As filed with the Securities and Exchange Commission on April 28, 2000
Registration No. 2-94184
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 27 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 23 [X]
REICH & TANG EQUITY FUND, INC.
(Exact Name of Registrant as Specified in Charter)
600 Fifth Avenue, New York, New York 10020
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 830-5200
Bernadette N. Finn
c/o Reich & Tang Asset Management L.P.
600 Fifth Avenue
New York, New York 10020
(Name and address of agent for service)
Copy to:Michael R. Rosella, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
(212) 856-6858
It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) 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.
<PAGE>
REICH & TANG EQUITY FUND, INC.
600 Fifth Avenue
New York, New York 10020
(212) 830-5280
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April 28, 2000
SUPPLEMENT TO PROSPECTUS DATED MAY 3, 1999
On March 22, 2000, the Board of Directors of Reich & Tang Equity Fund, Inc.
(the "Fund") approved an Agreement and Plan of Reorganization and Liquidation
(the "Plan") which contemplates the transfer of all of the assets and
liabilities of the Fund in exchange for Institutional Class shares of Delafield
Fund, Inc. ("Delafield"). Following such transfer, Institutional Class shares of
Delafield will be distributed to shareholders of the Fund and the Fund will be
subsequently dissolved. As a result of the proposed transaction, each
shareholder of the Fund will receive that number of full and fractional
Institutional Class shares of Delafield equal in value at the time of the
exchange to the value of such shareholders of the Fund.
The Board of Directors has determined that the interests of existing
shareholders of R&T Equity will not be diluted as a result of the transaction
contemplated by the Plan. Both the Fund and Delafield share three common
directors on the Board of Directors. Both Funds are equity funds with similar
investment objectives and strategies. The Fund is managed by Reich & Tang Asset
Management L.P. and Delafield is managed by the Delafield Asset Management
Division of Reich & Tang Asset Management L.P. (Reich & Tang Asset Management
L.P. and its Delafield Asset Management Division may be referred to herein as
"Reich & Tang"). The Board of Directors and Reich & Tang recognize that greater
economies of scale and efficiencies can be attained by combining the assets of
the Funds and that since the investment objectives are very similar, such a
combination would not materially alter the investment experience of the
shareholders of the Fund.
The Plan is subject to the affirmative approval of the shareholders of the
Fund.
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REICH & TANG 600 FIFTH AVENUE
EQUITY FUND, INC. NEW YORK, NY 10020
(212) 830-5220
================================================================================
Prospectus
April 28, 2000
A mutual fund whose investment objective is to seek growth of capital.
Investments will be made based upon their potential for capital appreciation.
Current income is a secondary objective.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TABLE OF CONTENTS
2 Risk/Return Summary: Investments, Risks 7 Management, Organization and Capital Structure
and Performance 7 Shareholder Information
4 Fee Table 14 Tax Consequences
5 Investment Objectives, Principal Investment 15 Distribution Arrangements
Strategies and Related Risks 17 Financial Highlights
</TABLE>
<PAGE>
I. RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE
Investment Objectives
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The Fund seeks growth of capital. Investments will be made based upon their
potential for capital appreciation. Current income is a secondary objective.
There is no assurance that the Fund will achieve its investment objectives.
Principal Investment Strategies
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The Fund's investment philosophy is to invest in the equity securities of
companies which, based on fundamental research, management believes are
undervalued.
The Fund intends to achieve its investment objectives by investing
primarily in a diversified portfolio of domestic equity securities.
Under normal circumstances, the Fund will have substantially all of its
assets (more than 65%) invested in equity securities, including common stocks,
securities convertible into common stocks and rights or warrants to subscribe
for or purchase common stocks. At times, the Fund may also invest up to 35% of
its total assets in debt securities and preferred stocks offering a significant
opportunity for price appreciation.
PRINCIPAL RISKS
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o As with all equity investments, it is possible to lose money by investing
in the Fund.
o Since the Fund primarily contains common stocks of domestic issuers, an
investment in the Fund should be made with an understanding of the risks
inherent in an investment in common stocks, including a susceptibility to
general stock market movements and volatile changes in value.
o The value of the Fund's shares and the securities held by the Fund can each
decline in value.
o This Fund is intended for investors who seek long-term capital growth and
are willing to tolerate short-term fluctuations in price in order to
achieve this objective.
RISK/RETURN BAR CHART
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The following bar chart and table may assist you in your decision to invest
in the Fund. The bar chart shows the change in the average annual returns of the
Fund over the last ten calendar years. The table shows how the average annual
returns for the last one, five and ten year periods and since inception,
compared with that of the S&P 500 Index. While analyzing this information,
please note that the Fund's past performance is not an indicator of how the Fund
will perform in the future.
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Reich & Tang Equity Fund, Inc.(1),(2)
[GRAPHIC OMITTED]
Calendar Year End % Total Return
- ----------------- ---------------
1990 -5.83%
1991 23.05%
1992 16.34%
1993 13.81%
1994 1.70%
1995 28.16%
1996 16.87%
1997 13.77%
1998 2.57%
1999 0.36%
================================================================================
(1) The Fund's highest quarterly return was 23.94% for the quarter ended
June 30, 1999; the lowest quarterly return was -19.80% for the quarter
ended September 30, 1998.
(2) Participating Organizations may charge a fee to investors for purchasing
and redeeming shares. Therefore, the net return to such investors may be
less than if they had invested in the Fund directly.
Average Annual Total Returns - For the periods ended December 31, 1999
Reich & Tang Equity Fund, Inc.
One Year 0.36%
Five Years 11.89%
Ten Years 10.66%
Average Annual Total Returns
since Inception (January 4, 1985) 13.40%
Standard and Poor's 500 Index
One Year 21.04%
Five Years 28.56%
Ten Years 18.20%
Average Annual Total Returns
since January 4, 1985 19.07%
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FEE TABLE
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This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<S> <C> <C>
Management Fees........................................ 0.80%
Distribution and Service (12b-1) Fees.................. 0.01%
Other Expenses......................................... 0.50%
Administration Fees............................. 0.20%
Total Annual Fund Operating Expenses................... 1.31%
</TABLE>
The Manager has voluntarily waived a portion of the Management Fee. After
such waiver, the Management Fee was 0.70%. The actual Total Fund Operating
Expense was 1.21%. The Management Fee waiver was in effect for the six
month period from February 1, 1999 through July 31, 1999, and has been
terminated effective July 1999.
<TABLE>
<CAPTION>
Example
This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other equity funds.
Assume that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. Also
assume that your investment has a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<S> <C> <C> <C>
1 year 3 years 5 years 10 years
$133 $415 $718 $1,579
</TABLE>
4
<PAGE>
II. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
INVESTMENT OBJECTIVES
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The Fund is a diversified management investment company whose investment
objective is to seek growth of capital. Investments will be made based upon
their potential for capital appreciation. Current income is a secondary
objective.
The Fund's investment objective of growth of capital is fundamental and may
only be changed upon the approval of the holders of a majority of the
outstanding shares of the Fund that would be affected by such a change.
PRINCIPAL INVESTMENT STRATEGIES
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The Fund's investment philosophy is to invest in equity securities of
companies which, based on fundamental research, management believes are
undervalued. Within this basic framework, the policy of the Fund will emphasize
flexibility in arranging its portfolio to seek the desired results. Consistent
with this philosophy, the Fund will invest primarily in a diversified portfolio
of domestic equity securities.
The Fund may invest in both listed and unlisted equity securities.
Under normal circumstances, the Fund will have substantially all of its
assets (more than 65%) invested in equity securities, including common stocks,
securities convertible into common stocks and rights or warrants to subscribe
for or purchase common stocks. At times, the Fund may also invest up to 35% of
its assets in debt securities and preferred stocks which offer significant
opportunities for price appreciation.
The Fund may enter into repurchase agreements with Federal Reserve member
banks or "primary dealers" (as designated by the Federal Reserve Bank of New
York) in U.S. government securities. A repurchase agreement is an instrument
under which an investor purchases a U.S. government security from a vendor, and
the vendor agrees to repurchase the security at the same price, plus interest at
a specified rate.
The Fund will not invest more than 5% of its total assets in securities of
issuers which together with their predecessors have a record of less than three
years of continuous operations.
DEFENSIVE POSITION
The Fund may take a temporary defensive position and invest in securities
that are inconsistent with its principal investment strategies when the Manager
determines that adverse market, economic, political, or other conditions warrant
such a position. Pursuant to this policy, the Fund may invest temporarily
without limit in investment grade debt securities, preferred stocks or money
market instruments.
The Fund will not necessarily dispose of a security that falls below
investment grade unless the Manager determines that the security is inconsistent
with the Fund's investment objectives.
Money market instruments purchased for this purpose include U.S. Government
obligations, high quality commercial paper and certificates of deposit and
bankers' acceptances issued by domestic banks having more than $1 billion in
total assets.
BUY/SELL DECISIONS
Critical factors which will be considered in the selection of securities
include (i) the values of
5
<PAGE>
individual securities relative to other investment alternatives, (ii) trends in
the variables that determine corporate profits, corporate cash flow, balance
sheet changes, management capability and practices, and (iii) the economic and
political outlook.
Disposal of a security will be based upon factors such as (i) increases in
the price level of the security or of securities generally which the Fund
believes reflect earnings growth too far in advance, (ii) changes in the
relative opportunities offered by various securities and (iii) actual or
potential deterioration of the issuer's earning power which the Fund believes
may adversely affect the price of its securities.
PORTFOLIO TURNOVER
The Fund will not seek to realize profits by anticipating short-term market
movements and intends to purchase securities for long-term capital appreciation
under ordinary circumstances. While the rate of portfolio turnover will not be a
limiting factor when the investment advisor deems changes appropriate, it is
anticipated that given the Fund's investment objectives, its annual portfolio
turnover should not generally exceed 75%. (A portfolio turnover rate of 75%
would occur, for example, if three-fourths of the stocks in the Fund's portfolio
were replaced in a period of one year.) Turnover will be influenced by sound
investment practices, the Fund's investment objectives, and the need of funds
for the redemption of the Fund's shares. The turnover rate of the Fund for the
fiscal year ended December 31,1999 was 66.10%.
RISKS
- --------------------------------------------------------------------------------
Risks inherent in an investment in common stocks include those associated
with the right to receive payments from the issuer of the common stock. Holders
of common stocks have a right to receive dividends only when and if declared by
the issuer's board of directors. Moreover, common stocks do not represent an
obligation of the issuer. Therefore, common stocks do not offer any assurance of
income or provide the degree of protection of debt securities. The issuance of
debt securities or even preferred stock by an issuer will create prior claims
for payment of principal, interest and dividends which can adversely affect the
ability of the issuer to pay dividends on its common stock or the economic
interest of holders of common stock with respect to assets of the issuer upon
liquidation or bankruptcy.
Common stocks are also especially susceptible to general stock market
movements and to volatile changes in value as market confidence in and
perceptions of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government, economic, monetary and
fiscal policies, inflation and interest rates, economic expansion or
contraction, and global or regional political, economic or banking crises. The
value of the Fund's shares and the securities held by the Fund can each decline
in value and the loss of money is a risk of investing in the Fund.
There are also risks to an investor if the Fund invests in low or below
investment grade debt securities. These securities may have speculative
characteristics and changes in economic condition or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with other debt securities.
If a vendor defaults on its repurchase obligation pursuant to a repurchase
agreement, the Fund might suffer a loss to the extent that the proceeds from the
sale of the collateral were less than the repurchase price. If the vendor
becomes bankrupt, the Fund might be delayed, or may incur costs or losses of
principal and income, in selling the collateral.
III. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
The Fund's investment adviser is Reich & Tang Asset Management L.P. (the
"Manager"). The Manager's principal business office is located at 600 Fifth
Avenue, New York, NY 10020. As of March 31, 2000, the Manager was the investment
manager, advisor or supervisor with respect to assets aggregating in excess of
$16.1 billion. The Manager has been an investment adviser since
6
<PAGE>
1970 and currently is manager of seventeen other registered investment companies
and also advises pension trusts, profit-sharing trusts and endowments.
Steven M. Wilson, J. Dennis Delafield, Charles Neuhauser, Vincent
Sellecchia and Glenn Sussman are responsible for the day-to-day investment
management of the Fund.
Messrs Wilson, Delafield and Sellecchia are Managing Directors of the
Capital Management Group. Mr. Wilson has been Managing Director and Chief
Investment Officer of the Capital Management Division of the Manager since July
1998. He was formerly Senior Vice President of the Capital Management Division
of the Manager with which he was associated since September 1986. Mr. Delafield
and Mr. Sellecchia are Managing Directors of the Delafield Asset Management
Division of the Manager, with which they have been associated since September
1993. Messrs Neuhauser and Sussman are Analysts/ Managers of the Capital
Management Division of the Manager. Mr. Neuhauser has been an Analyst/Manager
since October, 1998, and he was a Senior Vice President with Investment
Counselors of Maryland, from August 1991 until September 1998. Mr. Sussman has
been an Analyst/Manager since March 1997, and was a Vice President at Richter
Asset Management from July 1988 until March 1997.
Pursuant to the Investment Management Contract, the Manager manages the
Fund's portfolio of securities and makes decisions with respect to the purchase
and sale of investments, subject to the general control of the Board of
Directors of the Fund. Pursuant to the Investment Management Contract, the Fund
pays the Manager a fee equal to .80% per annum of the Fund's average daily net
assets for managing the Fund's investment portfolio and performing related
services.
Pursuant to the Administrative Services Contract, the Manager performs
clerical, accounting supervision and office service functions for the Fund. The
Manager provides the Fund with the personnel to perform all other clerical and
accounting type functions not performed by the Manager. For its services under
the Administrative Services Contract, the Fund pays the Manager a fee equal to
.20% per annum of the Fund's average daily net assets.
The Manager, at its discretion, may voluntarily waive all or a portion of
the Investment Management Fee and the Administrative Services Fee. Any portion
of the total fees received by the Manager may be used to provide shareholder
services and for distribution of Fund shares.
IV. SHAREHOLDER INFORMATION
The Fund sells and redeems its shares on a continuing basis at their net
asset value and does not impose a charge for either sales or redemptions. All
transactions in Fund shares are effected through the Fund's transfer agent who
accepts orders for purchases and redemptions from Participating Organizations
(see "Investments through Participating Organizations" for a definition of
Participating Organizations) and from investors directly.
Pricing of Fund Shares
- -------------------------------------------------------------------------------
The Fund determines the net asset value of the shares as of 4:00 p.m., New
York City time, on each Fund Business Day. Fund Business Day means weekdays
(Monday through Friday) except days on which the New York Stock Exchange is
closed for trading (e.g. national holidays). The net asset value is computed by
dividing the value of the Fund's net assets (i.e., the value of its securities
and other assets less its liabilities, including expenses payable or accrued,
but excluding capital stock and surplus) by the total number of shares
outstanding.
Portfolio securities for which market quotations are readily available are
valued at market value. U.S. Government obligations and other debt instruments
having sixty days or less remaining until maturity are stated at amortized cost.
All other investment assets of the Fund are valued in such manner as the Board
of Directors of the Fund in good faith deems appropriate to reflect their fair
value.
7
<PAGE>
Shares are issued as of the first determination of the Fund's net asset
value per share made after acceptance of the investor's purchase order. In order
to maximize earnings on its portfolio, the Fund normally has its assets as fully
invested as is practicable. Many securities in which the Fund invests require
the immediate settlement in funds of Federal Reserve member banks on deposit at
a Federal Reserve Bank (commonly known as "Federal Funds"). The Fund reserves
the right to reject any purchase order for its shares. Certificates for Fund
shares will not be issued to an investor.
Shares are issued as of 4:00 p.m., New York City time, on any Fund Business
Day on which an order for the shares and accompanying Federal Funds are received
by the Fund's transfer agent before 4:00 p.m., New York City time. Fund shares
begin accruing income on the day after the shares are issued to an investor.
PURCHASE OF FUND SHARES
- --------------------------------------------------------------------------------
Investors who have accounts with Participating Organizations may invest in
the Fund through their Participating Organizations in accordance with the
procedures established by the Participating Organization and are repaid to
Participant Investors. "Participating Organizations" are securities brokers,
banks and financial institutions or other industry professionals or
organizations which have entered into shareholder servicing agreements with the
Distributor with respect to investment of their customer accounts in the Fund.
All other investors, and investors who have accounts with Participating
Organizations but do not wish to invest in the Fund through them, may invest in
the Fund directly.
The minimum initial investment in the Fund is (i) $1,000 for purchases
through Participating Organizations - this may be satisfied by initial
investments aggregating $1,000 by a Participating Organization on behalf of
their customers whose initial investments are less than $1,000; (ii) $1,000 for
securities brokers, financial institutions and other industry professionals that
are not Participating Organizations and (iii) $5,000 for all other investors.
Initial investments may be made in any amount in excess of the applicable
minimums. The minimum amount for subsequent investments is $100 unless the
investor is a client of a Participating Organization whose clients have made
aggregate subsequent investments of $100; except that the minimum initial
investment for an Individual Retirement Account is $250.
Each shareholder, except certain shareholders who invest through accounts
at Participating Organizations ("Participant Investors"), will receive from the
Fund a personalized monthly statement listing (i) the total number of Fund
shares owned as of the statement closing date, (ii) purchase and redemptions of
Fund shares and (iii) the dividends paid on Fund shares (including dividends
paid in cash or reinvested in additional Fund shares).
INVESTMENTS THROUGH PARTICIPATING ORGANIZATIONS
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When instructed by a Participant Investor to purchase or redeem Fund
shares, the Participating Organization, on behalf of the Participant Investor,
transmits to the Fund's transfer agent a purchase or redemption order, and in
the case of a purchase order, payment for the shares being purchased.
Participating Organizations may confirm to Participant Investors who are
shareholders in the Fund each purchase and redemption of Fund shares for their
accounts. Also, Participating Organizations may send their customers periodic
account statements showing the total number of Fund shares owned by each
customer as of the statement closing date, purchases and redemptions of Fund
shares by each customer during the period covered by the statement and the
income earned by Fund shares of each customer during the statement period
(including dividends paid in cash or reinvested in additional Fund shares).
Participant Investors whose Participating Organizations have not undertaken to
provide such statements will receive them from the Fund directly.
Participating Organizations may charge
8
<PAGE>
Participant Investors a fee in connection with their use of specialized purchase
and redemption procedures. In addition, Participating Organizations offering
purchase and redemption procedures similar to those offered to shareholders who
invest in the Fund directly, may impose charges, limitations, minimums and
restrictions in addition to or different from those applicable to shareholders
who invest in the Fund directly. Accordingly, the net yield to investors who
invest through Participating Organizations may be less than by investing in the
Fund directly. A Participant Investor should read this Prospectus in conjunction
with the materials provided by the Participating Organization describing the
procedures under which Fund shares may be purchased and redeemed through the
Participating Organization.
In the case of qualified Participating Organizations, orders received by
the Fund's transfer agent before 4:00 p.m., New York City time, on a Fund
Business Day, without accompanying Federal Funds will result in the issuance of
shares on that day only if the Federal Funds required in connection with the
orders are received by the Fund's transfer agent before 4:00 p.m., New York City
time, on that day. Orders for which Federal Funds are received after 4:00 p.m.,
New York City time, will result in share issuance the following Fund Business
Day. Participating Organizations are responsible for instituting procedures to
insure that purchase orders by their respective clients are processed
expeditiously.
INITIAL DIRECT PURCHASES OF SHARES
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Investors who wish to invest in the Fund directly may obtain a current
prospectus and the subscription order form necessary to open an account by
telephoning the Fund at the following numbers:
Within New York 212-830-5220
Outside New York (TOLL FREE) 800-221-3079
Mail
Investors may send a check made payable to "Reich & Tang Equity Fund, Inc."
along with a completed subscription order form to:
Reich & Tang Equity Fund, Inc.
Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
Checks are accepted subject to collection at full value in United States
currency.
Bank Wire
To purchase shares of the Fund using the wire system for transmittal of
money among banks, investors should first obtain a new account number by
telephoning the Fund at 212-830-5220 (within New York) or at 800-221-3079
(outside New York) and then instruct a member commercial bank to wire money
immediately to:
State Street Kansas City
ABA # 101003621
Reich & Tang Funds
DDA # 890752-9570
For Reich & Tang Equity Fund, Inc.
Account of (Investor's Name)
Account #
SS#/Tax ID#
The investor should then promptly complete and mail the subscription order
form.
Investors planning to wire funds should instruct their bank early in the
day so the wire transfer can be accomplished the same day. There may be a charge
by the investor's bank for transmitting the money by bank wire, and there also
may be a charge for use of Federal Funds. The Fund does not charge investors in
the Fund for its receipt of wire transfers. Payment in the form of a "bank wire"
received prior to 4:00 p.m., New York City time, on a Fund Business Day, will be
treated as a Federal Funds payment received on that day.
Personal Delivery
Deliver a check made payable to "Reich & Tang Equity Fund, Inc." along with
a completed subscription order form to:
Reich & Tang Mutual Funds
600 Fifth Avenue - 8th Floor
New York, New York 10020
9
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ELECTRONIC FUNDS TRANSFERS (EFT), PRE-AUTHORIZED CREDIT AND DIRECT DEPOSIT
PRIVILEGE
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You may purchase shares of the Fund (minimum of $100) by having salary,
dividend payments, interest payments or any other payments designated by you,
Federal salary, social security, or certain veteran's, military or other
payments from the Federal government, automatically deposited into your Fund
account. You can also have money debited from your checking account. To enroll
in any one of these programs, you must file with the Fund a completed EFT
Application, Pre-authorized Credit Application, or a Direct Deposit Sign-Up Form
for each type of payment that you desire to include in the Privilege. The
appropriate form may be obtained from your broker or the Fund. You may elect at
any time to terminate your participation by notifying in writing the appropriate
depositing entity and/or Federal agency. Death or legal incapacity will
automatically terminate your participation in the Privilege. Further, the Fund
may terminate your participation upon 30 days' notice to you.
SUBSEQUENT PURCHASES OF SHARES
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Subsequent purchases can be made by personal delivery or by bank wire, as
indicated above, or by mailing a check to:
Reich & Tang Equity Fund, Inc.
Mutual Funds Group
P.O. Box 13232
Newark, New Jersey 07101-3232
All payments should clearly indicate the shareholder's account number.
Provided that the information on the subscription form on file with the
Fund is still applicable, a shareholder may reopen an account without filing a
new subscription order form at any time during the year the shareholder's
account is closed or during the following calendar year.
REDEMPTION OF SHARES
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A redemption is effected immediately following, and at a price determined
in accordance with, the next determination of net asset value per share upon
receipt by the Fund's transfer agent of the redemption order (and any supporting
documentation which it may require). Normally, payment for redeemed shares is
made on the same Fund Business Day the redemption is effected, provided the
redemption request is received prior to 4:00 p.m., New York City time. However,
redemption payments will not be effected unless the check (including a certified
or cashier's check) used for investment has been cleared for payment by the
investor's bank, which could take up to 15 days after investment.
A shareholder's original subscription order form permits the shareholder to
redeem by written request and to elect one or more of the additional redemption
procedures described below. A shareholder may only change the instructions
indicated on his original subscription order form by transmitting a written
direction to the Fund's transfer agent. Requests to institute or change any of
the additional redemption procedures will require a signature guarantee.
When a signature guarantee is called for, the shareholder should have
"Signature Guaranteed" stamped under his signature. It should be signed and
guaranteed by an eligible guarantor institution which includes a domestic bank,
a domestic savings and loan institution, a domestic credit union, a member bank
of the Federal Reserve system or a member firm of a national securities
exchange, pursuant to the Fund's transfer agent's standards and procedures.
Written Requests
Shareholders may make a redemption in any amount by sending a written
request to the Fund addressed to:
Reich & Tang Equity Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
All previously issued certificates submitted for redemption must be
endorsed by the shareholder and all written requests for redemption must be
10
<PAGE>
signed by the shareholder, in each case with signature guaranteed.
Normally the redemption proceeds are paid by check and mailed to the
shareholder of record.
Telephone
The Fund accepts telephone requests for redemption from shareholders who
elect this option on their subscription order form. Telephone requests for
redemptions may not exceed $25,000 per request per day. The proceeds of a
telephone redemption may be sent to the shareholders at their addresses or to
their bank accounts, both as set forth in the subscription order form or in a
subsequent written authorization. The Fund may accept telephone redemption
instructions from any person with respect to accounts of shareholders who elect
this service and thus such shareholders risk possible loss of principal and
interest in the event of a telephone redemption not authorized by them. The Fund
will employ reasonable procedures to confirm that telephone redemption
instructions are genuine, and will require that shareholders electing such
option provide a form of personal identification. Failure by the Fund to employ
such reasonable procedures may cause the Fund to be liable for the losses
incurred by investors due to unauthorized or fraudulent telephone redemptions.
A shareholder making a telephone withdrawal should call the Fund at
212-830-5220; outside New York at 800-221-3079, and state: (i) the name of the
shareholder appearing on the Fund's records; (ii) the shareholder's account
number with the Fund; (iii) the amount to be withdrawn; (iv) whether such amount
is to be forwarded to the shareholder's designated bank account or address; and
(v) the name of the person requesting the redemption. Usually the proceeds are
sent to the designated bank account or address on the same Fund Business Day the
redemption is effected, provided the redemption request is received before 4:00
p.m., New York City time. If the redemption request is received after such time,
proceeds are sent the next Fund Business Day. The Fund reserves the right to
terminate or modify the telephone redemption service in whole or in part at any
time and will notify shareholders accordingly.
There is no redemption charge, no minimum period of investment, no minimum
amount for a redemption, and no restriction on frequency of withdrawals.
Proceeds of redemptions are paid by check. Unless other instructions are given
in proper form to the Fund's transfer agent, a check for the proceeds of a
redemption will be sent to the shareholders' address of record. If a shareholder
elects to redeem all the shares of the Fund he owns, all dividends accrued to
the date of such redemption will be paid to the shareholder along with the
proceeds of the redemption.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after the shares are tendered for
redemption, except for any period during which the New York Stock Exchange, Inc.
is closed (other than customary weekend and holiday closings) or during which
the SEC determines that trading thereon is restricted. Additional exceptions
include any period during which an emergency (as determined by the SEC) exists
as a result of which disposal by the Fund of its portfolio securities is not
reasonably practicable or as a result of which it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or for such other
period as the SEC may by order permit for the protection of the shareholders of
the Fund.
The Fund has reserved the right to redeem the shares of any shareholder
(other than those in an IRA) if the net asset value of all the remaining shares
in the shareholder's or his Participating Organization's account after a
withdrawal is less than $500. Written notice of a proposed mandatory redemption
will be given at least 30 days in advance to any shareholder whose account is to
be redeemed or the Fund may impose a monthly service charge of $10 on such
accounts. For Participant Investor accounts, notice of a proposed mandatory
redemption will be given only to the appropriate Participating Organization. The
Participating Organization will be responsible for notifying the Participant
Investor of the proposed mandatory redemption. During
11
<PAGE>
the notice period, a shareholder or Participating Organization who receives such
a notice may avoid mandatory redemption by purchasing sufficient additional
shares to increase his total net asset value to the minimum amount.
SPECIFIED AMOUNT AUTOMATIC WITHDRAWAL PLAN
- --------------------------------------------------------------------------------
Shareholders may elect to withdraw shares and receive payment from the Fund
of a specified amount of $50 or more automatically on a monthly or quarterly
basis. The monthly or quarterly withdrawal payments of the specified amount are
made by the Fund on the 23rd day of the month. Whenever such 23rd day of a month
is not a Fund Business Day, the payment date is the Fund Business Day preceding
the 23rd day of the month. In order to make a payment, a number of shares equal
in aggregate net asset value to the payment amount are redeemed at their net
asset value on the Fund Business Day immediately preceding the date of payment.
To the extent that the redemptions to make plan payments exceed the number of
shares purchased through reinvestment of dividends and distributions, the
redemptions reduce the number of shares purchased on original investment, and
may ultimately liquidate a shareholder's investment.
The election to receive automatic withdrawal payments may be made at the
time of the original subscription by so indicating on the subscription order
form. The election may also be made, changed or terminated at any later time by
sending a signature guaranteed written request to the transfer agent. Because
the withdrawal plan involves the redemption of Fund shares, such withdrawals may
constitute taxable events to the shareholder.
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
Each dividend and capital gains distribution, if any, declared by the Fund
on its outstanding shares will, at the election of each stockholder, be paid in
cash or in additional shares of common stock of the Fund having an aggregate net
asset value as of the payment date of such dividend or distribution equal to the
cash amount of such dividend or distribution. Election to receive dividends and
distributions in cash or shares is made at the time shares are subscribed for
and may be changed by notifying the Fund in writing at any time prior to the
record date for a particular dividend or distribution. If the stockholder makes
no election the Fund will make the distribution in shares. There is no sales or
other charge in connection with the reinvestment of dividends and capital gains
distributions.
While it is the intention of the Fund to distribute to its stockholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by the Fund of income and capital gains
from investments. Dividends will normally be paid quarterly. Capital gains
distributions, if any, will be made at least annually and usually at the end of
the Fund's fiscal year. There is no fixed dividend rate, and there can be no
assurance that the Fund will pay any dividends or realize any capital gains.
RETIREMENT PLANS
- --------------------------------------------------------------------------------
The Fund has available a form of individual retirement account ("IRA") for
investment in the Fund's shares. In general, an individual can make an annual
contribution to an IRA in an amount equal to the lesser of $2000 or 100% of the
individual's earned income. In addition, in the case of a married couple filing
a joint return, annual IRA contributions of up to $2000 can generally be made
for each spouse, as long as the combined compensation of both spouses is at
least equal to the contributed amounts. IRA contributions can, in general, be
made to either traditional deductible IRAs, traditional non-deductible IRAs or
non-deductible Roth IRAs, a new type of IRA established by the Taxpayer Relief
Act of 1997. Contributions to a Roth IRA are not deductible, but qualified
distributions from a Roth IRA are not includable in income or subject to the
additional ten-percent tax on early withdrawals, if deemed a qualified
distribution. A "qualified distribution" is a distribution that is made after
the end of the five taxable year period beginning with the first taxable year in
which the individual made a contribution to
12
<PAGE>
a Roth IRA, and which is made on or after the date in which the individual
attains an age of 59 1/2, on or after the death of the individual or is
attributable to the disability of the individual, or is a distribution for
specified first-time home buyer expenses or certain education expenses.
Contributions to traditional deductible IRAs and Roth IRAs may be limited
based on adjusted gross income levels. The ability of a person who is an active
participant in an employer sponsored retirement plan to make deductible
contributions to a regular IRA is phased out based on the individual's adjusted
gross incomes. For 1998, the phase out occurs over a range of adjusted gross
incomes from $50,000 to $60,000 on a joint return and $30,000 to $40,000 on a
single return. The phase out range for a married individual who is not an active
participant but whose spouse is an active participant is between $150,000 and
$160,000.
The maximum annual contribution that can be made to a Roth IRA is also
subject to phase out rules that apply to married individuals filing joint
returns when adjusted gross income is between $150,000 and $160,000 and to
single individuals when adjusted gross income is between $95,000 and $110,000.
For both traditional deductible IRAs and Roth IRAs, the phase out range for
married individuals filing separate returns is from $0 to $10,000. The minimum
investment required to open an IRA is $250. Generally, there are penalties for
premature distributions from an IRA before the attainment of age 59 1/2, except
in the case of the participant's death or disability and certain other
circumstances including first-time home buyer expenses and certain education
expenses.
Fund shares may also be a suitable investment for assets of other types of
qualified pension or profit-sharing plans, including cash or deferred or salary
reduction "Section 401(k) plans" which give participants the right to defer
portions of their compensation for investment on a tax-deferred basis until
distributions are made from the plans.
Persons desiring information concerning investments by IRAs and other
retirement plans should write or telephone the Fund.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Shareholders of the Fund are entitled to exchange some or all of their
shares in the Fund for shares of certain other investment companies which retain
Reich & Tang Asset Management L.P. as investment adviser and which participate
in the exchange privilege program with the Fund. Currently the exchange
privilege program has been established between the Fund and California Daily Tax
Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Cortland
Trust, Inc., Daily Tax Free Income Fund, Inc., Florida Daily Municipal Income
Fund, Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal
Income Fund, Inc., New York Daily Tax Free Income Fund, Inc., Pennsylvania Daily
Municipal Income Fund and Short Term Income Fund, Inc. In the future, the
exchange privilege program may be extended to other investment companies which
retain Reich & Tang Asset Management L.P. as investment adviser or manager.
There is no charge for the exchange privilege or limitation as to frequency of
exchange. The minimum amount for an exchange is $1,000. However, shareholders
who are establishing a new account with an investment company through the
exchange privilege must ensure that a sufficient number of shares are exchanged
to meet the minimum initial investment required for the investment company into
which the exchange is being made. Each Fund's Shares are exchanged at their
respective net asset values.
The exchange privilege provides shareholders of the Fund with a convenient
method to shift their investment among different investment companies when they
feel such a shift is desirable. The exchange privilege is available to
shareholders resident in any state in which shares of the investment company
being acquired may legally be sold. Before making an exchange, the investor
should review the current prospectus of the investment company into which the
exchange is to be made.
13
<PAGE>
Instructions for exchanges may be made by sending a signature guaranteed
written request to:
Reich & Tang Equity Fund, Inc.
c/o Reich & Tang Funds
600 Fifth Avenue-8th Floor
New York, New York 10020
or, for shareholders who have elected that option, by telephoning the Fund
at 212-830-5220 (within New York) or 800-221-3079 (outside New York). The Fund
reserves the right to reject any exchange request and may modify or terminate
the exchange privilege at any time.
TAX CONSEQUENCES
- -------------------------------------------------------------------------------
The Fund qualified for the fiscal year ended December 31, 1999 and intends
for each year thereafter to qualify for tax treatment as a regulated investment
company under the Internal Revenue Code. Qualification as a regulated investment
company relieves the Fund of Federal income tax on net ordinary income and net
realized capital gains paid out to its stockholders.
Distributions of net ordinary income and net short-term capital gains are
taxable to stockholders as ordinary income. Some corporate stockholders will be
entitled to the dividends-received deduction to the extent that the Fund's
income is derived from qualifying dividends from domestic corporations. A
corporation's dividends-received deduction will be disallowed unless the
corporation holds shares in the Fund at least 46 days during the 90-day period
before the ex-dividend date of the stock. Furthermore, a corporation's
dividends-received deduction will be disallowed to the extent a corporation's
investment in shares of the Fund is financed with indebtedness.
