As filed with the Securities and Exchange Commission on January 26, 1996
File No. 2-99009
File No. 811-4354
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
F O R M N-1A
Registration Statement Under the Securities Act of 1933
Post-Effective Amendment No. 11 |X|
and
Registration Statement Under the Investment Company Act of 1940 |X|
Amendment No. 15
-------------------
RNC LIQUID ASSETS FUND, INC.
(Exact Name of Registrant as Specified in Charter)
11601 Wilshire Boulevard, 25th Floor
Los Angeles, California 90025
(Address of Principal Executive Office)
(310) 477-6543
Registrant's Telephone Number, Including Area Code)
JULIE ALLECTA
NANCY S. KIM
c/o Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
(Name and Address of Agent for Service)
-------------------
It is proposed that this filing will become effective:
(check appropriate box)
|_| immediately upon filing pursuant to Rule 485(b)
|X| on February 1, 1996, pursuant to Rule 485(b)
|_| 60 days after filing pursuant to Rule 485(a)(1)
|_| 75 days after filing pursuant to Rule 485(a)(2)
|_| on ________________, pursuant to Rule 485(a)
------------------
Total Number of pages _____ Exhibit Index appears at page _____
<PAGE>
Calculation of Registration Fees Under the Securities Act of 1933
----------------------------------------------------------------------
Proposed Proposed
Title of Maximum Aggregate
Securities Amount Offering Maximum Amount of
Being Being Price Offering Registration
Registered Registered Per Share Price* Fee*
- ---------- ---------- --------- --------- ------------
Shares of
Beneficial
Interest 91,452,614 $1.00 $91,452,614 $100
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
has previously registered an indefinite number of securities under the
Securities Act of 1933. The Registrant filed a notice pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940 for its fiscal year ended
September 30, 1995 on November 29, 1995.
-------------------
Please Send Copy of Communications to:
JULIE ALLECTA, ESQ.
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
(415) 772-6980
-------------------------
* Registrant elects to calculate the maximum aggregate offering price and
registration fee pursuant to Rule 24e-2 under the Investment Company
Act of 1940 (the "1940 Act"). Shares equalling $120,228,423 were
redeemed during the fiscal year ended September 30, 1995, of which
shares equalling $29,065,806 were used for reductions pursuant to
Paragraph (c) of Rule 24f-2 under the 1940 Act during the current
fiscal year. The balance of 91,162,617 shares ($91,162,617) together
with an additional $289,997 of shares, which in the aggregate total
91,452,614 shares, are being registered by this Amendment. For purposes
of calculating the registration fee, the amount of the 91,162,617
redeemed shares not used to reduce the Registrant's fee under its Rule
24f-2 Notice for its last fiscal year has been used for reduction of
the registration fee herein, leaving a balance of 289,997 shares (or
$289,997), for which the registration fee is $100.
<PAGE>
RNC LIQUID ASSETS FUND, INC.
Cross Reference Sheet
---------------
FORM N-IA
Part A: Information Required in Prospectus
-------------------------------------------
N-IA - Location in the Registration
Item No. Item Statement by Prospectus Heading
- -------- ---- -------------------------------
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Financial Highlights;
Information Additional Information
4. General Description The Fund and Its Objective
of Registrant and Policies; Additional Information
5. Management Management; Purchase of Shares;
of the Fund Portfolio Transactions; Additional
Information
6. Capital Stock and Cover Page; Dividends,
Other Securities Distributions and Taxes; Additional
Information
7. Purchase of Securities Purchase of Shares; Net Asset
Being Offered Value; Investor Services;
Shareholder Servicing and
Marketing Plans
8. Redemption or Redemption of Shares
Repurchase
9. Pending Legal Not Applicable
Proceedings
<PAGE>
Part B: Information Required in Statement of Additional Information
N-lA Location in the Registration
Item No. Item Statement by Heading
- -------- ---- ----------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information The Fund and Its Objective
and History and Policies
13. Investment Objectives The Fund and Its Objective
and Policies and Policies
14. Management of the Management of the Fund
Fund
15. Control Persons and Management of the Fund
Principal Holders
of Securities
16. Investment Advisory Investment Advisory
and Other Services and Other Services; Principal
Underwriter
17. Brokerage Allocation Portfolio Transactions
18. Capital Stock and See Prospectus Section
Other Securities "Additional Information"
19. Purchase, Redemption Purchase of Shares;
and Pricing of Securi- Redemption of Shares
ties Being Offered
20. Tax Status Taxes
21. Underwriters Principal Underwriter
22. Calculation of Yield Calculation
Performance Data
23. Financial Statements Financial Statements
Part C: Additional Information Required
---------------------------------------
Information required to be included in Part C is set forth under
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
RNC LIQUID ASSETS FUND, INC.
