 1996-97 State Financial Plan increases General Fund spending
by $842 million, primarily from funding increases for education, special
education and higher education ($563 million). The balance represents funding
increases to a variety of other programs, including community projects and
increased assistance to fiscally distressed cities. Resources uses to fund these
additional expenditures include $540 million in increased revenues projected for
1996-97 based on higher-than-projected tax collections during the first half of
calendar 1996, $110 million in projected receipts from a new
-9-
<PAGE> 35
State tax amnesty program, and other resources including certain non-recurring
resources.
The 1996-97 State Financial Plan includes actions that will
have an effect on the budget outlook for State fiscal year 1996-97 and beyond.
The Division of the Budget estimates that the 1996-97 State Financial Plan
contains actions that provide non-recurring resources or savings totaling
approximately $1.3 billion or 3.9% of total General Fund receipts.
The State Division of the Budget has noted that the economic
and financial condition of the State may be affected by various financial,
social, economic and political factors. Those factors can be very complex, can
vary from fiscal year to fiscal year, and are frequently the result of actions
taken not only by the State but also by entities, such as the federal
government, that are outside the State's control. Because of the uncertainty and
unpredictability of changes in these factors, their impact cannot be fully
included in the assumptions underlying the State's projections. There can be no
assurance that the State economy will not experience results that are worse than
predicted, with corresponding material and adverse effects on the State's
financial projections.
In the past, the State has taken management actions and made
use of internal sources to address cash flow needs and State financial plan
shortfalls, and the Division of Budget believes it could take similar action
should variances from its projections occur in the current fiscal year. Those
variances could, however, affect the State's ability to achieve a balanced
budget on a cash basis for the fiscal year.
Uncertainties with regard to both the economy and potential
decisions at the federal level add further pressure on future budget balance in
New York State. For example, various proposals relating to federal tax and
spending policies could, if enacted, have a significant impact on the State's
financial condition in the current and future fiscal years. The budget and tax
proposals under consideration at the federal level but not included in the
State's 1996-97 State Financial Plan could also have a disproportionately
negative impact on the longer-term outlook for the State's economy as compared
to other states. A significant risk to the State's projections arises from tax
legislation under consideration by Congress and the President. Congressionally
adopted retroactive changes to federal tax treatment of capital gains would flow
through automatically to the State personal income tax. Such changes, if
ultimately enacted, could produce revenue losses in the 1996-1997 fiscal year.
In addition, changes in federal aid programs could result in prolonged
interruptions in the receipt of federal grants.
-10-
<PAGE> 36
The projections and assumptions contained in the 1996- 97
State Financial Plan are subject to revision which may involve substantial
change, and no assurance can be given that these estimates and projections will
be realized.
In the State's 1997 fiscal year and in certain recent fiscal
years, the State has failed to enact a budget prior to the beginning of the
State's fiscal year.
RECENT FINANCIAL RESULTS. The General Fund is the principal operating fund of
the State and is used to account for all financial transactions, except those
required to be accounted for in another fund. It is the State's largest fund and
receives almost all State taxes and other resources not dedicated to particular
purposes.
The State reported a General Fund operating deficit of $1.426
billion for the 1994-95 fiscal year, as compared to an operating surplus of $914
million for the prior fiscal year. The 1994-95 fiscal year deficit was caused by
several factors, including the use of $1.026 billion of the 1993-94 cash-based
surplus to fund operating expenses in 1994-95 and the adoption of changes in
accounting methodologies by the State Comptroller. These factors were offset by
net proceeds of $315 million in bonds issued by the Local Government Assistance
Corporation.
The General Fund is projected to be balanced on a cash basis
for the 1996-97 fiscal year. Total receipts and transfers from other funds are
projected to be $33.17 billion, an increase of $365 million from the prior
fiscal year. Total General Fund disbursements and transfers to other funds are
projected to be $33.12 billion, an increase of $444 million from the total in
the prior fiscal year.
Total revenues for 1994-95 were $31.455 billion. Revenues
decreased by $173 million over the prior fiscal year, a decrease of less than
one percent. Total expenditures for 1994-95 totaled $33.079 billion, an increase
of $2.083 billion, or 6.7 percent over the prior fiscal year.
The State's financial position on a GAAP (generally accepted
accounting principles) basis as of March 31, 1995 showed an accumulated deficit
in its combined governmental funds of $1.666 billion, reflecting liabilities of
$14.778 billion and assets of $13.112 billion.
DEBT LIMITS AND OUTSTANDING DEBT. There are a number of methods by which the
State of New York may incur debt. Under the State Constitution, the State may
not, with limited exceptions for emergencies, undertake long-term general
obligation borrowing (i.e., borrowing for more than one year) unless the
borrowing is authorized in a specific amount for a single work or purpose by
-11-
<PAGE> 37
the Legislature and approved by the voters. There is no limitation on the amount
of long-term general obligation debt that may be so authorized and subsequently
incurred by the State.
The State may undertake short-term borrowings without voter
approval (i) in anticipation of the receipt of taxes and revenues, by issuing
tax and revenue anticipation notes, and (ii) in anticipation of the receipt of
proceeds from the sale of duly authorized but unissued general obligation bonds,
by issuing bond anticipation notes. The State may also, pursuant to specific
constitutional authorization, directly guarantee certain obligations of the
State of New York's authorities and public benefit corporations ("Authorities").
Payments of debt service on New York State general obligation and New York
State-guaranteed bonds and notes are legally enforceable obligations of the
State of New York.
The State employs additional long-term financing mechanisms,
lease-purchase and contractual-obligation financings, which involve obligations
of public authorities or municipalities that are State-supported but are not
general obligations of the State. Under these financing arrangements, certain
public authorities and municipalities have issued obligations to finance the
construction and rehabilitation of facilities or the acquisition and
rehabilitation of equipment, and expect to meet their debt service requirements
through the receipt of rental or other contractual payments made by the State.
Although these financing arrangements involve a contractual agreement by the
State to make payments to a public authority, municipality or other entity, the
State's obligation to make such payments is generally expressly made subject
to appropriation by the Legislature and the actual availability of money to the
State for making the payments. The State has also entered into a
contractual-obligation financing arrangement with the Local Government
Assistance Corporation ("LGAC") in an effort to restructure the way the State
makes certain local aid payments.
In 1990, as part of a State fiscal reform program, legislation
was enacted creating LGAC, a public benefit corporation empowered to issue
long-term obligations to fund certain payments to local governments
traditionally funded through New York State's annual seasonal borrowing. The
legislation empowered LGAC to issue its bonds and notes in an amount not in
excess of $4.7 billion (exclusive of certain refunding bonds) plus certain other
amounts. Over a period of years, the issuance of these long-term obligations,
which are to be amortized over no more than 30 years, was expected to eliminate
the need for continued short-term seasonal borrowing. The legislation also
dedicated revenues equal to one-quarter of the four cent State sales and use tax
to pay debt service on these bonds. The legislation also imposed a cap on the
annual seasonal borrowing of the State at $4.7 billion, less net
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<PAGE> 38
proceeds of bonds issued by LGAC and bonds issued to provide for capitalized
interest, except in cases where the Governor and the legislative leaders have
certified the need for additional borrowing and provided a schedule for reducing
it to the cap. If borrowing above the cap is thus permitted in any fiscal year,
it is required by law to be reduced to the cap by the fourth fiscal year after
the limit was first exceeded. As of June 1995, LGAC had issued bonds to provide
net proceeds of $4.7 billion, completing the program. The impact of LGAC's
borrowing is that the State is able to meet its cash flow needs in the first
quarter of the fiscal year without relying on short-term seasonal borrowings.
In June 1994, the Legislature passed a proposed constitutional
amendment that would significantly change the long-term financing practices of
the State and its public authorities. The proposed amendment would permit the
State, within a formula-based cap, to issue revenue bonds, which would be debt
of the State secured solely by a pledge of certain State tax receipts (including
those allocated to State funds dedicated for transportation purposes), and not
by the full faith and credit of the State. In addition, the proposed amendment
would (i) permit multiple purpose general obligation bond proposals to be
proposed on the same ballot, (ii) require that State debt be incurred only for
capital projects included in a multi-year capital financing plan, and (iii)
prohibit, after its effective date, lease-purchase and contractual-obligation
financing mechanisms for State facilities.
Before the approved constitutional amendment could be
presented to the voters for their consideration, it had to be passed by a
separately elected legislature. The amendment was passed by the Senate and
Assembly in June 1995. The Amendment was thereafter submitted to voters in
November 1995, where it was defeated.
On January 13, 1992, Standard & Poor's Corporation (" Standard
& Poor's") reduced its ratings on the State's general obligation bonds from A to
A- and, in addition, reduced its ratings on the State's moral obligation, lease
purchase, guaranteed and contractual obligation debt. Standard & Poor's also
continued its negative rating outlook assessment on State general obligation
debt. On April 26, 1993, Standard & Poor's revised the rating outlook assessment
to stable. On February 14, 1994, Standard & Poor's raised its outlook to
positive and, on February 28, 1994, confirmed its A- rating. On January 6, 1992,
Moody's Investors Service, Inc. ("Moody's") reduced its ratings on outstanding
limited-liability State lease purchase and contractual obligations from A to
Baa1. On February 28, 1994, Moody's reconfirmed its A rating on the State's
general obligation long-term indebtedness.
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<PAGE> 39
The State anticipated that its capital programs would be
financed, in part, by State and public authorities borrowings in 1996-97. The
State expected to issue $411 million in general obligation bonds (including
$153.6 million for purposes of redeeming outstanding bond anticipation notes)
and $154 million in general obligation commercial paper. The Legislature had
also authorized the issuance of up to $101 million in certificates of
participation during the State's 1996-97 fiscal year for equipment purchases.
The projection of the State regarding its borrowings for the 1996-97 fiscal year
may change if circumstances require.
In the 1996 legislative session, the Legislature approved the
Governor's proposal to present to the voters in November 1996 a $1.75 billion
State general obligation bond referendum to finance various environmental
improvement and remediation projects. The Clean Water, Clean Air Bond Act was
approved by the voters in November 1996. As a result, the amount of general
obligation bonds issued during the 1996-97 fiscal year may increase above the
$411 million currently included in the 1996-97 borrowing plan to finance a
portion of this new program.
Principal and interest payments on general obligation bonds
and interest payments on bond anticipation notes were $735 million for the
1995-96 fiscal year, and were estimated to be $719 million for the 1996-97
fiscal year. Principal and interest payments on fixed rate and variable rate
bonds issued by LGAC were $340 million for the 1995-96 fiscal year, and were
estimated to be $323 million for 1996-97.
New York State has never defaulted on any of its general
obligation indebtedness or its obligations under lease-purchase or
contractual-obligation financing arrangements and has never been called upon to
make any direct payments pursuant to its guarantees.
LITIGATION. Certain litigation pending against New York State or its officers or
employees could have a substantial or long-term adverse effect on New York State
finances. Among the more significant of these cases are those that involve (1)
the validity of agreements and treaties by which various Indian tribes
transferred title to New York State of certain land in central and upstate New
York; (2) certain aspects of New York State's Medicaid policies, including its
rates, regulations and procedures; (3) action against New York State and New
York City officials alleging inadequate shelter allowances to maintain proper
housing; (4) challenges to the practice of reimbursing certain Office of Mental
Health patient care expenses from the client's Social Security benefits; (5)
alleged responsibility of New York State officials to assist in remedying racial
segregation in the City of Yonkers; (6) challenges by commercial insurers,
employee welfare benefit plans, and health maintenance
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<PAGE> 40
organizations to the imposition of 13%, 11% and 9% surcharges on inpatient
hospital bills; (7) challenges to certain aspects of petroleum business taxes;
(8) action alleging damages resulting from the failure by the State's Department
of Environmental Conservation to timely provide certain data; (9) a challenge to
the constitutionality of a State lottery game; and (10) an action seeking
reimbursement from the State for certain costs arising out of the provision of
pre-school services and programs for children with handicapped conditions.
Several actions challenging the constitutionality of
legislation enacted during the 1990 legislative session which changed actuarial
funding methods for determining state and local contributions to state employee
retirement systems have been decided against the State. As a result, the
Comptroller developed a plan to restore the State's retirement systems to
prior funding levels. Such funding is expected to exceed prior levels by $30
million in fiscal 1994-95, $63 million in fiscal 1995-96, $116 million in fiscal
1996-97, $193 million in fiscal 1997-98, peaking at $241 million in fiscal
1998-99. Beginning in fiscal 2001-02, State contributions required under the
Comptroller's plan are projected to be less than that required under the prior
funding method. As a result of the United States Supreme Court decision in the
case of State of Delaware v. State of New York, on January 21, 1994, the State
entered into a settlement agreement with various parties. Pursuant to all
agreements executed in connection with the action, the State was required to
make aggregate payments of $351.4 million. Annual payments to the various
parties will continue through the State's 2002-03 fiscal year in amounts which
will not exceed $48.4 million in any fiscal year subsequent to the State's 1994-
95 fiscal year. Litigation challenging the constitutionality of the treatment of
certain moneys held in a reserve fund was settled in June 1996 and certain
amounts in a Supplemental Reserve Fund previously credited by the State against
prior State and local pension contributions will be paid in 1998.
The legal proceedings noted above involve State finances,
State programs and miscellaneous tort, real property and contract claims in
which the State is a defendant and the monetary damages sought are substantial.
These proceedings could affect adversely the financial condition of the State.
Adverse developments in these proceedings or the initiation of new proceedings
could affect the ability of the State to maintain a balanced 1996-97 State
Financial Plan. An adverse decision in any of these proceedings could exceed the
amount of the 1996-97 State Financial Plan reserve for the payment of judgments
and, therefore, could affect the ability of the State to maintain a balanced
1996-97 State Financial Plan. In its audited financial statements for the fiscal
year ended March 31, 1996, the State reported its estimated liability for
awarded and anticipated unfavorable judgments to be $474 million.
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<PAGE> 41
Although other litigation is pending against New York State,
except as described above, no current litigation involves New York State's
authority, as a matter of law, to contract indebtedness, issue its obligations,
or pay such indebtedness when it matures, or affects New York State's power or
ability, as a matter of law, to impose or collect significant amounts of taxes
and revenues.
AUTHORITIES. The fiscal stability of New York State is related, in part, to the
fiscal stability of its Authorities, which generally have responsibility for
financing, constructing and operating revenue-producing public benefit
facilities. Authorities are not subject to the constitutional restrictions on
the incurrence of debt which apply to the State itself, and may issue bonds and
notes within the amounts of, and as otherwise restricted by, their legislative
authorization. The State's access to the public credit markets could be
impaired, and the market price of its outstanding debt may be materially and
adversely affected, if any of the Authorities were to default on their
respective obligations, particularly with respect to debt that are
State-supported or State-related. As of September 30, 1995, date of the latest
data available, there were 17 Authorities that had outstanding debt of $100
million or more. The aggregate outstanding debt, including refunding bonds, of
these 17 Authorities was $73.45 billion.
Authorities are generally supported by revenues generated by
the projects financed or operated, such as fares, user fees on bridges, highway
tolls and rentals for dormitory rooms and housing. In recent years, however, New
York State has provided financial assistance through appropriations, in some
cases of a recurring nature, to certain of the 18 Authorities for operating and
other expenses and, in fulfillment of its commitments on moral obligation
indebtedness or otherwise, for debt service. This operating assistance is
expected to continue to be required in future years. In addition, certain
statutory arrangements provide for State local assistance payments otherwise
payable to localities to be made under certain circumstances to certain
Authorities. The State has no obligation to provide additional assistance to
localities whose local assistance payments have been paid to Authorities under
these arrangements. However, in the event that such local assistance payments
are so diverted, the affected localities could seek additional State funds.
NEW YORK CITY AND OTHER LOCALITIES. The fiscal health of the State of New York
may also be impacted by the fiscal health of its localities, particularly the
City of New York, which has required and continues to require significant
financial assistance from New York State. The City depends on State aid both to
enable the City to balance its budget and to meet its cash requirements. The
City has achieved balanced operating
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<PAGE> 42
results for each of its fiscal years since 1981 as reported in accordance with
the then-applicable GAAP.
In 1975, New York City suffered a fiscal crisis that impaired
the borrowing ability of both the City and New York State. In that year the City
lost access to the public credit markets. The City was not able to sell
short-term notes to the public again until 1979.
In 1975, Standard & Poor's suspended its A rating of City
bonds. This suspension remained in effect until March 1981, at which time the
City received an investment grade rating of BBB from Standard & Poor's. On July
2, 1985, Standard & Poor's revised its rating of City bonds upward to BBB+ and
on November 19, 1987, to A-. On July 2, 1993, Standard & Poor's reconfirmed its
A- rating of City bonds, continued its negative rating outlook assessment and
stated that maintenance of such rating depended upon the City's making further
progress towards reducing budget gaps in the outlying years. Moody's ratings of
City bonds were revised in November 1981 from B (in effect since 1977) to Ba1,
in November 1983 to Baa, in December 1985 to Baa1, in May 1988 to A and again in
February 1991 to Baa1. On July 10, 1995, Standard & Poor's downgraded its rating
on the City's $23 billion of outstanding general obligation bonds to "BBB+" from
"A-", citing to the City's chronic structural budget problems and weak economic
outlook. Standard & Poor's stated that New York City's reliance on one-time
revenue measures to close annual budget gaps, a dependence on unrealized labor
savings, overly optimistic estimates of revenues and state and federal aid and
the City's continued high debt levels also contributed to its decision to lower
the rating. Moody's currently has the City's rating under review for a possible
downgrade.
New York City is heavily dependent on New York State and
federal assistance to cover insufficiencies in its revenues. There can be no
assurance that in the future federal and State assistance will enable the City
to make up its budget deficits. To help alleviate the City's financial
difficulties, the Legislature created the Municipal Assistance Corporation
("MAC") in 1975. Since its creation, MAC has provided, among other things,
financing assistance to the City by refunding maturing City short-term debt and
transferring to the City funds received from sales of MAC bonds and notes. MAC
is authorized to issue bonds and notes payable from certain stock transfer tax
revenues, from the City's portion of the State sales tax derived in the City
and, subject to certain prior claims, from State per capita aid otherwise
payable by the State to the City. Failure by the State to continue the
imposition of such taxes, the reduction of the rate of such taxes to rates less
than those in effect on July 2, 1975, failure by the State to pay such aid
revenues and the reduction of such aid revenues below a specified level are
included among the events of default in the resolutions authoriz-
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<PAGE> 43
ing MAC's long-term debt. The occurrence of an event of default may result in
the acceleration of the maturity of all or a portion of MAC's debt. MAC bonds
and notes constitute general obligations of MAC and do not constitute an
enforceable obligation or debt of either the State or the City. As of December
31, 1995, MAC had outstanding an aggregate of approximately $4.684 billion of
its bonds. MAC is authorized to issue bonds and notes to refunds its outstanding
bonds and notes and to fund certain reserves, without limitation as to principal
amount, and to finance certain capital commitments to the Transit Authority
and the New York City School Construction Authority for the 1992 through 1997
fiscal years in the event the City fails to provide such financing.
The City and MAC have reached an agreement in principle under
which MAC will develop and implement a debt restructuring program which will
provide the City with $125 million in budget relief in fiscal year 1996, in
addition to the $20 million of additional budget relief provided by MAC to the
City since January 1996. The City has agreed with MAC that it will reduce
certain expenditures by $125 million in each of the four fiscal years starting
in fiscal year 1997. The proposed refinancing, which must satisfy MAC
refinancing criteria, is subject to market conditions.