The excess of net long-term capital gains over net short-term capital
losses realized and distributed by the Fund as capital gains distributions is
taxable to stockholders as long-term capital gains, irrespective of the length
of time a stockholder has held its stock. Long-term capital gains distributions
are not eligible for the dividends-received deduction referred to above. If a
stockholder that sells shares held for six months or less received a
distribution taxable as long-term capital gain, any loss realized on the sale of
the shares would be a long-term capital loss to the extent of the distribution.
Any dividend or distribution received by a stockholder shortly after the
purchase of shares of the Fund will reduce the net asset value of the shares by
the amount of the dividend or distribution. Furthermore, the dividend or
distribution is subject to tax even though they are, in effect, a return of
capital.
The Fund is required by Federal law to withhold 31% of reportable payments
(which may include dividends, capital gains distributions and redemptions) paid
to stockholders who have not complied with IRS regulations by certifying on its
application that the social security or tax identification number provided is
correct and that the stockholder is not subject to 31% backup withholding for
previous underreporting to the IRS.
The redemption of shares may result in the investor's receipt of more or
less than the investor paid for its shares and, thus, in a taxable gain or loss
to the investor.
An exchange pursuant to the exchange privilege is treated for Federal
income tax purposes as a sale on which a shareholder may realize a taxable gain
or loss.
V. DISTRIBUTION ARRANGEMENTS
Rule 12b-1 Fees
- --------------------------------------------------------------------------------
Investors do not pay a sales charge to purchase shares of the Fund.
However, the Fund pays fees in connection with the distribution of shares and
for services provided to its shareholders. The Fund pays these fees from its
assets on an ongoing basis and therefore, over time, the payment of these fees
will increase the cost of your investment and may cost you more than paying
other types of sales charges.
Pursuant to Rule 12b-1 under the 1940 Act, the SEC requires that an
investment company which bears any direct or indirect expense of distributing
its shares must do so only in accordance with a plan permitted by Rule 12b-1.
The Fund's Board of Directors has adopted a distribution and service plan (the
"Plan") and, pursuant to the Plan, the Fund and Reich & Tang
14
<PAGE>
Distributors, Inc. (the "Distributor") have entered into a Distribution
Agreement and the Fund and the Manager have entered into the Investment
Management Contract.
Under the Distribution Agreement, the Distributor serves as distributor of
the Fund's shares. For nominal consideration (i.e., $1.00) and as agent for the
Fund, the Distributor solicits orders for the purchase of the Fund's shares,
provided that any orders will not be binding on the Fund until accepted by the
Fund as principal.
The Investment Management Contract includes provisions allowing the Manager
to defray the cost of, or compensate other persons, including banks,
broker-dealers and other organizations whose customers or clients are Fund
stockholders ("Intermediaries"), for performing stockholder, administrative and
accounting services to the Fund. Under the Investment Management Contract, the
Manager may also compensate the foregoing persons and organizations for
providing assistance in distributing the Fund's shares. The Investment
Management Contract further contemplates that the Manager may compensate sales
personnel and pay for the preparation and printing of brochures and other
promotional materials, mailings to prospective stockholders, advertising and
other activities in connection with the distribution of the Fund's shares. The
Manager is not subject to any percentage limitation with respect to the amounts
it may expend for the activities described in this paragraph.
Under the Plan, the Manager may make payments in connection with the
distribution of the Fund's shares from the Management Fee received from the
Fund, from the Manager's revenues (which may include management or advisory fees
received from other investment companies) and past profits. The Manager, in its
sole discretion, will determine the amount of its payments made pursuant to the
Plan, but no such payment will increase the amount which the Fund is required to
pay to the Manager for any fiscal year under the Investment Management Contract.
Under the Plan, the Fund may pay the costs of printing and distributing the
Fund's prospectus to prospective investors and to defray the cost of the
preparation and printing of brochures and other promotional materials, mailings
to prospective stockholders, advertising, and other promotional activities,
including the salaries and/or commissions of sales personnel in connection with
the distribution of the Fund's shares. The payments made by the Fund for the
expenses referred to in this paragraph will not exceed in any year .05% of the
Fund's average daily net assets for the year.
15
<PAGE>
VI. FINANCIAL HIGHLIGHTS
This financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned [or lost] on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, for the fiscal year
ended December 31, 1999 and by other auditors for fiscal years prior to December
31, 1999.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout the year)
Net asset value, beginning of year........ $ 14.56 $ 17.25 $ 18.10 $ 17.73 $ 15.39
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income..................... 0.02 0.05 0.11 0.15 0.22
Net realized and unrealized
gains (losses) on investments........... -- 0.39 2.38 2.83 4.10
---------- ---------- ---------- ---------- ----------
Total from investment operations.......... 0.02 0.44 2.49 2.98 4.32
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income...... ( 0.02) ( 0.05) ( 0.11) ( 0.15) ( 0.22)
Distributions from net realized gains..... ( 3.02) ( 3.03) ( 3.23) ( 2.46) ( 1.76)
In excess of net realized gain............ -- ( 0.05) -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions....................... ( 3.04) ( 3.13) ( 3.34) ( 2.61) ( 1.98)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year.............. $ 11.54 $ 14.56 $ 17.25 $ 18.10 $ 17.73
========== ========== ========== ========== ==========
Total Return.............................. 0.4% 2.6% 13.8% 16.9% 28.2%
Ratios/Supplemental Data
Net assets, end of year (000)............. $ 34,193 $ 56,616 $ 88,553 $ 91,300 $ 112,333
Ratios to average net assets:
Expenses (net of fees waived)........... 1.21%(b) 1.19% 1.21%(a) 1.22%(a) 1.15%
Net investment income................... 0.14% 0.29% 0.56% 0.79% 1.21%
Portfolio turnover rate................... 66.10% 45.79% 29.59% 31.70% 27.69%
</TABLE>
(a) Before expenses paid indirectly, equivalent to .01% of average net assets.
(b) Before expenses paid indirectly, equivalent to .004% of average net assets.
17
<PAGE>
A Statement of Additional Information (SAI) dated April 28, 2000, and the
Fund's Annual and Semi-Annual Reports include additional information about the
Fund and its investments and are incorporated by reference into this prospectus.
In the Fund's Annual Report, you will find a discussion of the market conditions
and investment strategies that significantly affected the Fund's performance
during its last fiscal year. You may obtain the SAI, the Annual and Semi-Annual
Reports and material incorporated by reference without charge by calling the
Fund at 1-800-221-3079. To request other information, please call your financial
intermediary or the Fund.
======================================================
======================================================
A current SAI has been filed with the Securities and Exchange Commission.
You may visit the Securities and Exchange Commission's Internet website
(www.sec.gov) to view the SAI, material incorporated by reference and other
information. Copies of the information may be obtained after paying a
duplicating fee, by sending an electronic request to [email protected]. These
materials can also be reviewed and copied at the Commission's Public Reference
Room in Washington D.C. Information on the operation of the Public Reference
Room may be obtained by calling the Commission at 1-800-SEC-0330. In addition,
copies of these materials may be obtained, upon payment of a duplicating fee, by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-6009.
811-4148
REICH & TANG
EQUITY FUND, INC.
PROSPECTUS
April 28, 2000
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, NY 10020
(212) 830-5220
RTE400P
<PAGE>
- --------------------------------------------------------------------------------
REICH & TANG 600 FIFTH AVENUE, NEW YORK, NY 10020
EQUITY FUND, INC. (212) 830-5220
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
April 28, 2000
RELATING TO THE REICH & TANG EQUITY FUND, INC.
PROSPECTUS DATED April 28, 2000
This Statement of Additional Information (SAI) is not a Prospectus. The SAI
expands upon and supplements the information contained in the current Prospectus
of Reich & Tang Equity Fund, Inc. (the "Fund"), dated April 28, 2000 and should
be read in conjunction with the Fund's Prospectus.
A Prospectus may be obtained from any Participating Organization or by writing
or calling the Fund toll-free at 1-(800) 221-3079. The Financial Statements of
the Fund have been incorporated by reference to the Fund's Annual Report. The
Annual Report is available, without charge, upon request by calling the
toll-free number provided. The material relating to the purchase, redemption and
pricing of shares has been incorporated by reference into the Prospectus.
This Statement of Additional Information is incorporated by reference into the
Fund's Prospectus in its entirety.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Table of Contents
- ---------------------------------------------------------------------------------------------------------------
Fund History.........................................2 Brokerage Allocation and Other Practices...........8
Description of the Fund and its Investments and Capital Stock and Other Securities.................9
Risks............................................. 2 Purchase, Redemption and Pricing Shares............9
Management of the Fund...............................3 Taxation of the Fund..............................14
Control Persons and Principal Holders of Underwriters......................................15
Securities.......................................... 5 Calculation of Performance Data...................15
Investment Advisory and Other Services...............5 Financial Statements..............................16
</TABLE>
<PAGE>
I. FUND HISTORY
The Fund was incorporated on October 15, 1984 in the state of Maryland.
II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
The Fund is an open-end, diversified management investment company. The Fund's
investment objective is to seek long-term growth of capital. Current income is a
secondary objective. No assurance can be given that these objectives will be
achieved. Although not principal strategies, the Manager may enter into the
following types of transactions or invest in the following types of instruments
as part of its investment strategies.
(i) Warrants
The Fund may invest in warrants which entitle the holder to buy equity
securities at a specific price for a specific period of time. Warrants may be
considered more speculative than certain other types of investments in that they
do not entitle a holder to dividends or voting rights with respect to the
securities which may be purchased nor do they represent any rights in the assets
of the issuing company. Also, the value of a warrant does not necessarily change
with the value of the underlying securities and a warrant ceases to have value
if it is not exercised prior to the expiration date.
The Fund will not purchase any warrant if, as a result of such purchase, 5% or
more of the Fund's total assets are invested in warrants. Included within that
amount, but not to exceed 2% of the value of the Fund's total assets, may be
warrants which are not listed on the New York or American Stock Exchanges.
(ii) Foreign Securities
Investments may be made in both domestic and foreign companies. While the Fund
has no present intention to invest any significant portion of its assets in
foreign securities, it reserves the right to invest not more than 15% of the
value of its total assets (at the time of purchase and after giving effect
thereto) in the securities of foreign issuers and obligors.
Investments in foreign companies involve certain considerations which are not
typically associated with investing in domestic companies. An investment may be
affected by changes in currency rates and in exchange control regulations. There
may be less publicly available information about a foreign company than about a
domestic company. Foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards comparable to those
applicable to domestic companies. Foreign stock markets have substantially less
volume than the New York Stock Exchange and securities of some foreign companies
may be less liquid and more volatile than securities of comparable domestic
companies. There is generally less government regulation of stock exchanges,
brokers and listed companies than in the United States. In addition, with
respect to certain foreign countries, there is a possibility of expropriation or
confiscatory taxation, political or social instability or diplomatic
developments which could affect investments in those countries. Individual
foreign economies may differ favorably or unfavorably from the United States'
economy in such respects as growth of gross national product, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments
position.
(iii) Restricted Securities
The Fund may invest in restricted securities and in other assets having no ready
market if such purchases at the time thereof do not cause more than 10% of the
value of the Fund's net assets to be invested in all such restricted or not
readily marketable assets. Restricted securities may be sold only in privately
negotiated transactions, in a public offering with respect to which a
registration statement is in effect under the Securities Act of 1933 or pursuant
to Rule 144 promulgated under such Act. Where registration is required, the Fund
may be obligated to pay all or part of the registration expense, and a
considerable period may elapse between the time of the decision to sell and the
time the Fund may be permitted to sell a security under an effective
registration statement. If during such a period adverse market conditions were
to develop, the Fund might obtain a less favorable price than prevailed when it
decided to sell. Restricted securities will be valued in such manner as the
Board of Directors of the Fund in good faith deems appropriate to reflect their
fair market value.
(iv) Other Matters
In addition, for purposes of complying with the securities regulations of
certain states, the Fund has adopted the following additional investment
restriction, which may be changed by the Fund's Board of Directors without
stockholder approval. The Fund may not purchase or retain the securities of any
issuer if the officers or directors of the Fund or Reich & Tang Asset
Management, Inc., the general partner of the Fund's advisor, owning beneficially
more than 1/2 of 1% of the securities together own beneficially more than 5% of
such securities.
INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment restrictions. They may
not be changed unless approved by a majority of the outstanding shares "of each
series of the Fund's shares that would be affected by such a change." The
2
<PAGE>
term "majority of the outstanding shares" of the Fund means the vote of the
lesser of (i) 67% or more of the shares of the Fund present at a meeting, if the
holders of more than 50% of the outstanding shares of the Fund are present or
represented by proxy, or (ii) more than 50% of the outstanding shares of the
Fund. The Fund may not:
1. Purchase the securities of any one issuer, other than the U.S. government
or any of its agencies or instrumentalities, if immediately after such
purchase more than 5% of the value of its total assets would be invested in
such issuer or the Fund would own more than 10% of the outstanding voting
securities of such issuer, except that up to 25% of the value of the Fund's
total assets may be invested without regard to such 5% and 10% limitations;
2. Invest more than 25% of the value of its total assets in any particular
industry;
3. Purchase securities on margin, but it may obtain such short-term credits
from banks as may be necessary for the clearance of purchases and sales of
securities;
4. Make loans of its assets to any person, except for the purchase of debt
securities as discussed under "Investment Objectives, Strategies and
Related Risks" in the Prospectus;
5. Borrow money except for (i) the short-term credits from banks referred to
in paragraph 3 above and (ii) borrowings from banks for temporary or
emergency purposes, including the meeting of redemption requests which
might require the untimely disposition of securities. Borrowing in the
aggregate may not exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5%, of the value of the Fund's total assets
(including the amount borrowed) less liabilities (not including the amount
borrowed) at the time the borrowing is made. Outstanding borrowings in
excess of 5% of the value of the Fund's total assets will be repaid before
any subsequent investments are made;
6. Mortgage, pledge or hypothecate any of its assets, except as may be
necessary in connection with permissible borrowings mentioned in paragraph
5 above;
7. Purchase the securities of any other investment company, except by purchase
in the open market where to the best information of the Fund no commission
or profit to a sponsor or dealer (other than the customary broker's
commission) results from such purchase, or except when such purchase is
part of a merger, consolidation or acquisition of assets; and
8. Act as an underwriter of securities of other issuers, except that the Fund
may acquire restricted or not readily marketable securities under
circumstances where, if such securities were sold, the Fund might be deemed
to be an underwriter for purposes of the Securities Act of 1933. The Fund
will not, however, invest more than 10% of the value of its net assets in
restricted securities and not readily marketable securities.
9. Purchase or otherwise acquire interests in real estate, real estate
mortgage loans or interests in oil, gas or other mineral exploration or
development programs;
10. Sell securities short or invest in puts, calls, straddles, spreads or
combinations thereof;
11. Purchase or acquire commodities or commodity contracts;
12. Issue senior securities, except insofar as the Fund may be deemed to have
issued a senior security in connection with any permitted borrowing;
13. Participate on a joint or a joint and several basis in any securities
trading account; and
14. Invest in companies for the purpose of exercising control.
If a percentage restriction is adhered to at the time an investment is made, a
later change in percentage resulting from changes in the value of the Fund's
portfolio securities will not be considered a violation of the Fund's policies
or restrictions.
III. MANAGEMENT OF THE FUND
The Fund's Board of Directors, which is responsible for the overall management
and supervision of the Fund, has employed the Manager to serve as investment
manager of the Fund. The Manager provides persons satisfactory to the Fund's
Board of Directors to serve as officers of the Fund. Such officers, as well as
certain other employees and directors of the Fund, may be directors or officers
of Reich & Tang Asset Management, Inc., the sole general partner of the Manager
or employees of the Manager or its affiliates. Due to the services performed by
the Manager, the Fund currently has no employees and its officers are not
required to devote their full-time to the affairs of the Fund.
The Directors and Executive Officers of the Fund, and their principal
occupations during the past five years, are set forth below. Unless otherwise
specified, the address of each of the following persons is 600 Fifth Avenue, New
York, New York 10020. Directors deemed to be "interested persons" of the Fund
for the purposes of the Investment Company Act of 1940 (the "1940 Act"), as
amended are indicated by an asterisk.
3
<PAGE>
RICHARD E. SMITH, III, 50*: Director and Chairman of the Fund, has been
President and Chief Executive Officer of the Capital Management Division of the
Manager with which he has been associated since May 1994. Mr. Smith was formerly
Executive Vice President of Rhode Island Hospital Trust which he was associated
with from March 1993 to May 1994.
Dr. W. GILES MELLON, 69: Director of the Fund, is Professor of Business
Administration in the Graduate School of Management, Rutgers University with
which he has been associated since 1966. His address is Rutgers University
Graduate School of Management, 92 New Street, Newark, New Jersey 07102. Dr.
Mellon is also a Director/Trustee of 15 other funds in the Reich & Tang Fund
Complex.
ROBERT STRANIERE, 59: Director of the Fund, has been a member of the New York
State Assembly and a partner in The Straniere Law Firm since 1981. His address
is 182 Rose Avenue, Staten Island, New York 10306. Mr. Straniere is also a
Director/Trustee of 15 other funds in the Reich & Tang Fund Complex, and a
Director of Life Cycle Mutual Funds, Inc.
Dr. YUNG WONG, 61: Director of the Fund, was Director of Shaw Investment
Management (UK) Limited from 1994 to October 1995 and formerly a General Partner
of Abacus Partners Limited Partnership (a general partner of a venture capital
investment firm) from 1984 to 1994. His address is 29 Alden Road, Greenwich,
Connecticut 06831. Dr. Wong has been a Director of Republic Telecom Systems
Corporation (a provider of telecommunications equipment) since January 1989 and
of TelWatch, Inc. (a provider of network management software) since August 1989.
Dr. Wong is also a Director/Trustee of 15 other funds in the Reich & Tang Fund
Complex, and a Trustee of Eclipse Financial Asset Trust.
STEVEN M. WILSON, 40: President of the Fund, has been Managing Director and
Chief Investment Officer of the Capital Management Division of the Manager since
July 1998. Mr. Wilson was formerly Senior Vice President of the Capital
Management Division of the Manager with which he was associated since September
1986.
STEVEN W. DUFF, 46: Executive Vice President of the Fund, has been President of
the Mutual Funds division of the Manager since September 1994. Mr. Duff was
formerly Director of Mutual Fund Administration at NationsBank which he was
associated from June 1981 to August 1994. Mr. Duff is also President and a
Director/Trustee of 14 funds in the Reich & Tang Fund Complex, President of Back
Bay Funds, Inc., Director of Pax World Money Market Fund, Inc., and President
and Chief Executive Officer of Tax Exempt Proceeds Fund, Inc.
BERNADETTE N. FINN, 52: Vice President and Secretary of the Fund, has been Vice
President of the Mutual Funds division of the Manager since September 1993. Ms.
Finn was formerly Vice President and Assistant Secretary of Reich & Tang, Inc.
with which she was associated with from September 1970 to September 1993. Ms.
Finn is also Vice President and Secretary of 4 additional funds, and a Secretary
of 14 funds in the Reich & Tang Fund Complex.
MOLLY FLEWHARTY, 49: Vice President of the Fund has been Vice President of the
Mutual Funds division of the Manager since September 1993. Ms. Flewharty was
formerly Vice President of Reich & Tang, Inc. with which she was associated with
from December 1977 to September 1993. Ms. Flewharty is also a Vice President of
17 other funds in the Reich & Tang Fund Complex.
LESLEY M. JONES, 51: Vice President of the Fund has been Senior Vice President
of the Mutual Funds division of the Manager since September 1993. Ms. Jones was
formerly Senior Vice President of Reich & Tang, Inc. with which she was
associated from April 1973 to September 1993. Ms. Jones is also a Vice President
of 13 other funds in the Reich & Tang Complex.
DANA E. MESSINA, 43: Vice President of the Fund has been Executive Vice
President of the Mutual Funds division of the Manager since January 1995 and was
Vice President from September 1993 to January 1995. Ms. Messina was formerly
Vice President of Reich & Tang, Inc. with which she was associated from December
1980 to September 1993. Ms. Messina is also Vice President of 14 other funds in
the Reich & Tang Fund Complex.
RICHARD De SANCTIS, 43: Treasurer of the Fund, has been Vice President and
Treasurer of the Manager since September 1993. Mr. De Sanctis was formerly
Controller of Reich & Tang, Inc. from January 1991 to September 1993. Mr. De
Sanctis is also Treasurer of 17 other funds in the Reich & Tang Fund Complex,
and is Vice President and Treasurer of Cortland Trust, Inc.
ROSANNE D. HOLTZER, 35: Assistant Treasurer of the Fund, has been Vice President
of the Mutual Funds division of the Manager since December 1997. Ms. Holtzer was
formerly Manager of Fund Accounting for the Manager with which she was
associated since June 1986. She is also Assistant Treasurer of 18 other funds in
the Reich & Tang Fund Complex.
Directors of the Fund not affiliated with the Manager receive from the Fund an
annual retainer of $2,000 and a fee of $500 for each Board of Directors meeting
attended and are reimbursed for all out-of-pocket expenses relating to
attendance at such meetings. Directors who are affiliated with the Manager do
not receive compensation from the Fund.
4
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The Fund paid an aggregate remuneration of $12,000 to its Directors with respect
to the period ended December 31, 1999, all of which consisted of aggregate
director's fees paid to the three disinterested directors, pursuant to the terms
of the Investment Management Contract. See Compensation Table below.
<TABLE>
<CAPTION>
Compensation Table
<S> <C> <C> <C> <C> <C>
(1) (2) (3) (4) (5)
Name of Person, Aggregate Compensation Pension or Retirement Total Compensation from
Position from Registrant for Benefits Accrued as Estimated Annual Fund and Fund
Fiscal Year Part of Fund Expenses Benefits upon Retirement Complex Paid to Directors*
Dr. W. Giles Mellon, $4,000.00 0 0 $59,500 (16 Funds)
Director
Robert Straniere, $4,000.00 0 0 $59,500 (16 Funds)
Director
Dr. Yung Wong, $4,000.00 0 0 $59,500 (16 Funds)
Director
</TABLE>
* The total compensation paid to such persons by the Fund and Fund Complex for
the fiscal year ending December 31, 1999. The parenthetical number
represents the number of investment companies (including the Fund) from
which such person receives compensation that are considered part of the same
Fund complex as the Fund, because, among other things, they have a common
investment advisor.
CODE OF ETHICS
The Fund, the Manager and the Distributor have each adopted a Code of Ethics
(collectively, the "Code of Ethics") under Rule 17j-1 of the 1940 Act. The Code
of Ethics restricts the personal investing by certain access persons of the Fund
in securities that may be purchased or held by the Fund to ensure that such
investments do not disadvantage the Fund. The Code of Ethics for the Fund, the
Manager and the Distributor are filed as exhibits to the Fund's registration
statement and instructions concerning how these documents can be obtained may be
found on the back cover of the Fund's Prospectus.
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
On March 31, 2000 there were 2,581,341 shares of the Fund's common stock
outstanding. As of March 31, 2000, the amount of shares owned by all officers
and directors of the Fund, as a group, was less than 1% of the outstanding
shares of the Fund. Set forth below is certain information as to persons who
owned 5% or more of the Fund's outstanding common stock as of March 31, 2000:
Nature of
Name and Address % of Shares Ownership
Chase Manhattan Bank TTEE
MetLife Def Cont Group
770 Broadway
New York, NY 10003-9522 13.69% Record
Investors Fiduciary Trust Co.
Custodian for the Rollover IRA of Oscar L. Tang
600 Fifth Avenue - 8th Floor
New York, NY 10020-2302 26.01% Record and
Beneficial
Peter M. Butler Trustee U/A DTD
First National Bank Building
332 Minnesota Street
St. Paul, MN 55101 6.32% Record
V. INVESTMENT ADVISORY AND OTHER SERVICES
Pursuant to its Investment Management Contract with the Fund, Reich & Tang Asset
Management L.P. (the "Manager") is responsible for the investment management of
the Fund's assets, including the responsibility for making investment decisions
and placing orders for the purchase and sale of the Fund's investments directly
with the issuers or with brokers
5
<PAGE>
or dealers selected by it in its discretion. (See "Portfolio Transactions"
herein.) The Manager also furnishes to the Board of Directors periodic reports
on the investment performance of the Fund.
The Investment Manager for the Fund is Reich & Tang Asset Management L.P., a
Delaware limited partnership with principal offices at 600 Fifth Avenue, New
York, New York 10020 (the "Manager"). The Manager was at March 31, 2000 manager,
advisor or supervisor with respect to assets aggregating in excess of $16.1
billion. The Manager acts as manager or administrator of seventeen other
investment companies and also advises pension trusts, profit sharing trusts and
endowments.
Nvest Companies, L.P. ("Nvest Companies") is the limited partner and owner of a
99.5% interest in the Manager. Reich & Tang Asset Management, Inc. ("RTAM") is
the sole general partner and owner of the remaining 0.5% interest of the
Manager, as well as being an indirect wholly-owned subsidiary of Nvest
Companies. Nvest Companies is a publicly traded company of which approximately
13% of its outstanding partnership interests is owned, directly and indirectly,
by Reich & Tang, Inc. The managing general partner of Nvest Companies is Nvest
Corporation, a Massachusetts corporation (formerly known as The New England
Investment Companies, Inc.)
Nvest Companies is a holding company offering a broad array of investment styles
across a wide range of asset categories through seventeen subsidiaries,
divisions and affiliates offering a wide array of investment styles and products
to institutional clients. Its business units, in addition to the manager,
include AEW Capital Management, L.P., Back Bay Advisors, L.P.; Capital Growth
Management Limited Partnerships; Greystone Partners, L.P.; Harris Associates,
L.P.; Jurika & Boyles, L.P.; Loomis, Sayles & Company, L.P.; New England Funds,
L.P.; Nvest Associates, Inc.; Snyder Capital Management, L.P.; Vaughan, Nelson,
Scarborough & McCullough, L.P.; and Westpeak Investment Advisors, L.P. These
affiliates in the aggregate are investment advisors or managers to more than 80
other registered investment companies.
RTAM is also an indirect subsidiary of Metropolitan Life Insurance Company
("MetLife"). MetLife directly and indirectly owns approximately 47% of the
outstanding partnership interests of Nvest Companies and may be deemed a
"controlling person" and the Manager.
MetLife is a mutual fund insurance company and is the second largest life
insurance company in the United States in terms of total assets. MetLife
provides a wide range of insurance and investment products and services to
individuals and groups and is the leader among United States life insurance
companies in terms of total life insurance in force. MetLife and its affiliates
provide insurance or other financial services to approximately 36 million people
worldwide.
Steven M. Wilson, J. Dennis Delafield, Charles Neuhauser, Vincent Sellecchia and
Glenn Sussman are responsible for the day-to-day investment management of the
Fund.
Messrs Wilson, Delafield and Sellecchia are Managing Directors of the Capital
Management Group. Mr. Wilson has been Managing Director and Chief Investment
Officer of the Capital Management Division of the Manager since July 1998. He
was formerly Senior Vice President of the Capital Management Division of the
Manager with which he was associated since September 1993. Mr. Delafield and Mr.
Sellecchia are Managing Directors of the Delafield Asset Management Division of
the Manager, with which they have been associated since September 1993. Messrs
Neuhauser and Sussman are Analysts/Managers of the Capital Management Division
of the Manager. Mr. Neuhauser has been an Analyst/Manager since October, 1998,
and was a Senior Vice President with Investment Counselors of Maryland, from
August 1991 until September 1998. Mr. Sussman has been an Analyst/Manager since
March 1997, and was formerly a Vice President at Richter Asset Management from
July 1988 until March 1997.
The Investment Management Contract has been extended to December 31, 1999 and is
continued in force thereafter for successive twelve-month periods beginning each
January 1, provided that such continuance is specifically approved annually by
majority vote of the Fund's outstanding voting securities or by its Board of
Directors, and in either case by a majority of the directors who are not parties
to the Investment Management Contract or interest persons of any such party, by
votes cast in person at a meeting called for the purpose of voting on such
matter.
Pursuant to the Investment Management Contract, the Manager manages the Fund's
portfolio of securities and makes decisions with respect to the purchase and
sale of investments, subject to the general control of the Board of Directors of
the Fund.
The Manager provides persons satisfactory to the Board of Directors of the Fund
to serve as officers of the Fund. Such officers, as well as certain other
employees and directors of the Fund, may be directors or officers of Reich &
Tang Asset Management, Inc. the sole general partner of the Manager, or
employees of the Manager or its affiliates.
The Investment Management Contract is terminable without penalty by the Fund on
sixty days' written notice when authorized either by majority vote of its
outstanding voting shares or by a vote of a majority of its Board of Directors,
or by
6
<PAGE>
the Manager on sixty days' written notice, and will automatically terminate in
the event of its assignment. The Management Contract provides that in the
absence of willful misfeasance, bad faith or gross negligence on the part of the
Manager, or of reckless disregard of its obligations thereunder, the Manager
shall not be liable for any action or failure to act in accordance with its
duties thereunder.
For its services under the Investment Management Contract, the Manager receives
from the Fund a fee, payable monthly, at the annual rate of .80% of the Fund's
average daily net assets. In addition to management services with respect to the
purchase and sale of securities, the fee includes compensation for overall
management of the Fund and for distributing the Fund's shares. For the Fund's
fiscal years ended December 31, 1999, 1998 and 1997, the Manager received
investment management fees of $356,215, $586,073 and $740,385 respectively. From
February 1, 1999 through July 31, 1999, the Manager waived $45,940 of its
Management Fee equal to .10% of the average daily net assets of the Fund.
Pursuant to the Administrative Services Contract with the Fund, the Manager
performs clerical, accounting supervision, office service and related functions
for the Fund and provides the Fund with personnel to (i) supervise the
performance of accounting related services by Investors Fiduciary Trust Company,
the Fund's bookkeeping or recordkeeping agent, (ii) prepare reports to and
filings with regulatory authorities and (iii) perform such other services as the
Fund may from time to time request of the Manager. The personnel rendering such
services may be employees of the Manager, of its affiliates or of other
organizations. For its services under the Administrative Services Contract, the
Manager receives from the Fund a fee equal to .20% per annum of the Fund's
average daily net assets. For the Fund's fiscal years ended December 31, 1999,
1998 and 1997, the Manager received an administrative services fee of $89,054,
$146,518 and $185,096, respectively.
EXPENSE LIMITATION
The Manager has agreed to reimburse the Fund for its expenses (exclusive of
interest, taxes, brokerage and extraordinary expenses) which in any year exceed
the limits prescribed by any state in which the Fund's shares are qualified for
sale. The Fund's expenses for distribution purposes pursuant to the Plan,
described above, are included within such expenses only to the extent required
by the state with the most restrictive expense limitation in which the Fund's
shares are qualified for sale. The Fund may elect not to qualify its shares for
sale in every state. For the purpose of this limitation, expenses shall include
the fee payable to the Manager and the amortization of organization expenses.
For the purpose of this obligation to reimburse expenses, the Fund's annual
expenses are estimated and accrued daily, and any appropriate estimated payments
are made to it on a monthly basis. No such reimbursement was required for the
year ended December 31, 1999. As a result of the passage of the National
Securities Markets Improvement Act of 1996, all state expense limitations have
been eliminated at this time.
Subject to the Manager's obligations to pay for services performed by officers
of the Manager or its affiliates and for investment management services and
certain distribution and promotional expenses and to reimburse the Fund for its
excess expenses as described above, under the Investment Management Contract the
Fund has assumed responsibility for payment of all of its other expenses,
including (a) brokerage and commission expenses, (b) Federal, state and local
taxes, including issue and transfer taxes incurred by or levied on the Fund, (c)
commitment fees and certain insurance premiums, (d) interest charges on
borrowings, (e) charges and expenses of the Fund's custodian, (f) charges and
expenses of persons performing issuance, redemption, transfer and dividend
disbursing functions for the Fund, (g) recurring and nonrecurring legal and
accounting expenses, including the Fund's cost of the bookkeeping agent for the
determination of net asset value per share and the maintenance of portfolio and
general accounting records, (h) telecommunication expenses, (i) costs of
organizing and maintaining the Fund's existence as a corporation, (j)
compensation, including directors' fees, of any of the Fund's directors,
officers or employees who are not officers of Reich & Tang Asset Management,
Inc., the general partner of the Manager, and costs of other personnel providing
services to the Fund, (k) costs of stockholders' services including charges and
expenses of persons providing confirmations of transactions in Fund shares,
periodic statements to stockholders, and recordkeeping and stockholder services,
(l) costs of stockholders' reports, proxy solicitations, and corporate meetings,
(m) fees and expenses of registering the Fund's shares under the appropriate
Federal securities laws and of qualifying those shares under applicable state
securities laws, including expenses attendant upon the initial registration and
qualifications of the Fund's shares and attendant upon renewals of, or
amendments to, those registrations and qualifications, (n) expenses of preparing
and printing the Fund's prospectuses and statements of additional information
and of delivering them to stockholders of the Fund, (o) payment of fees and
expenses provided for in the Investment Management Contract, Administrative
Services Agreement and Distribution Agreement and (p) any other distribution or
promotional expenses pursuant to a distribution and service plan.
DISTRIBUTION AND SERVICE PLAN
The Fund's Distribution and Service Plan (the "Plan") provides that all written
agreements relating to the Plan entered into between either the Fund and the
Manager, Reich & Tang Distributors, Inc. (the "Distributor") and organizations
whose customers or clients are Fund stockholders ("Intermediaries") must be in a
form satisfactory to the Fund's Board of Directors. Pursuant to the Plan, the
Fund has entered into a Distribution Agreement with the Distributor.
7
<PAGE>
Reich & Tang Asset Management, Inc. serves as the sole general partner for Reich
& Tang Asset Management L.P.
The Plan requires the Fund and the Manager to prepare, at least quarterly,
written reports setting forth all amounts expended for distribution purposes by
the Fund and the Manager pursuant to the Plan and identifying the distribution
activities for which those expenditures were made. Such distribution activities
included the printing of prospectuses and subscription order forms and
promotional brochures and related promotional expenses. See "Investment
Management Contract" herein for information regarding fee arrangements and
termination provisions under the Investment Management Contract.
The Plan provided that it would be continued in effect until December 31, 1999
and it has been extended through December 31, 2000. Thereafter, it is continued
in effect for successive annual periods provided that it must be approved by a
vote of at least a majority of the outstanding voting securities of the Fund and
by a majority of the Board of Directors, including those directors who are not
"interested persons" of the Fund (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the Plan. The Plan must be approved at
least annually by the Board of Directors in the manner described in the
foregoing sentence and may be terminated at any time by a vote of a majority of
the outstanding voting securities of the Fund or a majority of those directors
who are not "interested persons" and who have no direct or indirect financial
interest in the Plan.