11601 Wilshire Blvd.
25th Floor
Los Angeles, California 90025
RNC Liquid Assets Fund, Inc. (the "Fund") is a diversified, open-end
management investment company. The investment objective of the Fund is to obtain
as high as possible current income consistent with preservation of capital and
liquidity by investing in a diversified portfolio of high-quality, short-term
money market securities. The Fund is a money market fund offering the advantages
of professional management, portfolio diversification, daily liquidity,
principal stability and current income. There is no assurance that the Fund will
achieve its investment objective or be able to maintain a constant net asset
value. See "The Fund and Its Objective and Policies."
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. The Fund seeks to maintain a constant net asset value of $1.00 per
share and declares dividends daily.
The investment adviser of the Fund is RNC Capital Management Co. (the
"Investment Adviser").
Shares of the Fund are sold at their net asset value with no sales load.
The minimum initial purchase for shares of the Fund is $1,000 ($250 for
individual retirement accounts) and the minimum subsequent purchase is $100. See
"Purchase of Shares," page 8.
This Prospectus sets forth basic information about the Fund that a
prospective investor should know before investing in the Fund. Investors should
read and retain this Prospectus for future reference. Additional information
about the Fund has been filed with the Securities and Exchange Commission in a
Statement of Additional Information dated February 1, 1996 , as may be amended
from time to time, which is available upon request and without charge, and which
is incorporated herein by reference. Investors and prospective investors may
obtain a copy of the Statement of Additional Information by writing to the Fund
at the address given above. Inquiries regarding the Fund can be made by calling
(800) 877-7624.
TABLE OF CONTENTS
Page
----
Expense Information................................................. 2
Financial Highlights................................................ 3
The Fund and Its Objective and Policies............................. 4
Management.......................................................... 7
Purchase of Shares.................................................. 8
Net Asset Value..................................................... 9
Redemption of Shares............................................... 10
Dividends, Distributions and Taxes.................................. 11
Portfolio Transactions.............................................. 12
Investor Services................................................... 12
Shareholder Servicing and Marketing Plans........................... 13
Additional Information.............................................. 14
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is February 1, 1996
<PAGE>
EXPENSE INFORMATION
The following tables set forth certain information regarding shareholder
transaction expenses and annual Fund operating expenses.
Shareholder Transaction Expenses.......................................... None
Annual Fund Operating Expenses (as a percentage of net assets)
Management Fees (after fee reduction)................................ 0.28%
12b-1 Fees (after fee waiver)........................................ None
Other Expenses....................................................... 0.52%
Total Fund Operating Expenses...................................... 0.80%
====
Example
1 Year 3 Years 5 Years 10 Years
------ ------- -------- --------
You would pay the following expenses
on a $1,000 investment in the Fund,
assuming (1) a 5% annual return and
(2) redemption at the end of each time
period.................................. $8 $26 $44 $99
The purpose of the foregoing table is to assist the investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly. The Annual Fund Operating Expenses reflect actual
expenses for the fiscal year ended September 30, 1995. The amount of the
management fee reflects a voluntary fee reduction, which is anticipated to
continue for the current fiscal year. The 12b-1 fees represent a fee waiver of
0.25%, which is anticipated to continue for the current fiscal year. In the
absence of these reductions, the rate of management fee payable under the
Investment Advisory Agreement would be 0.41%, the 12b-1 fee would be 0.25% and
the Total Fund Operating Expenses would be 1.18% at the Fund's current asset
level. In addition to this fee reduction, the Investment Adviser may absorb
certain Fund expenses to lower the Fund's operating costs. See the Sections of
the Prospectus entitled "Investor Services" and "Management" for more complete
descriptions of the various costs and expenses referred to above. The example
set forth above should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown.