Since 1975, the City's financial condition has been subject to
oversight and review by the New York State Financial Control Board (the "Control
Board") and since 1978 the City's financial statements have been audited by
independent accounting firms. To be eligible for guarantees and assistance, the
City is required during a "control period" to submit annually for Control Board
approval, and when a control period is not in effect for Control Board review, a
financial plan for the next four fiscal years covering the City and certain
agencies showing balanced budgets determined in accordance with GAAP. New York
State also established the Office of the State Deputy Comptroller for New York
City ("OSDC") to assist the Control Board in exercising its powers and
responsibilities. On June 30, 1986, the City satisfied the statutory
requirements for termination of the control period. This means that the Control
Board's powers of approval are suspended, but the Board continues to have
oversight responsibilities.
From time to time, the Control Board staff, OSDC, the City
comptroller and others issue reports and make public statements regarding the
City's financial condition, commenting on, among other matters, the City's
financial plans, projected revenues and expenditures and actions by the City to
eliminate projected operating deficits. Some of these reports and statements
have warned that the City may have underestimated certain expenditures and
overestimated certain revenues and have suggested that the City may not have
adequately provided for
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<PAGE> 44
future contingencies. Certain of these reports have analyzed the City's future
economic and social conditions and have questioned whether the City has the
capacity to generate sufficient revenues in the future to meet the costs of its
expenditure increases and to provide necessary services.
On January 31, 1996, the City published the financial plan
for the 1996-1999 fiscal years (the "City Financial Plan"), which is a
modification to a financial plan submitted to the Control Board on July 11,
1995. The City Financial Plan set forth proposed actions by the City for the
1996 fiscal year to close substantial projected budget gaps resulting from
lower than projected tax receipts and other revenues and greater than projected
expenditures. In addition to substantial proposed agency expenditure reductions,
the Financial Plan reflected a strategy to substantially reduce spending for
entitlements for the 1996 and subsequent fiscal years, and to decrease the
City's costs for Medicaid in the 1997 fiscal year and thereafter by increasing
the federal share of Medicaid costs otherwise paid by the City. This strategy
has been the subject of substantial debate, and implementation of this strategy
will be significantly affected by State and federal budget proposals currently
being considered. It is likely that the City Financial Plan will be changed
significantly in connection with the preparation of the Executive Budget for the
1997 fiscal year as a result of the status of State and federal budget proposals
and other factors.
The City Financial Plan also set forth projections for the
1997 through 1999 fiscal years and outlined a proposed gap-closing program to
eliminate a projected gap of $2.0 billion for the 1997 fiscal year, and to
reduce projected gaps of $3.3 billion and $4.1 billion for the 1998 and 1999
fiscal years, respectively, assuming successful implementation of the
gap-closing program for the 1996 fiscal year.
The proposed gap-closing actions for the 1997 through 1999
fiscal years included: (i) additional agency actions, totaling between $643
million and $691 million in each of the 1997 through 1999 fiscal years; (ii)
additional savings resulting from State and federal aid and cost containment in
entitlement programs to reduce City expenditures and increase revenues by $650
million in the 1997 fiscal year and by $727 million in each of the 1998 and 1999
fiscal years; (iii) additional proposed federal aid of $50 million in the 1997
fiscal year and State aid of $100 million in each of the 1997 through 1999
fiscal years; (iv) the receipt of $300 million in the 1997 fiscal year from
privatization or other initiatives, certain of which actions is expected to
require legislative action by the City Council; and (v) the assumed receipt of
revenues relating to rent payments for the City's airports, totaling $244
million, $226 million and $70 million in the 1997 through 1999 fiscal years,
respectively, which are currently the subject of a dispute with the Port
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<PAGE> 45
Authority and the collection of which may depend on the successful completion of
negotiations with the Port Authority or the enforcement of the City's remedies
under the leases through pending legal actions. The City was also preparing an
additional contingency gap-closing program for the 1997 fiscal year to be
comprised of $200 million in additional agency actions.
The federal and State budgets, when adopted, may result in
substantial reductions in revenues for the City, as well as a reduction in
projected expenditures in entitlement programs, including Medicare, Medicaid and
welfare programs. The nature and extent of the impact on the City of the federal
and State budgets, when adopted, is uncertain, and no assurance can be given
that federal or State actions included in the federal and State adopted budgets
may not have a significant adverse impact on the City's budget and the City
Financial Plan.
The projections for the 1996 through 1999 fiscal years
reflected the costs of the proposed settlement with the teachers union and the
recent settlement with a coalition of municipal unions, and assumed that the
City will reach agreement with its remaining municipal unions under terms which
are generally consistent with such settlements.
The City's financial plans have been the subject of
extensive public comment and criticism. The City comptroller has issued reports
identifying risks ranging between $440 million and $560 million in the 1996
fiscal year before taking into account the availability of $160 million in the
general reserve, and between $2.05 billion and $2.15 billion in the 1997 fiscal
year after implementation of the City's proposed gap-closing actions. With
respect to the 1997 fiscal year, the report noted that the City Financial Plan
assumed the implementation of highly uncertain State and federal actions, most
of which are unlikely to be implemented, that would provide between $1.2 billion
and $1.4 billion in relief to the City, and identified additional risks. The
report concluded that the magnitude of the budget risk for the 1997 fiscal year,
after two years of large agency cutbacks and workforce reductions, indicated the
seriousness of the City's continuing budget difficulties, and that the City
Financial Plan would require substantial revision in order to provide a credible
program for dealing with the large projected budget gap for the 1997 fiscal
year.
The City since 1981 has fully satisfied its seasonal financing
needs in the public credit markets, repaying all short-term obligations within
their fiscal year of issuance. The City has issued $2.4 billion of short-term
obligations in fiscal year 1996 to finance the City's current estimate of its
seasonal cash flow needs for the 1996 fiscal year. Seasonal financing
requirements for the 1995 fiscal year increased to $2.2 billion
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<PAGE> 46
from $1.75 billion and $1.4 billion in the 1994 and 1993 fiscal years,
respectively.
Certain localities, in addition to the City, could have
financial problems leading to requests for additional New York State assistance.
The potential impact on the State of such requests by localities was not
included in the State's projections of its receipts and disbursements.
Fiscal difficulties experienced by the City of Yonkers
("Yonkers") resulted in the creation of the Financial Control Board for the City
of Yonkers (the "Yonkers Board") by New York State in 1984. The Yonkers Board is
charged with oversight of the fiscal affairs of Yonkers. Future actions taken by
the Governor or the Legislature to assist Yonkers could result in allocation of
New York State resources in amounts that cannot yet be determined.
Beginning in 1990, the City of Troy experienced a series of
budgetary deficits that resulted in the establishment of a Supervisory Board for
the City of Troy in 1994. The Supervisory Board's powers were increased in 1995,
when Troy MAC was created to help Troy avoid default on certain obligations. The
legislation creating Troy MAC prohibits the city of Troy from seeking federal
bankruptcy protection while Troy MAC bonds are outstanding.
Seventeen municipalities received extraordinary assistance
during the 1996 legislative session through $50 million in special
appropriations targeted for distressed cities.
Municipalities and school districts have engaged in
substantial short-term and long-term borrowings. In 1994, the total
indebtedness of all localities in New York State other than New York City was
approximately $17.7 billion. A small portion (approximately $82.9 million) of
that indebtedness represented borrowing to finance budgetary deficits and was
issued pursuant to enabling New York State legislation. State law requires the
comptroller to review and make recommendations concerning the budgets of those
local government units other than New York City authorized by State law to issue
debt to finance deficits during the period that such deficit financing is
outstanding. Seventeen localities had outstanding indebtedness for deficit
financing at the close of their fiscal year ending in 1994.
From time to time, federal expenditure reductions could
reduce, or in some cases eliminate, federal funding of some local programs and
accordingly might impose substantial increased expenditure requirements on
affected localities. If New York State, New York City or any of the Authorities
were to suffer serious financial difficulties jeopardizing their respective
access to the public credit markets, the marketability of notes
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<PAGE> 47
and bonds issued by localities within New York State could be adversely
affected. Localities also face anticipated and potential problems resulting from
certain pending litigation, judicial decisions and long-range economic trends.
Long-range potential problems of declining urban population, increasing
expenditures and other economic trends could adversely affect localities and
require increasing New York State assistance in the future.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
In General.
Information on how to purchase and redeem Fund shares, and how
such shares are priced, is included in the Prospectus. The issuance of shares is
recorded on the books of the Fund, and share certificates are not issued unless
expressly requested in writing. Certificates are not issued for fractional
shares.
Prior to effecting a redemption of shares represented by
certificates, PFPC must have received such certificates at its principal office.
All such certificates must be endorsed by the redeeming shareholder or
accompanied by a signed stock power, in each instance with the signature
guaranteed by a commercial bank or a member of a major stock exchange, unless
other arrangements satisfactory to the Fund have previously been made. The Fund
may require any additional information reasonably necessary to evidence that a
redemption has been duly authorized.
Under the 1940 Act, the Fund may suspend the right of
redemption or postpone the date of payment upon redemption for any period during
which the New York Stock Exchange is closed, other than customary weekend and
holiday closings, or during which trading on said Exchange is restricted, or
during which (as determined by the SEC by rule or regulation) an emergency
exists as a result of which disposal or valuation of portfolio securities is not
reasonably practicable, or for such other periods as the SEC may permit. (The
Fund may also suspend or postpone the recordation of the transfer of its shares
upon the occurrence of any of the foregoing conditions.)
In addition, if, in the opinion of the directors of the Fund,
ownership of shares has or may become concentrated to an extent which would
cause the Fund to be deemed a personal holding company, the Fund may compel the
redemption of, reject any order for or refuse to give effect on the books of the
Fund to the transfer of the Fund's shares in an effort to prevent that
consequence. The Fund may also redeem shares involuntarily if such redemption
appears appropriate in light of the Fund's responsibilities under the 1940 Act
or otherwise. If the Fund's Board of Directors determines that conditions exist
which make
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<PAGE> 48
payment of redemption proceeds wholly in cash unwise or undesirable, the Fund
may make payment wholly or partly in securities or other property. In certain
instances, the Fund may redeem shares pro rata from each shareholder of record
without payment of monetary consideration. (See Statement of Additional
Information -- "Investment Objective and Policies (Portfolio Valuation)" for an
example of when such redemption or form of payment might be appropriate.)
Any institution purchasing shares on behalf of separate
accounts will be required to hold the shares in a single nominee name (a "Master
Account"). Institutions investing in more than one series of the Fund's shares
must maintain a separate Master Account for each series. Institutions may
arrange with PFPC for certain sub-accounting services (such as purchase,
redemption and dividend recordkeeping) paid for by the Fund, if PFPC is provided
with the information necessary for sub-accounting. Sub-accounts may be
established by name or number.
The customary national business holidays which either the
Federal Reserve Bank of Philadelphia or the New York Stock Exchange observe are
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and
Christmas Day.
Net Asset Value.
As stated in the Fund's Prospectus, the Fund's net asset value
per share is calculated by adding the value of all of the Fund's portfolio
securities and other assets belonging to the Fund, subtracting the liabilities
charged to the Fund including dividends that have been declared but not paid,
and dividing the result by the number of the Fund's shares outstanding
(irrespective of series). The value of the Fund's assets is calculated using the
amortized cost method pursuant to procedures adopted by the Board of Directors
under Rule 2a-7. "Assets belonging to" the Fund consist of the consideration
received upon the issuance of the Fund's shares together with all income,
earnings, profits and proceeds derived from the investment thereof, including
any proceeds from the sale of such investments and any funds or payments derived
from any re-investment of such proceeds. Assets belonging to the Fund are
charged with the direct liabilities of the Fund.
MANAGEMENT OF THE FUND
Directors and Officers.
The Fund's directors and officers, their addresses, principal
occupations during the past 5 years and other affiliations are as follows:
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<PAGE> 49
<TABLE>
<CAPTION>
Principal Occupations
during past 5 years
Name and Address Position and Other Affiliations(1)
- ---------------- -------- -------------------------
<S> <C> <C>
Thomas A. Melfe Chairman Partner of the law firm of
30 Rockefeller Plaza and Donovan Newton Leisure & Irvine
New York, NY 10112 Director since 1984; Director, Warburg
Age: 64 Pincus Funds.
Francis E. Drake, Jr. Director Retired; Chairman of Executive and
90 Knollwood Drive Finance Committee, Rochester Gas and
Rochester, NY 14618 Electric Corp. until December, 1988;
Age: 81 Chairman of the Board and Chief
Executive Officer, Rochester Gas and
Electric Corp. until 1980.
Rodney D. Johnson Director President, Fairmount Capital
Fairmount Capital Advisors, Inc. (financial advising)
Advisors, Inc. since 1987.
1435 Walnut Street
Drexel Building,
Philadelphia, PA
19102
Age: 54
Anthony M. Santomero Director Richard K. Mellon Professor of
310 Keithwood Road Finance, since April 1984 and Dean's
Wynnewood, PA 19096 Advisory Council Member since July
Age: 50 1984, The Wharton School, University
of Pennsylvania; Director, Wharton
Financial Institutions Center,
since July 1995; Associate
Editor, Journal of Banking and
Finance, since June 1978;
Associate Editor, Journal of
Economics and Business, since
October 1979; Associate Editor,
Journal of Money, Credit and
Banking, since January 1989;
Research Associate, New
York University Center for
Japan-US Business and Economic
Studies, since July 1989;
Editorial Advisory Board, Open
Economics Review, since November
1990; Director, The Zweig Fund and
The Zweig Total Return Fund.
Edward J. Roach President Certified Public Accountant;
Bellevue Park and Treasurer Vice Chairman of the Board,
Corporate Center Fox Chase Cancer Center;
Suite 100 Trustee Emeritus, Pennsylvania
400 Bellevue Parkway School for the Deaf; Trustee
Wilmington, DE 19809 Emeritus, Immaculata College;
Age: 72 Officer of various investment
companies advised by PNC
Institutional Management
Corporation.
</TABLE>
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<PAGE> 50
<TABLE>
<CAPTION>
Principal Occupations
during past 5 years
Name and Address Position and Other Affiliations(1)
- ---------------- -------- -------------------------
<S> <C> <C>
Morgan R. Jones Secretary Partner of the law firm of Drinker
1345 Chestnut Street Biddle & Reath.
Suite 1100
Philadelphia, PA 19107-3496
Age: 56
</TABLE>
(1) Additional affiliations with investment companies advised by PIMC or
PNC Bank are set forth below.
----------------------------
Mr. Johnson serves as a director of Temporary Investment Fund, Inc.
("TempFund") and as a trustee of Trust for Federal Securities ("FedFund") and
Municipal Fund for Temporary Investment ("MuniFund"). Messrs. Johnson and
Santomero serve as directors of Municipal Fund for California Investors, Inc.
("Calfornia Muni"). Mr. Santomero serves as a trustee of Compass Capital Funds
("Compass"). Each of these funds shares the same investment adviser and/or
sub-adviser as the Fund.
Mr. Roach is Vice President and Treasurer of TempFund, FedFund,
MuniFund, Independence Square Income Securities ("ISIS") and California Muni. In
addition, Mr. Roach is Treasurer of Chestnut Street Exchange Fund ("Chestnut")
and President and Treasurer of The RBB Fund, Inc. ("RBB"); and Mr. Jones is
Secretary of Chestnut, California Muni, MuniFund, Compass and RBB. Each of the
investment companies named above receives various advisory or other services
from PIMC or PNC Bank. Of the above-mentioned funds, PDI and PFPC provide
distribution and administration services to TempFund, FedFund, MuniFund, Compass
and California Muni. In addition, PFPC provides administration services to RBB.
Each director is paid $5,000 annually, plus $250 for each Board meeting
attended, and is reimbursed for expenses incurred in connection with his
attendance at Board meetings. The Chairman of the Board receives an additional
$2,500 per annum for his services in such capacity.
The following table sets forth information about the fees received by
the Fund's directors for the fiscal year ended July 31, 1996, the Fund's most
recently completed fiscal year.
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<TABLE>
<CAPTION>
Pension or Total
Retirement Estimated Compensation
Benefits Annual from Fund
Aggregate Accrued as Benefits and Fund
Name of Person Compensation Part of Fund Upon Complex1 Paid
Position from Fund Expenses Retirement to Directors
- -------------- ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
Thomas A. Melfe $ 8,500 0.00 N/A (1)2 $ 8,500
Director and Chairman
Rodney D. Johnson3 $ 6,000 0.00 N/A (6)2 $ 54,350
Director
Francis E. Drake, Jr. $ 6,000 0.00 N/A (1)2 $ 6,000
Director
Anthony M. Santomero4 $ 6,000 0.00 N/A (3)2 $ 51,025
Director
$26,500 0.00 $119,875
</TABLE>
1 A "fund complex" means two or more investment companies that hold
themselves out to investors as related companies for purposes of
investment and investor services, or have a common investment adviser
or have an investment adviser that is an affiliated person of the
investment adviser of any of the other investment companies. The fund
complex consists of the Fund, Muni Fund, FedFund, Compass, TempFund,
California Muni, Chestnut Street Exchange Fund and Independence
Square Income Securities, Inc.
2 Total number of investment companies each director serves on within the
fund complex.
3 Mr. Johnson resigned as trustee of Compass on January 4, 1996.
4 Mr. Santomero resigned as director/trustee of TempFund, FedFund and
Muni Fund on January 4, 1996.
In addition, the Fund contributed $1,196 for its last fiscal
year to its retirement plan for employees (who include Mr. Roach). No employee
of PDI, PIMC, PFPC or PNC Bank receives any compensation from the Fund for
acting as an officer or director of the Fund. The directors and officers of the
Fund own less than 1% of the Fund's shares.
By virtue of the responsibilities assumed by PDI, PIMC, PNC
Bank and PFPC under their respective agreements with the Fund, the Fund itself
requires only one part-time employee in addition to its officers. Drinker Biddle
& Reath, of which Mr. Jones is a partner, receives legal fees as counsel to the
Fund.
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Adviser and Administrators.
The advisory and administrative services provided and the
expenses assumed by PIMC and the administrators, as well as the fees payable to
each of them, are described in the Prospectus. For the fiscal years ended July
31, 1994, 1995 and 1996 the Fund paid $165,619, $134,630 and $133,705,
respectively, in advisory fees to PIMC (net of waivers). For the fiscal years
ended July 31, 1994, 1995 and 1996, the Fund paid administration fees to PFPC
and PDI (net of waivers) totalling $165,618, $134,629 and $133,705,
respectively. During the fiscal years ended July 31, 1994, 1995 and 1996, PIMC
and PFPC and PDI each voluntarily waived advisory and administration fees in
amounts totalling $379,276 and $379,277, respectively; $350,428 and $350,429,
respectively; and $391,595 and $391,594, respectively.
Banking Laws.
Certain banking laws and regulations with respect to
investment companies are discussed in the Fund's Prospectus. PIMC, PFPC and PNC
Bank believe that they may perform the services for the Fund contemplated by the
respective Advisory, Sub-Advisory, Transfer Agency and Custody Agreements
without violation of the Glass-Steagall Act or other applicable banking laws or
regulations. However, changes in legal requirements relating to the permissible
activities of banks and their affiliates, as well as further interpretations of
present and future requirements, could prevent PIMC, PNC Bank and PFPC from
continuing to perform such services for the Fund. If PIMC, PFPC or PNC Bank were
prohibited from continuing to perform such services, it is expected that the
Board of Directors would recommend that the Fund enter into new agreements with
other qualified firms. Any new advisory agreement would be subject to
shareholder approval.
Custodian and Transfer Agent.