The Plan further provides that it may not be amended to increase materially the
costs which may be incurred by the Fund for distribution pursuant to the Plan
without stockholder approval, and that all material amendments of the Plan must
be approved by a majority of the Board of Directors, including those who are not
"interested persons" of the Fund and who have no direct or indirect financial
interest in the Plan.
While the Plan is in effect, the selection and nomination of directors who are
not "interested persons" of the Fund (as defined in the 1940 Act) is committed
to the discretion of the directors who are not "interested persons" of the Fund.
The Distribution Agreement between the Fund and the Distributor provides that it
shall terminate automatically in the event of its assignment.
CUSTODIAN AND TRANSFER AGENT
State Street Kansas City, 801 Pennsylvania, Kansas City, Missouri 64105, is
custodian for the Fund's cash and securities. Reich & Tang Services, Inc., an
affiliate of the Fund's Manager, located at 600 Fifth Avenue, New York, NY
10020, is transfer agent and dividend agent for the shares of the Fund. The
custodian and transfer agents do not assist in, and are not responsible for,
investment decisions involving assets of the Fund.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Legal matters in connection with the issuance of shares of stock of the Fund are
passed upon by Battle Fowler LLP, 75 East 55th Street, New York, New York 10022.
Venable, Baetjer and Howard, Baltimore, Maryland, has provided an opinion for
matters relating to Maryland law.
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036, independent certified public accountants, have been selected as auditors
for the Fund.
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
The Manager makes the Fund's portfolio decisions and determines the broker to be
used in each specific transaction with the objective of negotiating a
combination of the most favorable commission and the best price obtainable on
each transaction (generally defined as best execution). When consistent with the
objective of obtaining the best price and execution available, brokerage may be
directed to persons or firms supplying investment information to the Manager or
portfolio transactions may be effected by the Manager. Neither the Fund nor the
Manager has entered into agreements or understandings with any brokers regarding
the placement of securities transactions because of research services they
provide. To the extent that such persons or firms supply investment information
to the Manager for use in rendering investment advice to the Fund, such
information may be supplied at no cost to the Manager and, therefore, may have
the effect of reducing the expenses of the Manager in rendering advice to the
Fund. While it is impossible to place an actual dollar value on such investment
information, its receipt by the Manager probably does not reduce the overall
expenses of the Manager to any material extent. Consistent with the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., and
subject to seeking best execution, the Manager may consider sales of shares of
the Fund as a factor in the selection of brokers to execute portfolio
transactions for the Fund.
The investment information provided to the Manager is of the type described in
Section 28(e) of the Securities Exchange Act of 1934 and is designed to augment
the Manager's own internal research and investment strategy capabilities.
Research services furnished by brokers through which the Fund effects securities
transactions are used by the Manager in carrying out its investment management
responsibilities with respect to all its clients' accounts. There may be
occasions where the transaction cost charged by a broker may be greater than
that which another broker may charge if the Manager determines in good faith
that the amount of such transaction cost is reasonable in relation to the value
of brokerage and
8
<PAGE>
research services provided by the executing broker. During the year ended
December 31, 1999, the Manager did not place any portfolio transactions for the
Fund with firms supplying investment information to the Manager.
The Fund may deal in some instances in securities which are not listed on a
national securities exchange but are traded in the over-the-counter market. It
may also purchase listed securities through the third market. Where transactions
are executed in the over-the-counter market or third market, the Fund will seek
to deal with the primary market makers; but when necessary in order to obtain
best execution, it will utilize the services of others. In all cases the Fund
will attempt to negotiate best execution.
The Distributor may from time to time effect transactions in the Fund's
portfolio securities. In such instances, the placement of orders with the
Distributor would be consistent with the Fund's objective of obtaining best
execution. With respect to orders placed with the Distributor for execution on a
national securities exchange, commissions received must conform to Section
17(e)(2)(A) of the 1940 Act and Rule 17e-1 thereunder, which permit an
affiliated person of a registered investment company (such as the Fund) to
receive brokerage commissions from such registered investment company provided
that such commissions are reasonable and fair compared to commissions received
by other brokers in connection with comparable transactions involving similar
securities during a comparable period of time. In addition, pursuant to Section
11(a) of the Securities Exchange Act of 1934, the Distributor is restricted as
to the nature and extent of the brokerage services it may perform for the Fund.
The Securities and Exchange Commission has adopted rules under Section 11(a)
which permit a distributor to a registered investment company to receive
compensation for effecting, on a national securities exchange, transactions in
portfolio securities of such investment company, including causing such
transactions to be transmitted, executed, cleared and settled and arranging for
unaffiliated brokers to execute such transactions. To the extent permitted by
such rules, the Distributor may receive compensation relating to transactions in
portfolio securities of the Fund provided that the Fund enters into a written
agreement, as required by such rules, with the Distributor authorizing it to
retain compensation for such services. Transactions in portfolio securities
placed with the Distributor which are executed on a national securities exchange
must be effected in accordance with procedures adopted by the Board of Directors
of the Fund pursuant to Rule 17e-1.
During the years ended December 31, 1999, 1998 and 1997, the Fund paid a total
of $177,186, $189,081 and $81,019 respectively, in brokerage commissions,
$22,639, $27,866 and $25,226, respectively, of which was paid to the
Distributor. During the years ended December 31, 1999, 1998 and 1997, the
brokerage commissions paid to the Distributor represented approximately 12.78%,
14.74% and 31.14%, respectively, of the total brokerage commissions paid by the
Fund during such years and were paid on account of transactions having an
aggregate dollar value equal to approximately 29.59%, 28.31% and 49.58%,
respectively, of the aggregate dollar value of all portfolio transactions of the
Fund during such years for which commissions were paid. The Fund's portfolio
turnover rate for the years ended December 31, 1999, 1998 and 1997 was 66.10%,
45.79% and 29.59%, respectively.
VII. CAPITAL STOCK AND OTHER SECURITIES
The authorized capital stock of the Fund consists of one hundred million shares
of common stock having a par value of one-tenth of one cent ($.001) per share.
Each share has equal dividend, distribution, liquidation and voting rights.
There are no conversion or preemptive rights in connection with any shares of
the Fund. All shares when issued in accordance with the terms of the offering
will be fully paid and non-assessable.
As a general matter, the Fund will not hold annual or other meetings of the
Fund's stockholders. This is because the By-laws of the Fund provide for annual
meetings only (a) for the election of directors, (b) for approval of revised
investment advisory contracts with respect to a particular class or series of
stock, (c) for approval of revisions to the Fund's distribution agreement with
respect to a particular class or series of stock, and (d) upon the written
request of shareholders entitled to cast not less than 25% of all the votes
entitled to be cast at such meeting. Annual and other meetings may be required
with respect to such additional matters relating to the Fund as may be required
by the 1940 Act including the removal of Fund director(s) and communication
among stockholders, any registration of the Fund with the SEC or any state, or
as the Directors may consider necessary or desirable. Each Director serves until
the next meeting of the stockholders called for the purpose of considering the
election or reelection of such Director or of a successor to such Director, and
until the election and qualification of his or her successor, elected at such a
meeting, or until such Director sooner dies, resigns, retires or is removed by
the vote of the stockholders.
VIII. PURCHASE, REDEMPTION AND PRICING SHARES
The material relating to the purchase, redemption and pricing of shares is
located in the Shareholder Information section of the Prospectus and is hereby
incorporated by reference.
NET ASSET VALUE
The Fund does not determine its net asset value per share on the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
For purposes of determining the Fund's net asset value per share, readily
marketable portfolio securities listed on the New
9
<PAGE>
York Stock Exchange are valued, except as indicated below, at the last sale
price reflected on the consolidated tape at the close of the New York Stock
Exchange on the business day as of which such value is being determined. If
there has been no sale on such day, the securities are valued at the mean of the
closing bid and asked prices on such day. If no bid or asked prices are quoted
on such day, then the security is valued by such method as the Board of
Directors shall determine in good faith to reflect its fair market value.
Readily marketable securities not listed on the New York Stock Exchange but
listed on other national securities exchanges or admitted to trading on the
National Association of Securities Dealers Automated Quotations, Inc. ("NASDAQ")
National List are valued in like manner. Portfolio securities traded on more
than one national securities exchange are valued at the last sale price on the
business day as of which such value is being determined as reflected on the tape
at the close of the exchange representing the principal market for such
securities.
Readily marketable securities traded in the over-the-counter market, including
listed securities whose primary market is believed by the Manager to be
over-the-counter but excluding securities admitted to trading on the NASDAQ
National List, are valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by NASDAQ, the
National Quotation Bureau or such other comparable sources as the Board of
Directors deems appropriate to reflect their fair market value.
U.S. Government obligations and other debt instruments having sixty days or less
remaining until maturity are stated at amortized cost. All other investment
assets, including restricted and not readily marketable securities, are valued
in such manner as the Board of Directors in good faith deems appropriate to
reflect their fair market value.
IX. TAXATION OF THE FUND
The Fund has elected and intends to continue to qualify to be treated as a
regulated investment company under the Internal Revenue Code (the "Code"). The
Fund will continue to qualify as a regulated investment company as long as it is
in the best interests of its shareholders to do so. To qualify as a regulated
investment company, the Fund must distribute to shareholders at least 90% of its
investment company taxable income (which includes, among other items, dividends,
taxable interest and the excess of net short-term capital gains over net
long-term capital losses), and meet certain diversification of assets, source of
income, and other requirements. By meeting these requirements, the Fund
generally will not be subject to Federal income tax on investment company
taxable income and net capital gains (the excess of net long-term capital gains
over net short-term capital losses) designated by the Fund as capital gain
dividends and distributed to shareholders. In determining the amount of net
capital gains to be distributed, any capital loss carryover from prior years
will be applied against capital gains to reduce the amount of distributions
paid. If the Fund does not meet all of these requirements, it will be taxed as
an ordinary corporation and distributions will generally be taxed to
shareholders as ordinary income.
Amounts, other than tax-exempt interest, not distributed on a timely basis in
accordance with a calendar year distribution requirement may be subject to a
nondeductible 4% of excise tax. To prevent imposition of the excise tax, the
Fund must distribute for the calendar year an amount equal to the sum of (1) at
least 98% of its ordinary income (excluding any capital gains or losses) for the
calendar year, (2) at least 98% of the excess of its capital gains over capital
losses (adjusted for certain losses) for the one-year period ending December 31
of such year, and (3) all ordinary income and capital gain net income (adjusted
for certain ordinary losses) for previous years that were not distributed during
such years.
Distributions of investment company taxable income generally are taxable to
shareholders as ordinary income. Distributions from the Fund may be eligible for
the dividends-received deduction available to corporations other than S
Corporations. However, any dividends received by the Fund that are attributable
to foreign corporations will not be eligible for the dividends-received
deduction, since that deduction is generally available only with respect to
dividends paid by domestic corporations. In addition, the dividends-received
deduction will be disallowed for shareholders who do not hold their shares in
the Fund for at least 45 days during the 90 day period beginning 45 days before
a share in the Fund becomes ex dividend with respect to such dividend and will
be disallowed with respect to an investment in the Fund that is debt financed.
Distributions of net capital gains, if any, designated by the Fund as capital
gain dividends are taxable to shareholders as long-term capital gains,
regardless of the length of time the Fund's shares have been held by the
shareholder. All distributions are taxable to the shareholder whether reinvested
in additional shares or received in cash. Shareholders will be notified annually
as to the Federal tax status of distributions.
Investors should be careful to consider the tax implications of buying shares
just prior to a distribution by the Fund. The price of shares purchased at that
time includes the amount of the forthcoming distribution. Distributions by the
Fund reduce the net asset value of the Fund's shares, and if a distribution
reduces the net asset value below a stockholder's cost basis, such distribution,
nevertheless, would be taxable to the shareholder as ordinary income or capital
gain as described above, even though, from an investment standpoint, it may
constitute a partial return of capital.
Upon the taxable disposition (including a sale or redemption) of shares of the
Fund, a shareholder may realize a gain or loss depending upon its basis in the
shares. Such gain or loss will be treated as capital gain or loss if the shares
are capital assets in the shareholder's hands. Such gain or loss will be
long-term or short-term, generally depending upon the
10
<PAGE>
shareholder's holding period for the shares. Non-corporate shareholders are
subject to tax at a maximum rate of 20% on capital gains resulting from the
disposition of shares held for more than 12 months. However, a loss realized by
a shareholder on the disposition of Fund shares with respect to which capital
gains dividends have been paid will, to the extent of such capital gain
dividends, also be treated as long-term capital loss if such shares have been
held by the shareholder for six months or less. Further, a loss realized on a
disposition will be disallowed to the extent the shares disposed of are replaced
(whether by reinvestment of distributions or otherwise) within a period of 61
days beginning 30 days before and ending 30 days after the shares are disposed
of. In such a case, the basis of the shares acquired will be adjusted to reflect
the disallowed loss. Shareholders receiving distributions in the form of
additional shares will have a cost basis for Federal income tax purposes in each
share received equal to the net asset value of a share of the Fund on the
reinvestment date.
Under certain circumstances, the sales charge incurred in acquiring shares of
the Fund may not be taken into account in determining the gain or loss on the
disposition of those shares. This rule applies where shares of the Fund are
exchanged within 90 days after the date they were purchased and new shares of
the Fund are acquired without sales charge or at a reduced sales charge. In that
case, the gain or loss recognized on the exchange will be determined by
excluding from the tax basis of the shares exchanged all or a portion of the
sales charge incurred in acquiring those shares. This exclusion applies to the
extent that the otherwise applicable sales charge with respect to the newly
acquired shares is reduced as a result of having incurred the sales charge
initially. Instead, the portion of the sales charge affected by this rule will
be treated as a sales charge paid for the new shares.
Gains or losses attributable to fluctuations in exchange rates resulting from
transactions in a foreign currency generally are treated as ordinary income or
ordinary loss. These gains or losses may increase, decrease, or eliminate the
amount of the Fund's investment company taxable income to be distributed to its
shareholders as ordinary income.
Income received by the Fund from sources within foreign countries may be subject
to withholding and other similar income taxes imposed by the foreign country.
The Fund does not expect to be eligible to elect to allow shareholders to claim
such foreign taxes or a credit against their U.S. tax liability.
The Fund is required to report to the IRS all distributions to shareholders
except in the case of certain exempt shareholders. Distributions by the Fund
(other than distributions to exempt shareholders) are generally subject to
backup withholding of Federal income tax at a rate of 31% if (1) the shareholder
fails to furnish the Funds with and to certify the shareholder's correct
taxpayer identification number or social security number, (2) the IRS notifies
the Fund or a shareholder that the shareholder has failed to report properly
certain interest and dividend income to the IRS and to respond to notices to
that effect, or (3) when required to do so, the shareholder fails to certify
that he or she is not subject to backup withholding. If the withholding
provisions are applicable, any such distributions (whether reinvested in
additional shares or taken in cash) will be reduced by the amounts required to
be withheld.
The foregoing discussion relates only to Federal income tax law as applicable to
U.S. persons (i.e., U.S. citizens and residents and U.S. domestic corporations,
partnerships, trusts and estates). Distributions by the Fund also may be subject
to state and local taxes, and the treatment of distributions under state and
local income tax laws may differ from the Federal income tax treatment.
Shareholders should consult their tax advisors with respect to particular
questions of Federal, state and local taxation. Shareholders who are not U.S.
persons should consult their tax advisors regarding U.S. foreign tax
consequences of ownership of shares of the Fund, including the likelihood that
distributions to them would be subject to withholding of U.S. tax at a rate of
30% (or at a lower rate under a tax treaty).
X. UNDERWRITERS
The Fund sells and redeems its shares on a continuing basis at their net asset
value and does not impose a sales charge. The Distributor does not receive an
underwriting commission. In effecting sales of Fund shares under the
Distribution Agreement, the Distributor, for nominal consideration (i.e., $1.00)
and as agent for the Fund, will solicit orders for the purchase of the Fund's
shares, provided that any subscriptions and orders will not be binding on the
Fund until accepted by the Fund as principal.
The Glass-Steagall Act and other applicable laws and regulations prohibit banks
and other depository institutions from engaging in the business of underwriting,
selling or distributing most types of securities. In the opinion of the Manager,
however, based on the advice of counsel, these laws and regulations do not
prohibit such depository institutions from providing other services for
investment companies such as the shareholder servicing and related
administrative functions referred to above. The Fund's Board of Directors will
consider appropriate modifications to the Fund's operations, including
discontinuance of any payments then being made under the Plan to banks and other
depository institutions, in the event of any future change in such laws or
regulations which may affect the ability of such institutions to provide the
above-mentioned services. It is not anticipated that the discontinuance of
payments to such an institution would result in loss to shareholders or change
in the Fund's net asset value. In addition, state securities laws on this issue
may differ from the interpretations of Federal law expressed herein and banks
and financial institutions may be required to register ad dealers pursuant to
state law.
11
<PAGE>
XI. CALCULATION OF PERFORMANCE DATA
From time to time the Fund may distribute sales literature or publish
advertisements containing "total return" quotations for the Fund. Such sales
literature or advertisements will disclose the Fund's average annual compounded
total return for the Fund's last one year period, five year period and the
period since the Fund's inception, and may include total return information for
other periods. The Fund's total return for each period is computed by finding,
through the use of a formula prescribed by the Securities and Exchange
Commission, the average annual compounded rates of return over the period that
would equate an assumed initial amount invested to the value of such investment
at the end of the period. For purposes of computing total return, income
dividends and capital gains distributions paid on shares of the Fund are assumed
to have been reinvested when received.
The Fund's total return for the twelve months ended December 31, 1999 was 0.36%.
The Fund's average annual compounded total return for the five year period ended
December 31, 1999 was 11.89%. The Fund's average annual compounded total return
from January 4, 1985 (inception) to December 31, 1999 was 13.40%.
The Fund's total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and quality of the
securities in the Fund's portfolio and the Fund's expenses. Total return
information is useful in reviewing the Fund's performance but such information
may not provide a basis for comparison with bank deposits or other investments
which pay a fixed return for a stated period of time. An investor's principal
invested in the Fund is not fixed and will fluctuate in response to prevailing
market conditions.
XII. FINANCIAL STATEMENTS
The audited financial statements for the Fund for the fiscal year ended December
31, 1999 and the report thereon of PricewaterhouseCoopers LLP are herein
incorporated by reference to the Fund's Annual Report. The Annual Report is
available upon request and without charge.
12
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Articles of Incorporation of Registrant (filed as Exhibit 1 to Registration
Statement on Form N-1A (File Nos. 2-94184 and 811-4148) and re-filed herein
for Edgar purposes only).
(a.1) Amendment to the Articles of Incorporation, (filed with Post Effective
Amendment No. 24 to said Registration Statement filed on April 30, 1998 and
incorporated by reference).
(b) By-Laws of Registrant (filed as Exhibit 2 to Registration Statement on Form
N-1A (File Nos. 2-94184 and 811-4148) and re-filed herein for Edgar
purposes only).
(c) Form of certificate for shares of the common stock of Registrant (filed as
Exhibit 4 to Registration Statement on Form N-1A (File Nos. 2-94184 and
811-4148) and re-filed herein for Edgar purposes only).
(d) Form of Investment Management Contract between the Registrant and Reich &
Tang Asset Management L.P. (filed with Post Effective Amendment No. 24 to
said Registration Statement filed on April 30, 1998 and incorporated by
reference).
(e) Form of Distribution Agreement between the Registrant and Reich & Tang
Distributors, Inc. (filed with Post Effective Amendment No. 24 to said
Registration Statement filed on April 30, 1998 and incorporated by
reference).
(f) None.
(g) Custody Agreement between the Registrant and Investors Fiduciary Trust
Company (filed as Exhibit 8(a) to Post-Effective Amendment No. 20 to
Registration Statement filed on April 26, 1995) (file Nos. 2-94184 and
811-4148) and incorporated herein by reference).
(g.1) Transfer Agency Agreement between the Registrant and Investors Financial
Services Company (filed as Exhibit 8(b) to Post-Effective Amendment No. 13
to Registration Statement on Form N-1A) (file Nos. 2-94184 and 811-4148)
and re-filed herein for Edgar purposes only).
(h) None.
(i) Opinion of Messrs. Seward & Kissel (filed as Exhibit 10(a) to Pre-Effective
Amendment No. 1 to Registration Statement on Form N-1A (File Nos. 2-94184
and 811-4148) and re-filed herein for Edgar purposes only).
(i.1) Opinion of Messrs. Venable, Baetjer and Howard (filed as Exhibit 10(b) to
Pre-Effective Amendment No. 1 to Registration Statement on Form N-1A (File
Nos. 2-94184 and 811-4148) and re-filed herein for Edgar purposes only).
(j) Consent of Independent Auditors.
(k) Audited Financial Statements for fiscal year ended December 31, 1999 (filed
with Annual Report).
(l) Investment representation letter of Reich & Tang, Inc. as initial purchaser
of shares of stock of Registrant (filed as Exhibit 13 to Pre-Effective
Amendment No. 1 to Registration Statement on Form N-1A (File No. 2-94184
and re-filed herein for Edgar purposes only).
(m) Form of Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (filed with Post-Effective Amendment No. 24
to said Registration Statement filed on April 30, 1998 and incorporated by
reference).
(m.1) Form of Distribution Agreement between the Registrant and Reich & Tang
Distributors, Inc. (filed as Exhibit (e) above.)
(m.2) Administrative Services Contract between the Registrant and Reich & Tang
Asset Management, Inc. (filed with Post Effective Amendment No. 24 to said
Registration Statement filed on April 30, 1998 and incorporated by
reference).
(n) Not applicable.
(o) Not applicable.
(p) Code of Ethics of the Registrant, the advisor (Reich and Tang Asset
Management L.P.) and the distributor (Reich & Tang Distributors, L.P.)
(q) Power of Attorney (filed with Post-Effective Amendment No. 24 to said
Registration Statement filed on April 30, 1998 and incorporated by
reference).
C-1
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 25. INDEMNIFICATION.
Registrant incorporates herein by reference the response to Item 27 of
Registration Statement filed with the Commission on November 6, 1984 (re-filed
herein for Edgar purposes only).
In accordance with section 2-418 of the General Corporation Law of the
State of Maryland, Article EIGHTH of the Registrant's Articles of Incorporation
provides as follows:
"EIGHTH: To the maximum extent permitted by the General Corporation Law of
the State of Maryland as from time to time amended, the Corporation shall
indemnify its currently acting and its former directors and officers and those
persons who, at the request of the Corporation, serve or have served another
corporation, partnership, joint venture, trust or other enterprise in one or
more of such capacities. "
Paragraph 4 of the proposed Management Contract between the Registrant and
Reich & Tang, Inc. provides that Reich & Tang, Inc. will not be liable for any
mistake of judgment but shall not be protected against any liability due to
wilfull misfeasance in the performance of or reckless disregard of the adviser's
duties.
Paragraph 7 of the proposed Distribution Agreement between the Registrant
and Reich & Tang, Inc. provides that the Registrant will hold Reich & Tang, Inc.
harmless against all liabilities arising out of any alleged untrue statement of
a material fact or alleged omis- sion to state a material fact in connection
with Registrant's Registration Statement or Prospectus. The distributor is not,
however, protected against any liability due to wilfull misfeasance in the
performance of or reckless disregard of the distributor's duties.
The foregoing references are qualified in their entirety by Registrant's
Articles of Incorporation, the proposed Management Contract and the proposed
Distribution Agreement, which are filed herewith as Exhibits (1), (5) and (6),
respectively.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indem nification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
the Registrant in the success- ful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
In the event that a claim for indemnification is asserted by a director or
officer of the regis- trant in connection with the securities being registered,
the registrant will not make such indemnification unless (i) the registrant has
submitted, before a court or other body, the question of whether the person to
be indemnified was liable by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of duties, and has obtained a final decision
on the merits that such person was not liable by reason of such conduct or (ii)
in the absence of such decision, the registrant shall have obtained a reasonable
determination, based upon a review of the facts, that such person was not liable
by virtue of such conduct, by (a) the vote of a majority of directors who are
neither interested persons as such term is defined in the Investment Company Act
of 1940, nor parties to the proceeding or (b) an independent legal counsel in a
written opinion.
The Registrant will not advance attorneys' fees or other expenses incurred
by the person to be indemnified unless the registrant shall have received an
undertaking by or on behalf of such person to repay the advance unless it is
ultimately determined that such person is entitled to indemni- fication and one
of the following conditions shall have occurred: (x) such person shall provide
security for his undertaking, (y) the registrant shall be insured against losses
arising by reason of any lawful advances or (z) a majority of the disinterested,
non-party directors of the regis- trant, or an independent legal counsel in a
written opinion, shall have determined that based on a review of readily
available facts there is reason to believe that such person ultimately will be
found entitled to indemnification.
Reich & Tang, Inc. also carries for itself Directors and Officers Liability
Insurance. Coverage under this policy has been extended to directors and
officers of the investment companies managed by Reich & Tang, Inc. Under this
policy, outside directors would be covered up to the limits specified for any
claim against them for acts com- mitted in their capacities as members of the
Board. Apro rata share of the premium for this coverage is charged to each
investment company.
c-2
<PAGE>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The description of Reich & Tang Asset Management L.P. under the caption
"Management, Organization and Capital Structure" in the Prospectus, and
"Investment Advisory and Other Services" in the Statement of Additional
Information of the Registration Statement is incorporated herein by reference.
The Registrant's investment adviser, Reich & Tang Asset Management L.P. is a
registered investment adviser. Reich & Tang Asset Management L.P.'s investment
advisory clients include California Daily Tax Free Income Fund, Inc.,
Connecticut Daily Tax Free Income Fund, Inc., Cortland Trust, Inc., Daily Tax
Free Income Fund, Inc., Florida Daily Municipal Income Fund, Georgia Daily
Municipal Income Fund, Inc., Institutional Daily Income Fund, Michigan Daily Tax
Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York
Daily Tax Free Income Fund, Inc., North Carolina Daily Municipal Income Fund,
Inc., Pax World Money Market Fund, Inc., Pennsylvania Daily Municipal Income
Fund, Short Term Income Fund, Inc., Tax Exempt Proceeds Fund, Inc., and Virginia
Daily Municipal Income Fund, Inc., registered investment companies whose
addresses are 600 Fifth Avenue, New York, New York 10020, which invest
principally in money market instruments; Delafield Fund, Inc. and Reich & Tang
Equity Fund, Inc. are registered investment companies whose address is 600 Fifth
Avenue, New York, New York 10020, which invests principally in equity
securities. In addition, RTAMLP is the sole general partner of Alpha Associates
L.P., August Associates L.P., Reich & Tang Minutus I, L.P., Reich & Tang Minutus
II, L.P., Reich & Tang Equity Partners L.P., Reich & Tang Micro Cap L.P., Reich
& Tang Concentrated Portfolio L.P. and Tucek Partners L.P., private investment
partnerships organized as limited partnerships.
Peter S. Voss, President, Chief Executive Officer and a Director of Nvest
Corporation (Formerly New England Investment Companies, Inc.) since October
1992, Chairman of the Board of Nvest Corporation since December 1992, Group
Executive Vice President, Bank of America, responsible for the global asset
management private banking businesses, from April 1992 to October 1992,
Executive Vice President of Security Pacific Bank, and Chief Executive Officer
of Security Pacific Hoare Govett Companies a wholly-owned subsidiary of Security
Pacific Corporation, from April 1988 to April 1992, Director of The New England
since March 1993, Chairman of the Board of Directors of Nvest Corporation's
subsidiaries other than Loomis, Sayles & Company, L.P. ("Loomis") and Back Bay
Advisors, L.P. ("Back Bay"), where he serves as a Director, and Chairman of the
Board of Trustees of all of the mutual funds in the TNE Fund Group and the
Zenith Funds. G. Neal Ryland, Executive Vice President, Treasurer and Chief
Financial Officer since July 1993, Executive Vice President and Chief Financial
Officer of The Boston Company, a diversified financial services company, from
March 1989 until July 1993, from September 1985 to December 1988, Mr. Ryland was
employed by Kenner Parker Toys, Inc. as Senior Vice President and Chief
Financial Officer. Lorraine C. Hysler has been Secretary of RTAM since July
1994, Assistant Secretary since September 1993, Vice President of the Mutual
Funds Group of NEICLP from September 1993 until July 1994, and Vice President of
Reich & Tang Mutual Funds since July 1994. Ms. Hysler joined Reich & Tang, Inc.
in May 1977 and served as Secretary from April 1987 until September 1993.
Richard E. Smith, III has been a Director of RTAM since July 1994, President and
Chief Operating Officer of the Capital Management Group of NEICLP from May 1994
until July 1994, President and Chief Operating Officer of the Reich & Tang
Capital Management Group since July 1994, Executive Vice President and Director
of Rhode Island Hospital Trust from March 1993 to May 1994, President, Chief
Executive Officer and Director of USF&G Review Management Corp. from January
1988 until September 1992. Steven W. Duff has been a Director of RTAM since
October 1994, President and Chief Executive Officer of Reich & Tang Mutual Funds
since August 1994, Senior Vice President of NationsBank from June 1981 until
August 1994. Mr. Duff is President and a Director of Back Bay Funds, Inc.,
California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income
Fund, Inc., Daily Tax Free Income Fund, Inc., Georgia Daily Municipal Income
Fund, Inc., Michigan Daily Tax Free Income Fund, Inc., New Jersey Daily
Municipal Income Fund, Inc., New York Daily Tax Free Income Fund, Inc., North
Carolina Daily Municipal Income Fund, Inc., Pax World Money Market Fund, Inc.,
Short Term Income Fund, Inc. and Virginia Daily Municipal Income Fund, Inc.
President and Trustee of Institutional Daily Municipal Income Fund, Pennsylvania
Daily Municipal Income Fund, President and Chief Executive Officer of Tax Exempt
Proceeds Fund, Inc., and Executive Vice President of Reich & Tang Equity Fund,
Inc. Bernadette N. Finn has been Vice President/Compliance of RTAM since July
1994, Vice President of Mutual Funds Division of NEICLP from September 1993
until July 1994, Vice President of Reich & Tang Mutual Funds since July 1994.
Ms. Finn joined Reich & Tang, Inc. in September 1970 and served as Vice
President from September 1982 until May 1987 and as Vice President and Assistant
Secretary from May 1987 until September 1993. Ms. Finn is also Secretary of Back
Bay Funds, Inc., California Daily Tax Free Income Fund, Inc., Connecticut Daily
Tax Free Income Fund, Inc., Cortland Trust, Inc., Delafield Fund, Inc., Daily
Tax Free Income Fund, Inc., Georgia Daily Municipal Income Fund, Inc.,
Institutional Daily Municipal Income Fund, Michigan Daily Tax Free Income Funds,
Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free
Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc., Pax World
Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Tax Exempt
Proceeds Fund, Inc.,
C-3
<PAGE>
and Virginia Daily Municipal Income Fund, Inc. a Vice President and
Secretary of Reich & Tang Equity Fund, Inc., and Short Term Income Fund, Inc.
Richard De Sanctis has been Treasurer of RTAM since July 1994, Assistant
Treasurer since September 1993 and Treasurer of the Mutual Funds Group of NEICLP
from September 1993 until July 1994, Treasurer of the Reich & Tang Mutual Funds
since July 1994. Mr. De Sanctis joined Reich & Tang, Inc. in December 1990 and
served as Controller of Reich & Tang, Inc., from January 1991 to September 1993.
Mr. De Sanctis was Vice President and Treasurer of Cortland Financial Group,
Inc. and Vice President of Cortland Distributors, Inc. from 1989 to December
1990. Mr. De Sanctis is also Treasurer of Back Bay Funds, Inc., California Daily
Tax Free Income Fund, Inc., Connecticut Daily Tax Free Income Fund, Inc., Daily
Tax Free Income Fund, Inc., Delafield Fund, Inc., Georgia Daily Municipal Income
Fund, Inc., Institutional Daily Municipal Income Fund, Michigan Daily Tax Free
Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily
Tax Free Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc.,
Pax World Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund,
Reich & Tang Equity Fund, Inc., Short Term Income Fund, Inc., Tax Exempt
Proceeds Fund, Inc. and Virginia Daily Municipal Income Fund, Inc., and is Vice
President and Treasurer of Cortland Trust, Inc. Richard I. Weiner has been Vice
President of RTAM since July 1994, has been Vice President of Nvest Corporation
since September 1993, Vice President of the Capital Management Group of NEIC
from September 1993 until July 1994, Vice President of Reich & Tang Asset
Management L.P. Capital Management Group since July 1994. Mr. Weiner joined
Reich & Tang, Inc. in August 1970 and has served as a Vice President since
September 1982. Rosanne D. Holtzer has been Vice President of the Mutual Funds
division of the Manager since December 1997. Ms. Holtzer was formerly Manager of
Fund Accounting for the Manager with which she was associated with from June
1986. She is also Assistant Treasurer of Back Bay Funds, Inc., Connecticut Daily
Tax Free Income Fund, Inc., Daily Tax Free Income Fund, Inc., Delafield Fund,
Inc., Florida Daily Municipal Income Fund, Georgia Daily Municipal Income Fund,
Inc., Institutional Daily Income Fund, Michigan Daily Tax Free Income Fund,
Inc., New Jersey Daily Municipal Income Fund, Inc., New York Daily Tax Free
Income Fund, Inc., North Carolina Daily Municipal Income Fund, Inc. Pax World
Money Market Fund, Inc., Pennsylvania Daily Municipal Income Fund, Short Term
Income Fund, Inc., Tax Exempt Proceeds Fund, Inc. and Virginia Daily Municipal
Income Fund, Inc. and is Vice President and Assistant Treasurer of Cortland
Trust, Inc.
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) Reich & Tang Distributors, Inc. is also distributor for Back Bay Funds,
Inc., California Daily Tax Free Income Fund, Inc., Connecticut Daily Tax Free
Income Fund, Inc., Cortland Trust, Inc., Daily Tax Free Income Fund, Inc.,
Delafield Fund, Inc., Florida Daily Municipal Income Fund, Georgia Daily
Municipal Income Fund, Inc., Institutional Daily Municipal Income Fund, Michigan
Daily Tax Free Income Fund, Inc., New Jersey Daily Municipal Income Fund, Inc.,
New York Daily Tax Free Income Fund, Inc., North Carolina Daily Municipal Income
Fund, Inc., Pax World Money Market Fund, Inc., Pennsylvania Daily Municipal
Income Fund, Short Term Income Fund, Inc., Tax Exempt Proceeds Fund, Inc. and
Virginia Daily Municipal Income Fund, Inc.