* * *
<PAGE>
FINANCIAL HIGHLIGHTS
(For One Share Outstanding Through Period)
The following financial highlights are for a share outstanding throughout
the period from May 12, 1986, the date on which the Fund's operations commenced,
through September 30, 1995. The information for the five years ended September
30, 1995 has been audited by Tait, Weller & Baker, the Fund's independent
certified public accountants, whose unqualified report thereon and other
financial statements of the Fund are incorporated by reference in the Statement
of Additional Information. This information should be read in conjunction with
the financial statements in the Fund's Annual Report to Shareholders, copies of
which may be obtained at no charge by writing or telephoning the Fund at the
address or telephone number appearing on the front page of this Prospectus.
<TABLE>
<CAPTION>
Fiscal Period Ended September 30, May 12,
---------------------------------------------------------------------- 1986
to
Sept. 30,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year.................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.050 .032 .026 .038 .064 .077 .085 .066 .056 .022
LESS DISTRIBUTIONS
Dividends from net
investment income...... (0.050) (.032) (.026) (.038) (.064) (.077) (.085) (.066) (.056) (.022)
------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end
of year.................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return................. 5.10% 3.20% 2.65% 3.83% 6.34% 7.63% 8.82% 6.60% 5.60% 5.60% *
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of
period (in 000's)...... 31,066 43,686 29,257 46,563 66,857 119,632 103,626 99,352 88,166 9,956
Ratio of expenses, net
of reimbursement, to
average net assets:.... 0.8% 0.7% 0.7% 0.8% 0.9% 0.8% 0.7% 0.8% 0.7% 0.0%
Ratio of net investment
income to average net
assets:................ 5.0% 3.2% 2.6% 3.9% 6.4% 7.7% 8.5% 6.6% 0.0% 5.6%*
*annualized
</TABLE>
3
<PAGE>
THE FUND AND ITS OBJECTIVE AND POLICIES
The investment objective of the Fund is to obtain as high as possible
current income consistent with preservation of capital and liquidity by
investing in a diversified portfolio of high-quality, short-term money market
securities which the Fund's Board of Directors determines present minimal credit
risks. This is a fundamental policy of the Fund, which may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
For purposes of its investment policies, the Fund defines short-term money
market securities as securities having a maturity of up to one year. These
securities will consist primarily (i.e., in excess of 90% of the Fund's net
assets) of short-term securities issued by the U.S. Government and government
agencies, bank certificates of deposit, commercial paper, bankers' acceptances
and repurchase agreements. There can be no assurance that the objective of the
Fund will be realized.
The Fund will not invest more than 5% of its assets in the securities of
any one issuer (other than the U.S. Government, its agencies or
instrumentalities), or in the event that such securities are not rated in the
highest short-term rating category by any one nationally recognized statistical
rating organization ("NRSRO"), not invest more than the greater of $1 million or
1% of its total assets in the securities of any one issuer. In addition, not
more than 5% of the Fund's total assets will be invested in securities that are
not rated in the highest short-term rating category by any NRSRO or, if unrated,
are not of comparable quality to securities with the highest rating as
determined by the Fund's Board of Directors. With respect to the Fund's entire
portfolio, the Fund shall not maintain a dollar-weighted average portfolio
maturity which exceeds 90 days and will invest only in U.S. dollar-denominated
securities.
The following is a description of the types of short-term money market
securities in which the Fund may invest:
United States Government Securities. The Fund may invest in marketable
securities having remaining maturities of less than one year issued by or
guaranteed as to principal and interest by the U.S. Government, and supported by
the full faith and credit of the U.S. Government. Securities issued by the U.S.
Government include three varieties of Treasury Securities, which differ in their
interest rates, maturities and times of issuance: Treasury Bills, which have a
maturity at time of issuance of one year or less; Treasury Notes, which have
initial maturities of one to ten years; and Treasury Bonds, which generally have
initial maturities of greater than ten years.
Government Agency Securities. The Fund may invest in debt securities
issued by agencies of the U.S. Government which are not direct obligations of
the U.S. Treasury but are issued, in general, under the authority of an act of
Congress. Some of these securities, such as Government National Mortgage
Association pass-through certificates ("GNMA certificates"), are supported by
the full faith and credit of the U.S. Treasury; others, such as those of the
Federal Home Loan Bank, by the right of the issuer to borrow from the Treasury;
others, such as those issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain obligations
of the agency; and others, such as those issued by the Student Loan Marketing
Association, only by the credit of the agency.