As custodian of the Fund's assets, PNC Bank (i) maintains a
separate account or accounts in the name of the Fund, (ii) holds and disburses
portfolio securities on account of the Fund, (iii) makes receipts and
disbursements of money on behalf of the Fund, (iv) collects and receives all
income and other payments and distributions on account of the Fund's portfolio
securities, (v) responds to correspondence from security brokers and others
relating to its duties and (vi) makes periodic reports to the Fund's Board of
Directors concerning the Fund's operations. PNC Bank is authorized to select one
or more banks or trust companies to serve as sub-custodian on behalf of the
Fund, provided that PNC Bank remains responsible for the performance of all its
duties under its Custody Agreement with the Fund and holds the Fund harmless
from the acts and omissions
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of any sub-custodian chosen by PNC Bank. The Fund pays PNC Bank a fee for its
custodial services equal to $.25 per annum for each $1,000 of the Fund's average
gross assets.
As the Fund's transfer and dividend disbursing agent, PFPC (i)
issues and redeems shares of the Fund, (ii) addresses and mails all
communications by the Fund to its shareholders, including reports to
shareholders, dividend and distribution notices and proxy material for its
meetings of shareholders, (iii) responds to correspondence by shareholders and
others relating to its duties, (iv) maintains shareholder accounts and
sub-accounts, (v) provides installation and other services in connection with
the Fund's computer access program maintained to facilitate shareholder access
to the Fund, and (vi) makes periodic reports to the Fund's Board of Directors
concerning the Fund's operations. PFPC may, on 30 days' notice to the Fund,
assign its duties thereunder to any other affiliate of PNC Bank Corp. For its
transfer agency, dividend disbursing and sub-accounting services, the Fund pays
PFPC $12.00 per account and sub-account per annum plus $1.00 for each purchase
or redemption transaction by an account (other than a purchase transaction made
in connection with the automatic reinvestment of dividends).
PFPC sends each shareholder of record a monthly statement
showing the total number of shares owned as of the last business day of the
month (as well as the dividends paid during the current month and year), and
provides each shareholder of record with a daily transaction report for each day
on which a transaction occurs in the shareholder's Master Account with the Fund.
Further, an institution establishing sub-accounts with PFPC is provided with a
daily transaction report for each day on which a transaction occurs in a
sub-account and, as of the last calendar day of each month, a report which sets
forth the share balance for the sub-account at the beginning and end of the
month and income paid or reinvested during the month.
Service Organizations.
As stated in the Fund's Prospectus, the Fund enters into
agreements with institutional investors ("Service Organizations") requiring them
to provide support services to their customers who beneficially own Dollar or
Plus shares in consideration of .25% (on an annualized basis) of the average
daily net asset value of the Dollar or Plus shares held by the Service
Organizations for the benefit of their customers. Such services include: (i)
aggregating and processing purchase and redemption requests from customers and
placing net purchase and redemption orders with the transfer agent; (ii)
providing customers with a service that invests the assets of their accounts in
Dollar or Plus shares; (iii) processing dividend payments from the Fund on
behalf of customers; (iv) providing
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<PAGE> 54
information periodically to customers showing their positions in Dollar and Plus
shares; (v) arranging for bank wires; (vi) responding to customer inquiries
relating to the services performed by the Service Organizations; (vii) providing
sub-accounting with respect to Dollar and Plus shares beneficially owned by
customers or the information necessary for sub-accounting; (viii) forwarding
shareholder communications from the Fund (such as proxies, shareholder reports,
annual and semi-annual financial statements and dividend, distribution and tax
notices) to customers, if required by law; and (ix) other similar services if
requested by the Fund. In addition, broker/dealers purchasing Plus shares may be
requested to provide from time to time assistance (such as the forwarding of
sales literature and advertising to customers) in connection with the
distribution of Plus shares. For the period from August 1, 1994 through December
1, 1994, the Fund paid a total of $302 to Service Organizations with respect to
Plus shares (no Plus Shares were outstanding from December 2, 1994 through July
31, 1996). For the period from April 15, 1996 through July 31, 1996, the Fund
a total of $22 to Service Organizations with respect to Dollar shares.
The Fund's agreements with Service Organizations are governed
by Plans (called "non-12b-1 Shareholder Services Plan" and "12b-1 Services Plan"
for the Dollar shares and Plus shares, respectively), which have been adopted by
the Fund's Board of Directors pursuant to applicable rules and regulations of
the SEC and an exemptive order granted by the SEC in connection with the
creation of the Dollar and Plus shares. Pursuant to the Plans, the Board of
Directors reviews, at least quarterly, a written report of the amounts expended
under the Fund's agreements with Service Organizations and the purposes for
which the expenditures were made. In addition, the Fund's arrangements with
Service Organizations must be approved annually by a majority of the Fund's
directors, including a majority of the directors who are not "interested
persons" of the Fund as defined in the 1940 Act and have no direct or indirect
financial interest in such arrangements (the "Disinterested Directors").
The Board of Directors has approved the Fund's arrangements
with Service Organizations based on information provided to the Board that there
is a reasonable likelihood that the arrangements will benefit the Fund and its
shareholders by affording the Fund greater flexibility in connection with the
servicing of the accounts of the beneficial owners of its shares in an efficient
manner. Any material amendment to the Fund's arrangements with Service
Organizations must be made in a manner approved by a majority of the Fund's
Board of Directors (including a majority of the Disinterested Directors), and
any amendment to increase materially the costs under the 12b-1 Services Plan
adopted by the Board with respect to Plus shares must be approved by the holders
of a majority of the outstanding
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<PAGE> 55
Plus shares. (It should be noted that while the annual service fee with respect
to Plus shares is currently set at .25%, the Plan adopted by the Board of
Directors permits the Board to increase this fee to .40% without shareholder
approval.) So long as the Fund's arrangements with Service Organizations are in
effect, the selection and nomination of the members of the Fund's Board of
Directors who are not "interested persons" (as defined in the 1940 Act) of the
Fund will be committed to the discretion of such non-interested directors.
Expenses.
Except as noted in the Prospectus, the Fund's service
contractors bear all expenses in connection with performance of their services.
The Fund bears the expenses incurred in its operations. Fund expenses include
taxes, interest, fees and salaries of its directors and officers, SEC fees,
state securities fees, costs of preparing and printing prospectuses for
regulatory purposes and for distribution to shareholders, advisory and
administration fees, charges of the custodian, transfer agent and dividend
disbursing agent, Service Organization fees, certain insurance premiums, outside
auditing and legal expenses, costs of independent pricing service, costs of
shareholder reports and shareholder meetings and any extraordinary expenses. The
Fund also pays for brokerage fees and commissions (if any) in connection with
the purchase of portfolio securities.
ADDITIONAL INFORMATION CONCERNING TAXES
The following summarizes certain additional Federal tax
considerations generally affecting the Fund and its shareholders that are not
described in the Fund's Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussion here and in the Fund's Prospectus is not intended as a substitute for
careful tax planning. Investors should consult their tax advisers with specific
reference to their own tax situations.
As described above and in the Fund's Prospectus, the Fund is
designed to provide New York institutional investors and their customers with
current tax-exempt interest income. The Fund is not intended to constitute a
balanced investment program and is not designed for investors seeking capital
appreciation or maximum tax-exempt income irrespective of fluctuations in
principal. Shares of the Fund would not be suitable for tax-exempt institutions
and may not be suitable for retirement plans qualified under Section 401 of the
Internal Revenue Code of 1986, as amended (the "Code"), H.R. 10 plans and
individual retirement accounts because such plans and accounts are generally
tax-exempt and, therefore, not only would not gain any additional
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<PAGE> 56
benefit from the Fund's dividends being tax-exempt, but such dividends would be
ultimately taxable to the beneficiaries when distributed to them. In addition,
the Fund may not be an appropriate investment for persons that are either
"substantial users" of facilities financed by private activity bonds or "related
persons" thereof. "Substantial user" is defined under U.S. Treasury Regulations
to include a non-exempt person who regularly uses a part of such facilities in
his trade or business and (i) whose gross revenues derived with respect to the
facilities financed by the issuance of bonds are more than 5% of the total
revenues derived by all users of such facilities, (ii) who occupies more than 5%
of the usable area of such facilities, or (iii) for whom such facilities or a
part thereof were specifically constructed, reconstructed or acquired. "Related
persons" include certain related natural persons, affiliated corporations, a
partnership and its partners and an S corporation and its shareholders.
The percentage of total dividends paid by the Fund with
respect to any taxable year which qualifies as Federal exempt-interest dividends
will be the same for all shareholders receiving dividends during such year. In
order for the Fund to pay exempt-interest dividends during any taxable year, at
the close of each fiscal quarter at least 50% of the aggregate value of the
Fund's portfolio must consist of Federal tax-exempt interest obligations. In
addition, the Fund must distribute an amount that is equal to at least the sum
of 90% of its net exempt-interest income and 90% of its investment company
taxable income with respect to each taxable year. After the close of its taxable
year, the Fund will notify each shareholder of the portion of the dividends paid
by the Fund to the shareholder with respect to such taxable year which
constitutes an exempt-interest dividend. However, the aggregate amount of
dividends so designated cannot exceed the excess of the amount of interest
exempt from tax under Section 103 of the Code received by the Fund during the
taxable year over any amounts disallowed as deductions under Sections 265 and
171(a)(2) of the Code.
Interest on indebtedness incurred by a shareholder to purchase
or carry Fund shares generally is not deductible for Federal and New York State
and New York City personal income tax purposes if the Fund distributes
exempt-interest dividends during the shareholder's taxable year.
While the Fund does not expect to earn any investment company
taxable income, any such income earned by the Fund will be distributed. In
general, the Fund's investment company taxable income will be its taxable income
(including, for example, its short-term capital gains) subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. To the
extent such income is distributed,
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<PAGE> 57
it will be taxable to shareholders as ordinary income, whether paid in cash or
additional shares.
The Fund does not expect to realize long-term capital gains
and therefore does not expect to distribute any capital gain dividends.
Dividends declared in October, November or December of any
year payable to shareholders of record on a specified date before the end of
the year will be deemed for Federal income tax purposes to have been received by
the shareholders and paid by the Fund in that year in the event such dividends
are actually paid during January of the following year.
A 4% non-deductible excise tax is imposed on regulated
investment companies that fail currently to distribute an amount equal to
specified percentages of their ordinary taxable income and capital gain net
income (excess of capital gains over capital losses). The Fund intends to make
sufficient distributions or deemed distributions of its ordinary taxable income
and any capital gain net income prior to the end of each calendar year to avoid
liability for this excise tax.
Although the Fund expects to qualify as a "regulated
investment company" and to be relieved of all or substantially all Federal
income taxes, the Fund may be subject to the tax laws of states or localities
depending upon the extent of its activities in such states and localities in
which its offices are maintained, in which its agents or independent contractors
are located or in which it is otherwise deemed to be conducting business.
If for any taxable year the Fund does not qualify for the
special Federal income tax treatment afforded regulated investment companies,
all of its taxable income will be subject to Federal income tax at regular
corporate rates (without any deduction for distributions to its shareholders).
In such event, dividend distributions, including amounts derived from interest
on tax-exempt obligations, would be taxable to shareholders to the extent of
current and accumulated earnings and profits, and would be eligible for the
dividends received deduction for corporations.
The Fund will be required in certain cases to withhold and
remit to the United States Treasury 31% of taxable dividends or 31% of gross
sale proceeds paid to shareholders who have failed to provide a correct tax
identification number in the manner required, who are subject to withholding by
the Internal Revenue Service for failure properly to include on their return
payments of taxable interest or dividends, or who have failed to certify to the
Fund that they are not subject to backup
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<PAGE> 58
withholding when required to do so or that they are "exempt recipients."
The foregoing discussion is based on Federal tax laws and
regulations which are in effect on the date of this Statement of Additional
Information; such laws and regulations may be changed by legislative or
administrative action. Shareholders are advised to consult their tax advisers
concerning the application of state and local taxes.
DIVIDENDS
General.
Net income for dividend purposes consists of interest accrued
and original discount earned on the Fund's assets for the applicable dividend
period, less amortization of market premium on such assets and accrued expenses
for such period. Net income for each of the Fund's three series of shares is
determined in the same manner, except that Dollar and Plus shares bear the fees
payable to Service Organizations for the services to the beneficial owners of
such shares. (See the Fund's Prospectus under "Dividends.") Realized and
unrealized gains and losses on portfolio securities are reflected in net asset
value.
Should the Fund incur or anticipate any unusual or unexpected
significant expense or loss which would affect disproportionately the income of
the Fund for a particular period, the Board of Directors would at that time
consider whether to adhere to the present dividend policy with respect to the
Fund or to revise it in order to mitigate to the extent possible the
disproportionate effect of such expense or loss on the income of the Fund. Such
expense or loss may result in the shareholder's receiving no dividends for the
period during which it held shares of the Fund and in it receiving upon
redemption a price per share lower than that which it paid.
Yield Information.
The "yields," "effective yields" and "tax-equivalent yields"
of the Fund's series of shares as described and shown in the Prospectus are
calculated according to formulas prescribed by the SEC. The standardized
seven-day yield for each of the Fund's three series of shares is computed
separately for each series by determining the net change in the value of a
hypothetical pre-existing account in the Fund having a balance of one share of
the series involved at the beginning of the period, dividing the net change by
the value of the account at the beginning of the period to obtain the base
period return, and multiplying the base period return by 365/7. The net change
in the value of an account in the Fund includes the value of
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additional shares purchased with dividends from the original share and dividends
declared on the original share and any such additional shares, net of all fees
charged to all shareholder accounts in proportion to the length of the base
period and the Fund's average account size, but does not include gains and
losses or unrealized appreciation and depreciation. The Fund's "effective yield"
is calculated by compounding the unannualized base period return for each series
of shares (calculated as above), by adding one to the base period return for the
series involved, raising that sum to a power equal to 365/7, and subtracting one
from the result. The Fund's "tax-equivalent" yield is computed by: (a) dividing
the portion of the Fund's yield (calculated as above) that is exempt from both
Federal and New York State income taxes by one minus a stated combined Federal
and New York State income tax rate; (b) dividing the portion of the Fund's yield
(calculated as above) that is exempt from Federal income tax only by one minus a
stated Federal income tax rate; and (c) adding the figures resulting from (a)
and (b) above to that portion, if any, of the Fund's yield that is not exempt
from Federal income tax.
From time to time, in advertisements or in reports to
shareholders, the yields of the Fund may be quoted and compared to those of
other mutual funds with similar investment objectives and to stock or other
relevant indices. For example, the yield of the Fund may be compared to
Donoghue's Money Fund Average, which is an average compiled by Donoghue's MONEY
FUND REPORT(R) of Holliston, MA 01746, a widely recognized independent
publication that monitors the performance of money market funds, or to the data
prepared by Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent service that monitors the performance of mutual funds.
The Fund may also from time to time include in advertisements,
sales literature, communications to shareholders and other materials
("Materials"), discussions or illustrations of the effects of compounding.
"Compounding" refers to the fact that, if dividends or other distributions on an
investment are reinvested by being paid in additional Fund shares, any future
income or capital appreciation of the Fund would increase the value, not only of
the original Fund investment, but also of the additional Fund shares received
through reinvestment. As a result, the value of the Fund investment would
increase more quickly than if dividends or other distributions had been paid in
cash.
In addition, the Fund may also include in Materials
discussions and/or illustrations of the potential investment goals of a
prospective investor, investment management strategies, techniques, policies or
investment suitability of the Fund, economic conditions, the relationship
between sectors of the economy and the economy as a whole, various securities
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markets, the effects of inflation and historical performance of various asset
classes, including but not limited to, stocks, bonds and Treasury securities.
From time to time, Materials may summarize the substance of information
contained in shareholder reports (including the investment composition of the
Fund), as well as the views of the adviser and/or sub-adviser as to current
market, economic, trade and interest rate trends, legislative, regulatory and
monetary developments, investment strategies and related matters believed to be
of relevance to the Fund. The Fund may also include in Materials charts, graphs
or drawings which compare the investment objective, return potential, relative
stability and/or growth possibilities of the Fund and/or other mutual funds, or
illustrate the potential risks and rewards of investment in various investment
vehicles, including but not limited to, stocks, bonds, Treasury securities and
shares of the Fund and/or other mutual funds. Materials may include a discussion
of certain attributes or benefits to be derived by an investment in the Fund
and/or other mutual funds (such as value investing, market timing, dollar cost
averaging, asset allocation, constant ratio transfer, automatic accounting
rebalancing, the advantages and disadvantages of investing in tax-deferred and
taxable investments), shareholder profiles and hypothetical investor scenarios,
timely information on financial management, tax and retirement planning and
investment alternatives to certificates of deposit and other financial
instruments. Such Materials may include symbols, headlines or other material
which highlight or summarize the information discussed in more detail therein.
Materials may include designations assigned the Fund by various rating or
ranking organizations, and Fund identifiers (such as CUSIP numbers or NASDAQ
symbols). The following information has been provided by the Fund's distributor:
In managing the Fund's portfolio, the investment adviser utilizes a "pure and
simple" approach, which may include disciplined research, stringent credit
standards and careful management of maturities.
From time to time, the Fund may compare its total returns to
rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example, such
data is found in IBC/Donoghue's Money Fund Report and reports prepared by Lipper
Analytical Services, Inc. Total return is the change in value of an investment
in the Fund over a particular period, assuming that all distributions have been
reinvested. SUCH RANKINGS REPRESENT THE FUND'S PAST PERFORMANCE AND SHOULD NOT
BE CONSIDERED AS REPRESENTATIVE OF FUTURE RESULTS.
The Fund's yields will fluctuate and any quotation of the
Fund's yield should not be considered as representative of the future
performance of the Fund. Since yields fluctuate, yield data cannot necessarily
be used to compare an investment in the Fund's shares with bank deposits,
savings accounts, and
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<PAGE> 61
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that yield
is generally a function of kind and quality of the investments held in a
portfolio, portfolio maturity, operating expenses, and market conditions. Any
fees charged by banks or other financial institutions to customer accounts
investing in shares of the Fund will not be included in calculations of yield;
such fees would reduce the actual yield from that quoted.
COUNSEL
Drinker Biddle & Reath, 1345 Chestnut Street, Suite 1100,
Philadelphia, Pennsylvania 19107, of which Mr. Jones, Secretary of the Fund, is
a partner, will pass upon certain legal matters for the Fund as its counsel.
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New York,
New York 10022, acts as special New York counsel for the Fund and has reviewed
the portions of this Statement of Additional Information and the Fund's
Prospectus concerning New York taxes and the description of special
considerations relating to New York Municipal Obligations.
INDEPENDENT ACCOUNTANTS
The financial statements of the Fund incorporated by reference
in this Statement of Additional Information and the Financial Highlights which
appear in the Fund's Prospectus have been audited by Coopers & Lybrand L.L.P.,
independent accountants, whose report thereon is incorporated by reference
herein, and have been included in the Fund's Prospectus in reliance upon the
report of said firm of independent accountants given upon their authority as
experts in accounting and auditing. Coopers & Lybrand L.L.P. has offices at 2400
Eleven Penn Center, Philadelphia, Pennsylvania 19103.
MISCELLANEOUS
The Fund was organized as a Maryland corporation on March 4,
1983 under the name of New York Municipal Fund for Temporary Investment, Inc. On
July 18, 1983, the Fund changed its name to Municipal Fund for New York
Investors, Inc.
As used in this Statement of Additional Information and the
Fund's Prospectus, a "majority of the outstanding shares of the Fund" means,
with respect to the approval of an investment advisory agreement, distribution
plan or a change in an investment objective or fundamental investment policy,
the lesser of (1) 67% of the Fund's shares, irrespective of series,
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represented at a meeting at which the holders of more than 50% of the
outstanding shares are present in person or by proxy, or (2) more than 50% of
the Fund's outstanding shares, irrespective of series.