(b) The following are the directors and officers of Reich & Tang
Distributors, Inc. The principal business address of Messrs. Voss, Ryland and
Wadsworth is 399 Boylston Street, Boston, Massachusetts 02116. For all other
persons, the principal business address is 600 Fifth Avenue, New York, New York
10020.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH THE DISTRIBUTOR WITH THE REGISTRANT
<S> <C> <C>
---- ----------------- ----------------------
Peter S. Voss President and Director None
G. Neal Ryland Director None
Richard E. Smith III President Chairman
Steven W. Duff Director Executive Vice President
Bernadette N. Finn Vice President Vice President & Secretary
Lorraine C. Hysler Secretary None
Richard De Sanctis Treasurer Treasurer
Richard I. Weiner Vice President None
</TABLE>
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained at the offices of Reich & Tang Asset Management L.P., 600 Fifth
Avenue, New York, New York 10020, and at the offices of Investors Fiduciary
Trust Company, 801 Pennsylvania Avenue, Kansas City, Missouri 64105, the
Registrant's Custodian, and Reich & Tang Services, Inc., 600 Fifth Avenue, New
York, New York 10020, the Registrant's transfer agent and dividend disbursing
agent.
ITEM 29. MANAGEMENT SERVICES.
Not applicable.
ITEM 30. UNDERTAKINGS.
The Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's annual report, as supplemented,
when available, upon request, without charge.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this Post-Effective Amendment
to its Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and State of New York, on the 28th day of
April, 2000.
REICH & TANG EQUITY FUND, INC.
By: /s/ Steven Wilson
Steven Wilson
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registrant's Registration Statement has been
signed below by the following persons in the capacities and on the date
indicated.
SIGNATURE TITLE DATE
(1) Principal Executive Officer:
/s/ Steven Wilson
Steven Wilson President 4/28/00
(2) Principal Financial and
Accounting Officer:
s/ Richard De Sanctis
Richard De Sanctis Treasurer 4/28/00
(3) Majority of Directors:
4/28/00
/s/ Richard E. Smith III
Richard E. Smith III
Dr. W. Giles Mellon (Director)
Robert Straniere (Director)
Dr. Yung Wong (Director)
By: 4/28/00
/s/ Richard E. Smith III
Richard E. Smith III
Attorney-in-fact*
* Powers of Attorney of Messrs. Mellon, Straniere and Wong filed with
Post-Effective Amendment No. 24 to said Registration Statement filed on
April 30, 1998 and incorporated herein by reference.
ARTICLES OF INCORPORATION
OF
REICH & TANG EQUITY FUND
FIRST: (1) The name of the incorporator is David R. Nuzzo
(2) The incorporator's post office address is Wall Street Plaza,
New York, New York 10005.
(3) The incorporator is over eighteen yeari
(4) The incorporator is forming the cor- poration named in these
Articles of Incorporation under th< general laws of the State of
Maryland.
SECOND: The name of the corporation (hereinafte) called the
"Corporation") is Reich & Tang Equity Fund, Inc.
THIRD: The purposes for which the Corporation is formed are:
(a) to conduct, operate and carry c the business of an investment
company;
(b) to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange,
distribute or otherwise dispose of notes, bills, bonds, debentures and
other negotiable or non-negotiable instruments, obligations and
evidences of indebtedness issued or guaranteed as to principal and
interest by the United States Government, or any agency or
instrumentality thereof, any State or local government, or any agency
or instrumentality thereof, or any other securities of any kind issued
by any corporation or other issuer organized under the laws of the
United States or any State, territory or possession thereof or any
territory or possession thereof or any foreign country or any
subdivision thereof
- --------------------------------------------------------------------------------
STATE OF MARYLAND
I hereby certitify that this is a true and complete copy of the 18 page document
file in this office. Dated 10/15/84.
STATE DEPARTMENT OF ASSESMENT AND TAXATION
BY: /s/ Paula Cary Mc Lean
This stamp replaces our previous certificate
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<PAGE>
or otherwise, to pay for the same in cash or by the issue of stock,
including treasury stock, bonds or notes of the Corporation or otherwise;
and to exercise any and all rights, powers and privileges of ownership or
interest in respect of any and all such investments of every kind and
description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more
persons, firms, associations or cor- porations to exercise any of said
rights, powers and privileges in respect of any said investments;
(c) to conduct research and investigations in respect of securities,
organizations, business and general business and financial conditions in
the United States of America and elsewhere for the purpose of obtaining
information pertinent to the investment and employment of the assets of the
Corporation and to procure any or all of the foregoing to be done by
others as independent contractors and to pay compensation therefor;
(d) to borrow money or otherwise obtain credit and to secure the same
by mortgaging, pledging or otherwise subject- ing as security the assets of
the Corporation, and to endorse, guarantee or undertake the performance
of any obligation, contract or engagement of any other person, firm,
association or corporation;
(e) to issue, sell, distribute, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, transfer and otherwise deal in,
shares of stock of the Corporation, including shares of stock of the
Corporation in fractional denominations, and to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of shares
of stock of the Corporation, any funds or property of the Corporation,
whether capital or surplus or otherwise, to the full extent now or
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hereafter permitted by the laws of the State of Maryland and by these
Articles of Incorporation;
(f) to conduct its business, promote its purposes, and carry on its
operations in any and all of its branches and maintain offices both within
and with- out the State of Maryland, in any and all States of the United
States of America, in the District of Columbia, and in any or all
commonwealths, territories, depend- encies, colonies, possessions, agencies
or instrumentalities of the United States of America and of foreign
governments;
(g) to carry out all or any part of the foregoing purposes or objects
as principal or agent, or in conjunction with any other person, firm,
association, cor- poration or other entity, or as a partner or member of a
partnership, syndicate or joint venture or otherwise, and in any part of
the world to the same extent and as fully as natural persons might or could
do;
(h) to have and exercise all of the powers and privileges conferred by
the laws of the State of Maryland upon corporations formed under the laws
of such State; and
(i) to do any and all such further acts and things and to exercise any
and all such further powers and privileges as may be necessary, incidental,
relative, condu- cive, appropriate or desirable for the foregoing purposes.
The enumeration herein of the objects and purposes of the Corporation shall
be construed as powers as well as objects and purposes and shall not be deemed
to exclude by inference any powers, objects or purposes which the Corpora- tion
is empowered to exercise, whether expressly by force of the laws of the State of
Maryland now or hereafter in effect, or impliedly by the reasonable construction
of the said laws.
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FOURTH; The post office address of the principal office of the Corporation
within the State of Maryland is 32 South Street, Baltimore, Maryland 21202, in
care of The Corporation Trust, Incorporated.
The resident agent of the Corporation in the State of Maryland is The
Corporation Trust, Incorporated, 32 South Street, Baltimore, Maryland 21202.
FIFTH: (1) The total nLunber of shares of stock of all classes which the
Corporation shall have authority to issue is One Hundred Million (100,000,000),
all of which stock shall have a par value of one tenth of one cent ($.001) per
share. The aggregate par value of all authorized shares of stock of the
Corporation is One Hundred Thousand Dollars ($100,000).
(2) (a) The Board of Directors of the Corporation is authorized to
classify or to re- classify, from time to time, any unissued shares of
stock of the Corporation, whether now or hereafter authorized, by setting,
changing or eliminating the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, and qualifications or
terms and conditions of or rights to require redemption of the stock and,
pursuant to such classification or reclassifica- tion, to increase or
decrease the number of autho- rized shares of any class, but the number of
shares of any class shall not be reduced by the Board of Directors below
the number of shares thereof then outstanding.
(b) Without limiting the generality of the foregoing, the dividends
and distributions of investment income and capital gains with respect to
the stock of the Corporation, and with respect to each class that hereafter
may be created, shall be in such amount as may be declared from time to
tim-e by the Board of Directors, and such dividends and distributions may
vary from class to class to such extent and for such purposes as the Board
of Directors may deem appropriate, including, but not limited to, the
purpose of complying with require- ments of regulatory or legislative
authorities.
(c) Without limiting the generality of the foregoing, the Board of
Directors may
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designate, from time to time, any unissued shares of stock of the
Corporation, whether now or here- after authorized, as a class or classes
or a number of series of preferred or special stock that is excluded from
the definition of "senior security' set forth in section 18(g) of the
Investment Company Act of 1940, as amended (or in a successor statute), by
virtue of section 18(f)(2) of said Act (or a successor statute).
(3) Until such time as the Board of Directors shall provide otherwise
pursuant to the authority granted in section (2) of this Article FIFTH, the One
Hundred Million (100,000,000) authorized shares of stock of the Corporation are
designated as Common Stock. Shares of the Common Stock and the holders thereof,
and shares of any class or series of the type referred to in subsection (c) of
section (2) of this Article FIFTH and the holders thereof, shall be subject to
the following provisions, provided, however, that if no shares of any class or
series of the type referred to in subsection (c) of section (2) of this Article
FIFTH are outstanding, the shares of the Common Stock and the holders thereof
shall nevertheless be subject to the follow- ing provisions except to the extent
that such provisions are by their terms applicable only when shares of two or
more classes are outstanding.
(a) As more fully set forth hereafter, the assets and liabilities and
the income and expenses of each class of the Corporation's stock shall be
determined separately and, accordingly, the net asset value, the dividends
payable to holders, and the amounts distributable in the event of
dissolution of the Corporation to holders, of shares of the Corporation's
stock may vary from class to class. Except for these differences and
certain other differences hereafter set forth, each class of the
Corporation's stock shall have the same preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of and rights to require
redemption.
(b) All consideration received by the Corporation for the issue or
sale
5
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of shares of a class of the Corporation's stock, together with all income,
earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation thereof, and any funds or pay- ments
derived from any reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to that class for all purposes, subject
only to the rights of creditors, and shall be so recorded upon the books of
account of the Corporation. Such consideration, income, earnings, profits,
and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may be, are herein
referred to as "assets belonging to" that class.
(c) The assets belonging to a class of the Corporation's stock shall
be charged with the liabilities of the Corpora- tion with respect to that
class and with that class' share of the liabilities of the Corporation not
attributable to any particular class, in the latter case in the proportion
that the net asset value of that class (deter- mined without regard to such
liabilities) bears to the net asset value of all classes of the
Corporation's stock (determined without regard to such liabilities) as
determined in accord- ance with Article NINTH of these Articles of
Incorporation. The determination of the Board of Directors shall be
conclusive as to the allocation of liabilities, including accrued expenses
and reserves, and assets to a parti- cular class or classes.
(d) Each holder of stock of the Corporation, upon request to the
Corporation (accompanied by surrender of the appropriate stock certificate
or certificates in proper form for transfer, if any certificates have been
issued to represent such shares) shall be entitled to require the
Corporation to redeem, to the extent that the Corporation may lawfully
effect such redemption under
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the laws of the State of Maryland, all or any part of the shares of stock
standing in the name of such holder on the books of the Corporation at a
price per share equal to the net asset value per share computed in
accordance with Article NINTH hereof.
(e)(i) The term "Minimum Amount" when used herein shall mean Five
Hundred Dollars ($500) unless otherwise fixed by the Board of Directors
from time to time, provided that the Minimum Amount may not in any event
exceed Twenty-Five Thousand Dollars ($25,000). The Board of Directors may
establish differing Minimum Amounts for each class of the Corporation's
stock and for categories of holders of shares of any class of stock based
on such criteria as the Board of Directors may deem appropriate.
(ii) If the net asset value of the shares of a class of the
Corporation's stock held by a stockholder shall be less than the Minimum
Amount then in effect with respect to shares of that class, or with respect
to the cateqor~ of holders' in vh ch the stockholder is included, of shares
of that class, the Corporation may redeem all of those shares, upon notice
given to the holder in accordance with paragraph (iv) of this subsection
(e), to the extent that the Corporation may lawfully effect such redemp
tion under the laws of the State of Maryland.
(iii) The Corporation shall be entitled but not required to redeem
shares of stock from any stockholder or stockholders, to the extent and at
such times as the Board of Directors shall, in its absolute discre- tion,
determine to be necessary or advisable to prevent the Corporation from
qualifying as a "personal holding company", within the meaning of the
Internal Revenue Code of 1954, as amended from time to time. Notice shall
be given in accordance with paragraph ("iv) of this subsection (e).
(iv) The notice referred to in paragraphs (ii) and (iii) of this
subsection
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<PAGE>
(e) shall be in writing personally delivered or deposited in the mail,
at least thirty days (or such other number of days as may be specified from
time to time by the Board of Directors) prior to such redemption. If
mailed, the notice shall be addressed to the stockholder at his post office
address as shown on the books of the Corporation, and sent by first class
mail, postage prepaid. The price for shares acquired by the Corporation
pursuant to this subsection (e) shall be an amount equal to the net asset
value of such shares, computed in accordance with Article NINTH hereof.
(f) Payment by the Corporation for shares of stock of the Corporation
surrendered to it for redemption shall be made by the Corporation within
seven busi- ness days of such surrender out of the funds legally available
therefor, provided that the Corporation may suspend the right of the
holders of stock of the Corporation to redeem shares of stock and may
postpone the right of such holders to receive payment for any shares when
permitted or required to do so by applicable statutes or regulations.
Payment of the aggregate price of shares surrendered for redemption may be
made in cash or, at the option of the Corporation, wholly or partly in such
portfolio securi- ties of the Corporation as the Corporation shall select.
(g) The right of any holder of stock of the Corporation redeemed by
the Cor- poration as provided in subsections (d) or (e) of this section (3)
to receive dividends thereon and all other rights of such holder with
respect to such shares shall terminate at the time as of which the purchase
or re- demption price of such shares is determined, except the right of
such holder to receive (i) the redemption price of such shares from the
Corporation or its designated agent and (ii) any dividend or distribution
to which such holder has previously become entitled as the record holder of
such shares on the
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record date for such dividend or distribution If shares of stock are
redeemed by the Corporation pursuant to subsection (e) of this section (3)
and certificates representing the redeemed shares have been issued, the
redemption price need not be paid by the Corporation until the certificates
have been received by the Corporation or its agent duly endorsed for
transfer.
(h) The Corporation shall be entitled to purchase shares of its stock,
to the extent that the Corporation may lawfully effect such purchase under
the laws of the State of Maryland, upon such terms and conditions and for
such consideration as the Board of Directors shall deem advisable, by
agreement with the stockholder at a price not exceeding the net asset value
per share computed in accordance with Article NINTH hereof.
(i) The net asset value of each share of a class of the Corporation's
stock issued and sold or redeemed or purchased at net asset value shall be
the net asset value per share of the shares of that class determined in
accordance with Article NINTH hereof based on the assets belonging to that
class less the liabilities charged to that class.
(j) In the absence of any speci- fication as to the purpose foe which
shares of stock of the Corporation are redeemed or purchased by it, all
shares so redeemed or purchased shall be deemed to be retired in the sense
contemplated by the laws of the Stdte of Maryland and the number of the
authorized shares of stock of the Corporation shall not be reduced by the
number of any shares redeemed or purchased by it. Until their
classification is changed in accordance with section (2) of this Article
FIFTH, all shares so redeemed or purchased shall continue to belong to the
same class or series to which they belonged at the time of their redemption
or purchase.
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(k) Shares of each class of stock shall be entitled to such dividends
or distri- butions, 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 that dividends or distributions shall be
paid on shares .of a class of stock only out of lawfully available assets
belonging to that class.
(1) For the purpose of allowing the net asset value per share of a
class of the Corporation's stock to remain constant, the Corporation shall
be entitled to declare, pay and credit as dividends daily the net income
(which may include or give effect to realized and unrealized gains and
losses, as determined in accordance with the Corporation's accounting and
portfolio valuation policies) of the Corporation allocated to that class.
If the amount so determined for any day is negative, the Corporation shall
be entitled, without the payment of monetary compensation but in
consideration of the interest of the Corporation and its stockholders in
maintaining a constant net asset value per share of the class, to redeem
pro rata from all the stockholders of record of shares of the class at the
time of such redemption (in proportion to their respective holdings
thereof) such number of outstanding shares of the class, or fractions
thereof, as shall be required to permit the net asset value per share of
the class to remain constant.
(m) In the event of the liquidation or dissolution of the Corporation,
the stockholders of a class of the Corporation's stock shall be entitled to
receive, as a class, out of the assets of the Corporation available for
distribution to stockholders, the assets belonging to that class. The
assets so distributable to the stockholders of a class shall be distributed
among such stockholders in proportion to the number of shares of that class
held by them and recorded on the books of the Corporation.
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In the event that there are any assets available for distribution that are
not attributable to any particular class of stock, such assets shall be
allocated to all classes in proportion to the net asset value of the
respective classes and then distributed to the holders of stock of each
class in proportion to the net asset value of the shares of that class held
by the respective holders.
(n) On each matter submitted to a vote of the stockholders, each
holder of a share of stock shall be entitled to one vote for each such
share standing in his name on the books of the Corporation irrespective of
the class thereof; provided, however, that to the extent class voting is
required by the Investment Company Act of 1940 or regulations thereunder,
as from time to time amended, or the laws of the State of Maryland as to
any such matter, those requirements shall apply.
(o) The Corporation may issue shares of stock in fractional
denominations to the same extent as its whole shares, and shares in
fractional denominations shall be shares of stock having proportionately to
the respective fractions represented thereby all the rights of whole
shares, including without limitation, the right to vote, the right to
receive dividends and distributions, and the right to participate upon
liquidation of the Corporation, but excluding the right to receive a stock
certificate representing fractional shares.
(4) No holder of any shares of stock of the Corporation shall be entitled
as of right to subscribe for, purchase, or otherwise acquire any such shares
which the Corporation shall issue or propose to issue; and any and all of the
shares of stock of the Corporation, whether now or hereafter authorized, may be
issued, or may be reissued or transferred if the same have been reacquired and
have treasury status, by the Board of Directors to such persons, firms,
corporations and associations, and for such lawful consideration, and as the
Board of Directors
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in its discretion may determinfif without first offering same, or any thereof,
to any said holder.
(5) All persons who shall acquire stock or other securities of the
Corporation shall acquire the same subject to the provisions of these Articles
of Incorporation, as from time to time amended.
SIXTH: The number of directors of the Corporation, until such number shall
be increased pursuant to the By-Laws of the Corporation, shall be one. The
number of directors shall never be less than the number prescribed by the
General Corporation Law of the State of Maryland and shall never be more than
twenty. The name of the person who shall act as director of the Corporation
until the first annual meeting or until his successor is duly chosen and
qualifies is Robert F. Hoerle.
SEVENTH: The following provisions are inserted for the purpose of defining,
limiting and regulating the powers of the Corporation and of the Board of
Directors and stockholders
(a) The business and affairs of the Corporation shall be managed under
the direction of the Board of Directors which shall have and may exercise
all powers of the Corporation except those powers which are by law, by
these Articles of Incorpora- tion or by the By-Laws conferred upon or
reserved to the stockholders. In further- ance and not in limitation of the
powers conferred by law, the Board of Directors shall have power;
(i) to make, alter and repeal by-laws of the Corporation;
(ii) to issue and sell, from time to time, shares of any class of
the Corporation's stock in such amounts and on such terms and
conditions, and for such amount and kind of consideration, as the
Board of Directors shall determine;
(iii) from time to time to set apart out of any assets of the
Corporation otherwise available for dividends a reserve or reserves
for
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working capital or for any other proper purpose or purposes, and to
reduce, abolish or add to any such reserve or reserves from time to
time as said Board of Directors may deem to be in the best interests
of the Corporation; and to determine in its discretion what part of
the assets of the Corporation available for dividends in excess of
such reserve or reserves shall be declared in dividends and paid to
the stockholders of the Corporation; and
(iv) from time to time to determine to what extent and at what
times and places and under what con- ditions and regulations the
accounts, books and records of the Corporation, or any of them, 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 the laws of the State of Maryland,
unless and until authorized to do so by resolution of the Board of
Directors or of the stockholders of the Corporation.
(b) Notwithstandinq any provision of the General Corporation Law
of the State of Maryland requiring a greater proportion than a
majority of the votes of all classes or of any class of the
Corporation's stock entitled to be cast in order to take or authorize
any action, any such action may be taken or authorized upon the
concurrence of a majority of the aggregate number of votes entitled to
be cast thereon subject to any applicable requirements of the
Investment Company Act of 1940, as from time to time in effect, or
rules or orders of the Securities and Exchange Commission or any
successor thereto.
(c) The presence in person or by proxy of the holders of
one-third of the shares of stock of the Corporation entitled to vote
(without regard to class) shall con-
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stitute a quorum at any meeting of the stock- holders, except with
respect to any matter which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one or more
classes of stock, in which case the presence in person or by proxy of
the holders of one-third of the shares of stock of each class required
to vote as a class on the matter shall constitute a quorum.
(d) 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 of the assets, debts, obligations, or
liabilities of the Corporation, as to the amount of any reserves or
charges set up and the propriety thereof, as to the time of or purpose
for creating such reserves or charges, as to the use, altera- tion or
cancellation of any reserves or charges- (whether or not any debt,
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 or
the method of valuing any investment owned or held by the Corpora-
tion, as to the market value or fair value of any investment or fair
value of any other asset of the Corporation, as to the alloca- tion of
any asset of the Corporation to a particular class or classes of the
Corpora- tion's stock, as to the charging of any liability of the
Corporation to a particular class or classes of the Corporation's
stock, as .to the number of shares of the Corporation outstanding, as
to the estimated expense to the Corporation in connection with
purchases of its shares, as to the ability to liquidate investments in
orderly fashion, or as to any other matters relating to the issue,
sale, purchase or other acquisition or disposition of investments or
shares of the Corporation, shall be final and conclusive and shall be
binding upon the Corporation and all holders of its shares, past,
present and future, and
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shares of the Corporation are issued and sold on the condition and
understanding that any and all such determinations shall be binding as
aforesaid.
(e) Except to the extent pro- hibited by the investment Company
Act of 1940, as amended, or rules, regulations or orders thereunder
promulgated by the Securities and Exchange Commission or any successor
thereto or by the By-Laws of the Corporation, a director, officer or
employee of the Corporation shall not be disqualified by his position
from dealing or contracting with the Corporation, nor shall any trans
action or contract of the Corporation be void or voidable by reason of
the fact that any director, officer or employee or any firm of which
any director, officer or employee is a member or any corporation of
which any director, officer or employee is a stockholder, officer or
director, is in any way- interested in such transaction or contract;
provided that in case a director, or a firm or corporation of which a
director is a member, stockholder, officer or director, is so
interested, such fact shall be disclosed to or shall have been known
by the Board of Directors or a majority thereof; and any director of
the Corporation who is so interested, or who is a member, stockholder,
officer or director of such firm or corpora tion, may be counted in
determining the existence of a quorum at any meeting of the Board of
Directors of the Corporation which shall authorize any such
transaction or contract, with like force and effect as if he were not
such director, or member, stockholder, officer or director of such
firm or corporation.
(f) Specifically and without limitation of subsection (e) of this
Article Seventh but subject to the exception therein prescribed, the
Corporation may enter into management or advisory, underwriting,
distribution and administration contracts and other contracts, and mav
otherwise do
15
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business, with Reich & Tang, Inc. and any parent, subsidiary or
affiliate of such firm or any affiliate of any such affiliate, or the
stockholders, directors, officers and employees thereof, and may deal
freely with one another not- withstanding that the Board of Directors
of the Corporation may be composed in part of directors, officers or
employees of such firm and/or its parents, subsidiaries or affiliates
and that officers of the Corpora- tion may have been, be or become
directors, officers, or employees of such firm and/or its parents,
subsidiaries or affiliates, and neither such management or advisory,
underwriting, distribution or administration contracts nor any other
contract or transaction between the Corporation and such firm and/or
its parents, subsidiaries or affiliates shall be invalidated or in any
way affected thereby, nor shall any director or officer of the
Corporation be liable to the Corpora- tion or to any stockholder or
creditor thereof or to any person for any loss incurred by it or him
under or by reason of such contract or transaction; provided that
nothing herein shall protect any director or officer of the
Corporation against any liability to the Corporation or to its
security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office; and provided
always that such contract or transaction shall have been on terms that
were not unfair to the corporation at the time at which it was entered
into.
EIGHTH: To the maximum extent permitted by the General Corporation Law of
the State of Maryland as from time to time amended, the Corporation shall
indemnify its currently acting and its former directors and officers and those
persons who, at the request of the Corporation, serve or have served another
corporation, partnership, joint venture, trust or other enterprise in one or
more of such capacities.
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<PAGE>
NINTH: For the purposes of the computation of net asset value referred to
in these Articles of Incorporation, the following rules shall apply:
(a) The net asset value of each share of a class of the Corporation's
stocJt issued or sold at its net asset value shall be the net asset value
per share of that class next determined, as provided in subsection (d) of
this Article NINTH, following acceptance by the Corporation of the purchase
order, subscription or other agreement with respect to the issue or sale of
such share.
(b) The net asset value of each share of a class of the Corporation's
stock redeemed by the Corporation at the request of its holder shall be the
net asset value per share of that class next determined, as provided in
subsection (d) of this Article NINTH, following the time the Corporation
receives a request for redemption of such share in good order with all
appropriate documentation, including stock certificates, if any, duly
endorsed for transfer.
(c) The net asset value of each share of a class of the Corporation's
stock purchased or redeemed by it otherwise than upon request for
redemption by the holder of the share shall be (i) the net asset' value per
share of that class of the Corpora- tion's stock next determined, as
provided in subsection (d) of this Article NINTH, following the
Corporation's determination or agreement to purchase or redeem such share,
the expiration of 'any notice period and fulfillment of any other
conditions precedent to such purchase or redemption, or (ii) such lower
price per share as may be specified in the agreement, if any, with the
stockholder for the purchase or redemption of his shares.
(d) The net asset value of a share of a class of the Corporation's
stock as at the time of a particular determination shall be the quotient
obtained by dividing the
17
<PAGE>
value at such time of the net assets of that class (i.e., the value of the
assets belonging to that class less the liabilities charged to that class
exclusive of capital stock and surplus) by the total number of shares of
that class outstanding at such time, all determined and computed as
provided in the Corporation's By-Laws or by or pursuant to the direction of
the Board of Directors.
(e) The Corporation shall determine the net asset value per share of a
class of its stock on such days and at such times as may be determined by
the Board of Directors 'subject to any applicable rules and regulations of
the Securities and Exchange Commission or any successor thereto.
(f) The Corporation may suspend the determination of the net asset
value of a class of its stock during any period when it may suspend the
right of the holders of shares of that class to require the Corporation to
redeem their shares.
TENTH: The Corporation reserves th~ ri3ht to amend, alter, change or repeal
any provision contained in these Articles of Incorporation or in any amendment
Hereto in the manner now or hereafter prescribed by the laws of the State of
Maryland, including any amendment which alters the contract rights, as expressly
set forth in these articles, of any outstanding stock, and all rights conferred
upon stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned, being the incorporator of the
Corporation, has adopted and signed these Articles of Incorporation for the
purpose of forming the corporation described herein pursuant to the General
Corporation Law of the State of Maryland and does hereby acknowledge that
said adoption and signing are his act.
/s/ David R. Nuzzo
David R. Nuzzo
Dated: October 10, 1984
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ARTICLES OF INCORPORATION
OF
REICH & TANG EQUITY FUND, INC.
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
APPROVED FOR RECORD
TIME MO. DAY YEAR
11:07 10 15 84
[GRAPHIC OMITTED]
CT CORPORATION
32 SOUTH ST.
BALTIMORE, MD 21202
Exhibit (2)
BY-LAWS
OF
RETCH & TANG EQUITY FUND, INC.
ARTICLE I
Offices
Section 1. PRINCIPAL OFFICE IN MARYLAND. The Corporation shall have a
principal office in the City of Baltimore, State of Maryland.
Section 2. OTHER OFFICES. The Corporation may have offices also at such
other places within and without the State of Maryland as the Board of Directors
may from time to time determine or as the business of the Corporation may
require.
ARTICLE II
Meetings of Stockholders
Section 1. PLACE OF MEETING. Meetings of stockholders shall be held at such
place, either within the State of Maryland or at such other place within the
United States, as shall be fixed from time to time by the Board of Directors
Section 2. ANNUAL MEETINGS. Annual meetings of stockholders shall be held
on a date fixed from time to time by the Board of Directors not less than ninety
nor more than one hundred twenty days following the end of each fiscal year of
the Corporation, for the election of directors
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and the transaction of any other business within the powers
of the Corporation.
Section 3. NOTICE OF ANNUAL MEETING. Written or printed notice of the
annual meeting, stating the place, date and hour thereof, shall be given to each
stockholder entitled to vote thereat not less than ten nor more than ninety days
before the date of the meeting.
Section 4. SPECIAL MEETINGS. Special meetings of stockholders may be called
by the chairman, the president or by the Board of Directors and shall be called
by the secretary upon the written request of holders of shares entitled to cast
not less than twenty-five per cent of all the votes entitled to be cast at such
meeting. Such request shall state the purpose or purposes of such meeting and
the matters proposed to be acted on thereat. In the case of such request for a
special meeting, upon payment by such stockholders to the Corporation of the
estimated reasonable cost of preparing and mailing a notice of such meeting, the
secretary shall give the notice of such meeting. The secretary shall not be
required to call a special meeting to consider any matter which is substantially
the same as a matter acted upon at any special meeting of stockholders held
within the preceding twelve months'unless requested to do so by holders of
shares entitled to cast not less than a majority of all votes entitled to be
cast at such meeting.
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Section 5. NOTICE OF SPECIAL MEETING. Written or printed notice of a
special meeting of stockholders, stating the place, date, hour and purpose
thereof, shall be given by the secretary to- each stockholder entitled to vote
thereat not less than ten nor more than ninety days before the date fixed for
the meeting.
Section 6. BUSINESS OF SPECIAL MEETINGS. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice
thereof.
Section 7. QUORUM. The holders of one-third of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
trans- action of business, except with respect to any matter which, under
applicable statutes or regulatory requirements, requires approval by a separate
vote of one or more classes of stock, in which case the presence in person or by
proxy of the holders of one-third of the shares of stock of each class required
to vote as a class on the matter shall con- stitute a quorum.
Section 8. VOTING. When a quorum is present at any meeting, the affirmative
vote of a majority of the votes cast, or, with respect to any matter requiring a
class vote, the affirmative vote of a majority of the votes cast of each class
entitled to vote as a class on the matter, shall decide
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any question brought before such meeting (except that directors may be elected
by the affirmative vote of a plurality of the votes cast), unless the question
is one upon which by express provision of the Investment Company Act of 1940, as
from time to time in effect, or other statutes or rules or orders of the
Securities and Exchange Commission or any successor thereto or of the Articles
of Incorporation a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 9. PROXIES. Each stockholder shall at every meeting of stockholders
be entitled to one vote in person or by proxy for each share of the stock having
voting power held by such stockholder, but no proxy shall be voted after eleven
months from its date, unless otherwise provided in the proxy.
Section 10. RECORD DATE. In order that the Corporation may determine the
stockholders entitled to notice of or. to vote at any meeting of stockholders or
any adjournment thereof, to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in
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advance, a record date which shall be not more than ninety days and, in the case
of a meeting of stockholders, not less than ten days prior to the date on which
the particular action requiring such determination of stockholders is to be
taken. In lieu of fixing a record date, the Board of Directors may provide that
the stock transfer books shall be closed for a stated period, but not to exceed,
in any case, twenty days. If the stock transfer books are closed for the purpose
of determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days immediately
preceding such meeting. If no record date is fixed and the stock transfer books
are not closed for the determination of stockholders: (1) The record date for
the determination of stockholders entitled to notice of, or to vote at, a
meeting of stock- holders shall be at the close of business on the day on which
notice of the meeting of stockholders is mailed or the day thirty days before
the meeting, whichever is the closer date. to the meeting; and (2) The record
date for the determination of stockholders entitled to receive payment of a
dividend or an allotment of any rights shall be at the close of business on the
day on which the resolution of the Board of Directors, declaring the dividend or
allotment of rights, is adopted, provided that the payment or allotment
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date shall not be more than sixty days after the date of the adoption of such
resolution.
Section 11. INSPECTORS OF ELECTION. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors to act at the meeting
or any adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors in
advance of the meeting or at the meeting by the person presiding thereat. Each
inspector, if any, before entering upon the discharge of his duties, shall take
and sign an oath faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the
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person presiding at the meeting or any stockholder, the inspec- tor or
inspectors, if any, shall make a report in writing of any challenge, question or
matter determined by him or them and execute a certificate of any fact found by
him or them.
Section 12. INFORMAL ACTION BY STOCKHOLDERS. Except to the extent
prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, any action required or permitted to be taken at any meeting
of stockholders may be taken without a meeting if a consent in writing, setting
forth such action, is signed by all the stockholders entitled to vote on the
subject matter thereof and any other stockholders entitled to notice of a
meeting of stockholders (but not to vote thereat) have waived in writing any
rights which they may have to dissent from such action, and such consent and
waiver are filed with the records of the Corporation.
ARTICLE III
Board of Directors
Section 1 NUMBER OF DIRECTORS. The number of directors constituting the
entire Board of Directors (which initially was fixed at one in the Corporation's
Articles of Incorporation~ "may be increased or decreased from time to time by
the vote of a majority of the entire Board of Directors within the limits
permitted by law but at no time may be more
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than twenty as provided in the Articles of Incorporation, but the tenure of
office of a director in office at the time of any decrease in the number of
directors shall not be affected as a result thereof. The directors shall be
elected to hold office at the annual meeting of stockholders, except as provided
in Section 2 of this Article, and each director shall hold office until the next
annual meeting of stock- holders or until his successor is elected and
qualified. Any director may resign at any time upon written notice to the
Corporation. Any director may be removed, either with or without cause, at any
meeting of stockholders duly called and at which a quorum is present by the
affirmative vote of the majority of the votes entitled to be cast thereon, and
the vacancy in the Board of Directors caused by such removal may be filled by
the stockholders at the time of such removal. Directors need not be
stockholders.
Section 2. VACANCIES AND NEWLY-CREATED DIRECTORSHIPS. Any vacancy occurring
in the Board of Directors for any cause other than by reason of an increase in
the number of directors may be filled by a majority of the remaining members of
the Board of Directors although such majority is less than a quorum. Any vacancy
occurring by reason of an increase in the number of directors may be filled by a
majority of the directors then in office, though less than a quorum. A director
elected by the Board of Directors to fill a vacancy shall be elected to
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hold office until the next annual meeting of stockholders or until his successor
is elected and qualifies.
Section 3. POWERS. The business and affairs of the Corporation .shall be
managed under the direction of 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 or by the Articles of Incorporation or by these By-Laws conferred
upon or reserved to the stockholders.
Section 4. ANNUAL MEETING. The first meeting of each newly elected Board of
Directors shall be held imme- diately following the adjournment of the annual
meeting of stockholders and at the place thereof. No notice of such meeting to
the directors shall be necessary in order legally to constitute the meeting,
provided a quorum shall be present. In the event such meeting is not so held,
the meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board of Directors.