4
<PAGE>
Bank Money Instruments. The Fund may invest in obligations of depository
institutions having assets, as most recently publicly reported, of at least $500
million, such as negotiable certificates of deposit, variable rate certificates
of deposit, certain time deposits and bankers' acceptances. If the demand period
of any variable rate certificate of deposit is greater than seven days, there
shall be a presumption that the security is an illiquid security. This
presumption may be overcome, however, if the Board of Directors, in its
reasonable business judgment, determines that the security is not an illiquid
security. As discussed under the caption "Investment Restrictions," below, the
Fund has adopted certain policies limiting the extent to which it may make
certain of these investments. Such obligations may include U.S.
dollar-denominated obligations issued by foreign branches of U.S. banks or U.S.
branches of foreign banks. Foreign branches of U.S. banks may be subject to less
stringent reserve requirements than U.S. banks. Investments in securities of
such foreign branches are subject to the risk of imposition of exchange control
regulations, which could impair the liquidity of the investments.
Commercial Paper. The Fund may invest in commercial paper, which refers to
short-term, unsecured promissory notes issued by U.S. and foreign corporations
to finance short-term credit needs, rated at the time of purchase in the top
rating category as determined by the requisite number of NRSROs or of
"comparable quality" as determined by the Board of Directors if unrated. For
additional information regarding various corporate debt ratings, see the
Statement of Additional Information under the caption "Appendix -- Description
of Commercial Paper Ratings."
Corporate Bonds. The Fund may invest in bonds issued by U.S. corporations
maturing within one year from the date of purchase and at the time of purchase
rated in the highest short-term rating, that is Prime-1 by Moody's Investors
Service and A-1 by Standard & Poor's Corporation, and also rated at time of
purchase A or better by Moody's Investors Service or A or better by Standard &
Poor's Corporation. For additional information regarding various corporate debt
ratings, see the Statement of Additional Information under the caption "Appendix
- -- Description of Commercial Paper Ratings."
Reverse Repurchase Agreements. The Fund may invest in repurchase
agreements with member banks of the Federal Reserve System or approved dealers
in U.S. Treasury Securities. The Fund's ability to use reverse repurchase
agreements is limited by investment restrictions which may not be changed
without approval of a majority of the Fund's outstanding voting securities. The
Fund does not intend to have more than 20% of its net assets committed to
repurchase agreements, nor to invest more than 10% of its net assets in
repurchase agreements having maturities greater than seven days (together with
other illiquid securities). At all times during the term of any repurchase or
reverse repurchase agreement, the Fund's position will be fully collateralized
with U.S. Government or U.S. Government agency securities.
For purposes of the Investment Company Act of 1940, a repurchase agreement
is deemed to be a loan from the Fund to the seller of the security subject to
the repurchase agreement. It is not clear whether a court would consider the
security acquired by the Fund subject to a repurchase agreement as being owned
by the Fund or as being collateral for a loan by the Fund to the seller. In the
event of the commencement of bankruptcy or insolvency proceedings with respect
to the seller of the security before its repurchase under a repurchase
agreement, the Fund may encounter delays and incur costs before being able
5
<PAGE>
to sell the security. Delays may involve loss of interest or a decline in price
of the security. If a court characterizes such a transaction as a loan and the
Fund has not perfected a security interest in the security, the Fund may be
required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt instrument purchased for the Fund, the
Investment Adviser seeks to minimize the risk of loss through repurchase
agreements by analyzing the creditworthiness of the obligor, in this case, the
seller of the security. The repurchase agreements to be entered into by the Fund
will usually be for short periods, such as under one week.
Apart from the risk of bankruptcy or insolvency proceedings, there is also
the risk that the seller may fail to repurchase the security. However, the Fund
will always receive as collateral for any repurchase agreement to which it is a
party securities acceptable to it. The market value of the collateral is equal
to at least 100% for U.S. Government securities and 102% for U.S. Government
agency securities of the amount invested by the Fund plus accrued interest, and
the Fund will make payment against such securities only upon physical delivery
or evidence of book entry transfer to the account of its custodian (the
"Custodian"). If the market value of the security subject to the repurchase
agreement becomes less than the repurchase price (including interest), the Fund
will, pursuant to its repurchase agreement, require the seller of the security
to deliver additional securities so that the market value of all securities
subject to the repurchase agreement will at all times equal or exceed the
amounts referred to above.