As stated in the Prospectus, holders of the Fund's Money,
Dollar and Plus shares will vote in the aggregate and not by series on all
matters, except where otherwise required by law, except that only Dollar shares
will be entitled to vote on matters submitted to a vote of shareholders
pertaining to the Fund's arrangements with Service Organizations with respect to
Dollar shares and only Plus shares will be entitled to vote on matters submitted
to a vote of shareholders pertaining to the Fund's arrangements with Service
Organizations with respect to Plus shares.
Rule 18f-2 under the 1940 Act provides that any matter
required to be submitted by the provisions of such Act or applicable state law,
or otherwise, to the holders of the outstanding securities of an investment
company such as the Fund shall not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding shares of each
series affected by the matter. Rule 18f-2 further provides that a series shall
be deemed to be affected by a matter unless it is clear that the interests of
each series in the matter are identical or that the matter does not affect any
interest of the series. Under the Rule, the approval of an investment advisory
agreement or any change in a fundamental investment policy would be effectively
acted upon with respect to a series only if approved by the holders of a
majority of the outstanding voting securities of such series. However, the Rule
also provides that the ratification of the selection of independent accountants,
the approval of principal underwriting contracts and the election of directors
are not subject to the separate voting requirements and may be effectively acted
upon by shareholders of the investment company voting without regard to series.
As of November 18, 1996, the name, address and percentage of
ownership of each institutional investor that owned of record 5% or more of the
outstanding shares of the Fund were as follows: Chemical Bank, Administrative
Services, AIS Section 31-270, 33rd Floor, 1211 Avenue of the Americas, 35th
Floor, New York, New York 10036, 16.76%; Chase Manhattan Bank, N.A., 1211 Avenue
of the Americas, 35th Floor, New York, New York 10036, 14.73%; Trulin & Co., c/o
Chase Manhattan Bank, N.A., P.O. Box 1412, Rochester, New York 14603, 22.62%;
Fleet New York, Fleet Investment Services, 159 East Main Street, Rochester, New
York 14638, 16.18%; Marine Midland Bank NA, Marine Midland General Account #10,
1 Marine Midland Center, 17th Floor, Buffalo, New York 14203, 7.67%. The Fund
does not know
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whether the entities named above are the beneficial owners of the shares held by
them.
The Fund does not currently intend to hold annual meetings of
shareholders (except as required by the 1940 Act or other applicable law). The
law under certain circumstances provides shareholders with the right to call for
a meeting of shareholders to consider the removal of one or more directors. To
the extent required by law, the Fund will assist in shareholder communication in
such matters.
Notwithstanding any provision of Maryland law requiring a
greater vote of the Fund's shares in connection with any corporate action,
unless otherwise provided by law or by the Fund's Charter, the Fund may take or
authorize such action upon the favorable vote of the holders of more than 50% of
the Fund's outstanding shares voting without regard to class or series. (See,
however, the Fund's Prospectus under "Description of Shares" regarding certain
special voting rights of Dollar and Plus shares on matters pertaining to the
Fund's arrangements with Service Organizations.)
FINANCIAL STATEMENTS
The Fund's Annual Report to Shareholders for the fiscal year
ended July 31, 1996 has been filed with the Securities and Exchange Commission.
The financial statements in such Annual Report (the "Financial Statements") are
incorporated by reference into this Statement of Additional Information. The
Financial Statements included in the Annual Report have been audited by the
Fund's independent accountants, Coopers & Lybrand L.L.P., whose report thereon
also appears in such Annual Report and is incorporated herein by reference. The
Financial Statements in such Annual Report have been incorporated herein in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
-38-
<PAGE> 64
APPENDIX
DESCRIPTION OF MUNICIPAL OBLIGATIONS RATINGS
The following summarizes the two highest ratings used by
Standard & Poor's Ratings Group for municipal debt:
AAA - This designation represents the highest rating assigned
by Standard & Poor's to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.
AA - Debt is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in small degree.
PLUS (+) OR MINUS (-) - To provide more detailed indications
of credit quality, the "AA" rating may be modified by the addition of a plus or
minus sign to show relative standing within this major rating category.
The following summarizes the two highest ratings used
by Moody's Investors Service, Inc. for municipal debt:
Aaa - Bonds are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa - Bonds are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
Moody's applies numerical modifiers (1, 2 and 3) with respect
to bonds rated Aa. The modifier 1 indicates that the issuer ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issuer ranks in the lower end of
its generic rating category.
A Standard and Poor's rating reflects the liquidity concerns
and market access risks unique to notes due in three years or less.
A-1
<PAGE> 65
SP-1 - The issuers of these municipal notes exhibit very
strong or strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics are given a plus (+) designation.
Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade ("MIG") and variable
rate demand obligations are designated Variable Moody's Investment Grade
("VMIG"). Such ratings recognize the differences between short-term credit risk
and long-term credit risk. The following summarizes the two highest ratings used
by Moody's for short-term notes and variable rate demand obligations:
MIG-1/VMIG-1-Loans bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
MIG-2/VMIG-2-Loans bearing these designations are of high
quality, with margins of protection ample although not so large as in the
preceding group.
Commercial paper rated A-1 by Standard & Poor's indicates that
the issuer's degree of safety for timely payment is strong. Those issues
determined to possess extremely strong safety characteristics are denoted A-1+.
Issuer's capacity for timely payment on commercial paper rated A-2 is
satisfactory, but the relative degree of safety is not as high as for issues
designated A-1.
The rating Prime-1 is the highest commercial paper rating
assigned by Moody's. Issuers rated Prime-1 (or related supporting institutions)
are considered to have a superior capacity for repayment of short-term
promissory obligations. Prime-1 repayment capacity will normally be evidenced by
the following characteristics: leading market positions in well established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earning coverage of fixed financial charges and high internal cash
generation; and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers rated Prime-2 (or related supporting institutions) are
considered to have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
A-2
<PAGE> 66
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Included in Part A of the Registration Statement: Financial
Highlights for New York Money Fund (Money Shares) for the
fiscal years ended July 31, 1996, 1995, 1994, 1993, 1992, 1991,
1990, 1989, 1988 and 1987; for New York Money Fund (Dollar
Shares) for the fiscal years ended July 31, 1996, 1995, 1994,
1993, 1992, 1991, 1990, 1989, 1988 and 1987; and for New York
Money Fund (Plus Shares) for the fiscal years ended July 31,
1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989, 1988 and 1987.
(2) Incorporated by reference in Part B of the Registration
Statement: Statement of Net Assets - July 31, 1996.
Statement of Operations for the fiscal year ended July 31,
1996. Statement of Changes in Net Assets for the fiscal years
ended July 31, 1996 and July 31, 1995. Financial Highlights
for New York Money Fund (Money Shares) for the fiscal years
ended July 31, 1996, 1995, 1994, 1993 and 1992; for New York
Money Fund (Dollar Shares) for the fiscal years ended July 31,
1996, 1995, 1994, 1993 and 1992; and for New York Money Fund
(Plus Shares) for the fiscal years ended July 31, 1996, 1995,
1994, 1993 and 1992. Notes to Financial Statement- July 31,
1996. Report of Independent Accountants - September 6, 1996.
(3) All required financial statements are included in Parts A and B
hereof. All other financial statements and schedules are
inapplicable.
C-1
<PAGE> 67
(b) Exhibits:
(1) (a) Articles of Incorporation dated February 23, 1983 are
incorporated herein by reference to Exhibit (1) of
Registrant's Registration Statement filed on March 8, 1983.
(b) Articles Supplementary to Registrant's Articles of
Incorporation dated July 11, 1983 are incorporated herein
by reference to Exhibit (1)(b) of Pre-Effective Amendment
No. 1 to Registrant's Registration Statement filed on July
27, 1983.
(c) Articles of Amendment to Registrant's Articles of
Incorporation dated July 15, 1983 are incorporated herein
by reference to Exhibit (1)(c) of Pre-Effective Amendment
No. 1 to Registrant's Registration Statement filed on July
27, 1983.
(d) Articles Supplementary to Registrant's Articles of
Incorporation dated August 31, 1985 are incorporated herein
by reference to Exhibit (1)(d) of Post-Effective Amendment
No. 4 to Registrant's Registration Statement filed on
October 7, 1985.
(2) (a) By-Laws as approved and adopted by Registrant's Board of
Directors are incorporated herein by reference to Exhibit
(2) of Registrant's Registration Statement filed on March
8, 1983.
(b) Amendment No. 1 to By-Laws as approved and adopted by
Registrant's Board of Directors on July 26, 1984 is
incorporated herein by reference to Exhibit (2)(b) of
Post-Effective Amendment No. 3 to Registrant's Registration
Statement filed on August 9, 1985.
(c) Amendment No. 2 to By-Laws as approved and adopted by
Registrant's Board of Directors on October 28, 1987 is
incorporated herein by reference to Exhibit (2)(c) of
Post-Effective
C-2
<PAGE> 68
Amendment No. 9 to Registrant's Registration Statement
filed on November 29, 1990.
(d) Amendment No. 3 to By-Laws as approved and adopted by
Registrant's Board of Directors on July 13, 1988 is
incorporated herein by reference to Exhibit (2)(c) of
Post-Effective Amendment No. 7 to the Registrant's
Registration Statement filed on November 30, 1988.
(3) None.
(4) (a) Specimen copy of share certificate for Class A Common Stock
is incorporated herein by reference to Exhibit (4) of
Pre-Effective Amendment No. 1 to Registrant's Registration
Statement filed on July 27, 1983.
(b) Specimen copy of share certificate for Class A Common Stock
- Special Series 1 is incorporated herein by reference to
Exhibit (4)(b) of Post-Effective Amendment No. 5 to
Registrant's Registration Statement filed on September 30,
1986.
(c) Specimen copy of share certificate for Class A Common Stock
- Special Series 2 is incorporated herein by reference to
Exhibit (4)(c) of Post-Effective Amendment No. 5 to
Registrant's Registration Statement filed on September 30,
1986.
(5) (a) Amended Investment Advisory Agreement between Registrant
and Provident Institutional Management Corporation dated as
of February 9, 1987 is incorporated herein by reference to
Exhibit (5)(a) of Post-Effective Amendment No. 6 to
Registrant's Registration Statement filed on September 29,
1987.
(b) Sub-Advisory Agreement between Provident Institutional
Management Corporation and Provident National Bank dated as
of August 8, 1983 is incorporated herein by
C-3
<PAGE> 69
reference to Exhibit (5)(b) of Post-Effective Amendment
No. 1 to Registrant's Registration Statement filed on
March 1, 1984.
(6) Distribution Agreement between Registrant and Provident
Distributors, Inc. dated January 31, 1994 is incorporated
herein by reference to Exhibit (6) of Post-Effective Amendment
No. 13 to Registrant's Registration Statement filed on November
30, 1994.
(7) Fund Office Retirement Profit-Sharing Plan and Trust Agreement
dated as of December 1, 1989 is incorporated herein by
reference to Exhibit (7) of Post-Effective Amendment No. 9 to
Registrant's Registration Statement filed on November 29, 1990.
(8) (a) Custody Agreement between Registrant and Provident National
Bank dated as of July 20, 1983 is incorporated herein by
reference to Exhibit (8) of Post-Effective Amendment No. 1
to Registrant's Registration Statement filed on March 1,
1984.
(b) Amendment No. 1 dated as of July 31, 1985 to Custody
Agreement between Registrant and Provident National Bank is
incorporated herein by reference to Exhibit (8)(b) of
Post-Effective Amendment No. 4 to Registrant's Registration
Statement filed on October 7, 1985.
(c) Amendment No. 2 dated as of October 30, 1985 to Custody
Agreement between Registrant and Provident National Bank is
incorporated herein by reference to Exhibit (8)(c) of
Post-Effective Amendment No. 5 to Registrant's Registration
Statement filed on September 30, 1986.
(9) (a) Administration Agreement between Registrant, Provident
Distributors, Inc. (formerly MFD Group, Inc.) and PFPC Inc.
dated January 18, 1993 is incorporated herein by reference
to Exhibit (9)(a) of Post-Effective Amendment No. 12 to
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<PAGE> 70
Registrant's Registration Statement filed on November 30,
1993.
(b) Transfer Agency Agreement between Registrant and Provident
Financial Processing Corporation dated as of August 8, 1983
is incorporated herein by reference to Exhibit (9)(b) of
Registrant's Registration Statement filed on March 1, 1984.
(c) Amendment No. 1 dated as of July 31, 1985 to Transfer
Agency Agreement between Registrant and Provident Financial
Processing Corporation is incorporated herein by reference
to Exhibit (9)(d) of Post-Effective Amendment No. 4 to
Registrant's Registration Statement filed on October 7,
1985.
(10) Opinion of Counsel.
(11) (a) Consent of Coopers & Lybrand L.L.P.
(b) Consent of Drinker Biddle & Reath.
(c) Consent of Willkie Farr & Gallagher.
(12) The Fund's Annual Report to Shareholders (File No. 2-82278)
for the fiscal year ended July 31, 1996 as filed with the
Commission on September 19, 1996 is incorporated by reference.
(13) None.
(14) None.
(15) 12b-1 Services Plan is incorporated herein by reference to
Exhibit (15) of Post-Effective Amendment No. 3 to Registrant's
Registration Statement filed on August 9, 1985.
(16) Schedule for Computation of Performance Quotations is
incorporated herein by reference to Exhibit (16) of
Post-Effective Amendment No. 11 to Registrant's Registration
Statement filed on November 25, 1992.
(27) Financial Data Schedules.
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<PAGE> 71
Item 25. Persons Controlled by or under Common Control with Registrant
Registrant is controlled by its Board of Directors.
Item 26. Number of Holders of Securities
The following information is as of November 18, 1996:
<TABLE>
<CAPTION>
Title of Class Number of
-------------- Record Holders
--------------
<S> <C>
Class A Common Stock (Money) 34
Class A Common Stock-Special Series 1 (Dollar) 2
Class A Common Stock-Special Series 2 (Plus) 0
</TABLE>
Item 27. Indemnification
Article VII, Section 3, of Registrant's Articles of Incorporation,
incorporated herein by reference as Exhibit (1)(a), and Article VI, Section 2,
of Registrant's By-Laws, incorporated herein by reference as Exhibit (2)(a),
require the indemnification of Registrant's directors and officers to the full
extent permissible under the General Laws of the State of Maryland and the
Investment Company Act of 1940. Indemnification of Registrant's principal
underwriter, custodian and transfer agent against certain losses is provided
for, respectively, in Section 6.b. of the Distribution Agreement, filed as
Exhibit (6) hereto, Section 22 of the Custody Agreement, incorporated herein by
reference as Exhibit (8)(a) hereto, and Section 15 of the Transfer Agency
Agreement, incorporated herein by reference as Exhibit (9)(b) hereto. The Fund
has obtained from a major insurance carrier a directors' and officers' liability
policy covering certain types of errors and omissions.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a director, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, 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
C-6
<PAGE> 72
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 28. Business and Other Connections of Investment Advisers
PIMC performs investment advisory services for Registrant and certain
other investment companies. PNC Bank and its predecessors have been in the
business of managing the investments of fiduciary and other accounts in the
Philadelphia area since 1847. In addition to its trust business, PNC Bank
provides commercial banking services.
To Registrant's knowledge, none of the directors or officers of PIMC or
PNC Bank, except those set forth below, is, or has been at any time during
Registrant's past two fiscal years, engaged in any other business, profession,
vocation or employment of a substantial nature, except that certain directors
and officers and certain executives of PNC Bank and PIMC also hold various
positions with, and engage in business for, PNC Bank Corp., which indirectly
owns all the outstanding stock of PNC Bank, or other subsidiaries of PNC Bank
Corp. Set forth below are the names and principal businesses of the directors
and certain executives of PNC Bank and the directors and certain of the senior
executive officers of PIMC who are engaged in any other business, profession,
vocation or employment of a substantial nature.
PNC INSTITUTIONAL MANAGEMENT CORPORATION
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PIMC NAME CONNECTIONS BUSINESS
- ------------- ---- -------------- --------
<S> <C> <C> <C>
Chairman and J. Richard Carnall Executive Vice President Banking
Director PNC Bank, National
Association (1)
Director Banking
PNC National Bank (2)
Chairman and Director Financial
PFPC Inc. (3) Related
Services
Director Fiduciary
PNC Trust Company Activities
of New York (11)
Director Equipment
Hayden Bolts, Inc.*
Director Real
Parkway Real Estate Company* Estate
</TABLE>
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<PAGE> 73
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PIMC NAME CONNECTIONS BUSINESS
- ------------- ---- -------------- --------
<S> <C> <C> <C>
Director
Provident Capital Management Investment
Inc. (5) Advisory
Director
PNC Asset Management Group, Inc.
Director
PFPC International Ltd. Financial-
Related
Services
Director
PFPC International (Cayman) Ltd. Financial-
Related
Service
Director
Advanced Investment Management Investment
Advisory
Chairman
International Dollar Reserve
Fund, Ltd.
Director Richard C. Caldwell Executive Vice President Banking
PNC Bank, National
Association (1)
Director Banking
PNC National Bank (2)
Director Fiduciary
PNC Trust Company Activities
of New York
Director
Provident Capital Management Investment
Inc. (5) Advisory
Executive Vice President Bank
PNC Bank Corp. (14) Holding
Company
Director Banking
PNC Bank, New Jersey,
National Association (16)
Director Financial
PFPC Inc. (3) Related
Services
Chairman, Director & CEO
PNC Asset Management Group, Inc.
Director
Compass Capital Group, Inc. Mutual Fund
Director
</TABLE>
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<PAGE> 74
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PIMC NAME CONNECTIONS BUSINESS
- ------------- ---- -------------- --------
<S> <C> <C> <C>
BlackRock Financial Investment
Management, Inc. Advisory
Director
PNC Equity Advisors Co. Investment
Advisory
Director
PNC Bank, New England Banking
Director Laurence D. Fink Chairman and Chief Executive
Officer
BlackRock Financial Management,
Inc.
Director
PNC Asset Management Group, Inc.
Director Richard L. Smoot President and Chief Banking
Executive Officer
PNC Bank, National
Association (Phila.) (1)
Senior Vice President Bank
PNC Bank Corp. (14) Holding
Company
Director Financial-
PFPC Inc. (3) Related
Services
Director Fiduciary
PNC Trust Company of NY (11) Activities
Director, Chairman and President Banking
PNC Bank, New Jersey, National
Association (16)
Director, Chairman, and CEO Banking
PNC National Bank (2)
Chairman & Director Leasing
PNC Credit Corp (13)
Director and Nicholas M. Marsini, Senior Vice President Banking
Chief Jr. PNC Bank, National
Financial Association (1)
Officer
Director Financial
PFPC Inc. (3) Related
Services
Senior Vice President Banking
and Chief Financial Officer
PNC Bank, Delaware (20)
</TABLE>
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<PAGE> 75
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PIMC NAME CONNECTIONS BUSINESS
- ------------- ---- -------------- --------
<S> <C> <C> <C>
Director, Vice President and Banking
Treasurer
PNC National Bank (2)
Director Banking
PNC Bank, New Jersey, National
Association (16)
Director Fiduciary
PNC Trust Company of Activities
New York (11)
Director and Treasurer Holding
PNC Bancorp, Inc. (9) Company
Director and Treasurer Investment
PNC Capital Corp. (17) Activities
Director and Treasurer Banking
PNC Holding Corp. (18)
Director and Treasurer Investment
PNC Venture Corp. (19) Activities
President and Thomas H. Nevin None.
Chief Investment
Officer
Vice President Michelle L. Petrilli Chief Counsel Banking
and Secretary PNC Bank, DE (20)
Secretary, PFPC Inc. (3) Financial
Related
Services
Executive Charles B. Landreth Vice President, PNC Bank, Banking
Vice President National Association (1)
Senior Vice Vincent J. Ciavardini President and Chief Financial
President Financial Officer Related
PFPC Inc. (3) Services
Director
PNC Asset Management Group, Inc.