Section 5. OTHER MEETINGS. The Board of Directors of the Corporation or any
conunittee thereof may hold meetings, both regular and special, either within or
without the State of Maryland. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the Board of Directors. Special meetings of the Board of Directors
may be called by
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the chairman, the president or by two or more directors. Notice of special
meetings of the Board of Directors shall be given by the secretary to each
director at least three days before the meeting if by mail or at least 24 hours
before the meeting if given in person or by telephone or by telegraph. The
notice need not specify the business to be transacted.
Section 6. QUORUM AND VOTING. During such times when the 'Board of
Directors shall consist of more than one director, a quorum for the transaction
of business at meetings of the Board of Directors shall consist of two of the
directors in office at the time, but in no event shall a quorum consist of less
than one-third of the entire Board of Directors. 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 of Directors. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
Section 7. COMMITTEES. The Board of Directors may appoint from among
its members an executive committee and other committees of the Board of
Directors, each committee to be composed of two or more of the directors of the
Corporation. The Board of Directors may, to the extent provided in the
resolution, delegate to such committees, in the intervals
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between meetings of the Board of Directors, any or all of the powers of the
Board of Directors in the management of the business and affairs of the
Corporation, except the power to declare dividends, to issue stock, to recommend
to stockholders any action requiring stockholders' approval, to amend the by-
laws or to approve any merger or share exchange which does not require
stockholders' approval. Such committee or committees shall have the name or
names as may be determined from time to time by resolution adopted by the Board
of Directors. Unless the Board of Directors designates one or more directors as
alternate members of any committee, who may replace an absent or disqualified
member at any meeting of the committee, the members of any such committee
present at any meeting and not disqualified from voting may, whether or not they
constitute a quorum, unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any absent or disqualified
member of such committee. At meetings of any such committee, a majority of the
members or alternate members of such committee shall constitute a quorum for the
transaction of business and the act of a majority of the members or alternate
members present at any meeting at which a quorum is present shall be the act of
the committee.
Section 8. MINUTES OF COMMITTEE MEETINGS. The committees shall keep regular
minutes of their proceedings.
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Section 9. INFORMAL ACTION BY BOARD OF DIRECTORS AND COMMITTEES. Any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if a written consent
thereto is signed by all members of the Board of Directors or of such committee,
as the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or committee.
Section 10. MEETINGS BY CONFERENCE TELEPHONE. The members of the Board of
Directors or any committee thereof may participate in a meeting of the Board of
Directors or committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and such parti- cipation shall
constitute presence in person at such meeting.
Section 11. FEES AND EXPENSES. The directors may be paid their expenses of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.
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ARTICLE IV
Notices
Section 1. GENERAL. Notices to directors and stockholders mailed to them at
their post office addresses appearing on the books of the Corporation shall be
deemed to be given at the time when deposited in the United States mail.
Section 2. WAIVER OF NOTICE. Whenever any notice is required to be given
under the provisions of the statutes, of the Articles of Incorporation or of
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed the equivalent of notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting except when the person attends a
meeting for the express purpose of objecting, at the the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.
ARTICLE V
Officers
Section 1. GENERAL. The officers of the Corporation shall be chosen by the
Board of Directors at its first meeting after each annual meeting of
stockholders and shall be a chairman of the Board of Directors, a president, a
secretary and a treasurer. The Board of Directors may choose also such vice
presidents and additional officers or assistant
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officers as it may deem advisable. Any number of offices, except the offices of
president and vice president, may be held by the same person. No officer shall
execute, acknow- ledge or verify any instrument in more than one capacity if
such instrument is required by law to be executed, acknow- ledged or verified
by two or more officers.
Section 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint
such other officers and agents as it desires who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
Section 3. TENURE OF OFFICERS. The officers of the Corporation shall hold
office at the pleasure of the Board of Directors. Each officer shall hold his
office until his successor is elected and qualifies or until his earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation. Any officer elected or appointed by the Board of Directors
may be removed at any time by the Board of Directors when, in its judgment, the
best interests of the Corporation will be served thereby. Any vacancy occurring
in any office of the Corporation by death, resignation, removal or otherwise
shall be filled by the Board of Directors.
Section 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The chairman of the Board of
Directors shall be the chief
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executive officer and shall preside at all meetings of the stockholders and of
the Board of Directors. He shall execute on behalf of the Corporation, and may
affix the seal or cause the seal to be affixed to, all instruments requiring
such execution except to the extent that signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
Section 5. PRESIDENT. The president shall, in the absence of the chairman
of the Board of Directors, preside at all meetings of the stockholders or of the
Board of Directors and shall have general and active management of the business
of the Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall be ex officio a member of all
committees designated by the Board of Directors. He shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
Section 6. VICE PRESIDENTS. The vice presidents shall act under the
direction of the president and in the absence or disability of the president
shall perform the duties and exercise the powers of the president. They shall
perform
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such other duties and have such other powers as the president or the Board of
Directors may from time to time prescribe. The Board of Directors may designate
one or more executive vice presidents or may otherwise specify the order of
seniority of the vice presidents and, in that event, the duties and powers of
the president shall descend to the vice presidents in the specified order of
seniority.
Section 7. SECRETARY. The secretary shall act under the direction of the
president. Subject to the direction of the president he shall attend all
meetings of the Board of Directors and all meetings of stockholders and record
the proceedings in a book to be kept for that purpose and shall perform like
duties for the committees designated by the Board of Directors when required. He
shall give, or cause to be given, notice of all meetings of stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the president or the Board of Directors. He shall keep
in safe custody the seal of the Corporation and shall affix the seal or cause it
to be affixed to any instrument requiring it.
Section 8. ASSISTANT SECRETARIES. The assistant secretaries in the order of
their seniority, unless otherwise determined by the president or the Board of
Directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary. They shall
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perform such other duties and have such other powers as the president or the
Board of Directors may from time to time prescribe.
Section 9. TREASURER. The treasurer shall act under the direction of the
president. Subject to the direc- tion of the president he shall have the custody
of the corporate funds and securities and shall keep full and accurate 'accounts
of receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the president or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
Corporation.
Section 10. ASSISTANT TREASURERS. The assistant treasurers in the order of
their seniority, unless otherwise determined by the president or the Board of
Directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the
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president or the Board of Directors may from time to time prescribe.
ARTICLE VI
Certificates of Stock
Section 1. GENERAL. Every holder of stock of the Corporation who has made
full payment of the consider- ation for such stock shall be entitled upon
request to have a certificate, signed by, or in the name of the Corporation by,
the president or a vice president and countersigned by the treasurer or an
assistant treasurer or the secretary or an assistant secretary of the
Corporation, certifying the number and class of whole shares of stock owned by
him in the Corporation.
Section 2. FRACTIONAL SHARE INTERESTS. The Corporation may issue fractions
of a share of stock. Fractional shares of stock shall have proportionately to
the respective fractions represented thereby all the rights of whole shares,
including the right to vote, the right to receive dividends and distributions
and the right to participate upon liquidation of the Corporation, excluding,
however, the right to receive a stock certificate representing such fractional
shares.
Section 3. SIGNATURES ON CERTIFICATES. Any of or all the signatures on a
certificate may be a facsimile.
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In case any officer who has signed or whose facsimile signature has been
placed upon a certificate shall cease to be such officer before such certificate
is issued, it may be issued with the same effect as if he were such officer at
the date of issue. The seal of the Corporation or a facsimile thereof may, but
need not, be affixed to certificates of stock.
Section 4. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of Directors
may direct a new certificate or certificates to be issued in place of any
certificate or certifi- cates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of any affi- davit of that
fact by the person claiming the certificate or certificates to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate or
certificates alleged to have been lost, stolen or destroyed.
Section 5. TRANSFER OF SHARES. Upon request by the registered owner of
shares, and if a certificate has
1
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been issued to represent such shares upon surrender to the Corporation or a
transfer agent of the Corporation of a certificate for shares of stock duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, subject to the Corporation's rights to redeem or purchase
such shares, it shall be the duty of the Corporation, if it is satisfied that
all provisions of the Articles of Incorporation, of the By-Laws and of the law
regarding the transfer of shares have been duly complied with, to record the
transaction upon its books, issue a new certificate to the person entitled
thereto upon request for such certificate, and cancel the old certificate, if
any.
Section 6. REGISTERED OWNERS. The Corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including redemption, voting and dividends, and
the Corporation shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any .other person, whether or
not it shall have. express or other notice thereof, except as otherwise provided
by the laws of Maryland.
ARTICLE VII
Net Asset Value
The net asset value of a share of Common Stock of the Corporation as at the
time of a particular determination
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shall be the quotient obtained by dividing the value at such time of the net
assets of the Corporation (i.e., the value of the assets of the Corporation less
its liabilities exclu- sive of capital and surplus) by the total number of
shares of Common Stock outstanding ac such time, all determined and computed as
follows:
(1) The assets of the Corporation shall be deemed to include (A)
all cash on hand, on deposit, or on call, (B) all bills and notes and
accounts receivable, (C) all securities owned or contracted for by the
Corporation, other than shares of its own Common Stock, (D) all
interest accrued on any interest bearing securities owned by the
Corporation and (E) all other property of every kind and nature
including prepaid expenses. Portfolio securities for which market
quotations are readily available shall be valued at market value. All
other investment assets of the Corporation, including restricted
securities, shall be valued in such manner as the Board of Directors
of the Corporation in good faith shall deem appropriate to reflect
such securities' fair value.
(2) The liabilities of the Corporation shall include (A) all
bills and notes and accounts payable, (B) all administrative expenses
payable and/or accrued (including .management and advisory fees
payable and/or accrued, including in the case of any con- tingent
feature thereof, an estimate based on the facts existing at the time),
(C) all contractual obligations for the payment of money or property,
including the amount of any unpaid dividend declared upon the
Corporation's Common Stocic, }D) all reserves, if any, authorized or
approved by the Board of Directors for taxes, including reserves for
taxes at current rates based on any unrealized appreciation in the
value of the assets of the
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Corporation's Coirunon Stock, (D) all reserves, if any, authorized or
approved by the Board of Directors for taxes, including reserves for
taxes at current rates based on any unrealized appreciation in the
value of the assets of the Corporation and (E) all other liabilities
of the Corporation of whatsoever kind and nature except liabilities
represented by outstanding capital stock ana surplus of the
Corporation.
(3) For the purposes thereof
(A) Common Stock subscribed for shall not be deemed to be
outstanding until immediately after the time as of which its net
asset value is deter- mined as provided in the Articles of
Incorporation next following the acceptance of the subscription
therefor and the subscription price thereof shall not be deemed
to ne an asset of the Corporation until after such time, but
immediately thereafter such capital stock shall be deemed to be
outstanding and until paid the subscription price thereof shall
be deemed to be an asset of the Corporation.
(B) Common Stock surrendered for redemption by the
Corporation pursuant to the provisions of the Articles of
Incorporation or purchased by the Corporation pursuant to the
provisions of the Articles of Incorporation or these By-Laws
shall be deemed to be outstanding to and including the time as of
which its net asset value is determined as provided in the
Articles of Incorporation but not thereafter, and thereupon and
until paid the redemption or purchase price thereof shall be
deemed to be a liability of the Corporation.
(C) Changes in the holdings of the Corporation's portfolio
securities shall be accounted for on a trade date basis,
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(D) Expenses, including management and advisory fees, shall
be included to date of calculation.
In addition to the foregoing, the Board of Directors is empowered, subject
to applicable legal requirements, in its absolute discretion, to establish
other methods for determining the net asset value of each share of Common
Stock of the Corporation.
ARTICLE VIII
Miscellaneous
Section 1. RESERVES. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for such other purpose as the Board of
Directors shall think conducive to the interest of the Corporation, and the
Board of Directors may modify or abolish any such reserve.
Section 2. DIVIDENDS. Dividends upon the stock of the Corporation may,
subject to the provisions of the Articles of Incorporation and of the provisions
of appli- cable law, be declared by the Board of Directors at any time.
Dividends may be paid in cash, in property or in shares of the Corporation's
stock, subject to the provisions of the Articles of Incorporation and of
applicable law.
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Section 3. CAPITAL GAINS DISTRIBUTIONS. The amount and number of capital
gains distributions paid to the stockholders during each fiscal year shall be
determined by the Board of Directors. Each such payment shall be accompanied by
a statement as to the source of such payment, to the extent required by law.
Section 4. CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 5. FISCAL YEAR. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 6. SEAL. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its organization and the words "Corporate Seal,
Maryland". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in another manner reproduced.
ARTICLE IX
Amendments
The Board of Directors shall have the power to make, alter and repeal
by-laws of the Corporation.
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[GRAPHIC OMITTED]
Incorporated under the Laws of the State of Maryland
REICH & TANG EQUITY FUND, INC.
CUSIP 759180102
THIS CERTIFIES THAT [ SPECIMEN ] IS THE OWNER OF [ ]
FULLY PAID AND NON-ASSESABLE SHARES OF COMMON STOCK, PAR VALUE $.001 PER
SHARE, OF REICH & TANG EQUITY FUND, INC. (HEREIN THE "CORPORATION")
TRANSFERABLE ON THE BOOKS OF THE CORPORATION IN PERSON OR BY ATTORNEY DULY
AUTHORIZED IN WRITING UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED. THE
HOLDER HEREOF BY ACCEPTING THIS CERTIFICATE EXPRESSLY ASSENTS TO AND IS BOUND BY
THE ARTICLES OF INCORPORATION, AS AMENDED, AND BY THE BY-LAWS, AS AMENDED, OF
THE CORPORATION, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE PRINICPAL
OFFICE OF THE CORPORATION IN THE STATE OF MARYLAND.
THE SHARES REPRESENTED BY THIS CERTIFICATE WILL BE REDEEMED BY THE CORPORATION
UPON REQUEST OF THE STOCKHOLDER AS PROVIDED IN THE ARTICLES OF INCORPORATION OF
THE CORPORATION. IN ADDITION, THE ARTICLES OF INCORPORATION PROVIDE THAT THE
CORPORATION, AT ITS OPTION, MAY REDEEM SHARES OF ITS STOCK UNDER CERTAIN OTHER
CIRCUMSTANCES. THE CORPORATION WILL FURNISH TO ANY STOCKHOLDER UPON REQUEST AND
WITHOUT CHARGE A FULL STATEMENT OF THE DESIGNATIONS, AND ANY PREFERENCES,
CONVERSION AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO
DIVIDENDS, QUALIFICATIONS AND TERMS AND CONDITIONS OF REDEMPTION OF THE STOCK OF
EACH CLASS AND SERIES AUTHORIZED TO BE ISSUED, THE DIFFRENCES IN THE RELATIVE
RIGHTS AND PREFERENCES THEREOF AND ANY AND OF ANY SUBSEQUENT SERIES OF ANY SUCH
CLASSES OR SEREIS.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
DATED [ ]
Reich & Tang Equity Fund, Inc.
Corporate
Seal
1984
Maryland
/s/ Bernadette N. Finn /s/ Robert Hoerle
Secretary President
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
UNIF GIFT MIN ACT - __________________Custodian_________, under Uniform Gifts
to Minors Act_________________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received, _______hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]_________________________________________________
_____________________________________________________________________ Shares
of the Capital Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint_____________________________Attorney to
transfer the said Stock on the books of the within named Corporation with full
power of substitution in the premises.
Dated________________19__________
In presence of
____________________________________________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT, OR ANY CHANGE WHATEVER.
EXHIBIT 8 (b)
TRANSFER AGENCY AGREEMENT
Agreement made as of the 7th of October, 1991 between Reich & Tang Equity
Fund, Inc., a Maryland corporation (hereinafter collectively referred to as the
"Fund"), having its principal office and place of business at 100 Park Ave., New
York, NY and Investors Financial Services Company, ("IFSC") a Delaware
corporation having its principal office and place of business at 120 South
LaSalle, Chicago IL 60603 (hereinafter referred to as the "Transfer Agent").
WITNESSETH:
That for and in consideration of the mutual promises hereinafter set forth, the
parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have the
following meanings:
l. "Approved Institution" shall mean an entity so named in a Certificate.
From time to time the Fund may amend a previously delivered Certificate by
delivering to the Transfer Agent a Certificate naming an additional entity or
deleting any entity named in a previously delivered Certificate.
2. The "Board of Directors" shall mean the Board of Directors of the Fund.
3. "Certificate" shall mean any notice, instruction, or
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other instrument in writing, authorized or required by this
Agreement to be given to the Transfer Agent by the Fund which is
signed by any Officer, as hereinafter defined, and actually
received by the Transfer Agent.
4. "custodian" shall mean the financial institution appointed as custodian
under the terms and conditions of the Custody Agreement between the financial
institution and the Fund, or its successor (s) .
5. "Fund Business Day" shall be deemed to be each day on which the New York
Stock Exchange, Inc. is open for trading.
6. "Officer" shall be deemed to be the Fund's Chairman of the Board, the
Fund's President, any Vice President of the Fund, the Fund's Secretary, the
Fund's Treasurer, the Fund's Controller, any Assistant Controller of the Fund,
any Assistant Treasurer of the Fund and any Assistant Secretary of the Fund, and
any other person duly authorized by the Board of Directors of the Fund to
execute any Certificate, instruction, notice or other instrument on behalf of
the Fund and named in the Certificate annexed hereto as Appendix A, as such
Certificate may be amended from time to time, and any person reasonably believed
by the Transfer Agent to be such a person.
7. "Prospectus" shall mean the last Fund prospectus actually received by
the Transfer Agent from the Fund with respect to which the Fund has indicated a
registration statement under the Federal Securities Act of 1933 has becomes
effective, including the Statement of Additional Information, incorporated by
reference
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therein.
8. "Shares" shall mean all or any part of each class or series of the
shares of beneficial interest of the Fund or Portfolio listed in the
Certificate, as may be amended from time to time, which are authorized and/or
issued by the Fund.
9. "Transfer Agent" shall mean Investors Financial Services Company,
("IFSC"), as transfer agent and dividend disbursing agent under the terms and
conditions of this Agreement, its successor (s) or assign(s).
10. "Out-of-Pocket Expenses" means amounts reasonably necessary and
actually paid to third parties by Transfer Agent in the provision of Transfer
Agent services or pursuant to this Agreement for the following purposes: (i)
postage; (ii) paper stocks and printing costs for statements, checks, envelopes,
tax and other forms; and (iii) such other expenses paid or incurred by Transfer
Agent at the request of the Fund.
ARTICLE II
APPOINTMENT OF TRANSFER AGENT
1. The Fund hereby constitutes and appoints the Transfer Agent as transfer
agent of all the Shares of the Fund and as dividend disbursing agent during the
period of this Agreement.
2. The Transfer Agent hereby accepts appointment as transfer agent and
dividend disbursing agent and agrees to perform duties thereof as hereinafter
set forth.
3. In connection with such appointment, the Fund upon the request of the
Transfer Agent, shall deliver the following
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<PAGE>
documents to the Transfer Agent:
(i) A copy of the Articles of Incorporation of the Fund and all
amendments thereto certified by the Secretary of the Fund ;
(ii) A copy of the By-Laws of the Fund certified by the Secretary of
the Fund;
(iii) A copy of a resolution of the Board of Directors of the Fund
certified by the Secretary of the Fund appointing the Transfer Agent and
authorizing the execution of this Transfer Agency Agreement;
(iv) A certificate signed by the Secretary of the Fund specifying: the
number of authorized Shares, the number of such authorized Shares issued,
the number of such authorized Shares issued and currently outstanding; the
names and specimen signatures of the Officers of the Fund; and the name and
address of the legal counsel for the Fund;
(v) Specimen Share certificate for each or series class of Shares in
the form approved by the Board of Directors of the Fund, together with a
Certificate signed by the Secretary of the Fund as to such approval;
(vi) Copies of the Fund's Registration Statement, as amended to date,
and the most recently filed Post-Effective Amendment thereto, filed by the
Fund with the Securities and Exchange commission under the Securities Act
of 1933, as amended, and under the Investment Company Act of 1940, as
amended, together with any applications filed in connection therewith; and
4
<PAGE>
(vii) Opinion of counsel for the Fund with respect to the validity of
the authorized and outstanding Shares, whether such Shares are fully paid
and non-assessable and the status of such Shares under the Securities Act
of 1933, as amended, and any other applicable federal law or regulation
(i.e., if subject to registration, that they have been registered and that
the Registration Statement has become effective or, if exempt, the specific
grounds therefor.)
ARTICLE III
AUTHORIZATION AND ISSUANCE OF SHARES
1. The Fund shall deliver to the Transfer Agent the following documents on
or before the effective date of any increase or decrease in the total number of
Shares authorized to be issued:
(a) A certified copy of the amendment to the Articles of Incorporation
giving effect to such increase or decrease;
(b) In the case of an increase, an opinion of counsel for the Fund
with respect to the validity of the Shares of the Fund and the status of
such Shares under the Securities Act of 1933, as amended, and any other
applicable federal law or regulation (i.e., if subject to registration,
that they have been registered and that the Registration Statement has
become effective or, if exempt, the specific grounds therefor); and
(c) In the case of an increase, if the appointment of the Transfer
Agent was theretofore expressly limited, a certified copy of a resolution
of the Board of Directors of the Fund increasing the authority of the
Transfer Agent.
5
<PAGE>
2. Prior to the issuance of any additional Shares of the Fund pursuant to
stock dividends or stock splits, etc., and prior to any reduction in the number
of shares outstanding, the Fund shall deliver the following documents to the
Transfer Agent:
(a) A certified copy of the resolution(s) adopted by the Board of
Director and/or the shareholders of the Fund authorizing such issuance of
additional Shares of the Fund or such reduction, as the case may be, and
(b) An opinion of counsel for the Fund with respect to the validity of
the Shares of the Fund and the status of such Shares under the Securities
Act of 1933, as amended, and any other applicable federal law or regulation
(i.e., if subject to registration, that they have been registered and that
the Registration Statement has become effective, or, if exempt, the
specific grounds therefor).
ARTICLE IV
RECAPITALIZATION OR CAPITAL ADJUSTMENT
1. In the case of any negative stock split, recapitalization or other
capital adjustment requiring a change in the form of Share certificates, the
Transfer Agent will issue Share certificates in the new form in exchange for, or
upon transfer of, outstanding Share certificates in the old form, upon
receiving:
(a) A Certificate authorizing the issuance of the Share certificates
in the new form;
(b) A certified copy of any amendment to the Articles of Incorporation
with respect to the change;
6
<PAGE>
(c) Specimen Share certificates for each class of Shares in the new
form approved by the Board of Directors of the Fund, with a Certificate
signed by the Secretary of the Fund as to such approval; and
(d) An opinion of counsel for the Fund with respect to the validity of
the Shares in the new form and the status of such Shares under the
Securities Act of 1933, as amended, and any other applicable federal law or
regulation (i.e., if subject to registration, that the Shares have been
registered and that the Registration Statement has become effective or, if
exempt, the specific grounds therefor.)
2. The Fund at its expense shall furnish the Transfer Agent with the
sufficient supply of blank Share certificates in the new form and from time to
time will replenish such supply upon the request of the Transfer Agent. Such
blank Share certificates shall be properly signed by facsimile or otherwise by
Officers of the Fund authorized by law or by the By-Laws to sign Share
certificates and, if required shall bear the corporate Seal or facsimile
thereof. The Fund agrees to indemnify and exonerate, save and hold the Transfer
Agent harmless, from and against any and all claims or demands that may be
asserted against the Transfer Agent with respect to the genuineness of any Share
certificate supplied to the Transfer Agent pursuant to this section.
7
<PAGE>
ARTICLE V
ISSUANCE,
REDEMPTION AND TRANSFER OF SHARES
i. (a) The Transfer Agent, acknowledges that it has received a copy of the
Fund's prospectus and statement of additional information, which prospectus and
statement of additional information describe how sales and redemption of shares
of the Fund shall be made, and the Transfer Agent agrees to accept purchase
orders and redemption requests with respect to Fund shares on each Fund Business
Day in accordance with such prospectus and statement of additional information.
The Fund agrees to notify the Transfer Agent 30 days in advance of any changes
in the procedures set forth in the prospectus and statement of additional
information regarding such purchase and redemption procedure.
(b) The Transfer Agent shall also accept with respect to each Fund Business
Day, at such times as are agreed upon froro time to time by the Transfer Agent
and the Fund, a computer tape consistent in all respects with the Transfer
Agent's tape layout package, as amended from time to time, which is believed by
the Transfer Agent to be furnished by or on behalf of any Approved Institution.
The Transfer Agent shall not be liable for any losses or damages to the Fund or
its shareholders in the event that a computer tape or electronic data
transmission from an Approved Institution is unable to be processed for any
reason beyond the control of the Transfer Agent, or if any of the information on
such
8
<PAGE>
tape or transmission is found to be incorrect.
2. On each Fund Business Day the Transfer Agent shall, as of the time at
which the Fund computes the net asset value of the Fund, issue to and redeem
from the accounts specified in a purchase order, redemption request, or computer
tape, which in accordance with the Prospectus is effective on such Fund Business
Day, the appropriate number of full and fractional Shares based on the net asset
value per Share of such Fund specified in an advice received on such Fund
Business Day from the Fund. Notwithstanding the foregoing, if a redemption
specified in a computer tape is for a dollar value of Shares in excess of the
dollar value of uncertificated Shares in the specified account, the Transfer
Agent shall not effect such redemption in whole or in part: and shall within
twenty-four hours orally advise both the Fund and the Approved Institution which
supplied such tape of the discrepancy.
3. In connection with a reinvestment of a dividend or distribution of
Shares of the Fund, the Transfer Agent shall as of each Fund Business Day, as
specified in a Certificate or resolution described in paragraph I of succeeding
Article VI, issue Shares of the Fund based on the net asset value per Share of
such Fund specified in an advice received from the Fund on such Fund Business
Day.
4. On each Fund Business Day the Transfer Agent shall supply the Fund with
a statement specifying with respect -to the immediately preceding Fund Business
Day: the total -number of Shares of the Fund (including fractional Shares)
issued and
9
<PAGE>
outstanding at the opening of business on such day; the total number of Shares
of the Fund sold on such day, pursuant to preceding paragraph 2 of this Article;
the total number of Shares of the Fund redeemed from Shareholders by the
Transfer Agent on such day; the total number of Shares of the Fund, if any, sold
on such day pursuant to preceding paragraph 3 of this Article, and the total
number of Shares of the Fund issued and outstanding. On the same day such
statement is received by the Fund, the Fund shall confirm the information
contained therein by delivering to the Transfer Agent a Certificate with respect
to the same.
5. In connection with each purchase and each redemption of Shares, the
Transfer Agent shall send such statements as are prescribed by the Federal
Securities laws applicable to transfer agents or as described in the Prospectus.
If the Prospectus indicates that certificates for Shares are available and if
specifically requested in writing by any shareholder, or if otherwise required
hereunder, the Transfer Agent will countersign, issue and mail to such
shareholder at the address set forth in the records of the Transfer Agent a
Share certificate for any full Share requested.
6. As of each Fund Business Day the Transfer Agent shall furnish the
Custodian with an advice setting forth the number and dollar amount of Shares to
be redeemed on such Fund Business Day in accordance with paragraph 2 of this
Article.
7. Upon receipt of a proper redemption request and moneys paid to it by the
Custodian in connection with a redemption of
10
<PAGE>
Shares, the Transfer Agent shall cancel the redeemed Shares and after making
appropriate deduction for any withholding of taxes required of it by applicable
law (a) in the case of a redemption of Shares pursuant to a redemption described
in preceding paragraph I (a) of this Article, make payment in accordance with
the Fund's redemption and payment procedures described in the Prospectus, and
(b) in the case of a redemption of Shares pursuant to a computer tape described
in preceding paragraph I (b) of this Article, make payment by directing a
federal funds wire order to the account previously designated by the Approved
institution specified in said computer tape.
8. The Transfer Agent shall not be required to issue any Shares after it
has received from an Officer of the Fund or from an appropriate federal or state
authority written notification that the sale of Shares has been suspended or
discontinued, and the Transfer Agent shall be entitled to rely upon such written
notification.
9. Upon the issuance of any Shares in accordance with this Agreement the
Transfer Agent shall not be responsible for the payment of any original issue or
other taxes required to be paid by the Fund in connection with such issuance of
any Shares.
10. The Transfer Agent shall accept a computer tape consistent with the
Transfer Agent's tape layout package, as amended from time to time, which is
reasonably believed by the Transfer Agent to be furnished by or on behalf of any
Approved Institution and is represented to be instructions with respect to
11
<PAGE>
the transfer of Shares from one account of such Approved Institution to another
such account, and shall effect the transfers specified in said computer tape.
The Transfer Agent shall not be liable for any losses to the Fund or its
shareholders in the event that a computer tape or electronic data transmission
from an Approved Institution is unable to be processed for any reason beyond the
control of the Transfer Agent, or if any of the information on such tape or
transmission is found to be incorrect.
II. (a) Except as otherwise provided in sub-paragraph (b) of this paragraph
and in paragraph 13 of this Article, Shares will be transferred or redeemed upon
presentation to the Transfer Agent of Share certificates or instructions
properly endorsed for transfer or redemption, accompanied by such documents as
the Transfer Agent deems necessary to evidence the authority of the person
making such transfer or redemption, and bearing satisfactory evidence of the
payment of stock transfer taxes. In the case of small estates where no
administration is contemplated, the Transfer Agent may, when furnished with an
appropriate surety bond, and without further approval of the Fund, transfer or
redeem Shares registered in the name of a decedent where the current market
value of the Shares being transferred does not exceed such amount as may from
time to time be prescribed by various states. The Transfer Agent reserves the
right to refuse to transfer or redeem Shares until it is satisfied that the
endorsement on the stock certificate or instructions is valid and genuine, and
for that purpose it will require, unless otherwise instructed by an authorized
officer of
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<PAGE>
the Fund, a guarantee of signature by a member firm of a National Securities
Exchange or by a commercial bank or trust company within the United States
acceptable to the Transfer Agent. The Transfer Agent also reserves the right to
refuse to transfer or redeem Shares until it is satisfied that the requested
transfer or redemption is legally authorized, and it shall incur no liability
for the refusal, in good faith, to make transfers or redemptions which the
Transfer Agent, in its judgement, deems improper or unauthorized, or until it is
satisfied that there is no basis to any claims adverse to such transfer or
redemption. The Transfer Agent may, in effecting transfers and redemptions of
Shares, rely upon those provisions of the Uniform Act for the Simplification of
Fiduciary Security Transfers or the Uniform Commercial Code, as the same may be
amended from time to time, applicable to the transfer of securities, and the
Fund shall indemnify the Transfer Agent for any act done or omitted by it in
good faith in reliance upon such laws. In no event will the Fund indemnify the
Transfer Agent for any act done by it as a result of willful misfeasance, bad
faith, negligence or reckless disregard of its duties.
(b) Notwithstanding the foregoing or any other provision contained in this
Agreement to the contrary, the Transfer Agent shall be fully protected by the
Fund in not requiring any instruments, documents, assurances, endorsements or
guarantees, including, without limitation, any signature guarantees, in
connection with a redemption, or transfer, of Shares whenever the Transfer Agent
reasonably believes that requiring the same would
13
<PAGE>
be inconsistent: with the transfer and redemption procedures as described in the
Prospectus.
12. Notwithstanding any provision contained in this agreement to the
contrary, the Transfer Agent shall not be required or expected to require, as a
condition to any transfer of any Shares pursuant to paragraph II of this Article
or any redemption of any Shares pursuant to a computer tape described in this
Agreement, any documents, including, without limitation, any documents of the
kind described in sub-paragraph (a) of paragraph 12 of this Article, to evidence
the authority of the person requesting the transfer or redemption and/or the
payment of any stock transfer taxes, and shall be fully protected in acting in
accordance with the applicable provisions of this Article.
13. (a) As used in this Agreement, the terms "computer tape" and "computer
tape believed by the Transfer Agent to be furnished by an Approved Institution",
shall include any tapes generated by the Transfer Agent to reflect information
believed by the Transfer Agent to have been inputted by an Approved Institution,
via a remote terminal or other similar link, into a data processing, storage, or
collection system, or similar system (the "System"), located on the Transfer
Agent's premises. For purposes of paragraph I of this Article, such a computer
tape shall be deemed to have been furnished at such times as are agreed upon
from time to time by the Transfer Agent and Fund only if the information
reflected thereon was inputted into the System at such times as are agreed upon
from time to time by the Transfer Agent and the Fund.
14
<PAGE>
(b) Nothing contained in this Agreement shall constitute any agreement or
representation by the Transfer Agent to permit, or to agree to permit, any
Approved Institution to input information into a System.
(c) The Transfer Agent reserves the right to approve, in advance, any
Approved Institution, such approval not to be unreasonably withheld. The
Transfer Agent also reserves the right to terminate any and all automated data
communications, at its discretion, upon a reasonable attempt to notify the Fund
when in the opinion of the Transfer Agent continuation of such communications
would jeopardize the accuracy and/or integrity of the Fund's records on the
System.
ARTICLE VI
DIVIDENDS AND DISTRIBUTIONS
I. The Fund shall furnish to the Transfer Agent a copy of a resolution of
its Board of Directors, certified by the Secretary or any Assistant Secretary,
either (i) setting forth the date of the declaration of a dividend or
distribution, the date of accrual or payment, as the case may be, thereof, the
record date as of which Shareholders entitled to payment, or accrual, as the
case may be, shall be determined, the amount per Share of such dividend or
distribution, the payment date on which all previously accrued and unpaid
dividends are to be paid, and the total amount, if any, payable to the Transfer
Agent on such payment date, or (ii) authorizing the declaration of dividends and
distributions on a daily or other periodic basis and authorizing the Transfer
Agent
15
<PAGE>
to rely on a Certificate setting forth the information described
in subsection (i) of this paragraph.
2. Upon the payment date specified in such Certificate or resolution, as
the case may be, the Fund shall, in the case of a cash dividend or distribution,
cause the Custodian to pay to the Transfer Agent an amount of cash, if any,
sufficient for the Transfer Agent to make the payment, as of the payment date,
specified in such Certificate or resolution, as the case may be, to the
Shareholders who were of record on the record date. The Transfer Agent will,
upon receipt of any such cash, make payment of such cash dividends or
distributions to the shareholders of record as of the record date by: (i)
mailing a check, payable to the registered shareholder, to the address of record
or dividend mailing address, or (ii) wiring such amounts to the accounts
previously designated by an Approved Institution, as the case may be. The
Transfer Agent shall not be liable for any improper payments made in good faith
and without negligence, in accordance with a Certificate or resolution described
in the preceding paragraph. If the Transfer Agent shall not receive from the
Custodian sufficient cash to make payments of any cash dividend or distribution
to all shareholders of the Fund as of the record date, the Transfer Agent shall,
upon notifying the Fund, withhold payment to all shareholders of record as of
the record date until sufficient cash is provided to the Transfer Agent.