Variable Amount Master Notes. The Fund may also purchase variable amount
master notes issued by U.S. and foreign companies having an outstanding debt
issue at the time of purchase rated AA or better by Standard & Poor's
Corporation or Aa or better by Moody's Investors Service. Variable amount master
notes are obligations that permit the short-term investment of fluctuating
amounts by the Fund at varying market rates of interest pursuant to direct
arrangements between the Fund, as lender, and the borrower. Because variable
amount master notes are direct lending arrangements between the lender and
borrower, the parties to the transaction generally do not contemplate that such
instruments will be traded, and there is no secondary market for the notes.
Accordingly, because of the illiquid nature of the notes, the Fund's investment
in such notes and other illiquid investments (such as repurchase agreements
having maturities greater than seven days) may not exceed 10% of its net assets.
Forward Commitments. The Fund may purchase money market securities on a
forward commitment based on fixed terms. The Fund does not intend to invest more
than 5% of its assets in such forward commitments.
Foreign Securities. The Fund is authorized to invest in securities of
foreign issuers of the types referred to above but has no current intention to
make any such investments.
$1.00 Per Share Price. The Fund seeks to maintain a net asset value of
$1.00 per share for purchases and redemptions. There can be no assurance,
however, that the Fund will be able to maintain a net asset value of $1.00 per
share.
Investment Restrictions. The Fund has adopted certain restrictions and
policies relating to the investment of its assets and other activities which are
fundamental policies of
6
<PAGE>
the Fund and may not be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities. Among the more significant
policies and restrictions, the Fund may not (1) purchase any securities other
than the types of money market securities and investments described under the
section of this Prospectus entitled "The Fund and Its Objective and Policies";
(2) invest more than 25% of its total assets in the securities of issuers in any
particular industry (other than U.S. Government securities, Government agency
securities or money market instruments issued by U.S. branches of banks located
in the United States); (3) purchase the securities of any one issuer, other than
the U.S. Government and U.S. Government agency securities, if immediately after
such purchase more than 5% of the value of its assets would be invested in such
issuer; (4) invest in securities having contractual restrictions on resale,
repurchase agreements or non-negotiable time deposits having more than seven
days to maturity or other illiquid securities if such investment would result in
the Fund having more than 10% of the value of its net assets invested in such
securities or repurchase agreements; or (5) borrow, except for temporary or
emergency purposes, and then only from banks in an amount not exceeding 10% of
the value of the total assets of the Fund.
Other restrictions and additional information on policies concerning such
portfolio strategies as investing in non-U.S. securities and lending portfolio
securities are set forth in the Statement of Additional Information under the
caption "The Fund and Its Objective and Policies -- Investment Restrictions."
MANAGEMENT
Advisory Services. The Fund's investment adviser, RNC Capital Management
Co., is responsible for providing investment advice to the Fund. As compensation
for its services to the Fund, the Fund pays the Investment Adviser a fee at a
maximum annual rate of 0.41% of the Fund's average daily net assets. From time
to time, the Investment Adviser may voluntarily waive all or a portion of its
fees payable by the Fund and may also absorb certain Fund expenses. This will
have the effect of lowering the overall expense ratio of the Fund and increasing
the Fund's yield or return to Fund investors while the fee waiver is in effect.
As further discussed in the Statement of Additional Information, the Investment
Adviser's fee is also subject to reduction to the extent that the operating
expenses of the Fund exceed the expense limitations applicable to the Fund
imposed by any state securities law or any regulations thereunder. See the
Statement of Additional Information under the caption "Investment Advisory and
Other Services."
The Investment Adviser and its affiliates have been in the business of
providing investment advice to taxable and tax-exempt accounts for over 25
years, and the Investment Adviser currently manages approximately $890 million
in assets on behalf of its clients. The Investment Adviser is a wholly owned
subsidiary of RNC Capital Group, Inc., which is in the business of providing
financial services to institutional and individual investors through its
subsidiaries. RNC Capital Group, Inc. is an indirect subsidiary of Bank Austria
Aktiengesellschaft (the "Bank"), a banking organization which is organized under
the laws of and domiciled in the Republic of Austria.