Director & President Financial-
PFPC International Ltd. Related
Services
Director Financial-
PFPC International (Cayman) Ltd. Related
Services
Director
International Dollar Reserve
Fund, Ltd.
Senior Vice Scott Moss None.
President
</TABLE>
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<PAGE> 76
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PIMC NAME CONNECTIONS BUSINESS
- ------------- ---- -------------- --------
<S> <C> <C> <C>
Senior Vice John N. Parthemore None.
President
Senior Vice Dushyant Pandit None.
President
Senior Vice James R. Smith None.
President
Vice President, Stephen M. Wynne Executive Vice President Financial
Chief Accounting and Chief Accounting Related
Officer and Assis- Officer, PFPC Inc. (3) Services
tant Secretary
Director Financial-
PFPC Trustee & Custodial Related
Services, Ltd. Services
Director Financial-
PFPC International (Cayman) Ltd. Related
Services
Executive Vice President Financial-
PFPC International Ltd. Related
Services
Controller Pauline M. Heintz Vice President Financial
PFPC Inc. (3) Related
Services
Vice President John R. Antczak None.
Vice President Jeffrey W. Carson None.
Vice President Katherine A. Chuppe None.
Vice President Mary J. Coldren None.
Vice President Michele C. Dillon None.
Vice President Patrick J. Ford None.
Vice President Richard Hoerner None.
Vice President Michael S. Hutchinson None.
Vice President Michael J. Milligan None.
Vice President G. Keith Robertshaw None.
Vice President W. Don Simmons None.
Vice President Charles Allen None.
Stiteler
</TABLE>
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<PAGE> 77
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PIMC NAME CONNECTIONS BUSINESS
- ------------- ---- -------------- --------
<S> <C> <C> <C>
Vice President William F. Walsh None.
Vice President Karen J. Walters None.
</TABLE>
- ---------------------
*INFORMATION REGARDING THIS CORPORATION CAN BE OBTAINED FROM THE OFFICE OF THE
SECRETARY.
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<PAGE> 78
PNC BANK, NATIONAL ASSOCIATION
DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PNC BANK NAME CONNECTIONS BUSINESS
- ------------- ---- -------------- --------
<S> <C> <C> <C>
Director B. R. Brown President and CEO of Consol, Coal
Inc. Consol Plaza
Pittsburgh, PA 15241
Director Constance E. Clayton Associate Dean, School of Medical
Health and Pediatrics
Medical College of PA
Hahnemann University
430 East Sedgwick St.
Philadelphia, PA 19119
Director Eberhard Faber, IV Chairman and C.E.O. E.F.L., Manufac-
Inc., 450 Hedge Road, turing
P.O. Box 49
Bearcreek, PA 18602
Director Dr. Stuart Heydt President and CEO Medical
Geisinger Foundation
100 N. Academy Avenue
Danville, PA 17822
Director Edward P. Junker, III Vice Chairman Banking
PNC Bank, N.A.
Ninth and State Streets
Erie, PA 16553
Director Thomas A. McConomy President, CEO and Chairman Manufac-
Calgon Caron Corporation turing
413 Woodland Road
Sewickley, PA 15143
Director Thomas H. O'Brien Chairman Banking
PNC Bank, National Association
One PNC Plaza, 30th Floor
Pittsburgh, PA 15265
Director Dr. J. Dennis Provost, The Smithsonian Educa-
O'Connor Institution tion
1000 Jefferson Drive, S.W.
Room 230, MRC 009
Washington, DC 20560
Director Rocco A. Ortenzio Chairman and CEO Medical
Continental Medical Systems, Inc.
P.O. Box 715
Mechanicsburg, PA 17055
Director Jane G. Pepper President, Pennsylvania Horti-
Horticulture Society, culture
325 Walnut Street
Philadelphia, PA 19106
</TABLE>
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<PAGE> 79
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS TYPE OF
PNC BANK NAME CONNECTIONS BUSINESS
- ------------- ---- -------------- --------
<S> <C> <C> <C>
Director Robert C. Robb, Jr. President Financial
Lewis, Eckert, Robb and
& Company Management Management
425 One Plymouth Meeting Consultants
Plymouth Meeting, PA 19462
Director James E. Rohr President and C.E.O. Bank
PNC Bank, National Associa- Holding
tion Company
One PNC Plaza, 30th Floor
Pittsburgh, PA 15265
Director Daniel M. Rooney President Football
Pittsburgh Steelers Football
Club of the National Football
League
300 Stadium Circle
Pittsburgh, PA 15212
Director Seth E. Schofield Chairman, President and CEO Airline
USAir Group, Inc.
and USAir, Inc.
2345 Crystal Drive
Arlington, VA 22227
</TABLE>
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<PAGE> 80
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
John E. Alden Senior Vice President
James C. Altman Senior Vice President
Lila M. Bachelier Senior Vice President
R. Perrin Baker Chief Market Counsel, Northwest PA
James R. Bartholomew Senior Vice President
Peter R. Begg Senior Vice President
Donald G. Berdine Senior Vice President
Ben Berzin, Jr. Senior Vice President
James H. Best Senior Vice President
Eva T. Blum Senior Vice President
Susan B. Bohn Senior Vice President
George Brikis Executive Vice President
Michael Brundage Senior Vice President
Anthony J. Cacciatore Senior Vice President
Richard C. Caldwell Executive Vice President
Craig T. Campbell Senior Vice President
J. Richard Carnall Executive Vice President
Edward V. Caruso Executive Vice President
Peter K. Classen President & CEO, PNC Bank, Northwest, Pa
James P. Conley Senior Vice President/Credit Policy
Andra D. Cochran Senior Vice President
Sharon Coghlan Coordinating Market Chief Counsel,
Philadelphia
John F. Calligan Senior Vice President
James P. Conley Senior Vice President
C. David Cook Senior Vice President
Alfred F. Cordasco Supervising Counsel, Pittsburgh, PA
Robert Crouse Senior Vice President
Peter M. Crowley Senior Vice President
Keith P. Crytzer Senior Vice President
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<PAGE> 81
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
John J. Daggett Senior Vice President
Peter J. Donchak Senior Vice President
Anuj Dhanda Senior Vice President
Victor M. DiBattista Chief Regional Counsel
Frank H. Dilenschneider Senior Vice President
Thomas C. Dilworth Senior Vice President
Alfred J. DiMatteis Senior Vice President
James Dionise Senior Vice President and C.F.O.
Patrick S. Doran Vice President, Head of Consumer Lending
Robert D. Edwards Senior Vice President
David J. Egan Senior Vice President
J. Lynn Evans Senior Vice President & Controller
William E. Fallon Senior Vice President
James M. Ferguson, III Senior Vice President
Charles J. Ferrero Senior Vice President
Frederick C. Frank, III Executive Vice President
William J. Friel Executive Vice President
John F. Fulgoney Coordinating Market Chief Counsel,
Northeast PA
Brian K. Garlock Senior Vice President
George D. Gonczar Senior Vice President
Richard C. Grace Senior Vice President
James S. Graham Senior Vice President
Michael J. Hannon Senior Vice President
Stephen G. Hardy Senior Vice President
Michael J. Harrington Senior Vice President
Marva H. Harris Senior Vice President
Maurice H. Hartigan, II Executive Vice President
G. Thomas Hewes Senior Vice President
Sylvan M. Holzer Senior Vice President
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<PAGE> 82
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
Bruce C. Iacobucci Senior Vice President
John M Infield Senior Vice President
Philip C. Jackson Senior Vice President
William J. Johns Controller
William R. Johnson Audit Director
Edward P. Junker, III Vice Chairman
Robert D. Kane Senior Vice President
Michael D. Kelsey Chief Compliance Counsel
Jack Kelly Senior Vice President
Geoffrey R. Kimmel Senior Vice President
Randall C. King Senior Vice President
Christopher M. Knoll Senior Vice President
Richard C. Krauss Senior Vice President
Frank R. Krepp Senior Vice President & Chief Credit
Policy Officer
Kenneth P. Leckey Senior Vice President & Cashier
Marilyn R. Levins Senior Vice President
Carl J. Lisman Executive Vice President
George Lula Senior Vice President
Jane E. Madio Senior Vice President
Nicholas M. Marsini, Jr. Senior Vice President
John A. Martin Senior Vice President
David O. Matthews Senior Vice President
Walter B. McClellan Senior Vice President
James F. McGowan Senior Vice President
Charlotte B. McLaughlin Senior Vice President
James C. Mendelson Senior Vice President
James W. Meighen Senior Vice President
Scott C. Meves Senior Vice President
Ralph S. Michael, III Executive Vice President
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<PAGE> 83
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
J. William Mills Senior Vice President
Barbara A. Misner Senior Vice President
Marlene D. Mosco Senior Vice President
Scott Moss Senior Vice President
Peter F. Moylan Senior Vice President
Michael B. Nelson Executive Vice President
Thomas J. Nist Senior Vice President
Thomas H. O'Brien Chairman
James F. O'Day Senior Vice President
Cynthia G. Osofsky Senior Vice President
Thomas E. Paisley, III Senior Vice President
Barbara Z. Parker Executive Vice President
George R. Partridge Senior Vice President
Daniel J. Panlick Senior Vice President
David M. Payne Senior Vice President
Charles C. Pearson, Jr. President and CEO, PNC Bank, Central PA
Helen P. Pudlin Senior Vice President
Edward V. Randall, Jr. President and CEO, PNC Bank, Pittsburgh
Arthur F. Rodman, III Senior Vice President
Richard C. Rhoades Senior Vice President
Bryan W. Ridley Senior Vice President
James E. Rohr President and Chief Executive Officer
Gary Royer Senior Vice President
Robert T. Saltarelli Senior Vice President
Robert V. Sammartino Senior Vice President
William Sayre, Jr. Senior Vice President
Alfred J. Schiavetti Senior Vice President
David W. Schoffstall Executive Vice President
Seymour Schwartzberg Senior Vice President
Timothy G. Shack Senior Vice President
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<PAGE> 84
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
Douglas E. Shaffer Senior Vice President
Alfred A. Silva Senior Vice President
George R. Simon Senior Vice President
Richard L. Smoot President and CEO of PNC Bank,
Philadelphia
Timothy N. Smyth Senior Vice President
Kenneth S. Spatz Senior Vice President
Darcel H. Steber Senior Vice President
William F. Strome Senior Vice President and Secretary
Robert L. Tassome Senior Vice President
Jane B. Tompkins Senior Vice President
Robert B. Trempe Senior Vice President
Kevin M. Tucker Senior Vice President
Alan P. Vail Senior Vice President
Frank T. VanGrofski Executive Vice President
Ronald H. Vicari Senior Vice President
William A. Wagner Senior Vice President
Patrick M. Wallace Senior Vice President
Annette M. Ward-Kredel Senior Vice President
Robert S. Wrath Senior Vice President
Arlene M. Yocum Senior Vice President
Carole Yon Senior Vice President
George L. Ziminski, Jr. Senior Vice President
(1) PNC Bank, National Association, 120 S. 17th Street, Philadelphia, PA
19103, Broad and Chestnut Streets, Philadelphia, PA 19101, 17th and
Chestnut Streets, Philadelphia, PA 19103.
(2) PNC National Bank, 103 Bellevue Parkway, Wilmington, DE 19809.
(3) PFPC Inc., 103 Bellevue Parkway, Wilmington, DE 19809.
(4) PNC Service Corp, 103 Bellevue Parkway, Wilmington, DE 19809.
(5) Provident Capital Management, Inc., 30 S. 17th Street, Suite 1500,
Philadelphia, PA 19103.
(6) PNC Investment Corp., Broad and Chestnut Streets, Philadelphia, PA
19101.
(7) Provident Realty Management, Inc., Broad and Chestnut Streets,
Philadelphia, PA 19101.
(8) Provident Realty, Inc., Broad and Chestnut Streets, Philadelphia, PA
19101.
(9) PNC Bancorp, Inc., 222 Delaware Avenue, Wilmington, DE 19810.
(10) PNC New Jersey Credit Corp., 1415 Route 70 East, Suite 604, Cherry
Hill, NJ 08034.
(11) PNC Trust Company of New York, 40 Broad Street, New York, NY 10084.
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<PAGE> 85
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
(12) Provcor Properties, Inc., Broad and Chestnut Streets, Philadelphia, PA
19101.
(13) PNC Credit Corp, 103 Bellevue Parkway, Wilmington, DE 19809.
(14) PNC Bank Corp., 5th Avenue and Woods Streets, Pittsburgh, PA 15265.
(16) PNC Bank, New Jersey, National Association, Woodland Falls Corporate
Park, 210 Lake Drive East, Cherry Hill, NJ 08002.
(17) PNC Capital Corp, 5th Avenue and Woods Streets, Pittsburgh, PA 15265.
(18) PNC Holding Corp, 222 Delaware Avenue, P.O. Box 791, Wilmington, DE
19899.
(19) PNC Venture Corp, 5th Avenue and Woods Streets, Pittsburgh, PA 15265.
(20) PNC Bank, Delaware, 300 Delaware Avenue, Wilmington, DE 19801.
(21) Bank of Delaware Corp., 300 Delaware Avenue, Wilmington, DE 19801.
(22) Del-Vest, Inc., 300 Delaware Avenue, Wilmington, DE 19801.
(23) Marand Corp., 222 Delaware Avenue, Wilmington, DE 19801.
(24) Millsboro Insurance Agency, 300 Delaware Avenue, Wilmington, DE 19801.
(25) Roney-Richards, Inc., 300 Delaware Avenue, Wilmington, DE 19801.
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<PAGE> 86
Item 29. Principal Underwriter
(a) Provident Distributors, Inc. ("PDI") currently acts as distributor
for, in addition to the Fund, Temporary Investment Fund, Inc., Trust for Federal
Securities, Municipal Fund for Temporary Investment and Municipal Fund for
California Investors, Inc.
(b) The information required by this Item 29 with respect to each
director, officer or partner of PDI is incorporated by reference to Schedule A
of Form BD filed by PDI with the Securities and Exchange Commission pursuant to
the Securities and Exchange Act of 1934 (see File No. 8-46564).
Item 30. Location of Accounts and Records
(1) PNC Bank, National Association, 1600 Market Street,
Philadelphia, Pennsylvania 19103 (records relating to its
functions as sub-investment adviser).
(2) PNC Bank, National Association, 200 Stevens Drive, Suite
440-A, Lester, Pennsylvania 19113 (records relating to its
functions as custodian).
(3) Provident Distributors Inc., 259 Radnor-Chester Road, Suite
120, Radnor, Pennsylvania 19087 (records relating to its
functions as distributor).
(4) PNC Institutional Management Corporation, 400 Bellevue
Parkway, 4th Floor, Wilmington, Delaware 19809 (records
relating to its functions as investment adviser).
(5) PFPC Inc., P.O. Box 8950, Wilmington, Delaware 19885-9628 and
Provident Distributors, Inc., 289 Radnor-Chester Road, Suite
120, Radnor, Pennsylvania 19087 (records relating to their
functions as administrators).
(6) PFPC Inc., 400 Bellevue Parkway, Wilmington, Delaware 19809
(records relating to its functions as transfer agent and
dividend disbursing agent).
(7) Drinker Biddle & Reath, 1100 Philadelphia National Bank
Building, 1345 Chestnut Street, Philadelphia, Pennsylvania
19107-3996 (Registrant's Articles of Incorporation, By-Laws
and Minute Books).
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<PAGE> 87
Item 31. Management Services
None.
Item 32. Undertakings
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest Annual Report to Shareholders upon
request and without charge.
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<PAGE> 88
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment No. 15 to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 15 to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wilmington and State of Delaware on November 27,
1996.
MUNICIPAL FUND FOR
NEW YORK INVESTORS, Inc.
/s/ Edward J. Roach
__________________________
Edward J. Roach
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 15 to Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Francis E. Drake, Jr. Director November 27, 1996
- -------------------------
Francis E. Drake, Jr.
* Rodney D. Johnson Director November 27, 1996
- -------------------------
Rodney D. Johnson
* Thomas A. Melfe Chairman of the November 27, 1996
- ------------------------ Board and Director
Thomas A. Melfe
* Anthony M. Santomero Director November 27, 1996
- ------------------------
Anthony M. Santomero
/s/ Edward J. Roach President and November 27, 1996
- ------------------------ Treasurer
Edward J. Roach
(Principal Financial and
Accounting Officer)
*By:/s/ Edward J. Roach
--------------------
Edward J. Roach
Attorney-in-Fact
Powers of Attorney incorporated by reference to Post-Effective Amendment No. 14
to the Registrant's Registration Statement on Form N-1A filed on November 30,
1995.
</TABLE>
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<PAGE> 89
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ----------- --------
<S> <C>
(1)(a) Articles of Incorporation dated
February 23, 1983.
(b) Articles Supplementary to
Registrant's Articles of
Incorporation dated July 11, 1983.
(c) Articles of Amendment to Registrant's
Articles of Incorporation dated
July 15, 1983.
(d) Articles Supplementary to
Registrant's Articles of
Incorporation dated August 31, 1985 .
(2)(a) By-Laws as approved and adopted by
Registrant's Board of Directors.
(b) Amendment No. 1 to By-Laws as
approved and adopted by Registrant's
Board of Directors on July 26, 1984.
(c) Amendment No. 2 to By-Laws as
approved and adopted by Registrant's
Board of Directors on October 28,
1987.
(d) Amendment No. 3 to By-Laws as
approved and adopted by Registrant's
Board of Directors on July 13, 1988.
(10) Opinion of Counsel.
(11)(a) Consent of Coopers & Lybrand., L.L.P.
(b) Consent of Drinker Biddle & Reath.
(c) Consent of Willkie Farr & Gallagher.
(27) Financial Data Schedules.
</TABLE>
<PAGE> 1
Exhibit (1)(a)
ARTICLES OF INCORPORATION
OF
NEW YORK MUNICIPAL FUND FOR TEMPORARY INVESTMENT, INC.
* * * *
ARTICLE I
THE UNDERSIGNED, William J. Nutt, whose post office address is
One Boston Place, Boston, Massachusetts 02106, being at least eighteen years of
age, does hereby act as an incorporator, under and by virtue of the General Laws
of the State of Maryland authorizing the formation of corporations and
with the intention of forming a corporation.
ARTICLE II
The name of the Corporation is:
NEW YORK MUNICIPAL FUND FOR TEMPORARY INVESTMENT, INC.
ARTICLE III
The purpose for which the Corporation is formed is to act as
management investment company under the Investment Company Act of 1940.
ARTICLE IV
The Corporation is expressly empowered as follows:
(1) To hold, invest and reinvest its assets in securities and
other investments or to hold part or all of its assets in cash.
(2) To issue and sell shares of its capital stock in such
amounts and on such terms and conditions and for such purposes and for such
amount or kind of consideration as may now or hereafter be permitted by law.
(3) To redeem, purchase or otherwise acquire, hold, dispose
of, resell, transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any manner and
to the extent now or hereafter permitted by law and by the Charter of the
Corporation.
<PAGE> 2
(4) To enter into a written contract or contracts with any
person or persons providing for a delegation of the management of all or part of
the Corporation's securities portfolio(s) and also for the delegation of the
performance of various administrative or corporate functions, subject to the
direction of the Board of Directors. Any such contract or contracts may be made
with any person even though such person may be an officer, other employee,
director or stockholder of this Corporation or a corporation, partnership, trust
or association in which any such officer, other employee, director or
stockholder may be interested.
(5) To enter into a written contract or contracts appointing
one or more distributors or agents or both for the sale of the shares of the
Corporation on such terms and conditions as the Board of Directors of this
Corporation may deem reasonable and proper, and to allow such person or persons
a commission on the sale of such shares. Any such contract or contracts may be
made with any person even though such person may be an officer, other employee,
director or stockholder of this Corporation or a corporation, partnership, trust
or association in which any such officer, other employee, director or
stockholder may be interested.