3. It is understood that the Transfer Agent shall in no way be responsible
for the determination of the rate or form of
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<PAGE>
dividends or capital gain distributions due to the shareholders. It is expressly
agreed and understood that the Transfer Agent is not liable for any loss as a
result of processing a distribution based on information provided in the
Certificate that is incorrect. The Fund agrees to pay the Transfer Agent for any
and all costs, both direct and out-of-pocket expenses, incurred in such
corrective work as necessary to remedy such error.
4. It is understood that the Transfer Agent shall file such appropriate
information returns concerning the payment of dividend and capital gain
distributions with the proper federal, state and local authorities as are
required by law to be filed by the Fund but shall in no way be responsible for
the collection or withholding of taxes due on such dividends or distributions
due to shareholders, except and only to the extent, required by applicable law.
ARTICLE VII
CONCERNING THE FUND
1. The Fund represents to the Transfer Agent that:
(a) It is a corporation duly organized and existing under the laws of the
State of ___________________.
(b) It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
(c) All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
(d) It is an investment company registered under the
17
<PAGE>
Investment Company Act of 1940, as amended.
(e) A registration statement under the Securities Act of 1933, as amended,
with respect to the Shares is effective. The Fund shall notify the Transfer
Agent if such registration statement or any state securities registrations have
been terminated or a stop order has been entered with respect to the Shares.
2. Each copy of the Articles of Incorporation of the Fund and copies of
all amendments thereto shall be certified by the Secretary of State (or other
appropriate official) of the state of organization, and if such Articles of
incorporation and/or amendments are required by law also to be filed with a
county or other officer or official body, a certificate of such filing shall be
filed with a 'certified copy submitted to the Transfer Agent. Each copy of the
By-Laws and copies of all amendments thereto, and copies of resolutions of the
Board of Directors of the Fund, shall be certified by the Secretary of the Fund
under seal.
3. The Fund shall promptly deliver to the Transfer Agent written notice of
any change in the Officers authorized to sign Share Certificates, notifications
or requests, together with a specimen signature of each new Officer. In the
event any Officer who shall have signed manually or whose facsimile signature
shall have been affixed to blank Share certificates shall die, resign or be
removed prior to issuance of such Share certificates, the Transfer Agent may
issue such Share certificates of the Fund notwithstanding such death,
resignation or removal, and the Fund shall promptly deliver to the Transfer
Agent such approval,
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<PAGE>
adoption or ratification as may be required by law.
4. It shall be the sole responsibility of the Fund to deliver to the
Transfer Agent the Fund's currently effective Prospectus and, for purposes of
this Agreement, the Transfer Agent shall not be deemed to have notice of any
information contained in such Prospectus until a reasonable time after it is
actually received by the Transfer Agent.
ARTICLE VIII
CONCERNING THE TRANSFER AGENT
l. The Transfer Agent represents and warrants to the Fund that:
(a) It is a corporation duly organized and existing under the laws of
the State of Delaware.
(b) It is empowered under applicable law and by its Charter and
By-laws to enter into and perform this Agreement.
(c) All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
(d) It is duly registered as a transfer agent under Section 17A of the
Securities Exchange Act of 1934, as amended.
2. The Transfer Agent shall not be liable and shall be indemnified in
acting upon any computer tape, writing or document reasonably believed by it to
be genuine and to have been signed or made by an Officer of the Fund or person
designated by the Fund and shall not be held to have any notice of any change of
authority of any person until receipt of written notice thereof from the Fund or
such person. It shall also be protected in processing Share
19
<PAGE>
certificates which bear the proper countersignature of the Transfer Agent and
which it reasonably believes to bear the proper manual or facsimile signature
of the Officers of the Fund.
3. The Transfer Agent upon notice to the Fund may establish such additional
procedures, rules and regulations governing the transfer or registration of
Share certificates as it may deem advisable and consistent with such rules and
regulations generally adopted by mutual fund transfer agents.
4. The Transfer Agent shall keep such records as are specified in Schedule
II hereto in the form and manner, and for such period, as it may deem advisable
and is agreeable to the Fund but not inconsistent with the rules and regulations
of appropriate government authorities, in particular Rules 31a-2 and 31a-3 under
the investment Company Act of 1940, as amended. The Transfer Agent acknowledges
that such records are the property of the Fund. The Transfer Agent may deliver
to the Fund from time to time at its discretion, for safekeeping or disposition
by the Fund in accordance with law, such records, papers, documents accumulated
in the execution of its duties as such Transfer Agent, as the Transfer Agent may
deem expedient, other than those which the Transfer Agent is itself required to
maintain pursuant to applicable laws and regulations. The Fund shall assume all
responsibility for any failure thereafter to produce any record, paper,
cancelled Share certificate, or other document so returned, if and when
required. The records specified in Schedule II hereto maintained by the Transfer
Agent pursuant to this paragraph 4,
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<PAGE>
which have not been previously delivered to the Fund pursuant to the foregoing
provisions of this paragraph 4, shall be considered to be the property of the
Fund, shall be made available upon request for inspection by the officers,
employees, and auditors of the Fund, and records shall be delivered to the Fund
upon request and in any event upon the date of termination of this Agreement, as
specified in Article IX of this Agreement, in the form and manner kept by the
Transfer Agent on such date of termination or such earlier date as may be
requested by the Fund.
5. The Transfer Agent shall not be liable for any loss or damage, including
counsel fees, resulting from its actions or omissions to act or otherwise,
except for any loss or damage arising out of its bad faith, negligence, willful
misfeasance, or reckless disregard of its duties under this agreement.
6a. The Fund shall indemnify and exonerate, save and hold harmless the
Transfer Agent from and against any and all claims (whether with or without
basis in fact or law), demands, expenses (including attorney's fees) and
liabilities of any and every nature which the Transfer Agent may sustain or
incur or which may be asserted against the Transfer Agent by any person by
reason of or as a result of any action taken or omitted to be taken by any prior
transfer agent of the Fund or as a result of any action taken or omitted to be
taken by the Transfer Agent in good faith and without negligence or willful
misconduct or in reliance upon (i) any provision of this Agreement; (ii) the
Prospectus; (iii) any instruction or order including, without limitation, any
computer
21
<PAGE>
tape reasonably believed by the Transfer Agent to have been received from an
Approved Institution; (iv) any instrument, order of Share certificate reasonably
believed by it to be genuine and to be signed, countersigned or executed by any
duly authorized Officer of the Fund; (v) any Certificate or other instructions
of an Officer; or (vi) any opinion of legal counsel for the Fund or the Transfer
Agent. The Fund shall indemnify and exonerate, save and hold the Transfer Agent
harmless from and against any and all claims (whether with or without basis in
fact or law), demands, expenses (including attorney's fees) and liabilities of
any and every nature which the Transfer Agent may sustain or incur or which may
be asserted against the Transfer Agent by any person by reason of or as a result
of any action taken or omitted to be taken by the Transfer Agent in good faith
in connection with its appointment or in reliance upon any law, act, regulation
or any interpretation of the same even though such law, act or regulation may
thereafter have been altered, changed, amended or repealed.
6b. The Transfer Agent shall not settle any claim, demand, expense or
liability to which it may seek indemnity pursuant to paragraph 6 (a) above
(each, an "Indemnifiable Claim") without the express written consent of an
Officer of the Fund. The Transfer Agent shall notify the Fund within 15 days of
receipt of notification of an Indemnifiable Claim, provided that the failure by
the Transfer Agent to furnish such notification shall not impair its right to
seek indemnification from the Fund unless the Fund is unable to adequately
defend the Indemnifiable Claim as a result of
22
<PAGE>
such failure, and further provided, that if as a result of the Transfer Agent's
failure to provide the Fund with timely notice of the institution of litigation
a judgment by default is entered, prior to seeking indemnification from the Fund
the Transfer Agent, at its own cost and expense, shall open such judgment. The
Fund shall have the right to defend any Indemnifiable Claim at its own expense,
provided that such defense shall be conducted by counsel selected by the Fund
and reasonably acceptable to the Transfer Agent. The Transfer Agent may join in
such defense at its own expense, but to the extent that it shall so desire the
Fund shall direct such defense. The Fund shall not settle any Indemnifiable
Claim without the express written consent of the Transfer Agent if the Transfer
Agent determines that such settlement would have an adverse effect on the
Transfer Agent beyond the scope of this Agreement, in such event, each of the
Fund and the Transfer Agent shall be responsible for their own defense at their
own cost and expense, and such claim shall not be deemed an Indemnifiable Claim
hereunder. If the Fund shall fail or refuse to defend an Indemnifiable Claim,
the Transfer Agent may provide its own defense at the cost and expense of the
Fund. Anything in this Agreement to the contrary notwithstanding, the Fund shall
not indemnify the Transfer Agent against any liability or expense arising out of
the Transfer Agent's willful misfeasance, bad faith, negligence or reckless
disregard of its duties and obligations under this Agreement. The Transfer Agent
shall indemnify and hold the Fund harmless from and against any and all losses,
damages, costs,
23
<PAGE>
charges, counsel fees, payments, expenses and liability arising out of or
attributable to any action or failure or omission to act by the Transfer Agent
as a result of the Transfer Agent's lack of good faith, negligence or willful
misconduct.
7. The Transfer Agent shall not be liable to the Fund with respect to any
redemption check on which the signature of the drawer is forged and which the
Fund's Custodian or Cash Management bank has advised the Transfer Agent to honor
the redemption.
8. There shall be excluded from the consideration of whether the Transfer
Agent has been negligent or has breached this Agreement, any period of time, and
only such period of time, during which the Transfer Agent's performance is
materially affected, by reason of circumstances beyond its control
(collectively, "Causes"), including, without limitation (except as provided
below), (a) mechanical breakdowns of equipment (including any alternative power
supply and operating systems software), flood or catastrophe, acts of God,
failures of transportation, communication or power supply, strikes, lockouts,
work stoppages or other similar circumstances.
9. At any time the Transfer Agent may apply to an Officer of the Fund for
written instructions with respect to any matter arising in connection with the
Transfer Agent's duties and obligations under this Agreement, and the Transfer
Agent shall not be liable for any action taken or permitted by it in good faith
in accordance with such written instructions. Such application by the Transfer
Agent for written instructions from an Officer of the Fund
24
<PAGE>
may set forth in writing any action proposed to be taken or omitted by the
Transfer Agent with respect to its duties or obligations under this Agreement
and the date on and/or after which such action shall be taken. The Transfer
Agent shall not be liable for any action taken or omitted in accordance with a
proposal included in any such application on or after the date specified therein
unless, prior to taking or omitting any such action, the Transfer Agent has
received written instructions in response to such application specifying the
action to be taken or omitted. The Transfer Agent may consult counsel of the
Fund, or upon notice to the Fund, its own counsel, at the expense of the Fund
and shall be fully protected with respect to anything done or omitted by it in
good faith in accordance with the advice or opinion of counsel to the Fund or
its own counsel.
10. The Transfer Agent may issue new Share certificates in place of
certificates represented to have been lost, stolen, or destroyed upon receiving
written instructions from the shareholder accompanied by proof of an indemnity
or surety bond issued by a recognized insurance institution specified by the
Fund or the Transfer Agent. If the Transfer Agent receives written notification
from the shareholder or broker dealer that the certificate issued was never
received, and such notification is made within 30 days of the date of issuance,
the Transfer Agent may reissue the certificate without requiring a surety bond.
The Transfer Agent may also reissue certificates which are represented as lost,
stolen, or destroyed without requiring a surety bond
25
<PAGE>
provided that the notification is in writing and accompanied by an
indemnification signed on behalf of a member firm of the New York Stock
Exchange and signed by an officer of said firm with the signature guaranteed.
Notwithstanding the foregoing, the Transfer Agent will reissue a certificate
upon written authorization from an Officer of the Fund.
11. The Transfer Agent will issue and mail subscription warrants for Shares
of capital stock. Shares representing stock dividends, exchanges or splits, or
act as conversion agent upon receiving written instructions from an Officer and
such other documents as the Transfer Agent may deem necessary.
12. The Transfer Agent will supply shareholder lists to the Fund upon
receiving a request therefor from an Officer of the Fund.
13. In case of any requests or demands for the inspection of the
shareholder records of the Fund, the Transfer Agent will endeavor to notify the
Fund promptly and to secure instructions from an Officer as to such inspection.
The Transfer Agent reserves the right, however, to exhibit the shareholder
records to any person whenever it receives an opinion from its counsel -that
there is a reasonable likelihood that the Transfer Agent will be held liable for
the failure to exhibit the shareholder records to such person; provided,
however, that in connection with any such disclosure the Transfer Agent shall
promptly notify the Fund that such disclosure has been made or is to be made.
14. At the request of an Officer of the Fund the Transfer Agent will
address and mail such appropriate notices to
26
<PAGE>
shareholders as the Fund may direct.
15. Notwithstanding any of the foregoing provisions of this Agreement, the
Transfer Agent shall be under no duty or obligation to inquire into, and shall
not be liable for:
(a) The legality of the issue or sale of any Shares, the sufficiency
of the amount to be received therefor, or the authority of the Approved
institution or of the Fund, as the case may be, to request such sale or
issuance;
(b) The legality of a transfer of Shares, or of a redemption of any
Shares, the propriety of the amount to be paid therefor, or the authority
of the Approved Institution or of the Fund, as the case may be, to request
such transfer or redemption;
(c) The legality of the declaration of any dividend by the Fund, or
the legality of the issue of any Shares in payment of any stock dividend;
or
(d) The legality of any recapitalization or readjustment of Shares.
16. The Transfer Agent shall be entitled to receive and the Fund hereby
agrees to pay to the Transfer Agent for its performance hereunder, including its
performance of the duties and functions set forth in Schedule I hereto, (i) its
reasonable out-of-pocket expenses (including legal expenses and attorney's fees)
incurred in connection with its performance hereunder and (ii) such compensation
as may be agreed upon in writing from time to time by the Transfer Agent and the
Fund.
17. The Transfer Agent shall have no duties or
27
<PAGE>
responsibilities whatsoever except such duties and responsibilities as are
specifically set forth in this Agreement, and no covenant or obligation shall be
implied in this Agreement against the Transfer Agent.
18. Purchase and Prices of Services.
(a) The Fund will compensate the Transfer Agent for, and Transfer
Agent, will provide, beginning on the execution date of this Agreement and
continuing until the termination of this Agreement as provided hereinafter,
the Services set forth in Schedule 1.
(b) The current unit prices for the Services are set forth in Schedule
III (the "Schedule III Fee Schedule"). After the initial eighteen month
term (as described in Article X hereof) at least once in each term, the
Transfer Agent roay elect to raise the Schedule III Fees by providing
written notice at least 120 days prior to the beginning of that term. Any
increases in prices or one-time charges due to changes in the legal or
regulatory requirements will be subject to the approval of the Fund, which
approval shall not be unreasonably withheld.
19. Billing and Payment.
(a) The Transfer Agent shall bill the Fund as follows: (i) monthly in
advance for Accounts maintained and in arrears for any Out-of-Pocket
Expenses incurred by the Transfer Agent, provided, however, that with
respect to Out-of-Pocket Expenses the Transfer Agent shall provide the Fund
monthly with an amount to be advanced to the Transfer Agent for estimated
postage expenses and
28
<PAGE>
special services requested by the Fund for the following month. Documentation
to support reconciliation of actual postal charges will be provided to the Fund
monthly. The Transfer Agent may from time to time request the Fund to make
additional advances when appropriate.
(b) The Fund shall pay the Transfer Agent in immediately available
funds at United Missouri Bank in Kansas City, MO (15) days of the receipt
of the bill.
ARTICLE IX
TERM AND TERMINATION; OPTION TO CONVERT TO REMOTE SERVICE
l. The initial Term of this agreement shall be eighteen (18) months,
commencing on October 7, 1991. At the expiration of this initial eighteen month
term, this Agreement will automatically renew for successive one (1) year terms
thereafter unless termination notice is provided by either party to the other at
least 90 days prior to the end of any term hereof.
2. Notwithstanding anything herein to the contrary, the Fund may terminate
this Agreement after April 1, 1992 (upon thirty (30) days advance written notice
to the Transfer Agent) provided that one of the following conditions is met
prior to the termination date:
(a) payment to the Transfer Agent in immediately available funds of an
Early Termination Fee of Two Hundred Seventy Thousand Dollars ($270,000);
or
(b) delivery to the Transfer Agent of a remote service agreement in
the form of Exhibit A, attached hereto and
29
<PAGE>
incorporated by reference herein, executed by the Fund's successor
transfer agent.
3. In the event this Agreement is terminated as provided herein, the
Transfer Agent, upon the written request of the Fund, shall deliver the records
of the Fund on electromagnetic media to the Fund or its successor transfer
agent. The Fund shall be responsible to- the Transfer Agent for the reasonable
costs and expenses associated with the preparation and delivery of such media.
ARTICLE X
MISCELLANEOUS
1. The Fund agrees that prior to effecting any change in the Prospectus
which would increase or alter the duties and obligations of the Transfer Agent
hereunder, it shall advise the Transfer Agent of such proposed change at least
30 days prior to the intended date of the same, and shall proceed with such
change only if it shall have received the written consent of the Transfer Agent
thereto, which shall not be unreasonably withheld.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at the address first
above written, or at such other place as the Fund may from time to time
designate in writing.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Transfer Agent shall be sufficiently given if
addressed to the Transfer Agent and mailed
30
<PAGE>
or delivered to the Secretary at 120 South LaSalle, Chicago, IL, with a copy to
the President at the same address, or at such other place as the Transfer Agent
may from time to time designate in writing.
4. This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties with the formality of this Agreement.
5. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns. This Agreement shall not be
assignable by either party without the written consent of the other party,
except that the Transfer Agent may assign this Agreement to a corporate
affiliate with advance written notice to the Fund.
6. This Agreement shall be governed by and construed in accordance with the
laws of the State of Illinois.
7. This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
8. The provisions of this Agreement are intended to benefit only the
Transfer Agent and the Fund, and no rights shall be granted to any other person
by virtue of this Agreement.
9. (a) The Transfer Agent will endeavor to assist in resolving shareholder
inquiries and errors relating to the period during which prior transfer agents
acted as such for the Fund. Any such inquiries or errors which cannot be
expediently resolved by the Transfer Agent will be referred to the Fund.
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<PAGE>
(b) The Transfer Agent shall only be responsible for the safekeeping and
maintenance of transfer agency records, cancelled certificates and
correspondence of the Fund created or produced prior to the time of conversion
which are under its control and acknowledged in a writing to the Fund to be in
its possession. Any expenses or liabilities incurred by the Transfer Agent as a
result of shareholder inquiries, regulatory compliance or audits related to such
records and not caused as a result of Transfer Agent's bad faith, willful
malfeasance or negligence shall be the responsibility of the Fund as provided in
Article VIII herein.
IN WITNESS WHEREOF, the parities hereto have caused this Agreement to be
executed by their respective corporate officer, thereunto duly authorized and
their respective corporate seals to be hereunto affixed, as the day and year
first above written.
Investors Financial Services Reich & Tang Equity Fund, Inc.
By: /s/ Frank E. Diaz /s/ Bernadette N. Finn
Frank E. Diaz Bernadette N. Finn
Chairman Secretary
October 8, 1991 October 3, 1991
32
<PAGE>
SCHEDULE I
DESCRIPTION OF SERVICES
In consideration of the fees to be paid in such manner and at such times as
Fund and Transfer Agent may agree. Transfer Agent will provide the services set
forth below:
Examine and Process New Accounts, Subsequent Payments, Liquidations,
Exchanges, Telephone Transactions, Check: Redemptions, Automatic Withdrawals,
Certificate Issuance, Wire Order Trades, Dividends, Dividend Statements, Dealer
Statements.
DAILY ACTIVITY
Maintain the following shareholder information in such a manner as the
Transfer Agent shall determine:
Name and Address, including Zip Code
Balance of Uncertificated Shares
Balance of Certificated Shares
Certificate number, number of shares, issuance date of each
certificate outstanding and cancellation date for each certificate
date for each certificate no longer outstanding, if issued
Balance of dollars available for redemption
Dividend code (daily accrual, monthly reinvest, monthly cash or
quarterly cash)
Type of account code
Establishment date indicating the date an account was opened, carrying
forward pre-conversion data as available
Original establishment date for accounts opened by exchange
W-9 withholding status and periodic reporting
State of residence code Social Security or taxpayer identification
number, and indication of certification
Historical transactions on the account for the most recent 18 months,
or other period as mutually agreed to from time-to-
33
<PAGE>
time
indication as to whether phone transactions can be accepted for this
account. Beneficial owner code, i.e. male, female, joint tenant, etc.
An alternate or "secondary" account number issued by a dealer (or
bank, etc.) to a customer for use, inquiry and transaction input by
"remote accessors"
FUNCTIONS
Answer investor and dealer telephone and/or written inquiries, except
those concerning Fund policy, or requests for investment advice which
will be referred to the Fund, or those which the Fund chooses to
answer
Deposit Fund share certificates into accounts upon receipt of
instructions from the investor or other authorized person, if issued
Examine and process transfers of shares insuring that all transfer
requirements and legal documents have been supplied
Process and confirm address changes
Process standard account record changes as required, i.e. Dividend
Codes, etc.
Microfilm source documents for transactions, such as account
applications and correspondence
Perform backup withholding for those accounts which federal government
regulations indicate is necessary
Perform withholdings on liquidations, if applicable, for employee
benefit plans. Prepare and mail 5498s and W2Ps
Handle bad purchase check processing by notifying Fund prior to trade
reversal
Solicit missing taxpayer identification numbers
Provide remote access inquiry to Fund records via Fund supplied
hardware
34
<PAGE>
REPORTS PROVIDED
Daily Journals Reflecting all shares and
dollar activity for the
previous day
Blue Sky Report Supply information monthly
for Fund's preparation of
Blue Sky Reporting
N-SAR Report Supply monthly correspondence,
redemption and liquidation
information for use in fund's
N-SAR Report
Additionally, the following will be provided at the Fund's request to the Fund
at no charge:
o Shareholder listings:
- by Beneficial Owner Code
- by Tax Status Code
- by State Code
- by Establishment Date
- by Dividend Code
- by Account Plan Type
- Top Ten Shareholders
o Dealer Transaction Totals
o Monthly average daily balance reports
Prepare and mail copies of summary statements to dealers and
investment advisers
Generate and mail confirmation statements for financial transactions
DIVIDEND ACTIVITY
Reinvest or pay in cash including reinvesting in other funds within
the fund group serviced by the Transfer Agent as described in each
Fund prospectus
Distribute capital gains simultaneously with income dividends
DEALER SERVICES
Prepare and mail confirmation statements to dealers daily
35
<PAGE>
Prepare and mail copies of statements to dealers, same frequency as
investor statements
ANNUAL MEETINGS
One Proxy mailing per year per fund
Address and mail proxies and related material. Tabulate returned
proxies and supply daily reports when sufficient proxies have been
received (material must be adaptable to mechanical equipment as
reasonably specified by the Transfer Agent)
Prepare certified list of stockholders, hard copy or microform
PERIODIC ACTIVITIES
Mail transaction confirmation statements daily to investors
Address and mail four (4) periodic financial reports (material must be
adaptable to Transfer Agent's mechanical equipment as reasonably
specified by the Transfer Agent)
Mail periodic statement to investors
Compute, prepare and furnish all necessary reports to Governmental
authorities: Forms 1096, 1099DIV, 1099B, 1042 and 1042S
Enclose various marketing material as designated by the Fund in
statement mailings, i.e. monthly and quarterly statements (material
must be adaptable to mechanical equipment as reasonably specified by
the Transfer Agent)
36
<PAGE>
SCHEDULE II
RECORDS MAINTAINED BY TRANSFER AGENT
Account applications
Cancelled certificates plus stock powers and supporting documents
Checks including check registers, reconciliation records, any
adjustment records and tax withholding documentation
Indemnity bonds for replacement of lost or missing stock certificates
and checks
Liquidation, redemption, withdrawal and transfer requests including
stock powers, signature guarantees and any supporting documentation
Proxy records for annual meetings held within the previous nine months
State and federal tax records
37
<PAGE>
SCHEDULE III
FULL SERVICE FEE SCHEDULE
Base Fee: $45,000 per month, plus out-of-pocket expenses as defined below.
Out-of-pocket expenses shall include but not be limited to, postage (and
first class mail insurance in connection with mailing share certificates),
envelopes, check forms, continuous forms, forms for reports and statements,
stationery, and other similar items, telephone and telegraph charges
incurred in answering inquiries from dealers or shareholders, microfilm
used each year to record the previous year's transactions in shareholder
accounts and computer tapes used for permanent storage of records and cost
of insertion of materials in mailing envelopes, and any special or
exception processing. Any labor costs associated with the foregoing shall
also be considered as out-of-pocket expenses.
In addition, a fee of $300 per Business Day will be charged for processing
buy, sell, exchange, transfer, andNor maintenance transactions currently
received by the Fund and forwarded to the Transfer Agent for processing.
The above fees apply to all the Reich & Tang mutual funds which have
entered into Transfer Agency agreements on an aggregate basis and do not
apply to each fund individually.
Fee for use of Institutional interface shall be $1.00 per trade.
<PAGE>
REMOTE SERVICE AGREEMENT
AGREEMENT, made as of the 1st day of _____________________, by and between
_______________________ ("User"), a Delaware corporation having a place of
business at _______________________________________________________ and
Investors Financial Services Company ("IFSC"), a Delaware corporation having a
principal place of business at 120 South LaSalle, Chicago IL 60603.
SECTION 1. USE OF THE IFSC SYSTEM AND FACILITIES.
1.01 Subject to the provisions of this Agreement, User hereby agrees to use
the computerized data processing recordkeeping system owned by IFSC for
securityholder accounting (the "IFSC System") which is installed on IFSC
hardware located in Kansas City, Missouri and utilizes IFSC software (the "IFSC
Facilities") to maintain certain securityholder records and to generate output
for the registered investment companies set forth on Exhibit A hereto, as
amended from time to time, (the "Funds") that User provides certain services.
Subject to the provisions of this Agreement, IFSC hereby agrees to provide User
the use of such IFSC System and Facilities to maintain records of information
and data transmitted to IFSC by User with respect to such securityholder records
and to deliver or transmit to User such output as is generated by the use of
such IFSC System and Facilities.
1.02 User, with computer equipment and through transmission
1
<PAGE>
facilities installed on its premises, shall transmit to the IFSC Facilities in
Kansas City, Missouri, such information and data that User determines is to be
input and that is required to maintain the records and generate the output
required hereunder with respect to the Funds.
1.03 IFSC will make on-line access to the IFSC System available to User
between the hours of 7:00 a.m. and 7:00 p.m. Central Time, Monday through
Friday, except for such holidays as are observed by the New York Stock Exchange.
Access to the System at other times will be by mutual agreement. Reports
generated during or as a result of the nightly processing of the IFSC System
will be available for printing by or before 6:00 a.m. Central Time and reports
completed during nightly processing will be made available for printing when
completed.
1.04 User shall, at its sole expense, arrange with a provider of
communication circuit services (the "Communications Company") for the
communication circuits necessary to enable User to utilize the IFSC System and
interface with the IFSC Facilities. IFSC shall utilize communications network
control and monitoring capabilities to assist User with the identification and
resolution of any problems which appear to be related to communications circuits
and shall use its best efforts to contact, coordinate with and obtain the
correction thereof by the Communications Company, but is not otherwise
responsible for, and shall have no liability for inadequacies or failures to
perform related to or arising out of, such communications circuits prior to
their entry into the IFSC
2
<PAGE>
Facilities. Subsequent, to the entry of the conanunication circuits into the
IFSC Facilities, IFSC shall be responsible for the maintenance of all
communications equipment on the premises of IFSC's Facilities.
SECTION 2. TERM AND TERMINATION.
2.01 This Agreement shall remain in force and effect for a minimum period
of one (1) year, the initial term of the Agreement. Thereafter, this Agreement
shall automatically renew for additional one year terms unless terminated by
either party upon six (6) months prior written notice to the other party;
provided, however, that if User does not renew this Remote Service Agreement at
the end of the initial one year term. User shall pay to IFSC a one-time
Non-Renewal Fee of $50,000 in immediately available funds.
2.02 In the event that this Agreement is terminated, IFSC agrees that, in
order to provide for uninterrupted service to User, IFSC, at User's request,
shall offer reasonable assistance to User in converting the records of User from
the IFSC System to whatever service or system is selected by User. IFSC shall
also provide to whatever service company is selected by User, copies in IFSC
machine readable format of all information on the shareholder master file, and
all subfiles, history files, dealer files, fail/free data files, reconciliation
file data, redemption and dividend check data, and debit card information, if
any, for each Fund, to the extent such information is maintained on the IFSC
System. Nothing herein shall obligate IFSC to change the format
3
<PAGE>
of any files currently on the IFSC System or to input into the IFSC System any
file, information or data not maintained therein prior to the giving of any
termination notice hereunder. Additionally, all hard copy of User or Fund
records shall be delivered to User which agrees to maintain, preserve and
produce upon request such records in accordance and in compliance with the
requirements of Section 17Ad-7 (g) of the Securities and Exchange Act of 1934
and Section 31a-3 of the Investment Company Act of 1940. IFSC's obligations
under this Section 2.02 shall be subject to its recompense by User for such
assistance at IFSC's standard rates and fees in effect at the time.
2.03 If either of the parties hereto shall breach this Agreement or be in
default in the performance of any of its duties and obligations hereunder the
non-defaulting party may give written notice thereof to the defaulting party and
if such default or breach shall not have been remedied within thirty (30) days
after such written notice is given, then the party giving such written notice
may terminate this Agreement upon ninety (90) days prior written notice.
Termination of this Agreement by one party by reason of default or breach of the
other party shall not constitute a waiver by the terminating party of any other
rights it might have under this Agreement against the other party, including
without limitation rights with reference to services performed prior to such
termination or rights of IFSC to be reimbursed for out-of- pocket expenditures
or equipment or communication circuit termination fees.
4
<PAGE>
SECTION 3. FEES AND EXPENSES.
3.01 During the initial term of this Agreement, User shall pay to IFSC upon
receipt of IFSC's statement the fees and charges in the amounts as set out in
Exhibit B annexed hereto and made a part hereof. Following the initial term of
this Agreement and 90 days prior to the anniversary date of this Agreement in
each calendar year, the parties shall negotiate a mutually agreeable fee
schedule to become effective on each respective anniversary date. If a new fee
schedule cannot be agreed upon by the anniversary date, the then-existing fee
schedule shall remain in effect until termination of the Agreement is effected
pursuant to section 2.01 hereof.
3.02 User shall reimburse IFSC, for all out-of-pocket expenses described on
Exhibit B in accordance with the procedures set out therein. User shall also
reimburse IFSC for all out-of- pocket expenses incurred by IFSC at the request
of User or the Fund which are not covered under Exhibit B in accordance with the
procedures set out therein.
3.03 User shall notify IFSC, or cause the appropriate Fund to notify IFSC,
promptly under the circumstances in writing of any disputed charges for
out-of-pocket expenses which it is disputing in good faith. Payment for such
disputed charges shall be due on or before the close of the seventh (7th)
business day after the day on which IFSC provides User with documentation
reasonably substantiating the disputed charges and the dispute is reasonably
resolved. Non-disputed charges shall be paid within 30 days of
5
<PAGE>
billing.
3.04 User shall have the right to add new funds to the IFSC System upon
reasonable prior written notice to IFSC provided that: (i) the requirements of
the new funds are generally consistent with services then being provided by IFSC
under this Agreement, and (ii) User or any entity which is controlled by, under
common control with or controlling User shall act as the registered investment
advisor, sponsor or distributor for such fund. Rates or charges for additional
funds shall be as set forth in Exhibit B for the remainder of the contract term
except as such funds use functions, features or characteristics for which IFSC
has imposed an additional charge as part of its standard pricing schedule. In
the latter event, rates and charges shall be in accordance with IFSC's
then-standard pricing schedule.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF IFSC.
IFSC represents and warrants that:
4.01 It is a corporation duly organized and existing and in good standing
under the laws of the State of Delaware and is, and will at all times material
hereto continue to be, registered in good standing as a transfer agent with the
appropriate regulatory agency (as defined in the Securities Exchange Act of
1934);
4.02 It has the requisite power and authority under applicable laws and by
its charter and bylaws and has taken all action necessary to enter into and
perform the services contemplated by this Agreement and this Agreement has been
duly executed and delivered by IFSC and constitutes a legal, valid and
6
<PAGE>
binding obligation of IFSC, enforceable in accordance with its
terms;
4.03 It has and will continue to have and maintain the necessary system and
facilities to perform its duties and obligations under this Agreement.
4.04 The IFSC System will function in all material respects in accordance
with the reference manuals provided by IFSC to User, as amended from time to
time provided the IFSC System is operated by User in compliance with such
reference manuals. IFSC also warrants that the IFSC System and IFSC Facilities
will be monitored on an ongoing basis and that any identified, material and
critical problems in the operation of the IFSC System and the IFSC Facilities
(the "Problems") will be addressed promptly and corrected in the shortest time
frame possible. Less than critical and material problems will be addressed in a
timely fashion and corrective action will be implemented as soon as possible
under the circumstances. IFSC will promptly inform User of the existence of any
Problems which adversely affect the ability of User to use the IFSC System and
IFSC Facilities, to transmit information and data to IFSC and to receive the
output generated as a result thereof. The FOREGOING WARRANTY IS IN LIEU OF ALL
OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THOSE OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF USER.
User represents and warrants that:
5.01 It is a corporation duly organized, validly existing and
7
<PAGE>
in good standing under the laws of the State of New Jersey and is, and will at
all times material hereto continue to be, registered in good standing as a
transfer agent with the appropriate regulatory agency (as defined in the
Securities Exchange Act of 1934) ;
5.02 It has the requisite power and authority under applicable laws,
agreements with the Funds it services, and its Articles of Incorporation and
bylaws, and has taken all action necessary for it to enter into and employ IFSC
to perform the services contemplated by and to fulfill this Agreement, and this
Agreement has been duly executed and delivered by User and constitutes a legal,
valid and binding obligation of User, enforceable in accordance with its terms;
SECTION 6. INDEMNIFICATION.