Anteilsverwaltung-Zentralsparkasse owns a majority of the voting securities of
the Bank, and the Republic of Austria and Wiener Stadtische each own more than
5% of the voting securities of the Bank. No other single entity owns more than
5% of the issued and outstanding stock of the Bank.
7
<PAGE>
Administration Agreement. The Fund has also entered into an Administration
Agreement with Investment Company Administration Corporation ("ICAC" or the
"Administrator") under which ICAC provides the Fund with certain services in
connection with the management of the Fund's operations. These services include
supervising the Fund's operations; providing the Fund with officers;
coordinating the preparation of reports and other materials; and other
functions. ICAC is affiliated with the Fund's Principal Underwriter (see below).
As compensation for providing these services, the Fund pays ICAC a fee at a
maximum annual rate of $60,000, payable monthly.
Board of Directors. The Fund has a Board of Directors, which establishes
the Fund's policies and supervises and reviews the management of the Fund. The
day-to-day operations of the Fund are the responsibility of the officers of the
Fund, who are appointed by the Board of Directors, and, respectively, the Fund's
Administrator and its Investment Adviser, who are each subject to the general
supervision of the Fund's Board of Directors pursuant to the terms of the
Investment Advisory Agreement.
PURCHASE OF SHARES
Shares of the Fund may be purchased directly from the Fund through the
Fund's transfer agent (the "Transfer Agent"), or through First Fund
Distributors, Inc. (the "Principal Underwriter"), whose address is 4455 East
Camelback Road, Suite 261E, Phoenix, Arizona 85018, or from securities dealers
who have entered into a Selected Dealers Agreement with the Principal
Underwriter.
The public offering price is the net asset value per share, which is
expected to remain constant at $1.00 per share. There can be no assurance,
however, that the Fund will be able to maintain a net asset value of $1.00 per
share. See the Section of this Prospectus entitled "Net Asset Value." The
minimum initial purchase in the Fund is $1,000 ($250 for individual retirement
accounts). The minimum subsequent purchase is $100.
How to Buy Shares. To purchase shares directly from the Fund, investors
must complete and sign the attached Account Application and pay for the shares
purchased. Corporations, trusts or associations may be required to provide
additional information.
Shares may be purchased by mail or by wire.
Purchase by Mail. Send a check or Federal Reserve draft for the purchase
price by mail to RNC Liquid Assets Fund, Inc., c/o American Data Services, Inc.,
P. O. Box 1131, Cincinnati, Ohio, 45264-1131, and, in the case of a new account,
a completed Account Application. Checks and Federal Reserve drafts should be
made payable to "RNC Liquid Assets Fund, Inc." Certified checks are not
necessary, but checks are accepted subject to collection at full face value in
United States Dollars and must be drawn on a bank located in the United States.
Investors purchasing shares by check will not receive payment upon redemption of
such shares until the Fund is reasonably satisfied that the investment has been
collected (which may take up to 15 days). If the Fund is unable to collect upon
the full face value of an investor's check, the purchase order will be canceled
and the investor or the dealer through which the shares are purchased will be
liable for any losses or fees incurred.
Purchase by Wire. Purchases by wire are normally used for large purchases
(purchases of $100,000 or more). You may use a bank or Federal Funds wire. Your
bank
8
<PAGE>
will probably charge you for the wire. Federal Funds are monies credited to a
bank's account with a Federal Reserve Bank. To purchase shares of the Fund by
wire, the investor must have an application on file and must telephone the
Transfer Agent, at (800) 385-7003, to receive a wire order number. The initial
purchase by an investor may be made by wire provided that the investor has an
application on file. On the telephone the following information will be
requested by the Transfer Agent: name(s) in which the account is registered,
account number, amount being wired and wiring bank. Instructions should then be
given by the investor to its bank to wire the specified amount, along with the
account name(s) and number and Wire Order Number, to:
Star Bank, N.A. CINTI/TRUST
ABA # 0420-0001-3
DDA # 483897690
For Account: 19-7200 RNC Liquid Assets Fund, Inc.