(6) To enter into a written contract or contracts employing
such custodian or custodians for the safekeeping of the property of the
Corporation and of its shares, such dividend disbursing agent or agents, and
such transfer agent or agents and registrar or registrars for its shares, on
such terms and conditions as the Board of Directors of the Corporation may deem
reasonable and proper for the conduct of the affairs of the Corporation, and to
pay the fees and disbursements of such custodians, dividend disbursing agents,
transfer agents, and registrars out of the income and/or any other property of
the Corporation. Notwithstanding any other provision of these Articles of
Incorporation or the By-Laws of the Corporation, the Board of Directors may
cause any or all of the property of the Corporation to be transferred to, or to
be acquired and held in the name of, any custodian so appointed or any nominee
or nominees of the Corporation or nominee or nominees of such custodian
satisfactory to the Board of Directors.
(7) To employ the same person in any multiple capacity under
Sections (4), (5) and (6) of this Article IV who may receive compensation from
the Corporation in as many capacities in which such person shall serve the
Corporation.
(8) To do any and all such further acts or things and to
exercise any and all such further powers or rights as may be necessary,
incidental, relative, conducive, appropriate or desirable for the
accomplishment, carrying out or attainment of the purposes stated in Article III
hereof.
-2-
<PAGE> 3
The Corporation shall be authorized to exercise and enjoy all
of the powers, rights and privileges granted to, or conferred upon, corporations
by the General Laws of the State of Maryland now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE V
The post office address of the principal office of the
Corporation in the State of Maryland is c/o The Corporation Trust Incorporated,
32 South Street, Baltimore, Maryland 21202. The name of the resident agent of
the Corporation in this State is The Corporation Trust Incorporated, a
corporation of this State, and the post office address of the resident agent is
32 South Street, Baltimore, Maryland 21202.
ARTICLE VI
(1) The total number of shares of capital stock which the
Corporation shall have authority to issue is Two Billion (2,000,000,000) shares,
of the par value of One Mill ($0.001) per share and of the aggregate par value
of Two Million Dollars ($2,000,000).
(2) Any fractional share shall carry proportionately all the
rights of a whole share, excepting any right to receive a certificate evidencing
such fractional share, but including, without limitation, the right to vote and
the right to receive dividends.
(3) All persons who shall acquire stock in the Corporation
shall acquire the same subject to the provisions of the Charter and the By-laws
of the Corporation.
(4) Except to the extent otherwise provided by applicable law,
the Board of Directors shall have authority by resolution to classify and
reclassify any authorized but unissued shares of capital stock from time to time
by setting or changing in any one or more respects the preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of the capital stock. The
power of the Board of Directors to classify or reclassify any of the shares of
capital stock shall include, without limitation, authority to classify or
reclassify any such stock into a class or classes of capital stock and to divide
and classify shares of any class into one or more series of such class.
-3-
<PAGE> 4
(5) Subject to the power of the Board of Directors to classify
and reclassify any authorized but unissued shares of capital stock pursuant to
Section 4 of this Article VI, shares of capital stock of the Corporation shall
have the following preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption:
(A) Assets Belonging to a Class. All consideration
received by the Corporation for the issue or sale of stock of
any class of capital stock, together with all income,
earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, any
funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, and any general
assets of the Corporation not belonging to any particular
class which the Board of Directors may, in its sole
discretion, allocate to a class, shall irrevocably belong to
the class of shares of capital stock with respect to which
such assets, payments or funds were received or allocated for
all purposes, subject only to the rights of creditors, and
shall be so handled upon the books of account of the
Corporation. Such assets, income, earnings, profits and
proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation thereof, and any assets derived
from any reinvestment of such proceeds in whatever form, are
herein referred to as "assets belonging to" such class.
(B) Liabilities Belonging to a Class. The assets
belonging to any class of capital stock shall be charged with
the liabilities in respect to such class, and shall also be
charged with such class's share of the general liabilities of
the Corporation, in proportion to the asset value of the
respective classes of capital stock determined as hereinafter
provided. The liabilities so allocated to a class are herein
referred to as "liabilities belonging to" such class.
(C) Dividends and Distributions. Shares of each class
of capital stock shall be entitled to such dividends and
distributions, in stock or in cash or both, as may be declared
from time to time by the Board of Directors, acting in its
sole discretion, with respect to such class; provided,
however, that dividends and distributions on shares of a class
of capital stock shall be paid only out of the lawfully
available "assets belonging to such class" as such phrase is
defined in Section 5(A) of this Article VI.
-4-
<PAGE> 5
(D) Liquidating Dividends and Distributions. In
the event of the liquidation or dissolution of the
Corporation, stockholders of each class of capital stock
shall be entitled to receive, as a class, out of the assets
of the Corporation available for distribution to stockholders,
but other than general assets not belonging to any particular
class of stock, the assets belonging to such class; and the
assets so distributable to the stockholders of any class of
capital stock shall be distributed among such stockholders in
proportion to the number of shares of such class held by them
and recorded on the books of the Corporation. In the event
that there are any general assets not belonging to any
particular class of stock and available for distribution,
such distribution shall be made to the holders of stock of
all classes of capital stock in proportion to the asset value
of the respective classes of capital stock determined as
hereinafter provided.
(E) Voting. Each stockholder of each class of capital
stock shall be entitled to one vote for each share of capital
stock, irrespective of the class, then standing in his name on
the books of the Corporation, and on any matter submitted to a
vote of stockholders, all shares of capital stock then issued
and outstanding and entitled to vote shall be voted in the
aggregate and not by class except that: (i) when expressly
required by law, shares of capital stock shall be voted by
individual class and (ii) only shares of capital stock of the
respective class or classes affected by a matter shall be
entitled to vote on such matter.
(F) Redemption. To the extent the Corporation has
funds or other property legally available therefor, each
holder of shares of capital stock of the Corporation shall be
entitled to require the Corporation to redeem all or any part
of the shares of capital stock of the Corporation standing in
the name of such holder on the books of the Corporation, and
all shares of capital stock issued by the Corporation shall be
subject to redemption by the Corporation, at the redemption
price of such shares as in effect from time to time and in the
manner determined by the By-Laws or the Board of Directors of
the Corporation in accordance with the provisions hereof,
subject to the right of the Board of Directors of the
Corporation to suspend the right of redemption of shares of
capital stock of the Corporation or postpone the date of
payment of such redemption price in accordance with provisions
of applicable law. Without limiting the generality of the
foregoing, the Corporation shall, to the extent
-5-
<PAGE> 6
permitted by applicable law, have the right at any time to
redeem the shares owned by any holder of capital stock of the
Corporation (i) if such redemption is, in the opinion of the
Board of Directors of the Corporation, desirable in order to
prevent the Corporation from being deemed a "personal holding
company" within the meaning of the Internal Revenue Code of
1954, as amended, (ii) if the value of such shares in the
account maintained by the Corporation or its transfer agent
for any class of capital stock is less than Four Thousand
Dollars ($4,000.00); provided, however, that each stockholder
shall be notified that the value of his account is less than
Four Thousand Dollars ($4,000.00) and allowed sixty (60) days
to make additional purchases of shares before such redemption
is processed by the Corporation, or (iii) if the net income
with respect to any particular class of capital stock should
be negative or it should otherwise be appropriate to carry out
the Corporation's responsibilities under the Investment
Company Act of 1940, as amended, in each case subject to such
further terms and conditions as the Board of Directors of the
Corporation may from time to time adopt. The redemption price
of shares of any class of capital stock of the Corporation
shall, except as otherwise provided in this Section 5(F), be
the net asset value thereof as determined by the Board of
Directors of the Corporation from time to time in accordance
with the provisions of applicable law, less such redemption
fee or other charge, if any, as may be fixed by resolution of
the Board of Directors of the Corporation. Payment of the
redemption price shall be made in cash by the Corporation at
such time and in such manner as may be determined from time to
time by the Board of Directors of the Corporation unless, in
the opinion of the Board of Directors, which shall be
conclusive, conditions exist which make payment wholly in cash
unwise or undesirable; in such event the Corporation may make
payment wholly or partly by securities or other property
included in the assets belonging or allocable to the class of
the shares redemption of which is being sought, the value of
which shall be determined as provided herein. When the net
income with respect to any particular class of capital stock
is negative or whenever deemed appropriate by the Board of
Directors in order to carry out the Corporation's
responsibilities under the Investment Company Act of 1940, as
amended, the Corporation may, without payment of monetary
compensation but in consideration of the interest of the
Corporation and the stockholders in maintaining a constant net
asset value per share of such class, redeem pro rata from each
stockholder of
-6-
<PAGE> 7
record on such day such number of full and fractional shares
of the Corporation's capital stock of such class as may be
necessary to reduce the aggregate number of outstanding shares
in order to permit the net asset value thereof to remain
constant.
(G) Conversion. Each holder of any class of capital
stock of the Corporation, who surrenders his share certificate
in good delivery form to the Corporation or, if the shares in
question are not represented by certificates, who delivers to
the Corporation a written request in good order signed by the
stockholder, shall, to the extent permitted by the By-Laws or
by resolution of the Board of Directors, be entitled to
convert the shares in question on the basis hereinafter set
forth, into shares of stock of any other class of the
Corporation. The Corporation shall determine the net asset
value, as provided herein, of the shares to be converted and
may deduct therefrom a conversion cost, in an amount
determined within the discretion of the Board of Directors.
Within five (5) business days after such surrender and payment
of any conversion cost, the Corporation shall issue to the
stockholder such number of shares of stock of the class
desired as, taken at the net asset value thereof determined as
provided herein in the same manner and at the same time as
that of the shares surrendered, shall equal the net asset
value of the shares surrendered, less any conversion cost as
aforesaid. Any amount representing a fraction of a share may
be paid in cash at the option of the Corporation. Any
conversion cost may be paid and/or assigned by the Corporation
to the underwriter and/or to any other agency, as it may
elect.
(H) Restrictions on Transferability. If, in the
opinion of the Board of Directors of the Corporation,
concentration in the ownership of shares of capital stock
might cause the Corporation to be deemed a personal holding
company within the meaning of the Internal Revenue Code, as
now or hereafter in force, the Corporation may at any time and
from time to time refuse to give effect on the books of the
Corporation to any transfer or transfers of any share or
shares of capital stock in an effort to prevent such personal
holding company status.
ARTICLE VII
(1) The number of directors of the Corporation shall
be three (3) provided that: (A) If there is no capital stock of
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<PAGE> 8
the Corporation outstanding, the number of directors may be less than three (3)
but not less than one (1); and (B) if there is capital stock of the Corporation
outstanding and so long as there are less than three (3) stockholders of the
Corporation, the number of directors may be less than three (3) but not less
than the number of stockholders. The number of directors of the Corporation may
be increased or decreased pursuant to the By-laws of the Corporation but shall
never be less than three (3), except as provided in this Article VII. The name
of the director who shall act until the first annual meeting of stockholders or
until his successor(s) is duly elected and qualifies is:
William J. Nutt.
(2) No holder of stock of the Corporation shall, as such
holder, have any right to purchase or subscribe for any shares of the capital
stock of the Corporation or any other security of the Corporation which it may
issue or sell (whether out of the number of shares authorized by the Charter, or
out of any shares of the capital stock of the Corporation acquired by it after
the issue thereof, or otherwise) other than such right, if any, as the Board of
Directors, in its discretion, may determine.
(3) Each director and each officer of the Corporation shall be
indemnified by the Corporation to the full extent permitted by the General Laws
of the State of Maryland and the Investment Company Act of 1940, now or
hereafter in force, including advance of related expenses.
ARTICLE VIII
Any determination made in good faith and, so far as accounting
matters are involved in accordance with generally accepted accounting
principles, by or pursuant to the direction of the Board of Directors as to the
amount and value of assets, obligations or liabilities of the Corporation, as to
the amount of net income of the Corporation from dividends and interest for any
period or amounts at any time legally available for the payment of dividends, as
to the amount of any reserves or charges set up and the propriety thereof, as to
the time of or purpose for creating reserves or as to the use, alteration or
cancellation of any reserves or charges (whether or not any obligation or
liability for which such reserves or charges shall have been created shall have
been paid or discharged or shall be then or thereafter required to be paid or
discharged), as to the value of any security owned by the Corporation, as to the
allocation of any assets or liabilities to a class or classes of capital stock,
as to the times at which shares of any class of capital stock shall be deemed to
be outstanding or no longer outstanding, or as to any other matters relating to
the issuance, sale, redemption or other acquisition or disposition of
-8-
<PAGE> 9
securities or shares of capital stock of the Corporation, and any reasonable
determination made in good faith by the Board of Directors as to whether any
transaction constitutes a purchase of securities on "margin," a sale of
securities "short," or an underwriting of the sale of, or a participation in any
underwriting or selling group in connection with the public distribution of, any
securities, shall be final and conclusive, and shall be binding upon the
Corporation and all holders of its capital stock, past, present and future, and
shares of the capital stock of the Corporation are issued and sold on the
condition and understanding, evidenced by the purchase of shares of capital
stock or acceptance of share certificates, that any and all such determinations
shall be binding as aforesaid. No provision of the Charter of the Corporation
shall be effective to (i) require a waiver of compliance with any provision of
the Securities Act of 1933, as amended, or the Investment Company Act of 1940,
as amended, or of any valid rule, regulation or order of the Securities and
Exchange Commission thereunder or (ii) protect or purport to protect any
director or officer of the Corporation against any liability to the Corporation
or 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.
ARTICLE IX
The duration of the Corporation shall be perpetual.
ARTICLE X
(1) The Corporation reserves the right from time to time to
make any amendments to its Charter which may now or hereafter be authorized by
law, including any amendments changing the terms or contract rights, as
expressly set forth in its Charter, of any of its outstanding stock by
classification, reclassification or otherwise, but no such amendment which
changes such terms or contract rights of any of its outstanding stock shall be
valid unless such amendment shall have been authorized by not less than a
majority of the aggregate number of the votes entitled to be cast thereon by a
vote at a meeting.
(2) Notwithstanding any provision of the General Laws of the
State of Maryland requiring any action to be taken or authorized by the
affirmative vote of the holders of a designated proportion of the votes of all
classes or of any class of stock of the Corporation, such action shall be
effective and valid if taken or authorized by the affirmative vote of the
holders of a majority of the total number of shares outstanding and entitled to
vote thereon, except as otherwise provided herein.
-9-
<PAGE> 10
(3) So long as permitted by Maryland law, the books of the
Corporation may be kept outside of the State of Maryland at such place or places
as may be designated from time to time by the Board of Directors or in the
By-Laws of the Corporation.
(4) In furtherance, and not in limitation, of the powers
conferred by the laws of the State of Maryland, the Board of Directors is
expressly authorized:
(A) To make, alter or repeal the By-Laws of the
Corporation, except where such power is reserved by the
By-Laws to the stockholders, and except as otherwise required
by the Investment Company Act of 1940, as amended.
(B) From time to time to determine whether and to
what extent and at what times and places and under what
conditions and regulations the books and accounts of the
Corporation, or any of them other than the stock ledger, shall
be open to the inspection of the stockholders, and no
stockholder shall have any right to inspect any account or
book or document of the Corporation, except as conferred by
law or authorized by resolution of the Board of Directors or
of the stockholders.
(C) Without the assent or vote of the stockholders,
to authorize the issuance from time to time of shares of the
stock of any class of the Corporation, whether now or
hereafter authorized, and securities convertible into shares
of its stock of any class or classes, whether now or hereafter
authorized, for such consideration as the Board of Directors
may deem advisable.
(D) Without the assent or vote of the stockholders,
to authorize and issue obligations of the Corporation, secured
and unsecured, as the Board of Directors may determine, and to
authorize and cause to be executed mortgages and liens upon
the property of the Corporation, real or personal.
(E) Notwithstanding anything in these Articles of
Incorporation to the contrary, to establish in its absolute
discretion the basis or method for determining the value of
the assets belonging to any class, the value of the
liabilities belonging to any class, the allocation of any
assets or liabilities to any class, the times at which shares
of any class shall be deemed to be outstanding or no longer
outstanding and the net asset value of each share of any class
of capital stock
-10-
<PAGE> 11
of the Corporation for purposes of sales, redemptions,
repurchases of shares or otherwise.
(F) To determine in accordance with generally
accepted accounting principles and practices what constitutes
net profits, earnings, surplus or net assets in excess of
capital, and to determine what accounting periods shall be
used by the Corporation for any purpose, whether annual or any
other period, including daily; to set apart out of any funds
of the Corporation such reserves for such purposes as it shall
determine and to abolish the same; to declare and pay any
dividends and distributions in cash, securities or other
property from surplus or any funds legally available therefor,
at such intervals (which may be as frequently as daily) or on
such other periodic basis, as it shall determine; to declare
such dividends or distributions by means of a formula or other
method of determination, at meetings held less frequently than
the frequency of the effectiveness of such declarations; to
establish payment dates for dividends or any other
distributions on any basis, including dates occurring less
frequently than the effectiveness of declarations thereof; and
to provide for the payment of declared dividends on a date
earlier or later than the specified payment date in the case
of stockholders of the Corporation redeeming their entire
ownership of shares of any class of the Corporation.
(G) In addition to the powers and authorities granted
herein and by statute expressly conferred upon it, the Board
of Directors is authorized to exercise all such powers and do
all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of
Maryland law, these Articles of Incorporation and the By-Laws
of the Corporation.
IN WITNESS WHEREOF, the undersigned incorporator of NEW YORK
MUNICIPAL FUND FOR TEMPORARY INVESTMENT, INC. hereby executes the foregoing
Articles of Incorporation and acknowledges the same to be his act.
Dated the 13th day of February, 1983.
/s/William J. Nutt
__________________
William J. Nutt
-11-
<PAGE> 1
Exhibit (1)(b)
ARTICLES SUPPLEMENTARY TO
ARTICLES OF INCORPORATION OF
NEW YORK MUNICIPAL FUND FOR TEMPORARY INVESTMENT, INC.
NEW YORK MUNICIPAL FUND FOR TEMPORARY INVESTMENT, INC. a
Maryland corporation having its principal office in the City of Baltimore,
Maryland (hereinafter called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to Section 2-208 of the Maryland General
Corporation Law, the Board of Directors of the Corporation has classified all of
the Two Billion (2,000,000,000) authorized, unissued and unclassified shares of
capital stock of the Corporation (par value One Mill ($.001) per share) as Class
A Common Stock pursuant to the following resolutions adopted by the Board of
Directors of the Corporation by written unanimous consent dated March 7, 1983:
RESOLVED, that pursuant to Article VI of the Articles
of Incorporation of the Corporation, all of the Two Billion
(2,000,000,000) authorized, unissued and unclassified shares
of capital stock of the Corporation (of the par value of One
Mill ($.001) per share and of the aggregate par value of Two
Million Dollars ($2,000,000)) be, and hereby are, classified
and designated as Class A Common Stock;
FURTHER RESOLVED, that each share of Class A Common
Stock shall have all of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of
redemption that are set forth in the Articles of Incorporation
of the Corporation with respect to its shares of capital
stock.
SECOND: The shares of Class A Common Stock of the Corporation
classified pursuant to the resolutions set forth in
<PAGE> 2
Article FIRST of these Articles Supplementary have been classified by the
Corporation's Board of Directors under the authority contained in the charter of
the Corporation.
IN WITNESS WHEREOF, NEW YORK MUNICIPAL FUND FOR TEMPORARY
INVESTMENT, INC., has caused these presents to be signed in its name and on its
behalf by its President and its corporate seal to be hereunto affixed and
attested by its Secretary on this 11th day of July, 1983.