6.01 IFSC shall not be responsible for, and User shall indemnify and hold
IFSC harmless from and against, any and all claims, actions, suits, costs,
expenses, losses, damages, charges, counsel fees, payments and liability, which
may be asserted against IFSC or for which it may be liable, arising out of or
attributable to:
(a) All actions of IFSC required to be taken by IFSC pursuant to this
Agreement provided that IFSC has acted in good faith and with due diligence;
(b) User's faiivlre to vise and employ, or User's errors or mistakes in the
use or employ of , the IFSC System, the IFSC Facilities or the appropriate
control procedures relative thereto
8
<PAGE>
in accordance with procedures with which User has been provided, or User's
failure to verify within five (5) days reports, information and/or data received
through use of the IFSC System and Facilities;
(c) IFSC's reasonable reliance on, or reasonable use or implementation of,
in performing its duties and obligations hereunder, instructions or requests,
information, data, records and documents received by IFSC from User: and
(d) User's refusal or failure to comply with the terms of this Agreement,
or which arise out of User's negligence or misconduct or which arise out of the
breach of any representation or warranty of User hereunder.
6.02 IFSC shall be responsible for and shall indemnify and hold User
harmless from and against any and all claims, actions, suits, costs, expenses,
losses, damages, charges, counsel fees, payments and liability arising out of or
attributable to IFSC's refusal of failure to comply with the terms of this
Agreement, or which arise out of IFSC's negligence or wilful misconduct or which
arise out of the breach of any representation or warranty of IFSC hereunder.
6.03 in the event IFSC is unable to perform its obligations under the terms
of this Agreement due to causes beyond its control, including but not limited
to, fires, civil disobedience, riots, rebellion, acts of God or other similar
occurrences, IFSC will not be liable for any damages resulting from such causes.
In such event, IFSC will use its best efforts to assist User to obtain
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alternate sources of service, including, subject to the execution of IFSC's
Confidentiality and Limited License Agreement by such service company, providing
to the service company designated by User a copy of the IFSC System used to
provide to User services hereunder and assisting such service company to install
and operate such IFSC System; provided, however, (i) that such IFSC System shall
not be copied and (ii) promptly upon the correction by IFSC of the Problem and
the restoration of IFSC's ability to perform under this Agreement the IFSC
System, with all documentation relating thereto, shall be returned to IFSC and
User shall resume use of the IFSC System at the IFSC Facilities.
6.04 At any time IFSC may apply to a person indicated on User's "Schedule
of Authorized Personnel" (attached hereto as Exhibit E), for instructions with
respect to any matter arising in connection with this Agreement. IFSC shall not
be liable for, and shall be indemnified by User against, any action taken or
omitted by IFSC in good faith in reliance upon such instructions of User or upon
the opinion of User's legal counsel.
6.05 In the event malfunction of the IFSC System causes an error or mistake
in any record, report, data, information or output provided by IFSC under the
terms of this agreement, IFSC shall at its expense correct and reprocess such
records; provided. User shall promptly notify IFSC in writing of such error or
mistake.
6.06 EXCEPT IN THE CASE OF WILLFUL MISCONDUCT OR A VIOLATION OF SECTIONS
11.02 AND 11.03 HEREOF, IN NO EVENT AND UNDER NO CIRCUMSTANCES SHALL EITHER
PARTY UNDER THIS AGREEMENT BE LIABLE TO
10
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THE OTHER PARTY FOR PUNITIVE, INDIRECT, OR OTHER SPECIAL DAMAGES UNDER ANY
PROVISION OF THIS AGREEMENT OR FOR ANY ACT OR FAILURE TO ACT HEREUNDER, EVEN IF
ADVISED OF THE POSSIBILITY THEREOF.
6.07 Within 20 days after the receipt by either party (the "Indemnitee") of
notice of any claim, determination, suit or cause of action with respect to
which any other party is obligated to provide indemnification (the "Indemnifying
Party") pursuant to Section 6 hereof, the Indemnitee shall give the Indemnifying
Party written notice thereof and the Indemnifying Party shall be entitled to
assume control of the defense and the negotiations, if any, regarding settlement
of this matter. If the indemnifying Party assumes such control, the Indemnitee
shall be entitled to participate in the defense and negotiations of such matter
at its own expense. The parties agree to cooperate in such negotiations, defense
or settlement and to give each other full access to any information relevant
thereto. The indemnitee shall not enter into any settlement matter without the
written consent Indemnifying Party, which consent shall not be unreasonably
withheld, and the Indemnifying Party shall not be obligated to indemnify the
Indemnitee for any settlement: entered into without the written consent of the
Indemnifying Party. If the consent of the Indemnitee is required to effectuate
any settlement and the Indemnitee refuses to consent to any settlement
negotiated by the Indemnifying Party, then the liability of the Indemnifying
Party for losses arising out of or due to such matter shall be limited to the
amount of the rejected proposed settlement.
11
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SECTION 7. COVENANTS OF IFSC.
7.01 IFSC shall maintain -the appropriate computer files of all information
and data transmitted to the IFSC Facilities by User; provided, however, that
IFSC shall not be responsible or liable for any changes, alterations,
modifications therein or failure to maintain the same if User shall have made
such changes, alterations, or modifications or shall be the cause of such
failure to maintain the same. IFSC will notify User of any changes to the IFSC
System and IFSC Facilities which materially, adversely impact upon User's
transmissions to IFSC. It is expressly understood that all such data transmitted
by User and maintained hereunder remains the exclusive property of User.
7.02 Throughout the term of this Agreement, IFSC shall maintain backup
procedures for the protection and safekeeping of the data processing files
containing the information and data transmitted by User as well as reasonable
backup procedures at its Data Center in case of loss of power or water or
failure of a computer.
7.03 IFSC at all times shall use its best efforts to maintain adequate
insurance coverage to satisfy all of its reasonably foreseeable liabilities
hereunder. A schedule of IFSC's current insurance coverage is attached hereto as
Exhibit F. IFSC shall promptly notify User of any changes in such insurance
coverage.
SECTION 8. COVENANTS OF USER
8.01 User shall utilize and employ all reasonable control procedures
available under the IFSC System of which User is advised
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and User shall promptly advise IFSC of any error or mistakes in the data or
information transmitted to IFSC's Facilities, the records maintained or output
generated hereunder and, using normal audit and control procedures. User shall
verify all output received hereunder.
8.02 User shall transmit to the IFSC Facilities, in the formats and form
specified by IFSC, all information and data required in connection therewith so
that the output produced by the system shall be complete and accurate when it is
generated by the IFSC System and Facilities. In the event User shall erroneously
transmit information or shall transmit incorrect information or data to the IFSC
Facilities, or shall have failed to verify within five (5) days of receipt any
such data or information when it is generated by the IFSC System and Facilities,
User shall correct such information and data and retransmit the same to the IFSC
Facilities and shall be responsible and liable for the cost or expense of
regenerating any output. In the event that such error shall have been the result
of, or arise out of, a failure by IFSC to notify User of a change to the IFSC
System of IFSC Facilities or a failure by IFSC to generate any output or
properly to process such information or data, then User shall resubmit such
information or data of IFSC shall regenerate the output at its own cost or
expense. If either party hereto shall request a special computer processing to
be made, which special computer processing is not occasioned by the error,
mistake or negligence of either party, the requesting party shall be liable for
the cost or expense of such
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special computer processing.
8.03 User at all -times shall use its best efforts to maintain adequate
insurance coverage to satisfy all of its reasonable foreseeable liabilities
hereunder.
SECTION 9. CHANGES AND MODIFICATIONS.
9.01 Except as may otherwise be provided in Exhibit C, during the term of
this Agreement, IFSC will make available for User's use all modifications and
improvements to the IFSC System done within the ordinary course of business. No
charges will be assessed therefor unless such modifications and improvements
become part of the standard IFSC pricing schedule as a result substantial system
revisions, significant new features or capabilities or modifications
necessitated by changes in existing laws, rules or regulations. At User's
expense, IFSC will use its best efforts to make any reasonable changes to the
IFSC System requested by User ("Client Requested Software"). Charges attendant
to the development of Client Requested Software shall be at IFSC's standard
rates and fees in effect at the time. If the cost to IFSC of operating the IFSC
System is increased by the addition of Client Requested Software, IFSC shall be
entitled to increase its fees by an amount to be mutually agreed upon.
9.02 IFSC shall have the right, at any time, and from time to time, to
alter and modify any systems, file layouts, programs, procedures or facilities
used or employed in performing its duties and obligations hereunder, provided
that no such alteration or modification shall, without the consent of User,
materially
14
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adversely change or affect the operations and procedures of User in using or
employing IFSC's System or Facilities hereunder. In the event that IFSC changes
its transmission requirements without at least thirty (30) days prior
notification to User, IFSC will be prepared to accept transmissions in the old
format and manner for up to thirty (30) days after User notifies IFSC of any
problem emanating therefrom.
9.03 IFSC and User will jointly determine the level of dedicated system
resources required to meet User's enhancement priorities. At User's expense,
IFSC agrees to use reasonable efforts to make dedicated programming support
available for all projects requested by User. The amount of the resources
required and the project to which those resources are assigned shall be
determined jointly based upon joint periodic review of project requirements.
Such resources will be charged to User at IFSC's standard rates and fees in
effect at the time. Generally, all projects shall be limited to 320 manhours of
programming resources to complete, and will conform to specific productivity and
quality standards established for all such projects as IFSC completes on its own
behalf. All enhancements, improvements, modifications or new features which are
added to or become part of the basic IFSC System and which do not consist of
stand-alone programs shall be, and shall remain, the confidential, exclusive
property of, and proprietary to, IFSC; any enhancements, improvements,
modifications or new features which are paid for by User and which are a
subsystem of the IFSC System, that is a set of stand-alone programs
15
<PAGE>
(the "Subsystem"), will with respect to User not become the exclusive property
of IFSC and, in the event that User shall convert form the IFSC System, a copy
of the programs pertaining to each such Subsystem shall be delivered to User for
their continued use.
SECTION 10. ASSIGNMENT
10.01 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party hereto without the prior written consent of the other,
except to entities controlled by, under common control with or controlling the
assigning party.
10.02 This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns (subject to
compliance with the requirements of Section 10.01).
SECTION II. MISCELLANEOUS
11.01 User or its duly authorized independent auditors will have the right
under this Agreement to perform on-site audits of records and accounts directly
pertaining to the securityholder accounts in Funds serviced by User at the IFSC
Facilities in accordance with reasonable procedures and at reasonable
frequencies. At the request and expense of User and upon execution of IFSC's
confidentiality agreement, IFSC, during normal business hours, will make
available to User's auditors or to representatives of the appropriate regulatory
agencies all reasonably requested records, data and access to operating
procedures.
11.02 The parties hereto agree that all tapes, books,
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reference manuals, instructions, records, information and data pertaining to the
business of the other party, the IFSC System and the customers serviced by User
hereunder which are exchanged or received pursuant to the negotiation of and/or
the carrying out of this Agreement are confidential and shall remain not be
voluntarily disclosed to any other person and that all such tapes, books,
reference manuals, instructions, records, information and data in the possession
of each of the parties hereto shall be returned to the party from which it was
obtained upon the termination or expiration of this Agreement.
11.03 Except as otherwise provided in Section 9.03 hereof regarding
Subsystems, User acknowledges that IFSC has proprietary rights in and to the
IFSC System, including without limitation any changes or modifications made at
the request or expense or both of User, and any other IFSC programs, data bases,
supporting documentation, or procedures, but excluding the Subsystems ("IFSC
protected Information" ) which User ' s access to the IFSC System of Facilities
may permit User or its employees or agents to become aware of or to access. User
further acknowledges that the IFSC Protected Information constitutes
confidential material and trade secrets of IFSC. User agrees to maintain the
confidentiality of the IFSC Protected Information. User acknowledges that any
unauthorized use, misuse, disclosure or taking of IFSC Protected Information
which is confidential as provided by law, or which is a trade secret, residing
or existing internal or external to a computer, computer system, or computer
network, or the knowing and
17
<PAGE>
unauthorized accessing or causing to be accessed of any computer, computer
system, or computer network, may be subject to civil liabilities and criminal
penalties under applicable state law. User will advise all of its employees and
agents who have access to any IFSC will advise all of its employees Protected
Information or to any computer equipment capable of accessing IFSC Facilities of
the foregoing.
11.04 IFSC and User agree that during any term of this agreement, neither
party will solicit for employment or offer employment to any employees of the
other.
11.05 To the extent that any provision herein is inconsistent with or in
violation of any applicable law, rule or regulation, that provision shall be
deemed modified so as to comply with such law, rule or regulation, and shall not
otherwise affect any other provisions of this Agreement. Any provision of this
Agreement that is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
provisions of this Agreement or affecting the validity or enforceability of that
term or any of the provisions of this Agreement in any other jurisdiction.
11.06 The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights resulting from
any breach of any of the terms or conditions of this Agreement, including the
payment of damages, shall not be construed as a continuing or permanent waiver
of any
18
<PAGE>
such terms, conditions, rights or privileges, but the same shall continue and
remain in full force and effect as if no such forbearance or waiver had
occurred.
11.07 The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
11.08 This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all or which together shall constitute one
and the same agreement.
11.09 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written, and this Agreement may not be modified or
amended except in a written instrument executed by both of the parties hereto.
11.10 This validity, construction and performance of this Agreement shall
be governed by and construed in accordance with the laws of the State of
Missouri, excluding that body of law applicable to choice of law.
11.11 The representations and warranties shall survive the execution of
this Agreement and they, the covenants and the indemnification provisions
contained herein and the provisions of Sections 11.02, 11.03 and 11.10 hereof
shall survive the termination of this Agreement.
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IN WITNESS WHEREOF, -the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and througl- their duly
authorized officers as of the day and year first above
written.
USER
By:
Date:
INVESTORS FINANCIAL SERVICES COMPANY
By:
Dated
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EXHIBIT B
REMOTE FEE SCHEDULE
FEES: $4.00 per account per year subject to a minimuro annua] fee of $125,000,
plus out-of-pocket and other expenses as defined below.
Out-of-pocket expenses shall include but not be limited to, postage (and first
class mail insurance in connection with mailing share certificates), envelopes,
check forms, continuous forms, forms for reports and statements, stationery, and
other similar items, telephone and telegraph charges incurred in answering
inquiries from dealers or shareholders, microfilm used each year to record the
previous year ' s transactions in shareholder accounts anc computer tapes used
for permanent storage of records and cost of insertion of materials in mailing
envelopes, and any special or exception processing. Any labor costs associated
with the foregoing shall also be considered as out-of-pocket expenses.
Fee for use of Institutional interface shall be $1.00 per trade.
21
SEWARD & KISSEL
WALL STREET PALAZA
NEW YORK, N.Y. 10005212 248-2800
JANUARY 3, 1985
Reich & Tang Equity Fund, lr
100 Park Avenue
New York, New York 10017
Dear Sirs:
We have acted as counsel for Reich & Tang Equity Fund, inc., a Maryland
corporation (the "Company"), in connection with the organization of the
Company, the registra- ~ tion of the Company under the Investment Company Act of
1940 I and the registration of an indefinite number of shares of Common Stock
(par value $.001 per share) of the Company under the Securities Act of 1933.
As counsel for the Company we have participated in the
preparation of the Registration Statement on Form N-1A relating to such
shares and have examined and relied upon such corporate records of the
Company and such other document and certificates as to factual matters as
we have deemed to be necessary to render the opinion expressed herein.
Based on such examination, we are of the opinion that:
1 The Company is a duly organized and validly existing corporation in
good standing under the laws of the State of Maryland.
2. The 10,000 shares of presently issued and outstanding Common
Stock of the Company have been validly and legally issued and are fully
paid and non-assessable shares of Common Stock of the Company.
3. The shares of Common Stock of the Company to be offered for sale
pursuant to the prospectus and Statement of Additional information
contained in said Registration State
<PAGE>
Reich & Tang Equity January 3, 1985
Fund, Inc.
ment are, to the extent of the number of shares authorized to be issued by
the Company in its Articles of Incorporation, duly authorized and unissued
shares and when such shares have been duly sold, issued and paid for as
contemplated in the prospectus and Statement of Additional Information,
such shares will have been validly and legally issued and will be fully
paid and non-assessable shares of Common Stock of the company under the
laws of the State of Maryland (assuming that the sale price of each share
is not less than the par value thereof).
As to matters of Maryland law contained in the foregoing opinion we have
relied on the opinion of Messrs. Venable, Baetjer and Howard of Baltimore,
Maryland, dated January 3, 1985, a copy of which is attached hereto.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the
reference to our firm under the caption "Counsel, Auditors and Custodian,
Transfer Agent and Dividend Agent" in the related Statement of Additional
information included therein.
Very truly yours,
SEWARD & KISSEL
VENABLE, BAETJER AND HOWARD
ATTORNEYS AT LAW
A PARTNERSHIP INCLUDING PROFFESIONAL CORPORATIONS
1300 MERCANTILE BANK & TRUST BUILDING
2 HOPKINS PALZA
BALTIMORE, MARYLAND 21201
(301) 244-7400
Telecopier
(301) 244-7742
Seward & Kissel
Wall Street Plaza
New York, New Yoi
Re: Reich & Tang Equity Fund, Inc.
Gentleman:
We have acted as Maryland counsel for Reich & Tang Equity Fund, Inc., a
Maryland corporation (the "Company") in connection with the organization of the
Company and the issuance of shares of its Common Stock.
We have examined the Company's Articles of Incorporation, its Bylaws, the
Prospectus and Statement of Additional Information included in its Registration
Statement on Form N-IA, substantially in the form in which it has or is to
become effective (the "Prospectus"), and have examined and relied upon such
corporate records of the Company and other documents and certificates as to
factual matters as we have deemed to be necessary to render the opinion
expressed herein. We have assumed without independent verification the
genuineness of the signatures on and the authenticity of all documents furnished
to us.
Based on such examination we are of the opinion that:
1. The Company is duly organized and validly existing as a corporation
in good standing under the laws of the State of Maryland;
2. The 10,000 shares of presently issued and outstandinq Common Stock
of the Company have been validly and legally issued and are fully paid and
non-assessable shares under the laws of the State of Maryland;
3. The balance of the shares of Common Stock of the Company to be
offered for sale pursuant to the Prospectus are authorized and unissued
shares, and when such shares have been duly sold, issued and paid for as
contemplated in the Prospectus, such shares will have been validly and
leqally issued and
<PAGE>
Seward & Kissell
Page 2
will be fully paid and non-assessable shares of Common Stock of the company
under the laws of the State of Maryland.
This letter expresses our opinion as to the Maryland general Corporation
Law governing matters such as due incorporation and the authorization and
issuance of stock, but does ot extend to the securities or "Blue Sky" laws of
Maryland or to federal, securities or other laws.
You may rely upon our foregoing opinion in rendering your opinion to the
Company which is to be filed as an exhibit to the Registration Statement, and we
hereby consent to the pgference to us in the Prospectus and to the filing of
this opinion with the Securities and Exchange Commission as an exhibit to the
Registration Statement.
Very truly yours,
Venable, Baetjer and Howard
EXHIBIT j
McGLADREY & PULLEN, L.L.P. RSM
-------------------------- ---
Certified Public Accountants & Consultants international
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated January 29, 1999, on the financial
statements of Reich & Tang Equity Fund, Inc. referred to in the Post-Effective
Amendment to the Registration Statement on Form N-1A as filed with the
Securities and Exchange Commission.
McGladrey & Pullen, LLP
New York, New York
April 26, 2000
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form N-1A of our report dated January 28, 2000, relating to the
financial statements and financial highlights which appears in the December 31,
1999 Annual Report to Shareholders of Reich & Tang Equity Fund, Inc. which is
also incorporated by reference into the Registration Statement. We also consent
to the references to us under the headings "Financial Highlights", "Financial
Statements", and "Counsel and Independent Accountants" in such Registration
Statement.
PricewaterhouseCoopers LLP
New York, New York
April 26, 2000
REICH & TANG, INC.
100 Park Avenue
New York, New York 10017
January 2, 1985
Reich & Tang Equity Fund, Inc.
100 Park Avenue
New York, New York 10017
Gentlemen:
In connection with our purchase of 10,000 shares of Reich & Tang Equity
Fund, Inc. common stock for a cash consideration of ten dollars ($10.00) per
share, this will confirm that we are buying such shares for investment for our
own account only, and not with a view to reselling or otherwise distributing
them.
REICH & TANG, INC.
/s/ Bernadette N. Finn
Bernadette N. Finn
Vice President
EXHIBIT A
February 17, 2000
REICH & TANG EQUITY FUND, INC.
Wrapper to Adviser/Underwriter's Code of Ethics
Reich & Tang Equity Fund, Inc. hereby adopts as its own the annexed Code of
Ethics (the "Code") of its investment adviser, Reich & Tang Asset Management
L.P., and its principal underwriter, Reich & Tang Distributors, Inc. with the
following changes:
Definitions. Reich & Tang Equity Fund, Inc. is a "Fund" as that term is
defined in the Code, and each director, officer and employee of the Fund shall
be deemed to be an "Employee" as that term is used in the Code. Notwithstanding
the foregoing, any director of the Fund who is not an "interested person" of the
Fund within the meaning of Section 2(a)(19) of the Investment Company Act of
1940 ("disinterested director") generally shall not be deemed to be an
"Employee" as that term is used in the Code, except for purposes of Sections B1,
B2 (the first sentence only) and B3 of Article II and Sections D and F of
Article III. For purposes of the Fund's Code, "Advisory Person" shall also
include any natural person in a control relationship to the Fund.
Reporting. The only reporting requirement for each disinterested director
shall be as follows: he or she shall report each calendar quarter (rather than
each month) on the form attached hereto as Appendix __, but only if there had
been a personal Security transaction ( other than Exempt Transactions as defined
in Article II, Section B3) during the preceding quarter with respect to which he
or she, at the time of a purchase or sale of such Security, knew or, in the
ordinary course of fulfilling his or her official duties as a director of the
Fund, should, should have known that during the 15-day period immediately
preceding or after the date of the transaction in a Security by such
disinterested director, such Security is or was purchased or sold by the Fund or
was being considered for purchase or sale by the Fund or its investment adviser.
Sanctions. A sanction, if any, to be imposed on a disinterested director
may be imposed not by the Partnership, but rather by a majority of the other,
uninvolved directors of the Fund.
<PAGE>
REICH & TANG ASSET MANAGEMENT L.P.
REICH & TANG DISTRIBUTORS, INC.
CODE OF ETHICS AND CONDUCT ("Code")
Effective March 1, 2000
I. Definitions
A. "Partnership" shall mean Reich & Tang Asset Management L.P.
B. "Security" shall have the meaning set forth in Section 2(a) (36) of the
Investment Company Act of 1940, as amended ("the Act"), but shall not include
securities issued or guaranteed by the United States Government or its agencies
or instrumentalities, bankers' acceptances, bank certificates of deposit,
commercial paper, shares of registered open-end investment companies or other
money market instruments designated by the Partnership.
C. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell such security has been made and communicated
and, with respect to the person making the recommendation, when such person
seriously considers making such a recommendation.
D. "Control" shall have the meaning set forth in Section 2(a) (9) of the
Act.
E. "Access Person" shall mean any partner, officer, or Advisory Person of
the Partnership or any director or officer of Reich & Tang Asset Management,
Inc. who, in the ordinary course of his or her business, makes, participates in,
or obtains information regarding, the purchase or sale of Securities by the
Partnership, or whose functions or duties as part of the ordinary course of his
or her business relate to the making of any recommendation by the Partnership
regarding the purchase or sale of Securities.
F. "Advisory Person" shall mean:
1. any Employee, as defined herein, of the Partnership (or Reich &
Tang Asset Management, Inc.) who, in connection with his or her
regular functions or duties, makes, participates in, or obtains
information regarding, the purchase or sale of a Security by the
Partnership, or whose functions relate to the making of any
recommendation with respect to such purchases or sales; or
2. any natural person in a control relationship to the Partnership
who obtains information concerning recommendations made with
regard to the purchase or sale of a Security by the Partnership.
G. "Director" means a director of Reich & Tang Asset Management, Inc.
within the meaning of Section 202(a) (8) of the Investment Advisors Act of 1940
("Advisors Act").
H. "Employee" includes all "Access Persons" and "Advisory Persons" and
"Portfolio Managers" as defined herein as well as all other employees of the
Partnership.
<PAGE>
I. "Beneficial Ownership" shall be interpreted in the same manner as it
would be under Rule 16a-1(a)(2) under the Securities Exchange Act of 1934, as
amended. Generally, a person is considered the beneficial owner of securities if
the person has a pecuniary interest in the securities and includes securities
held by members of the person's immediate family sharing the same household, or
other persons if, by reason of any contract, understanding, relationship,
agreement or other arrangement, the person obtains from such securities benefits
substantially equivalent to those of ownership.
J. "Portfolio Manager" shall mean those Employees of the Partnership
entrusted with the direct responsibility and authority to make investment
decisions affecting clients and who, therefore, are the persons best informed
about clients' investment plans and interests.
K. "Fund" shall mean an investment company registered under the Act.
L. "Distributor" shall mean Reich & Tang Distributors, Inc.
II. Conflicts of Interest-Personal Investments
A. General. All Employees are obliged to put the interests of the
Partnership's clients before their own personal interests and to act honestly
and fairly in all respects in their dealings with clients. This is an obligation
imposed on all Employees of any investment advisory firm.
It is the fundamental policy of the Partnership and the Distributor to
avoid conflicts of interest, potential conflicts of interest or even the
appearance of such conflicts whenever possible. Moreover, it is a basic policy
of the Partnership and the Distributor that no Employee should take advantage of
their position with the Partnership and the Distributor for personal gain.
However, if a conflict were to unavoidably occur, it is also the policy of the
Partnership to resolve such conflict in favor of the client. Even in instances
in which there is an identity of interest between a client and an Employee, the
Employee must recognize that the Partnership's clients have priority in any
right to benefit from our investment advice over any rights of the Employee, or
any non-client members of the Employee's family whom he or she may advise. This
condition inevitably places some restrictions on the freedom of investment of
our Employees and their families.
This Code does not attempt to describe all possible conflicts of interests,
but rather, attempts to establish general principles and to highlight possible
problem areas. Employees should be conscious that areas other than personal
securities transactions may involve conflicts of interest. For example, one such
area would be accepting gifts or favors from persons such as brokers, dealers,
securities salespersons or other persons with whom the Partnership has a
business relationship since such gifts or favors (such as the ability to
participate in initial public offerings or private placements) could impair the
Employee's objectivity. Thus, the requirements set forth below are not intended
to cover all situations that may involve a possible conflict of interest. Rather
they are intended to provide (i) a framework for understanding such conflicts
and (ii) a mechanism for monitoring and reporting personal securities
transactions. If there is any doubt about such matters, the compliance officers
listed in Appendix A or such other persons designated by them to perform such
functions ("Compliance Officers") should be consulted before any action
regarding such matters are taken.
B. Prohibited Personal Trading
1. Improper Use of Information. No Employee may use their
knowledge concerning any client's securities transactions for trading
in their personal account, any account in which he or she has a
"beneficial ownership" interest, or in any account controlled by or
under the influence of such Employee.
2. Purchases and Sales. Unless the transaction is exempt under
II.B.3. below, no Employee may purchase or sell, directly or
indirectly, any Security in which he or she has, or by reason of the
transaction will acquire, any direct or indirect beneficial ownership
interest and to their actual
<PAGE>
knowledge at the time of such Security's purchase or sale (a) is
currently being purchased or sold on behalf of a client (i.e., an
order has been entered but not executed for a client), or (b) is
currently being considered for purchase or sale on any client's
behalf, even though no order has been placed, unless either (i) the
order for the client is executed or withdrawn or (ii) the Employee's
order is executed at the same time and at the same price as the
client's order and the Employee's order does not otherwise receive any
unfair advantage. In addition, unless the transaction is exempt under
II.B.3. below, no Portfolio Manager may purchase or sell, directly or
indirectly, any Security in which he or she has, or by reason of the
transaction will acquire, any direct or indirect beneficial ownership
interest and to their actual knowledge at the time of such purchase or
sale (a) is currently being considered for purchase or sale on any
clients' behalf or (b) has been purchased or sold for a client's
account within the prior seven business days, unless the Portfolio
Manager obtains the prior written approval of one of the Compliance
Officers. In the event client orders cannot be fully satisfied,
Employee orders for the same security that were entered at the same
time as client orders will only be satisfied after client orders are
filled unless otherwise approved by a Compliance Officer. For these
purposes, registered investment companies and unregistered investment
funds are treated as client accounts even if Employees or their
affiliates own all or substantially all of such entities. Any profits
on transactions prohibited by this paragraph will be required to be
disgorged.
Unless the transaction is exempt under II.B.3. below or the
transaction does not involve a Security, every Employee intending to
make a personal securities transaction that will result in the
Employee acquiring or disposing of any direct or indirect beneficial
ownership interest in Securities whose value exceeds $10,000 must
either (i) obtain prior written approval for such personal securities
transaction from one of the Compliance Officers or (ii) refrain from
effecting such transaction.
Requests by Employees for prior clearance of personal securities
transactions must be made in writing on the standard Personal Trading
Request and Authorization Form attached as Appendix B ("Authorization
Form") and submitted to one of the Compliance Officers, who will be
responsible for reviewing and processing such requests. Written
responses to such requests will also be provided on the Authorization
Form. The requesting Employee should retain a copy of the
Authorization Form for his or her records.
A Compliance Officer may grant such approval if the transaction
(i) is considered not to be potentially harmful to any client, or (ii)
would be very unlikely to affect the market in which such Securities
are traded, or (iii) clearly is not related economically to the
Securities to be purchased, sold, or held by any client and the
Employee is not in possession of material non-public information
obtained in the course of the Employee's duties for the Partnership.
Prior clearance of any personal securities transaction is
effective for five (5) business days from and including the date
clearance is granted. If the personal securities transaction is not
completed within that period, reapproval of the transaction for each
additional period of five (5) business days must be obtained.
3. Exempt Transactions. The prohibitions of II.B.2. above do not
apply to the following transactions:
a. purchases or sales effected in any account over which an
Employee has no direct or indirect influence or control; or
in any account of the Employee which is managed on a
discretionary basis by a person other than the Employee and
which the Employee does not in fact influence or control the
purchase or sale transactions;
b. purchases or sales which are non-volitional on the part of
the Employee;
c. purchases which are part of an automatic dividend
reinvestment plan;
<PAGE>
d. purchases effected upon the exercise of rights issued pro
rata to all holders of a class of Securities to the extent
such rights were acquired from such issuer, and sales of
such rights so acquired;
e. purchases or sales of Securities which are not eligible for
purchase or sale by any client;
f. purchases and sales of shares of open-end investment
companies and other instruments not considered to be
"Securities" for purposes of this Code.
C. Specific Rules. The following rules govern Employee investment
activities for the Employee's personal account and for accounts in which the
Employee has any direct or indirect beneficial ownership interest. These rules
are in addition to those described in II.B. above.
1. New Issues. No Employee may purchase any Securities available in an
initial public offering ("IPO") of common stock or convertible securities
directly from the issuer or an underwriter at the initial offering price,
but must purchase such securities in secondary trading after obtaining the
prior written approval of one of the Compliance Officers.
2. Private Placements. No Employee may purchase a Security that is the
subject of a private offering unless the prior written approval of one of
the Compliance Officers has been obtained. The rationale of the Compliance
Officer supporting the approval will be retained in the Partnership's files
with the approval.
3. Short Sales. No Employee may sell a Security short that is owned by
any client.
4. Short-Term Trading. No Employee shall profit in the purchase and
sale, or sale and purchase, of the same (or equivalent) Securities within
15 calendar days without the prior written approval of one of the
Compliance Officers. Any profit realized by an Employee on such short-term
trading will be disgorged, unless such prior written approval has been
obtained.
5. Commissions. Commissions on personal securities transactions may be
negotiated by the Employee, but payment of a commission rate that is better
than the rate available to the Partnership's clients through similar
negotiations is prohibited.
6. Options and Futures. The purchase, sale, and utilization of options
and futures contracts on specific Securities by the Employee are subject to
the same restrictions as those set forth in this Code with respect to
Securities, i.e., the option or futures contract should be treated as if it
were the Security for these purposes.
III. General Standards
A. Written Record of Securities Recommendations. Every order for the
purchase or sale of Securities for clients, excluding recommendations to
increase or decrease existing positions, must be memorialized in writing either
prior to or immediately after the purchase or sale order is provided to the
trading desk. A standard Security Trading Advice Form (buy/sell ticket) for
purchase or sale orders must be used for this purpose and should be provided to
or otherwise made available to the trading desk.
B. Use of Securities Recommendations. Any investment ideas developed by any
Employee in the course of working for the Partnership must be made available for
use by clients prior to any personal trading or investment by any Employee based
on such investment ideas, provided, however, that this shall not prohibit any
Employee from purchasing such Securities where such purchase by clients would be
inappropriate at such time in the opinion of the applicable Portfolio Manager.
See also the prohibitions against self-dealing and front-running described in
III.E. and III.F. below.
<PAGE>
C. Gifts, Favors and Gratuities. No Employee should seek from a
broker-dealer, securities salesperson, approved company (i.e., a company the
Securities of which are held by a client), supplier, client or other person or
organization with whom the Employee has a business relationship any gift, favor,
gratuity or preferential treatment that is or may appear to be connected with
any present or future business dealings between the Partnership and that person
or organization and which may create or appear to create a conflict of interest.
As one consequence, no Employee may purchase IPOs or private placements, except
as described in II.C.1. and 2. above. No gifts or other items of more than de
minimis value may be accepted from any person or entity that does business with
or on behalf of the Partnership. All gifts, favors or gratuities having a fair
market value in excess of $100 should be reported immediately to one of the
Compliance Officers and described on the Monthly Securities Transaction report
("Monthly Report'). Gifts, favors or gratuities with an aggregate value of less
than $100 need only be reported on the Monthly Report. A determination will be
made whether any such gifts, favors or gratuities should be returned. In
addition, discretion should be used in accepting invitations for dinners,
evening entertainment, sporting events or theater. While in certain
circumstances it may be appropriate to accept such invitations, all invitations
whose value exceeds $100 should also be immediately reported to one of the
Compliance Officers and described on the Monthly Report. Any invitations from
any person or organization involving free travel for more than one day must
receive prior approval from one of the Compliance Officers. No Employee should
offer any gifts, favors or gratuities that could be viewed as influencing
decision-making or otherwise could be considered as creating a conflict of
interest on the part of their recipient.
D. Inside Information. No Employee may seek any benefit for himself or
herself, a client or anyone else from the use of material, non-public
information about issuers, whether or not held in the portfolios of our clients
or suitable for inclusion in their portfolios. Any Employee who believes he or
she is in possession of such information must contact one of the Compliance
Officers immediately. This prohibition should not preclude an Employee from
contacting officers and employees of issuers or other investment professionals
in seeking information about issuers that is publicly available. Please
remember, in this regard, to review the Statement of Policy Regarding Insider
Trading attached as Appendix C ("Policy Statement").