Investing through Securities Dealers. Investors may purchase shares of the
Fund from the Principal Underwriter or securities dealers who have entered into
a Selected Dealers Agreement with the Principal Underwriter. Investors should
contact their securities dealer directly for appropriate instructions, as well
as information pertaining to accounts and any related fees. Purchase orders
through securities dealers are effected at the net asset value next determined
after receipt of the order by such dealer, and it is the responsibility of the
securities dealer to transmit orders on a timely basis to the Fund's Transfer
Agent.
General. All monies will be fully invested in full and fractional shares
of the Fund on the day the order is placed with the Transfer Agent, receiving
the dividend and net asset value determined on that day, provided the order and
good payment in respect of the order are received by the Transfer Agent prior to
2:00 p.m., Eastern time, on that day. The issuance of shares is recorded on the
books of the Fund, and, to avoid additional operating costs and for investor
convenience, stock certificates are not issued unless expressly requested of the
Transfer Agent in writing by a shareholder. If requested, stock certificates are
issued at no charge to shareholders. Certificates are not issued for fractional
shares. The Transfer Agent sends to each shareholder of record a statement of
shares of the Fund owned after each purchase or redemption transaction relating
to such shareholder. Any order may be rejected by the Principal Underwriter or
the Fund. The Fund reserves the right to suspend the sale of its shares to the
public in response to conditions in securities markets, or otherwise.
Individual Retirement Account. An investor may establish an individual
retirement account with the Fund's Custodian and purchase shares in the Fund
through such individual retirement account. The minimum initial investment in
the Fund for such an account is $250. Additional information regarding
establishment of such an account may be obtained by contacting the Fund or the
Principal Underwriter.
NET ASSET VALUE
The net asset value per share of the Fund is determined as of 4:00 p.m.,
Eastern time, (Monday through Friday) on each business day the New York Stock
Exchange ("NYSE") is open for trading. The net asset value per share is computed
by dividing the value of the net assets of the Fund by the total number of
shares outstanding, rounded to the nearest cent. The Fund uses the amortized
cost method of valuing its portfolio securities. Expenses, including the
investment advisory fees payable to the Investment Adviser, are accrued daily.
9
<PAGE>
REDEMPTION OF SHARES
Shareholders have the right to require the Fund to redeem their shares
upon receipt of a written request in proper form, by check or by wire. The
redemption price is the net asset value per share of the Fund next determined
after the initial receipt of proper notice of redemption by the Fund's Transfer
Agent.
Ordinary Redemption Procedure. A shareholder wishing to redeem shares of
the Fund may do so without charge by tendering a written request for redemption
in proper form, as explained below, directly to the Transfer Agent, American
Data Services, Inc., (RNC Liquid Assets Fund, Inc.), 24 West Carver Street, 2nd
Floor, Huntington, New York, 11743, together with the stock certificates, if
any, issued for such shares. To be in proper form, the redemption request
requires the signature(s) of all persons in whose name(s) the shares are
registered, signed exactly as their name(s) appear on the Transfer Agent's
register or on the stock certificate(s), as the case may be. In addition, the
signatures on the notice must be guaranteed by an eligible financial
institution, such as a commercial bank, a savings association, a trust company
or a member firm of a national or regional securities exchange. A notary public
is not an acceptable guarantor. In certain instances, the Transfer Agent may
require additional documents such as, but not limited to, trust instruments,
death certificates, appointments as executor or administrator, or certificates
of corporate authority. For shareholders redeeming their shares directly with
the Transfer Agent, payment will be mailed within seven days of receipt of a
proper notice of redemption.
At various times, the Fund may be requested to redeem shares for which it
has not yet received good payment. The Fund may delay or cause to be delayed the
mailing of a redemption check for a period of up to 15 days until it is assured
that good payment (i.e., cash or a certified check drawn against an account
maintained in a bank located in the United States) has been collected for the
purchase of such shares.
The Fund may, at its option, compel the redemption of a shareholder's
shares if the value of the shareholder's account falls below $750 ($250 for
individual retirement accounts) as the result of shareholder redemptions. A
shareholder will receive 60 days' written notice before mandatory redemption
occurs, during which time the shareholder will have the right to increase his or
her account above $750 ($250 for individual retirement accounts).