NEW YORK MUNICIPAL FUND FOR
TEMPORARY INVESTMENT, INC.
By:/s/ William J. Nutt
______________________________
William J. Nutt, President
/s/ Morgan R. Jones
__________________________
Morgan R. Jones, Secretary
-2-
<PAGE> 3
CERTIFICATE
THE UNDERSIGNED, President of NEW YORK MUNICIPAL FUND FOR
TEMPORARY INVESTMENT, INC., who executed on behalf of said Corporation the
attached Articles Supplementary to Articles of Incorporation of said
Corporation, of which this certificate is made a part, hereby acknowledges, in
the name and on behalf of said Corporation, the foregoing Articles Supplementary
to be the corporate act of said Corporation, and certifies that, to the best of
his knowledge, information and belief the matters and facts set forth in the
attached Articles Supplementary with respect to authorization and approval are
true in all material respects, under the penalties for perjury.
/s/ William J. Nutt
_________________________
William J. Nutt
President
Date: July 11, 1983
<PAGE> 1
Exhibit (1)(c)
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
NEW YORK MUNICIPAL FUND FOR
TEMPORARY INVESTMENT, INC.
NEW YORK MUNICIPAL FUND FOR TEMPORARY INVESTMENT, INC., a
Maryland corporation, having its principal office in the City of Baltimore,
Maryland (hereinafter called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The Articles of Incorporation of the Corporation are
hereby amended as follows:
By striking out Article II of the Articles of
Incorporation in its entirety and inserting in lieu thereof the following:
"The name of the Corporation is:
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC."
SECOND: The foregoing amendment to the Articles of
Incorporation has been duly approved by a majority of the entire Board of
Directors of the Corporation and no stock entitled to be voted on the matter was
outstanding or subscribed for at the time of approval.
IN WITNESS WHEREOF, NEW YORK MUNICIPAL FUND FOR TEMPORARY
INVESTMENT, INC. has caused these presents to be signed in its name and on its
behalf by its President and its corporate
<PAGE> 2
seal to be hereunto affixed and attested by its Secretary on this 15th day of
July, 1983.
NEW YORK MUNICIPAL FUND FOR
TEMPORARY INVESTMENT, INC.
By:/s/ William J. Nutt
__________________________
William J. Nutt
President
(SEAL)
ATTEST:
/s/ Morgan R. Jones
__________________________
Morgan R. Jones, Secretary
-2-
<PAGE> 3
CERTIFICATE
THE UNDERSIGNED, President of NEW YORK MUNICIPAL FUND FOR
TEMPORARY INVESTMENT, INC., who executed on behalf of said Corporation the
foregoing Articles of Amendment, of which this certificate is made a part,
hereby acknowledges, in the name and on behalf of said Corporation, the
foregoing Articles of Amendment to be the corporate act of said Corporation and
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to authorization and approval
are true in all material respects, under the penalties of perjury.
/s/ William J. Nutt
___________________
William J. Nutt
President
Date: July 15, 1983
<PAGE> 1
Exhibit (1)(d)
ARTICLES SUPPLEMENTARY
OF
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC., a Maryland
corporation having its principal office in the City of Baltimore, Maryland
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: Pursuant to Section 2-208 of the Maryland General
Corporation Law, the Board of Directors of the Corporation has reclassified
Three Hundred Million (300,000,000) shares of authorized and unissued Class A
Common Stock of the Corporation (par value One Mill ($.001) per share) as Class
A Common Stock - Special Series 1 (par value One Mill ($.001) per share)
pursuant to the following resolutions adopted at a regular meeting of the Board
of Directors of the Corporation held on July 18, 1985:
RESOLVED, that pursuant to Article VI of the Articles of
Incorporation of the Corporation Three Hundred Million (300,000,000)
authorized and unissued shares of Class A Common Stock of the
Corporation (of the par value of One Mill ($.001) per share and of the
aggregate par value of Three Hundred Thousand Dollars ($300,000)) be,
and hereby are, divided into and classified as a separate series of
said Class to be known as Class A Common Stock - Special Series 1;
FURTHER RESOLVED, that all consideration received by the
Corporation for the issue or sale of shares of Class A Common Stock -
Special Series 1 shall be invested and reinvested with the
consideration received by the Corporation for the issue and sale of all
other shares now or hereafter designated as Class A Common Stock
(irrespective of whether said shares have been designated as
<PAGE> 2
Special Series of said Class and, if so designated as a Special Series,
irrespective of the particular Series designations), together with all
income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, any funds or
payments derived from any reinvestment of such proceeds in whatever
form the same may be, and any general assets of the Corporation
allocated to the shares of Class A Common Stock - Special Series 1 or
such other shares by the Board of Directors in accordance with the
Charter of the Corporation, and each share of Class A Common Stock -
Special Series 1 shall share equally with each such other share in such
consideration and other assets, income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any assets derived from any reinvestment of
such proceeds in whatever form;
FURTHER RESOLVED, that each share of Class A Common Stock -
Special Series 1 shall be charged equally with each other share now or
hereafter designated as Class A Common Stock (irrespective of whether
said share has been designated as part of a Special Series of said
Class and, if so designated as a part of a Special Series, irrespective
of the particular Series designation) with the expenses and liabilities
of the Corporation in respect of shares of Class A Common Stock -
Special Series 1 or such other shares and in respect of any general
expenses and liabilities of the Corporation allocated to shares of
Class A Common Stock Special Series 1 or such other shares in
accordance with the Charter of the Corporation, except that:
(a) shares of Class A Common Stock - Special Series 1
shall bear the expenses and liabilities of payments to institutions
under any agreements entered into by or on behalf of the Corporation
which provide for services by the institutions to their customers who
beneficially own such shares but do not provide for services to any
beneficial owners of shares of capital stock of the Corporation other
than shares of Class A Common Stock - Special Series 1; and
(b) shares of Class A Common Stock - Special Series 1
shall not bear the expenses and liabilities of payments to institutions
under any agreements entered into by or on behalf of the Corporation
which provide for services by the institutions to their customers who
beneficially own shares of capital stock of the Corporation other than
shares of Class A Common Stock - Special Series 1 but do not provide
for services to any beneficial owners of shares of Class A Common Stock
- Special Series 1;
-2-
<PAGE> 3
FURTHER RESOLVED, that each share of Class A Common Stock -
Special Series 1 shall otherwise have the same preferences, conversion
and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption as
each other share now or hereafter designated as Class A Common Stock
(irrespective of whether said share has been designated as part of a
Special Series of said Class and, if so designated as part of a Special
Series, irrespective of the particular Series designation), except
that:
(a) on any matter that pertains to the agreements or
expenses and liabilities described in clause (a) of the immediately
preceding resolution (or to any plan or other document adopted by the
Corporation relating to said agreements, expenses or liabilities) and
is submitted to a vote of shareholders of the Corporation, only shares
of Class A Common Stock - Special Series 1 shall be entitled to vote,
except that: (i) if said matter affects shares of capital stock of the
Corporation other than shares of Class A Common Stock - Special Series
1, such other affected shares of capital stock shall also be entitled
to vote, and in such case shares of Class A Common Stock - Special
Series 1 shall be voted in the aggregate together with such other
affected shares and not by class or series except where otherwise
required by law or permitted by the Board of Directors of the
Corporation; and (ii) if said matter does not affect shares of Class A
Common Stock - Special Series 1, said shares shall not be entitled to
vote (except where otherwise required by law or permitted by the Board
of Directors) even though the matter is submitted to a vote of the
holders of shares of capital stock of the Corporation other than shares
of Class A Common Stock - Special Series 1; and
(b) on any matter that pertains to the agreements or
expenses and liabilities described in clause (b) of the immediately
preceding resolution (or any plan or other document adopted by the
Corporation relating to said agreements, expenses or liabilities) and
is submitted to a vote of shareholders of the Corporation, shares of
Class A Common Stock - Special Series 1 shall not be entitled to vote,
except where otherwise required by law or permitted by the Board of
Directors of the Corporation, and except that if said matter affects
shares of Class A Common Stock Special Series 1 such shares shall be
entitled to vote, and in such case shares of Class A Common Stock -
Special Series 1 shall be voted in the aggregate together with all
other shares of capital stock of the Corporation voting on the matter
and not by class or series except where otherwise required by law or
permitted by the Board of Directors.
-3-
<PAGE> 4
SECOND: Pursuant to Section 2-208 of the Maryland General
Corporation Law, the Board of Directors of the Corporation has reclassified an
additional Three Hundred Million (300,000,000) shares of authorized and unissued
Class A Common Stock of the Corporation (par value One Mill ($.001) per share)
as Class A Common Stock - Special Series 2 (par value One Mill ($.001) per
share) pursuant to the following resolutions adopted at a regular meeting of the
Board of Directors of the Corporation held on July 18, 1985:
RESOLVED, that pursuant to Article VI of the Articles of
Incorporation of the Corporation Three Hundred Million (300,000,000)
authorized and unissued shares of Class A Common Stock of the
Corporation (of the par value of One Mill ($.001) per share and of the
aggregate par value of Three Hundred Thousand Dollars ($300,000)) be,
and hereby are, divided into and classified as a separate series of
said Class to be known as Class A Common Stock - Special Series 2;
FURTHER RESOLVED, that all consideration received by the
Corporation for the issue or sale of shares of Class A Common Stock -
Special Series 2 shall be invested and reinvested with the
consideration received by the Corporation for the issue and sale of all
other shares now or hereafter designated as Class A Common Stock
(irrespective of whether said shares have been designated as Special
Series of said Class and, if so designated as a Special Series,
irrespective of the particular Series designations), together with all
income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, any funds or
payments derived from any reinvestment of such proceeds in whatever
form the same may be, and any general assets of the Corporation
allocated to the shares of Class A Common Stock - Special Series 2 or
such other shares by the Board of Directors in accordance with the
Charter of the Corporation, and each share of Class A Common Stock -
Special Series 2 shall share equally with each such other share in such
consideration and other assets, income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any assets derived from any reinvestment of
such proceeds in whatever form;
-4-
<PAGE> 5
FURTHER RESOLVED, that each share of Class A Common Stock -
Special Series 2 shall be charged equally with each other share now or
hereafter designated as Class A Common Stock (irrespective of whether
said share has been designated as part of a Special Series of said
Class and, if so designated as a part of a Special Series, irrespective
of the particular Series designation) with the expenses and liabilities
of the Corporation in respect of shares of Class A Common Stock -
Special Series 2 or such other shares and in respect of any general
expenses and liabilities of the Corporation allocated to shares of
Class A Common Stock Special Series 2 or such other shares in
accordance with the Charter of the Corporation, except that:
(a) shares of Class A Common Stock - Special Series 2
shall bear the expenses and liabilities of payments to institutions
under any agreements entered into by or on behalf of the Corporation
which provide for services by the institutions to their customers who
beneficially own such shares but do not provide for services to any
beneficial owners of shares of capital stock of the Corporation other
than shares of Class A Common Stock - Special Series 2; and
(b) shares of Class A Common Stock - Special Series 2
shall not bear the expenses and liabilities of payments to institutions
under any agreements entered into by or on behalf of the Corporation
which provide for services by the institutions to their customers who
beneficially own shares of capital stock of the Corporation other than
shares of Class A Common Stock - Special Series 2 but do not provide
for services to any beneficial owners of shares of Class A Common Stock
- Special Series 2;
FURTHER RESOLVED, that each share of Class A Common Stock -
Special Series 2 shall otherwise have the same preferences, conversion
and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption as
each other share now or hereafter designated as Class A Common Stock
(irrespective of whether said share has been designated as part of a
Special Series of said Class and, if so designated as part of a Special
Series, irrespective of the particular Series designation), except
that:
(a) on any matter that pertains to the agreements or
expenses and liabilities described in clause (a) of the immediately
preceding resolution (or to any plan or other document adopted by the
Corporation relating to said agreements, expenses or liabilities) and
is submitted to a vote of shareholders of the Corporation, only shares
of Class A Common Stock - Special Series 2 shall be entitled to vote,
except that: (i) if said matter affects shares of
-5-
<PAGE> 6
capital stock of the Corporation other than shares of Class A Common
Stock - Special Series 2, such other affected shares of capital stock
shall also be entitled to vote, and in such case shares of Class A
Common Stock - Special Series 2 shall be voted in the aggregate
together with such other affected shares and not by class or series
except where otherwise required by law or permitted by the Board of
Directors of the Corporation; and (ii) if said matter does not affect
shares of Class A Common Stock - Special Series 2, said shares shall
not be entitled to vote (except where otherwise required by law or
permitted by the Board of Directors) even though the matter is
submitted to a vote of the holders of shares of capital stock of the
Corporation other than shares of Class A Common Stock - Special Series
2; and
(b) on any matter that pertains to the agreements or
expenses and liabilities described in clause (b) of the immediately
preceding resolution (or any plan or other document adopted by the
Corporation relating to said agreements, expenses or liabilities) and
is submitted to a vote of shareholders of the Corporation, shares of
Class A Common Stock - Special Series 2 shall not be entitled to vote,
except where otherwise required by law or permitted by the Board of
Directors of the Corporation, and except that if said matter affects
shares of Class A Common Stock Special Series 2 such shares shall be
entitled to vote, and in such case shares of Class A Common Stock -
Special Series 2 shall be voted in the aggregate together with all
other shares of capital stock of the Corporation voting on the matter
and not by class or series except where otherwise required by law or
permitted by the Board of Directors.
THIRD: The shares of Common Stock of the Corporation
reclassified pursuant to the resolutions set forth in Article FIRST and Article
SECOND of these Articles Supplementary have been reclassified by the
Corporation's Board of Directors under the authority contained in the Charter of
the Corporation.
IN WITNESS WHEREOF, MUNICIPAL FUND FOR NEW YORK INVESTORS,
INC., has caused these presents to be signed in its name and on its behalf by
its Vice President and its corporate
-6-
<PAGE> 7
seal to be hereunto affixed and attested by its Secretary on this
31st day of August, 1985.
MUNICIPAL FUND FOR
NEW YORK INVESTORS, INC.
[SEAL] By:/s/Edward J. Roach
_________________________________
Edward J. Roach
Vice President
Attest:
/s/Morgan R. Jones
__________________________
Morgan R. Jones, Secretary
-7-
<PAGE> 8
CERTIFICATE
THE UNDERSIGNED, Vice President of MUNICIPAL FUND FOR NEW YORK
INVESTORS, INC., who executed on behalf of said Corporation the attached
Articles Supplementary of said Corporation, of which this certificate is made a
part, hereby acknowledges, in the name and on behalf of said Corporation, the
attached Articles Supplementary to be the corporate act of said Corporation, and
certifies that to the best of his knowledge, information and belief the matters
and facts set forth in the attached Articles Supplementary with respect to
authorization and approval are true in all material respects, under the
penalties for perjury.
/s/Edward J. Roach
__________________
Edward J. Roach
Dated: August 31, 1985 Vice President
<PAGE> 1
Exhibit (2)(a)
NEW YORK MUNICIPAL FUND FOR TEMPORARY INVESTMENT, INC.
BY-LAWS
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. The annual meeting of the stockholders of
the Corporation shall be held at the registered office of the Corporation, or at
such other place, within or without the State of Maryland, as may be determined
by the Board of Directors and as shall be designated in the notice of said
meeting, on such day and at such time as shall be specified by the Board of
Directors for the purpose of electing directors and for the transaction of such
other business as may properly be brought before the meeting.
SECTION 2. Special Meetings. Special meetings of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute or by the
Charter, may be held at any place, within or without the State of Maryland, and
may be called at any time by the Board of Directors or by the President, and
shall be called by the President or Secretary at the request in writing of a
majority of the Board or at the request in writing of stockholders entitled to
cast at least twenty-five (25) percent of all the votes entitled to be cast at
such meeting. Such request shall state the purpose or purposes of the proposed
meeting and the matters proposed to be acted on at it; provided, however, that
unless requested by stockholders entitled to cast a majority of all the votes
entitled to be cast at the meeting, a special meeting need not be called to
consider any matter which is substantially the same as a matter voted on at any
special meeting of the stockholders held during the preceding twelve (12)
months.
SECTION 3. Notice of Meetings and Shareholder List. Written or printed
notice of the purpose or purposes and of the time and place of every meeting of
the stockholders shall be given by the Secretary of the Corporation to each
stockholder of record entitled to vote at the meeting and each other stockholder
entitled to notice of the meeting, by placing such notice in the mail at least
ten (10) days, but not more than ninety (90) days, and in any event within the
period prescribed by law, prior to the date named for the meeting addressed to
each stockholder at his address appearing on the books of the Corporation or
supplied by him to the Corporation for the purpose of notice. The notice of
every meeting of stockholders may be accompanied by a form of proxy approved by
the Board of Directors in favor of such actions or persons as the Board of
Directors may select. At least five (5) days prior to each meeting of
stockholders, the officer or agent having charge of the share transfer books of
the Corporation shall make a complete list of stockholders entitled
<PAGE> 2
to vote at such meeting, in alphabetical order with the address of and the
number of shares held by each stockholder.
SECTION 4. Record Date. The Board of Directors may fix a date not more
than ninety (90) days preceding the date of any meeting of stockholders, or the
date fixed for the payment of any dividend, or the date of the allotment of
rights or the date when any change or conversion or exchange of shares shall go
into effect, as a record date for the determination of stockholders entitled to
notice of, or to vote at, any such meeting (or any adjournment thereof) or
entitled to receive payment of any dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be. In such case, only
stockholders of record at the close of business on the date so fixed shall be
entitled to vote, to receive notice, or receive dividends or rights, or to
exercise rights, notwithstanding any subsequent transfer on the books of the
Corporation. The Board of Directors shall not close the books of the Corporation
against transfers of shares during the whole or any part of such period. In the
case of a meeting of stockholders, the record date shall be fixed not less than
ten (10) days prior to the date of the meeting.
SECTION 5. Quorum and Shareholder Action. Except as otherwise provided
by statute or by the Charter, the presence in person or by proxy of stockholders
of all the Corporation entitled to cast at least a majority of all the votes to
be cast at the meeting shall constitute a quorum and a majority of all the votes
cast at a meeting at which a quorum is present shall be sufficient to approve
any matter which properly comes before the meeting. In the absence of a quorum,
the stockholders present in person or by proxy, by majority vote and without
notice other than by announcement, may adjourn the meeting from time to time as
provided in Section 7 of this Article I until a quorum shall attend. The
stockholders present at any duly organized meeting may continue to do business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum.
SECTION 6. Organization. At every meeting of the stockholders, the
Chairman of the Board, if one has been selected and is present or, if not, the
President, or in the absence of the Chairman of the Board and the President, a
Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a chairman chosen by the stockholders, shall act as
chairman; and the Secretary, or in his absence, an Assistant Secretary, or in
the absence of the Secretary and all the Assistant Secretaries, a person
appointed by the chairman, shall act as secretary.
SECTION 7. Adjournment. Any meeting of the stockholders
may be adjourned from time to time, without notice other than by
announcement at the meeting at which such adjournment is taken,
-2-
<PAGE> 3
and at any such adjourned meeting at which a quorum shall be present any action
may be taken that could have been taken at the meeting originally called;
provided, that the meeting may not be adjourned to a date more than the number
of days after the original record date for the meeting permitted by law, and if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the adjourned meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Election and Powers. The number of directors shall be fixed
from time to time by resolution of the Board of Directors adopted by a majority
of the directors then in office; provided, however, that the number of directors
shall in no event be less than three (3) nor more than fifteen (15), except that
(a) if there is no stock outstanding the number of directors may be less than
three (3) but not less than one (1), and (b) if there is stock outstanding and
so long as there are less than three (3) stockholders, the number of directors
may be less than three (3) but not less than the number of stockholders. The
business, affairs and property of the Corporation shall be managed by the Board
of Directors, which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute, the Charter or these By-Laws
required to be exercised or done by the stockholders. The members of the Board
of Directors shall be elected by the stockholders at their annual meeting and
each director shall hold office until the annual meeting next after his election
and until his successor shall have been duly elected and qualified, until he
shall have resigned, or until he shall have been removed as provided in Section
10 of this Article II.