E. Fair Dealing vs. Self-Dealing. Every Employee shall act in a manner
consistent with the obligation to deal fairly with all clients when taking
investment action. Self-dealing for personal benefit or for the benefit of the
Partnership, at the expense of clients, will not be tolerated. The receipt of
"special favors" from a stock promoter, such as participation in a private
placement or IPO, as an inducement to purchase other Securities for clients is
not permitted. The existence of any substantial economic relationship between a
proposed personal securities transaction and any Securities held or to be
acquired by the Partnership or clients must be disclosed on the Authorization
Form.
F. Front-Running. No Employee shall engage in "front-running" an order or
recommendation, even if the Employee is not handling either the order or the
recommendation and even if the order or recommendation is for someone other than
a client of the Partnership. Front-running consists of executing a transaction
in the same or underlying Securities, options, rights, warrants, convertible
Securities or other related Securities, in advance of block or large
transactions of a similar nature likely to affect the value of the Securities,
based on the knowledge of the forthcoming transaction or recommendation. See
II.B.2. above in this regard.
G. Confidentiality. Information relating to any client's portfolio or
activities is strictly confidential and should not be discussed with anyone
outside of the Partnership. In addition, from the time that an Employee
anticipates making a recommendation to purchase or sell a Security, through the
time that all transactions for clients based on that recommendation have been
consummated, the "subject and content" of the recommendation may be considered
to constitute "inside information". Accordingly, Employees must maintain the
utmost confidentiality with respect to their recommendations during this period
and may not discuss a contemplated recommendation with anyone outside of the
Partnership. In this regard, please also see the Policy Statement.
<PAGE>
Any written or oral disclosure of information concerning clients or
particular purchase or sale transactions for client accounts should be made only
by persons who are specifically authorized to release that information, after
consultation with one of the Compliance Officers. Please note that this
prohibition is not intended to inhibit exchanges of information among Employees.
H. Service as a Director. No Portfolio Manager shall serve on the board of
directors of a publicly traded company, absent prior written authorization from
a Compliance Officer based upon a determination that the board service would be
consistent with the interests of the Partnership and its clients.
IV. Reports of Personal Investments by Employees
A. Account Reporting. Every Employee must immediately notify one of the
Compliance Officers in writing of any account in which they have or will have a
beneficial interest or for which they exercise influence or control over
investment decisions. Such notification must identify the brokerage firm at
which the account is maintained, the date the account was established, the
account executive, the title of the account, the account number and the names
and addresses of all individuals with a beneficial interest in the account. This
requirement also includes all such accounts of the Partnership's clients in
which the Employee has or will have a beneficial interest. Each Employee is
responsible for arranging to have records for securities transactions in such
accounts, other than those at the Partnership, sent to a Compliance Officer in
accordance with IV.B. below.
B. Monthly Reporting. Rule 204-2 under the Advisers Act requires that, with
certain minor exceptions, the Partnership must maintain a record of every
transaction in a Security in which the firm or any Employee has, or by reason of
such transaction acquires, direct or indirect beneficial interest in the
Security; provided, however, that no Employee shall be required to make a report
with respect to an exempt transaction specified in II.B.3. above. This
recordkeeping requirement is met through Monthly Reports sent to the
Partnership.
All Employees of the Partnership must file with the Partnership, by the
tenth calendar day of each month, a confidential Monthly Report for the
immediately preceding month whether or not there has been a personal securities
transaction for the month. (A copy of this Monthly Report is attached as
Appendix D). Each Monthly Report must set forth every transaction in a Security:
1. for the Employee's own account;
2. for any account in which the Employee has any "direct or
indirect beneficial ownership interest" (as defined herein),
unless the Employee has no direct or indirect "influence or
control" over investment decisions for the account; and
3. for any accounts of non-clients that the Employee manages
(for example, as trustee) or to whom the Employee gives
investment or voting advice.
In filing Monthly Reports for such accounts, please note:
a. Employees must file a report every month whether or not
there were any reportable transactions for such
accounts. If an Employee did not have any reportable
transactions, the Monthly Report should state "None."
All reportable transactions should be listed, if
possible, on a single form. If necessary, because of
the number of transactions, please attach a second form
and mark it "continuation." For every Security listed
on the Monthly Report, the information called for must
be completed by all Employees. Copies of duplicate
confirmation statements and account statements
(including those with the Partnership) may be attached
to a
<PAGE>
signed and dated Monthly Report in lieu of setting
forth the information otherwise required, or may be
mailed directly to a Compliance Officer.
b. Monthly Reports must show: (i) the date of the
transaction, the name of the issuer, the interest rate
and maturity date (if applicable), and the number of
shares and the principal amount of the Security
involved; (ii) the nature of the transaction, i.e.,
purchase, sale or other acquisition or disposition,
including gifts, the rounding out of fractional shares,
exercises of conversion rights and exercises or sales
of subscription rights; (iii) the price at which the
transaction was effected; (iv) the name of the broker,
dealer or bank with or through whom the transaction was
effected; and (v) the date that the report is submitted
by the Employee.
c. If duplicate confirmation statements and copies of
account statements are not attached to the Employee's
Monthly Report they should be mailed to a Compliance
Officer.
d. Monthly Reports on family and other accounts in which
an Employee has any direct or indirect beneficial
interest, and which are fee paying clients of the
Partnership or traded through the Partnership's Access
System, need merely list the Partnership account
number. Securities transactions for such accounts need
not be separately itemized.
4. Disclaimer of Beneficial Ownership. The broad definition of
"beneficial ownership" is for purposes of this Code only. It
does not necessarily cover other securities or tax laws. In
reporting securities transactions to the Partnership, an
Employee can include in their Monthly Report "a statement
declaring that the reporting or recording of any securities
transaction shall not be construed as an admission that the
reporting person has any direct or indirect beneficial
ownership in the security." For example, if an Employee who
is a parent or custodian sold securities owned by a minor
child under a Uniform Gifts to Minor Act, the Employee would
report such transaction on the Monthly Report, but such
Employee could disclaim beneficial ownership.
Whether an Employee's Monthly Report should include such a
disclaimer is a personal matter on which the Partnership
will make no recommendation. A disclaimer may be important
not only for securities law purposes, but also because it
might be some evidence of ownership for other purposes, such
as estate taxes. Accordingly, an Employee may wish to
consult his/her own attorney on this issue.
V. Securities Holdings Report
Upon entering employment with the Partnership (but in no event later
than 10 days thereafter), each new employee must complete an Existing Brokerage
Accounts memorandum, which is attached as Appendix E.2. Thereafter during
January in each year, all Employees must disclose on the Annual Personal
Securities Holdings Form, which is attached as Appendix F.2, all Securities
which they own or in which they have a beneficial interest and all securities in
any non-client account for which they participate in making decisions as of a
date no more than 30 days before the report is submitted. The Annual Personal
Securities Holdings Form must show: (i) the title of the Security, name of the
issuer, the number of shares and principal amount of the Security involved; (ii)
the name of the broker, dealer or bank with whom such accounts are maintained;
and (iii) the date that the report is submitted by the Employee.
<PAGE>
VI. Advising Non-Partnership Clients
Employees may not render investment advice to persons other than
clients of the Partnership or members of the Employee's immediate family, unless
the advisory relationship, including the identity of those involved and any fee
arrangements, has been disclosed to and cleared with a Compliance Officer. Such
advisory relationships are subject to the reporting provisions of IV. above.
VII. Violations of this Code
Violations of this Code may result in the imposition of sanctions by
regulatory authorities and/or the Partnership, including forfeiture of any
profit from a transaction, reduction in salary, fine, letter of censure,
suspension or termination of employment or such other remedial action as deemed
appropriate by the Partnership.
VIII. Acknowledgment of Receipt
Shortly following the commencement of employment, new Employees must
meet with the Compliance Officer to review the obligations imposed by this Code.
New Employees shall then sign a Compliance Certificate, which is attached to the
Code as Appendix E.1, to affirm that they have received the Code and will be
given a copy of the Code for their files. All Employees shall be required on an
annual basis to review the Code and sign another Compliance Certificate, which
is attached as Appendix F.1.
IX. Report to Boards of Fund Clients
At least annually, the Partnership and the Distributor must furnish to
the Board of each Fund client that it advises or underwrites, respectively, a
written report that (i) describes any issues arising under the Code, including,
but not limited to, information about material violations of the Code or
procedures and sanctions imposed in response to the material violations; and
(ii) certifies that the Partnership has adopted procedures reasonably necessary
to prevent Employees from violating the Code.
<PAGE>
APPENDIX A
Compliance Officers
Richard E. Smith III
Lorraine C. Hysler
<PAGE>
Appendix B
PERSONAL TRADING REQUEST AND AUTHORIZATION FORM
This Form must be completed by all Employees and Portfolio Managers of Reich &
Tang Asset Management, L.P. ("Partnership") prior to certain personal securities
transactions specified in the Partnership's Code of Ethics, unless the
transaction concerns an "exempt transaction" or does not involve "Securities" as
defined in the Code of Ethics for the Partnership.
Section I. (to be completed by the Employee)
1. Name: (Phone: )
2. Date or dates of proposed transaction:
3. Name of the issuer and dollar amount and/or number of securities of the
issuer proposed to be Purchased or sold:
4. Nature of transaction (i.e., purchase, sale, or other type of acquisition):
(1)
5. Are you or is a member of your immediate family an officer or director of
the issuer of the securities or any affiliate2 of the issuer? Yes[] No[]
If yes, please describe:
6. Do you have any direct or indirect professional or business relationship
with the issuer of the securities: (3)
If so, please describe:
7. Do you currently beneficially own more than 1/2 of 1% of the outstanding
equity securities of the issuer? Yes [] No[]
If yes, please report the total number of shares "beneficially owned":
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(1) If other than a market order, please describe any proposed limits.
(2) For purposes of this question, "affiliate" would include (i) any
entity that directly or indirectly owns, controls, or holds with power
to vote 5% or more of the outstanding voting securities of the issuers
and (ii) any entity under common control with the issuer.
(3) A "professional relationship" includes, for example, the provision of
legal counsel or accounting services. A "business relationship"
includes, for example, the provision of consulting services and
insurance coverage.
<PAGE>
Section II. (to be completed by the Employee)
1. Are you aware of any facts regarding the proposed personal securities
transaction, including the existence of any substantial economic
relationship between the proposed personal securities transaction and any
securities held or to be acquired by the Partnership, or clients of the
Partnership, that may be relevant to a determination as to the existence of
a potential conflict of interest? (4)
Yes[] No[]
If yes, please describe:
2. Is the Security in question being considered for recommendation to any
client account or is there an order for a client account pending?
Yes[] No[]
If YES, do you intend to trade at a different time or price?
Yes[] No[]
If YES, all Employee orders must wait until the client order is executed or
withdrawn. All Portfolio Manager orders concerning such Securities must
receive prior written approval. See criteria listed in Section III below.
3. Has the Security in question been purchased or sold within the past seven
days? Yes[] No[]
If YES, all Portfolio Manager orders concerning such Securities must
receive prior written approval. See criteria list in Section III below.
4. Does the personal securities transaction involve Securities to be acquired
or sold having a value exceeding $10,000? Yes [] No []
If YES, the transaction must receive prior written approval. See criteria
listed in Section III below.
To the best of your knowledge and belief, the answers that you have
provided above in this Form are true and correct.
Date Signature
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(4) Facts that would be responsive to this question would include, for
example, the receipt of "special favors" from a stock promotor, such
as participation in a private placement or initial public offering, as
an inducement to purchase other securities for clients. Another
example would be investment in securities of a limited partnership
that in turn owned warrants of a company formed for the purpose of
effecting a leveraged buy-out in circumstances where clients might
invest in securities related to the leveraged buy-out. The foregoing
are by no means the only examples of pertinent facts and in no way
limits the types of facts that may be responsive to this question.
<PAGE>
Section III. (to be completed by the Compliance Officer)
In determining whether to grant approval, the Compliance Officer will consider
the following factors:
1. Will the Employee or Portfolio Manager forseeably obtain a better price
with respect to the same Securities than any pending or recommended
transactions for clients? Yes [] No []
2. Does the Employee or Portfolio Manager propose to purchase a Security in a
rising market ahead of any client accounts? Yes [] No []
3. Does the Employee or Portfolio Manager propose to sell a Security in a
falling market ahead of any client accounts? Yes [] No []
4. Is the broker selection unusual in any respect? Yes [] No []
5. Is the size of the personal securities transaction large in comparison to
the average trading volume for the Security? Yes [] No []
6. Is the size of the personal securities transaction large in comparison to
the size of other transactions effected for the Employee or Portfolio
Manger? Yes [] No []
7. Does the Employee or Portfolio Manager have a pattern of short-term
transactions? Yes [] No []
8. Does the Employee or Portfolio Manager have a pattern of trading before
client transactions? Yes [] No[]
Section IV.
Approval or Disapproval of Personal Trading Request (to be completed by
Compliance Officer):
[] I confirm that the above-described proposed transaction is consistent with
the policies described in the Code of Ethics of the Partnership and that
the conditions necessary (5) for approval of the proposed transaction have
been satisfied.
[] I do not believe the above-described proposed transaction is consistent
with the policies described in the Code of Ethics of the Partnership or
that the conditions necessary for approval of the proposed transaction have
been satisfied.
Dated: Signed:
Title:
- ------------------------
(5) In the case of a personal securities transaction that involves a
"security" and is not an "exempt transaction" under the Code of
Ethics, please note that one of the Compliance Officers is required to
determine that the proposed personal securities transaction (i) is not
potentially harmful to any client, or (ii) would be very unlikely to
affect the market in which the portfolio securities are traded, or
(iii) clearly is not related economically to securities to be
purchased, sold, or held by any client. In addition, the Code of
Ethics require that the decision to purchase or sell the security at
issue does not involve the use of material non-public information
obtained in the course of the Employee's relationship with the
Partnership.
<PAGE>
Appendix C
STATEMENT OF POLICY REGARDING INSIDER TRADING
("POLICY STATEMENT")
Every Employee (1) of Reich & Tang Asset Management L.P. ("RTAM"), a
registered investment adviser, must read and retain a copy of this Policy
Statement. Any questions regarding this Policy Statement should be referred to
RTAM's compliance officers (the "Compliance Officers") who are primarily
responsible for the enforcement of the policies and procedures described herein.
SECTION I. STATEMENT OF POLICY
This Policy Statement applies to every Employee and extends to activities
both within and outside the scope of their duties at RTAM. RTAM forbids any
Employee from engaging in any activities that would be considered to be "insider
trading."
The term "insider trading" is not defined in the federal securities laws,
but generally is understood to prohibit the following activities:
1. trading by an insider, while in possession of material non-public
information;
2. trading by a non-insider while in the possession of material
non-public information, where the information either was disclosed to
the non-insider in violation of an insider's duty to keep it
confidential or was misappropriated;
3. recommending the purchase or sale of securities while in possession of
material non-public information; or
4. communicating material non-public information to others (i.e.,
"tipping").
The elements of insider trading and the penalties for such unlawful conduct
are discussed below. If after reviewing this Policy Statement, you have any
questions, you should consult one of the Compliance Officers.
A. Who is an Insider? The concept of "insider" is broad and it includes
officers, partners, and employees of a company. In addition, a person can be a
"temporary insider" if he or she enters into a special confidential relationship
in the conduct of a company's affairs and, as a result, is given access to
information solely for the company's purposes. A temporary insider can include,
among others, a company's attorneys, accountants, consultants, bank lending
officers, and the employees of these organizations. In addition, RTAM and its
Employees may become temporary insiders of a company that RTAM advises or for
which RTAM performs other services. According to the U.S. Supreme Court, before
an outsider will be considered a temporary insider for these purposes, the
company must expect the outsider to keep the disclosed non-public information
confidential and the relationship must, at least, imply such a duty.
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(1) The term "Employee" as used herein includes "access persons" and
"advisory representatives," as those terms are defined in Rule 17j-1
under the Investment Company Act of 1940 and Rule 204-2 under the
Investment Advisers Act of 1940, respectively, as well as all other
employees of RTAM. Your receipt of this Policy Statement for your
review and signature means you are a person to whom all of the
provisions of this Policy Statement apply.
<PAGE>
B. What is Material Information? Trading, tipping, or recommending
securities transactions based on inside information is not an actionable
activity unless the information is "material." Generally, information is
considered material if: (i) there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions;
or (ii) it is reasonably certain to have a substantial effect on the price of a
company's securities. Information that should be considered material includes,
but is not limited to, the following: dividend changes, earnings estimates,
changes in previously released earning estimates, a joint venture, the borrowing
of significant funds, a major labor dispute, merger or acquisition proposals or
agreements, major litigation, liquidation problems, and extraordinary management
developments. For information to be considered material, it need not be so
important that it would have changed an investor's decision to purchase or sell
a particular security; rather it is enough that is the type of information on
which reasonable investors rely in making purchase or sale decisions. The
materiality of information relating to the possible occurrence of any future
event would depend on the likelihood that the event will occur and its
significance if it did occur.
C. What is Non-Public Information? All information is considered non-public
until it has been effectively communicated to the marketplace. One must be able
to point to some fact to show that the information is generally public. For
example, information found in a report filed with the Securities and Exchange
Commission ("SEC"), or appearing in Dow Jones, Reuters Economic Services, The
Wall Street Journal, or other publications of general circulation would be
considered public. Information in bulletins and research reports disseminated by
brokerage firms are also generally considered to be public information.
D. Bases for Liability. In order to be found liable for insider trading,
one must either: (i) have a fiduciary relationship with the other party to the
transaction and have breached the fiduciary duty owed to that other party; or
(ii) have misappropriated material non-public information from another person.
1. Fiduciary Duty Theory
Insider trading liability may be imposed on the theory that the insider
breached a fiduciary duty to a company. In 1990, the U.S. Supreme Court held
that there is no general duty to disclose before trading on material non-public
information, and that such a duty arises only where there is a fiduciary
relationship. That is, there must be an existing relationship between the
parties to the transaction such that one party has a right to expect that the
other party would either: (a) disclose any material non-public information, if
appropriate or permitted to do so; or (b) refrain from trading on such material
non-public information.
In 1983, the U.S. Supreme Court stated alternative theories under which
non-insiders can acquire the fiduciary duties of insiders: (a) they can enter
into a confidential relationship with the company through which they gain the
information (e.g., attorneys and accountants); or (b) they can acquire a
fiduciary duty to the company's shareholders as "tippees" if they were aware, or
should have been aware, that they had been given confidential information by an
insider that violated his or her fiduciary duty to the company's shareholders by
providing such information to an outsider.
However, in the "tippee" situation, a breach of duty occurs only where the
insider personally benefits, directly or indirectly, from the disclosure. Such
benefit does not have to be pecuniary, and can be a gift, a reputational benefit
that will translate into future earnings, or even evidence of a relationship
that suggests a quid pro quo.
2. Misappropriation Theory
Another basis for insider trading liability is the "misappropriation"
theory. Under the misappropriation theory, liability is established when trading
occurs as a result of, or based upon, material non-public information that was
stolen or misappropriated from any other person. The U.S. Supreme Court held
that a columnist for The Wall Street Journal had defrauded the Journal when he
obtained information
<PAGE>
that was to appear in the Journal and used such information for trading in the
securities markets. The U.S. Supreme Court held that the columnist's
misappropriation of information from his employer was sufficient to give rise to
a duty to disclose such information or abstain from trading thereon, even though
the columnist owed no direct fiduciary duty to the issuers of the securities
described in the column or to the purchasers or sellers of such securities in
the marketplace. Similarly, if information is given to an analyst on a
confidential basis and the analyst uses that information for trading purposes,
liability could arise under the misappropriation theory.
E. Penalties for Insider Trading. Penalties for trading on or communicating
material non-public information are severe, both for individuals involved in
such unlawful conduct and their employers. A person can be subject to some or
all of the penalties below even if he or she did not personally benefit from the
violation. Penalties include:
1. civil injunctions;
2. criminal penalties of up to $1 million and a maximum jail term of
from five to ten years for individuals and, for "non-natural
persons", penalties of up to $2.5 million;
3. private rights of actions for disgorgement of profits;
4. civil penalties for the person who committed the violation of up
to three times the profit gained or loss avoided, whether or not
the person actually benefitted;
5. civil penalties for the employer or other controlling person of
up to the greater of $1 million per violation or three times the
amount of profit gained or loss avoided as a result of each
violation; and
6. a permanent bar, pursuant to the SEC's administrative
jurisdiction, from association with any broker, dealer,
investment company, investment adviser, or municipal securities
dealer.
In addition, any violation of this Policy Statement can be expected to
result in serious sanctions by RTAM, including dismissal of the person(s)
involved.
SECTION II. PROCEDURES TO IMPLEMENT
THIS POLICY STATEMENT
The following procedures have been established to aid Employees in avoiding
insider trading, and to aid in preventing, detecting, and imposing sanctions
against insider trading. Every Employee of RTAM must follow these procedures or
risk serious sanctions, as described above. If you have any questions about
these procedures, please contact one of the Compliance Officers.
A. Identifying Insider Information. Before trading for yourself or others,
including for any client accounts managed by RTAM, in the securities of a
company about which you may have potential insider information, or before
revealing such information to others or making a recommendation based on such
information, you should ask yourself the following questions:
1. Is the information material? Is this information that an investor
would consider important in making an investment decision? Is
this information that would substantially affect the market price
of the securities if generally disclosed?
2. Is the information non-public? To whom has this information been
provided? Has the information been effectively communicated to
the marketplace by being
<PAGE>
published in The Wall Street Journal or other publications of
general circulation, or has it otherwise been made available to
the public?
If, after consideration of the above, you believe that the information is
material and non-public, or if you have any questions as to whether the
information is material and non-public, you should take the following steps:
1. Report the matter immediately to one of the Compliance Officers.
In consulting with the Compliance Officers, you should disclose
all information that you believe may bear on the issue of whether
the information you have is material and non-public.
2. Refrain from purchasing or selling securities with respect to
such information on behalf of yourself or others, including for
client accounts managed by RTAM, and from recommending a purchase
or sale of such securities.
3. Refrain from communicating the information inside or outside
RTAM, other than to the Compliance Officers.
After the Compliance Officers have reviewed the issue, you will be
instructed to continue the prohibitions against trading, recommending, or
tipping, or you will be allowed to trade, recommend, or communicate the
information. In appropriate circumstances, the Compliance Officers will consult
with legal counsel as to the appropriate course to follow.
B. Personal Securities Trading. All Employees of RTAM must adhere to the
Code of Ethics and Conduct ("Code") with respect to securities transactions
effected for their own account, accounts over which they have a direct or
indirect beneficial interest, and accounts over which they exercise any direct
or indirect influence. Please refer to the Code as necessary. In accordance with
the Code, Employees are required to obtain prior written approval from the
Compliance Officers on all personal securities transactions (unless otherwise
exempted) and to submit to the Compliance Officers Monthly Securities
Transaction Reports ("Monthly Reports") concerning their securities transactions
as required by the Code.
C. Restricting Access to Material Non-Public Information. Information in
your possession that you identify, or which has been identified to you, as
material and non-public must not be communicated to anyone, except as provided
in paragraph II.A., above. In addition, you should make certain that such
information is secure.
D. Resolving Issues Concerning Insider Trading. If, after consideration of
the items set forth in paragraph II.A., above, doubt remains as to whether
information is material or non-public, or if there is any unresolved question as
to the applicability or interpretation of the foregoing procedures, or as to the
propriety of any action, please discuss such matters with one of the Compliance
Officers before trading or recommending a purchase or sale based on such
information or communicating the information in question to anyone.
E. Supervisory Procedures. The Compliance Officers are critical to the
implementation and maintenance of these Policy and Procedures against insider
trading. The supervisory procedures set forth below are designed: (i) to prevent
insider trading; and (ii) to detect insider trading.
1. Prevention of Insider Trading.
In addition to the prior approval and the reporting and
monitoring procedures specified in the Code concerning personal
securities transactions, the following measures have been implemented
to prevent insider trading by Employees.
<PAGE>
a. Each Employee will be provided with a copy of this Policy
Statement regarding insider trading;
b. The Compliance Officers will, on a regular basis, conduct
educational seminars to familiarize Employees with this
Policy Statement. Such educational seminars will target, in
particular, persons in sensitive areas of RTAM who may more
often receive inside information;
c. The Compliance Officers will answer questions regarding this
Policy Statement;
d. The Compliance Officers will resolve issues of whether
information received by an Employee is material or
non-public;
e. The Compliance Officers will review on a regular basis, and
update as necessary, this Policy Statement;
f. Whenever it has been determined that an Employee has
material non-public information, the Compliance Officers
will: (i) implement measures to prevent dissemination of
such information, and (ii) restrict Employees from trading
in the securities by placing such securities on RTAM's
Restricted List; and
g. Upon the request of any Employee, one of the Compliance
Officers will promptly review and either approve or
disapprove a request for clearance to trade in specified
securities.
2. Detection of Insider Trading. To detect insider trading, the
Compliance Officers will:
a. review the personal securities transaction reports filed by
each Employee, including subsequent monthly review of all
personal securities transactions;
b. review the trading activity of client accounts managed by
RTAM;
c. review the trading activity of RTAM's own accounts, if any;
and
d. coordinate this review with other appropriate Employees of
RTAM, when the Compliance Officers have reason to believe
that insider information has been provided to certain
Employees.
3. Special Reports to Management. Promptly upon learning of a
potential violation of this Policy Statement, the Compliance Officers will
investigate the situation and prepare a confidential written report to
management providing full details and recommendations for further action.
4. Annual Reports to Management. On an annual basis, the Compliance
Officers will prepare a written report to RTAM's management summarizing
this Policy Statement particularly indicating any changes hereto since last
year's report, describing the steps taken to communicate this Policy
Statement to Employees, and detailing any investigation, either internal or
by any regulatory agency, into possible insider trading by any Employee and
describing the outcome and any resulting disciplinary action. In response
to the findings detailed in the report, RTAM's management may determine
that changes to this Policy Statement may be appropriate.
<PAGE>
Appendix D
REICH & TANG ASSET MANAGEMENT L.P.
MONTHLY REPORT OF SECURITIES TRANSACTIONS
FOR THE MONTH ENDED _________________
[] I have no securities transactions to report for this month.
[] I have securities transactions to report for this month and they are
listed as follows (to report additional transactions, please attach
additional pages, as needed).
[] As an analyst/manager, to the best of my knowledge, all of the trades
that I have given to the Capital Management Equity Trading Desk for
clients have been executed in accordance with my instructions.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
================ ============== ================ =================== ================ ============== ============== ===============
INTEREST RATE AND NAME OF
SHARES/ MATURITY DATE (IF BROKER OR
DATE AMOUNT SECURITY* APPLICABLE) PRICE BUY SELL BANK USED
- ---------------- -------------- ---------------- ------------------- ---------------- -------------- -------------- ---------------
- ---------------- -------------- ---------------- ------------------- ---------------- -------------- -------------- ---------------
- ---------------- -------------- ---------------- ------------------- ---------------- -------------- -------------- ---------------
- ---------------- -------------- ---------------- ------------------- ---------------- -------------- -------------- ---------------
- ---------------- -------------- ---------------- ------------------- ---------------- -------------- -------------- ---------------
================ ============== ================ =================== ================ ============== ============== ===============
*Please do not abbreviate or use ticker symbol.
</TABLE>
I (received __________ did not receive __________) favors, gifts or gratuities
from brokers, dealers, investment bankers or other business-related persons or
organizations during the above month. If such items were received, please
describe such favors, gifts or gratuities with a fair market value in excess of
$100 and the circumstances under which such items were received under "NOTES"
below.
Does any transaction for the month involve:
(a) Sales of securities purchased within 15 days of the sales? Yes [] No []
(b) Purchases or sales of private placement securities? Yes [] No []
(c) Purchases of an IPO within 5 days of its issuance? Yes [] No []
<PAGE>
NOTES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Directions:
1. Include all securities transactions other than transactions in shares of
open-end investment companies (mutual funds), direct obligations of the
United States or any other OECD country or purchases which are part of an
automatic dividend reinvestment plan.
2. Report all transactions for all accounts (including client accounts) in
which you have any direct or indirect beneficial interest, except any such
account where you have no influence or control over investments. This
includes accounts of other members of your household for whose welfare you
are responsible or with whom you share expenses, such as a spouse, child,
or elderly relation. It would also include securities owned by an entity if
you are in a position to influence investment decisions of that entity.
3. A report on this form is required every month. It is to be filed within 10
days after the end of each month even if no securities transactions have
been carried out during the month.
- ----------------------------- ---------------------------------
Name (Please Print) Signature
- -----------------------------
Date Submitted:
<PAGE>
Appendix E.1
MEMORANDUM
TO: Reich & Tang Asset Management L.P. Employees
FROM: Lorraine C. Hysler
RE: Code of Ethics and Conduct Statement of Policy Regarding Insider Trading
DATE:
- --------------------------------------------------------------------------------
Attached to this memorandum are the Code of Ethics and Conduct (the "Code") and
Statement of Policy Regarding Insider Trading (the "Policy Statement") for Reich
& Tang Asset Management L.P. Both of these documents are essential in helping us
to protect the interests of all of our clients by maintaining the high standards
and reputation of the firm and guarding against inadvertent violations of
federal and/or state securities laws by the Partnership, its partners, officers
and employees.
For these reasons, we will from time to time distribute copies of the Code and
Policy Statement to our partners, officers and employees to be sure that
everyone is familiar with their provisions and continues to agree to comply with
the Code and Policy Statement as a condition of employment.
After you have had an opportunity to read and understand the Code and Policy
Statement, please return a signed copy of this memorandum to Lorraine C. Hysler
acknowledging (i) your receipt of such documents, (ii) your compliance with
their terms, including reporting or disclosing all personal securities
transactions or instances of insider trading required to be reported or
disclosed pursuant to the requirements of the Code and Policy Statement, (iii)
your agreement to comply with the provisions of those documents in the future
and (iv) your understanding that violations of the Code or Policy Statement may
lead to sanctions, including disciplinary action or dismissal and may also be a
violation of federal and/or state securities laws. Retain the Code and Policy
Statement for your files.
- -------------------- -----------------------------------------
Date Signature
------------------------------------------
(Print Name)
<PAGE>
Appendix E.2
MEMORANDUM
TO: Lorraine C. Hysler
FROM:
DATE:
SUBJECT: Existing Brokerage Accounts
This memo is to acknowledge that I understand that as part of my compliance with
Reich & Tang's Code of Ethics, I may only maintain a brokerage relationship with
Schroder Wertheim.
I understand that I am not to open any new brokerage accounts other than an
account at Schroder with trades executed by the Equity Trading Desk.
I have listed any existing brokerage relationships below and will contact each
to close my account within the next 30 days.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------- -----------------------------------------
Date Signature of Employee
<PAGE>
Appendix F.1
TO: Reich & Tang Asset Management L.P. Employees
FROM: Richard E. Smith, III
RE: Annual Distribution of Code of Ethics and Conduct
Statement of Policy Regarding Insider Trading
Attached to this memorandum are the Code of Ethics and Conduct (the
"Code") and Statement of Policy Regarding Insider Trading (the "Policy
Statement") for Reich & Tang Asset Management L.P. Both of these documents are
being distributed to all employees to be sure that everyone is familiar with
their provisions and continues to agree to comply with the Code and Policy
Statement as a condition of employment. We have made the following changes to
the Code:
- - Clarified the Definition of "Beneficial Ownership";
- - Added that a Compliance Officer must provide his or her rationale for
permitting an employee to invest in a private placement;
- - Specified in greater detail the information and timing requirement of the
various monthly and annual reports required of employees under the Code;
- - Added the requirement of providing a written report and certification to
the Board of Directors of the equity funds concerning the Code and any
violations of it by RTAM employees;
- - Provided that, absent approval of a Compliance Officer, client orders would
be fully satisfied before RTAM employee orders for the same security placed
at the same time and at the same price, if the aggregated order could not
be completely filled;
- - Restricted RTAM employees from purchasing securities in an initial public
offering directly from the issuer or an underwriter of such offering,
relegating such employees to purchasing such issues in secondary trading;
- - Clarified that no gifts of more than a de minimis value may be accepted
from any person or entity that does business with RTAM;
- - Expanded the scope of remedial action that RTAM could take in response to
Code violations.
After you have had an opportunity to read and understand the Code and
Policy Statement, please return a signed copy of this memorandum to Lorraine
Hysler acknowledging (i) your receipt of such documents, (ii) your compliance
with the terms, including reporting or disclosing personal securities
transaction or instances of insider
<PAGE>
trading required to be reported or disclosed pursuant to the requirements of the
Code and Policy Statement, (iii) your agreement to comply with the provisions of
those documents in the future and (iv) your understanding that violations of the
Code or Policy Statement may lead to sanctions, including disciplinary action or
dismissal and may also be a violation of federal and/or state securities laws.
Retain the Code and Policy Statement for your files.
This form and the attached Annual Personal Securities Holdings form must be
completed and returned to Lorraine Hysler as soon as possible.
- ----------------- ---------------------------
Date Signature
<PAGE>
Appendix F.2
REICH & TANG ASSET MANAGEMENT L.P.
ANNUAL PERSONAL SECURITIES HOLDINGS
In accordance with Section V of the Code of Ethics, please provide a
list of all Securities which you own or in which you have a Beneficial Interest,
including those in accounts of your immediate family members and all Securities
in non-client accounts for which you make investment decisions.
(1) Your name:
(2) If different than (1), name of the
person in whose name the account
is held:
(3) Relationship of (2) to (1):
(4) Broker at which account is maintained:
(5) Account Number:
(6) Contact person at Broker and phone number:
(7) For each account, attach the most recent account statement listing
Securities in that account. If you own or have a Beneficial Interest in
Securities that are not listed in an attached account statement(s),
list each such Security below:
Name of Security Quantity Value
Custodian
1.______________________________________________________________________________
2.______________________________________________________________________________
3.______________________________________________________________________________
4.______________________________________________________________________________
5.______________________________________________________________________________
6.______________________________________________________________________________
(Attach separate sheet if necessary)
I certify that this form and the attached statement(s) (if any)
constitute all of the Securities that I own or in which I have a Beneficial
Interest, including those held in accounts of my Immediate Family.
Date: Your Signature
Print Name
This form should be returned to Lorraine Hysler - 10th Floor
by February 15th of each year
<PAGE>
APPENDIX G
Effective January 1, 1998, all existing brokerage relationships were
"grandfathered"; all new accounts must be opened at Schroder and trades must be
executed by the Equity Trading Desk located on the 8th Floor.