SECTION 2. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice on such dates as the Board may from time to time
determine.
SECTION 3. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board, the President or by
a majority of the directors either in writing or by vote at a meeting.
SECTION 4. Notice of Special Meetings. Notice of the place, day and
hour of every special meeting shall be delivered personally to each director or
mailed, telegraphed or cabled to his address on the books of the Corporation at
least one (1) day before the meeting. It shall not be requisite to the validity
of any meeting of the Board of Directors that notice thereof shall have been
given to any director who is present thereat, or, if
-3-
<PAGE> 4
absent, waives notice thereof in writing filed with the records of the meeting
either before or after the holding thereof.
SECTION 5. Place of Meetings. The Board of Directors may hold its
regular and special meetings at such place or places within or without the State
of Maryland as the Board may from time to time determine.
SECTION 6. Quorum and Board Action. Except as otherwise provided by
statute or by the Charter: (a) one-third (1/3) of the entire Board of Directors,
but in no case less than two (2) directors (unless there is only one (1)
director of the Corporation, in which event one (1) director), shall be
necessary to constitute a quorum for the transaction of business at each meeting
of the Board; (b) the action of a majority of the directors present at a meeting
at which a quorum is present shall be the action of the Board; and (c) if at any
meeting there be less than a quorum present, a majority of those directors
present may adjourn the meeting from time to time, but not for a period greater
than thirty (30) days at any one time, without notice other than by announcement
at the meeting until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting as originally scheduled.
SECTION 7. Chairman. The Board of Directors may at any time appoint one
of its members as Chairman of the Board, who shall serve at the pleasure of the
Board and who shall perform and execute such duties and powers as may be
conferred upon or assigned to him by the Board or these By-Laws, but who shall
not by reason of performing and executing these duties and powers be deemed an
officer or employee of the Corporation.
SECTION 8. Organization. At every meeting of the Board of Directors,
the Chairman of the Board, if one has been selected and is present, and, if not,
the President, or in the absence of the Chairman of the Board and the President,
a Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a chairman chosen by a majority of the directors
present, shall preside; and the Secretary, or in his absence, an Assistant
Secretary, or in the absence of the Secretary and all the Assistant Secretaries,
a person appointed by the chairman, shall act as secretary.
SECTION 9. Vacancies. Any vacancy on the Board of Directors occurring
by reason of any increase in the number of directors may be filled by a majority
of the entire Board of Directors. Any vacancy on the Board of Directors
occurring for any other cause may be filled by a majority of the remaining
members of the Board of Directors, whether or not these members constitute a
quorum under Section 6 of this Article II. Any director so chosen to fill a
vacancy shall hold office until the
-4-
<PAGE> 5
next annual meeting of stockholders and until his successor shall have been duly
elected and qualified.
SECTION 10. Removal. At any meeting of the stockholders called for that
purpose, the stockholders of the Corporation may remove from office any
director, with or without cause, by the affirmative vote of a majority of the
votes entitled to be cast for the election of directors, and another director
may be elected in the place of the director so removed to serve for the
remainder of the term of the removed director.
SECTION 11. Resignations. Any director may resign at any time by giving
written notice to the Board of Directors, the President or the Secretary. Any
such resignation shall take effect at the time 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 12. Committees. The Board of Directors may appoint from among
its members an executive and other committees of the Board composed of two (2)
or more directors. To the extent permitted by law, the Board of Directors may
delegate to any such committee or committees any of the powers of the Board of
Directors in the management of the business, affairs and property of the
Corporation and may authorize any such committee or committees to cause the seal
of the Corporation to be affixed to all papers which may require it. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors. Each committee
shall keep regular minutes of its meetings and report the same to the Board of
Directors when required. The members of a committee present at any meeting,
whether or not they constitute a quorum, may appoint a director to act in the
place of an absent member.
SECTION 13. Telephone Conference. 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
by means of which all persons participating in the meeting can hear each other
at the same time and participation by such means shall constitute presence in
person at the meeting.
SECTION 14. Compensation of Directors. Any director, whether or not he
is a compensated officer, employee, agent or contractor of the Corporation, may
be compensated for his services as director or as a member of a committee, or as
Chairman of the Board or chairman of a committee, and in addition may be
reimbursed for transportation and other expenses, all in such manner and amounts
as the directors may from time to time determine.
-5-
<PAGE> 6
ARTICLE III
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a
President, a Secretary and a Treasurer, and may include one or more Vice
Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers,
and such other officers as the Board of Directors may from time to time
determine. Any officer may hold more than one office in the Corporation, except
that an officer may not serve concurrently as both the President and a Vice
President.
SECTION 2. Election and Term of Office. The officers of the Corporation
shall be elected by the Board of Directors and, subject to earlier termination
of office, each officer shall hold office for one year and until his successor
shall have been elected and qualified.
SECTION 3. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President, or the Secretary
of the Corporation. 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. Removal. If the Board of Directors in its judgment finds
that the best interests of the Corporation will be served, the Board may remove
any officer of the Corporation at any time.
SECTION 5. President. The President shall be the chief executive
officer of the Corporation and shall have general supervision over the business
and operations of the Corporation, subject, however, to the control of the Board
of Directors. He, or such persons as he shall designate, shall sign, execute,
acknowledge, verify, deliver and accept, in the name of the Corporation, deeds,
mortgages, bonds, contracts and other instruments authorized by the Board of
Directors, except in the case where the signing, execution, acknowledgement,
verification, delivery or acceptance thereof shall be delegated by the Board to
some other officer or agent of the Corporation; and, in general, he shall have
general executive powers as well as other powers and duties as from time to time
may be conferred upon or assigned to him by the Board.
SECTION 6. The Vice Presidents. In the absence or disability of the
President, or when so directed by the President, any Vice President designated
by the Board of Directors may perform any or all of the duties of the President,
and, when so acting, shall have all the powers of, and be subject
-6-
<PAGE> 7
to all the restrictions upon, the President; provided, however, that no Vice
President shall act as a member of or as chairman of any committee of which the
President is a member or chairman by designation of ex-officio, except when
designated by the Board. Each Vice President shall perform such other duties as
from time to time may be conferred upon or assigned to him by the Board or the
President.
SECTION 7. The Secretary. The Secretary shall record all the votes of
the stockholders and of the directors and the minutes of the meetings of the
stockholders and of the Board of Directors in a book or books to be kept for
that purpose; he shall see that notices of meetings of the stockholders and the
Board of Directors are given and that all records and reports are properly kept
and filed by the Corporation as required by law; he shall be the custodian of
the seal of the Corporation and shall see that it is affixed to all documents to
be executed on behalf of the Corporation under its seal, provided that in lieu
of affixing the corporate seal to any document, it shall be sufficient to meet
the requirements of any law, rule or regulation relating to a corporate seal to
affix the word ("SEAL") adjacent to the signature of the authorized officer of
the Corporation; and, in general, he shall perform all duties incident to the
office of Secretary, and such other duties as from time to time may be conferred
upon or assigned to him by the Board or the President.
SECTION 8. Assistant Secretaries. In the absence or disability of the
Secretary, or when so directed by the Secretary, any Assistant Secretary may
perform any or all of the duties of the Secretary, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the Secretary.
Each Assistant Secretary shall perform such other duties as from time to time
may be conferred upon or assigned to him by the Board of Directors, the
President or the Secretary.
SECTION 9. The Treasurer. Subject to the provisions of any contract
which may be entered into with any custodian pursuant to authority granted by
the Board of Directors, the Treasurer shall have charge of all receipts and
disbursements of the Corporation and shall have or provide for the custody of
its funds and securities; he shall have full authority to receive and give
receipts for all money due and payable to the Corporation, and to endorse
checks, drafts and warrants, in its name and on its behalf, and to give full
discharge for the same; he shall deposit all funds of the Corporation, except
such as may be required for current use, in such banks or other places of
deposit as the Board of Directors may from time to time designate; and, in
general, he shall perform all duties incident to the office of Treasurer and
such other duties as from time to time may be conferred upon or assigned to him
by the Board or the President.
-7-
<PAGE> 8
SECTION 10. Assistant Treasurers. Each Assistant Treasurer shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors or the President.
SECTION 11. Compensation of Officers. The compensation of all officers
shall be fixed from time to time by the Board of Directors, or any committee or
officer authorized by the Board so to do. No officer shall be precluded, except
as determined by the Board of Directors or any such committee thereof, from
receiving such compensation by reason of the fact that he is also a director of
the Corporation.
ARTICLE IV
STOCK
SECTION 1. Certificates. Each stockholder shall be entitled upon
written request to a stock certificate or certificates, representing and
certifying the number and kind of full shares held by him, signed by the
President, a Vice President or the Chairman of the Board and countersigned by
the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer,
which signatures may be either manual or facsimile signatures, and sealed with
the seal of the Corporation, which seal may be either facsimile or any other
form of seal. Stock certificates shall be in such form, not inconsistent with
law or with the Charter, as shall be approved by the Board of Directors.
SECTION 2. Transfer of Shares. Transfers of shares shall be made on the
books of the Corporation at the direction of the person named on the
Corporation's books or named in the certificate or certificates for such shares
(if issued), or by his attorney lawfully constituted in writing, upon surrender
of such certificate or certificates (if issued) properly endorsed, together with
a proper request for redemption, to the Corporation's Transfer Agent, with such
evidence of the authenticity of such transfer, authorization and such other
matters as the Corporation or its agents may reasonably require, and subject to
such other reasonable terms and conditions as may be required by the Corporation
or its agents; or, if the Board of Directors shall by resolution so provide,
transfer of shares may be made in any other manner permitted by law.
SECTION 3. Transfer Agents and Registrars. The Corporation may have one
or more Transfer Agents and one or more Registrars of its stock, whose
respective duties the Board of Directors may, from time to time, define. No
certificate of stock shall be valid until countersigned by a Transfer Agent, if
the Corporation shall have a Transfer Agent, or until registered by a Registrar,
if the Corporation shall have a Registrar. The duties of Transfer Agent and
Registrar may be combined.
-8-
<PAGE> 9
SECTION 4. Mutilated, Lost, Stolen or Destroyed Certificates. The Board
of Directors, by standing resolution or by resolutions with respect to
particular cases, may authorize the issuance of a new stock certificate in lieu
of any stock certificate lost, stolen, destroyed or mutilated, upon such terms
and conditions as the Board may direct. The Board may in its discretion refuse
to issue such a new certificate, unless ordered to do so by a court of competent
jurisdiction.
SECTION 5. Stock Ledgers. The Corporation shall not be required to keep
original or duplicate stock ledgers at its principal office in the City of
Baltimore, Maryland, but stock ledgers shall be kept at the respective offices
of the Transfer Agents of the Corporation's capital stock.
ARTICLE V
SEAL
The seal of the Corporation shall be in such form as the Board of
Directors shall prescribe.
ARTICLE VI
SUNDRY PROVISIONS
SECTION 1. Amendments. (a) By Stockholders. By-Laws may be adopted,
altered, amended or repealed in the manner provided in Section 5 of Article I
hereof at any annual or special meeting of the stockholders.
(b) By Directors. By-Laws may be adopted, altered, amended
or repealed in the manner provided in Section 6 of Article II hereof by the
Board of Directors at any regular or special meeting of the Board.
SECTION 2. Indemnification of Directors and Officers. (a)
Indemnification. Any person who was or is a party or is threatened to be made a
party in any threatened, sending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
such person is a current or former director or officer of the Corporation, or is
or was serving while a director or officer of the Corporation at the request of
the Corporation as a director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, shall be indemnified by the Corporation against
judgments, penalties, fines, excise taxes, settlements and reasonable expenses
(including attorney's fees) actually incurred by such person in connection with
such action, suit or proceeding to the full extent permissible under the General
Laws of the State of Maryland, the Securities Act of 1933
-9-
<PAGE> 10
and the Investment Company Act of 1940, as such statutes are now or hereafter in
force, except that such indemnity shall not protect any such person against any
liability to the Corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
(b) Advances. Any current or former director or
officer of the Corporation claiming indemnification within the scope of this
Section 2 shall be entitled to advances from the Corporation for payment of the
reasonable by him in connection with proceedings to which he is a party in the
manner and to the full extent permissible under the General Laws of the State of
Maryland, the Securities Act of 1933 and the Investment Company Act of 1940, as
such statutes are now or hereafter in force.
(c) Procedure. On the request of any current or
former director or officer requesting indemnification or an advance under this
Section 2, the Board of Directors shall determine, or cause to be determined, in
a manner consistent with the General Laws of the State of Maryland, the
Securities Act of 1933 and the Investment Company Act of 1940, as such statutes
are now or hereafter in force, whether the standards required by this Section 2
have been met.
(d) Other Rights. The indemnification provided
by this Section 2 shall not be deemed exclusive of any other right, in respect
of indemnification or otherwise, to which those seeking such indemnification may
be entitled under any insurance or other agreement, vote of stockholders or
disinterested directors or otherwise, both as to action by a director or officer
of the Corporation in his official capacity and as to action by such person in
another capacity while holding such office or position, and shall continue as to
a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.
-10-
<PAGE> 1
Exhibit (2)(b)
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
Board of Directors
July 26, 1984
Amendment of By-Laws.
RESOLVED, that Article I, Section 1 of the By-Laws of the Fund
be, and the same hereby is, amended and restated in its entirety as
follows:
SECTION 1. Annual Meetings. The annual meeting of the
stockholders of the Corporation shall be held at the
registered office of the Corporation, or at such other place,
within or without the State of Maryland, as may be determined
by the Board of Directors and as shall be designated in the
notice of said meeting, on such day during the month of
November and at such time as shall be specified by the Board
of Directors for the purpose of electing directors and for the
transaction of such other business as may properly be brought
before the meeting.
<PAGE> 1
Exhibit (2)(c)
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
Amendments to By-Laws as approved and adopted by Registrant's
Board of Directors on October 28, 1987.
1. Article I, Section I of the Fund's By-Laws was
amended and restated in its entirety as follows:
SECTION 1. No Annual Meeting Required. No annual
meeting of stockholders of the Corporation shall
be held unless required by applicable law or
otherwise determined by the Board of Directors.
2. The last sentence of Section 1 of Article II of
the Fund's By-Laws was amended to provide as follows:
Subject to the provisions of Article I, Section I,
the members of the Board of Directors shall be
elected by the stockholders at their annual meeting
and each director shall hold office until the annual
meeting next after his election and until his
successor shall have been duly elected and qualified,
until he shall have resigned, or until he shall have
been removed as provided in Section 10 of this
Article II.
<PAGE> 1
Exhibit (2)(d)
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
Amendment to By-Laws
Adopted by the Board of Directors
on July 13, 1988
RESOLVED, that Section 2, paragraph (a) of Article VI of the
Fund's By-Laws be, and hereby is, amended and restated in its entirety to read
as follows:
Section 2. Indemnification of Directors and
Officers.
(a) Indemnification. The Corporation shall
indemnify its directors to the fullest extent that
indemnification of directors is permitted by the
Maryland General Corporation Law. The Corporation
shall indemnify its officers to the same extent as
its directors and to such further extent as is
consistent with law. The Corporation shall indemnify
its directors and officers who while serving as
directors or officers also serve at the request of
the Corporation as a director, officer, partner,
corporation, partnership, joint venture, trust, other
enterprise or employee benefit plan to the fullest
extent consistent with law. This Section shall not
protect any such person against any liability to the
Corporation or any stockholder thereof to which such
person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the
conduct of his office.
<PAGE> 1
EXHIBIT 10
November 26, 1996
Municipal Fund for New York Investors, Inc.
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, Delaware 19809
Re: POST-EFFECTIVE AMENDMENT NO. 15 TO REGISTRATION STATEMENT
ON FORM N-1A FOR MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
(REGISTRATION NO. 2-82278)
Gentlemen:
We have acted as counsel for Municipal Fund for New York
Investors, Inc., a Maryland corporation (the "Fund"), in connection with the
registration of 168,507,520 shares of Class A Common Stock (the "Shares"),
pursuant to Post-Effective Amendment No. 15 to the Fund's Registration
Statement under the Securities Act of 1933. The registration of the Shares has
been made in reliance upon Rule 24e-2 under the Investment Company Act of 1940.
The Fund is an open-end investment company authorized to issue a total of two
billion shares of Common Stock, par value $.001 per share, of which one
billion, four hundred million shares were classified as Class A Common Stock,
three hundred million shares were classified as Class A Common Stock -- Special
Series 1 and three hundred million shares were classified as Class A Common
Stock -- Special Series 2 at all times during the fiscal year ended July 31,
1996 and as of this date. All such shares are registered as Class A Common
Stock in the aforesaid Post-Effective Amendment and are considered as such for
purposes of this opinion. We have reviewed the Fund's Charter, its By-Laws,
resolutions adopted by its Board of Directors and shareholders and such other
legal and factual matters as we have deemed appropriate and relied upon a
certificate of the Fund's transfer agent as to certain matters including
whether at any time during the fiscal year ended July 31, 1996 the number of
issued and outstanding shares of any class or series of the Fund's Common Stock
exceeded the number of such Shares that the Fund was then authorized to issue.
On the basis of the foregoing, we are of the opinion that the
Shares, when issued for payment as described in the Fund's Prospectus, will be
validly issued, fully paid and non-assessable by the Fund.
<PAGE> 2
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to Post-Effective Amendment No. 15 to the
Fund's Registration Statement.
Very truly yours,
DRINKER BIDDLE & REATH
<PAGE> 1
Exhibit 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the following with respect to Post-Effective Amendment No.
15 to the Registration Statement (No. 2-82278) on Form N-1A under the Securities
Act of 1933, as amended, of Municipal Fund for New York Investors, Inc.:
1. The incorporation by reference of our report dated September
6, 1996 accompanying the financial statements in the Statement
of Additional Information.
2. The reference to our Firm under the heading "Financial
Highlights" in the Prospectus and under the heading
"Independent Accountants" in the Statement of Additional
Information."
/s/ Coopers & Lybrand
COOPERS & LYBRAND, L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
November 25, 1996
<PAGE> 1
Exhibit 11(b)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references
to our firm under the captions "Management of the Fund - Directors and Officers"
and "Counsel" in the Statement of Additional Information that is included in
Post-Effective Amendment No. 15 to the Registration Statement (No. 2-82278) of
Municipal Fund for New York Investors, Inc. under the Securities Act of 1933.
This consent does not constitute a consent under Section 7 of the Securities Act
of 1933, and in consenting to the use of our name and the references to our firm
under such captions we have not certified any part of the Registration Statement
and do not otherwise come within the categories of persons whose consent is
required under Section 7 or the rules and regulations of the Securities and
Exchange Commission thereunder.
/s/ DRINKER BIDDLE & REATH
___________________________
Drinker Biddle & Reath
Philadelphia, Pennsylvania
November 25, 1996
<PAGE> 1
Exhibit 11(c)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references
to our Firm under the caption "Counsel" included in the Statement of Additional
Information that is included in Post- Effective Amendment No. 15 to the
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended, and Amendment No. 16 to the Registration Statement on Form N-1A under
the Investment Company Act of 1940, as amended (No. 2-82278) of Municipal Fund
for New York Investors, Inc.
/s/ Willkie Farr & Gallagher
_____________________________
Willkie Farr & Gallagher
November 25, 1996
New York, New York
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