Redemption by Check. The Transfer Agent will establish a checking account
for any shareholder at the shareholder's written request. Checks drawn on this
account can be made payable to the order of any person in any amount not less
than $500. The payee of the check may cash or deposit the check like any other
check drawn on a bank. When such a check is presented to the Transfer Agent for
payment, the Transfer Agent will present the check to the Fund as authority to
redeem a sufficient number of shares in the shareholder's account to cover the
amount of the check. This enables the shareholder to continue earning daily
income dividends until the check is cleared. The Transfer Agent will return
canceled checks to the shareholder.
Shareholders are subject to the Transfer Agent's rules and regulations
governing such checking accounts, including the right of the Transfer Agent not
to honor checks in amounts exceeding the value of the shareholder's account at
the time the check is presented for payment. Also, the Transfer Agent may not
honor checks drawn against shares purchased,
10
<PAGE>
other than by Federal Funds wire or bank wire, until 15 days after the purchase
of such shares.
Redemption by Wire. Shareholders may have redemption proceeds wired to a
bank account if the shareholder has checked the appropriate box on the Fund's
Account Application, and filed a Telephone Authorization Form with the Transfer
Agent. Redemption requests may be made by telephone or letter and, if received
by the Transfer Agent by 2:00 p.m., Eastern time, the proceeds will be wired on
the same day. Requests received after 2:00 p.m. will be wired on the next
business day after the redemption request is received. The Fund reserves the
right to refuse any redemption request made by telephone, in which case ordinary
redemption procedures should be used. The minimum amount which may be wired is
$1,000. The Fund may limit the frequency of telephone redemptions. Shares in
certificate form may not be redeemed by check or wire.
The Transfer Agent and the Fund have reserved the right to modify or
terminate the privileges of redemption by check or wire and disclaim any
responsibility for any unauthorized redemptions by telephone.
Repurchase. The Fund will also repurchase shares of the Fund from a
shareholder through the securities dealer from which the shareholder originally
purchased shares. The Fund will normally accept orders to repurchase shares by
wire or telephone, from dealers for their customers at the net asset value next
computed after receipt of the order by the dealer, provided that the request for
repurchase is received by the securities dealer prior to the close of business
on the NYSE on the day received and is received by the Fund from such dealer not
later than 2:00 p.m., Eastern time, on the same day. Dealers have the
responsibility of submitting such repurchase requests to the Fund not later than
2:00 p.m., Eastern time, in order to obtain that day's closing price. These
repurchase arrangements are for the convenience of shareholders and do not
involve a charge by the Fund; however, securities dealers may impose a charge on
the shareholder for transmitting the notice of repurchase to the Fund. The Fund
reserves the right to reject any order for repurchase. The exercise of such
right of rejection might adversely affect shareholders seeking to sell their
shares through the repurchase procedure. If, however, a "repurchase order" is
accompanied by a tender of share certificates, the order will be deemed to be a
redemption request. Redemption requests may not be rejected by the Fund and
therefore provide an alternative means for shareholders whose repurchase orders
are rejected to sell their shares.
For shareholders requesting repurchases through their listed securities
dealer, payment for shares will be made by the Transfer Agent directly to the
shareholder or dealer within seven days of the proper tender of the
certificates, if any, and a stock power or letter requesting redemption, in each
instance with signatures guaranteed as noted above.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions. The Fund's policy is to declare dividends
from net income daily and to pay them monthly. Long-term capital gains are
currently declared and paid annually after the end of the fiscal year in which
they have been earned; distributions of any realized securities gains are made
by December 31 of each year with respect to the twelve-month period ending on
October 31 of such year. Dividends begin accruing the day shares are purchased
or credited to a shareholder's account. All dividends and distributions are
automatically reinvested in additional full and fractional Fund shares at the
net asset value
11
<PAGE>
next determined after payment of the dividend or distribution and credited to
the share-holder's account or, at the shareholder's option, paid in cash. If a
shareholder elects to receive distributions in cash, such payments will be made
monthly. All expenses are accrued daily and deducted before declaration of
dividends to investors. See the section of this Prospectus entitled "Investor
Services -- Reinvestment of Dividends and Capital Gains Distributions" for
information as to how to elect either dividend reinvestment or cash payments.
Taxes. The Fund has qualified and elected, and intends to continue to
qualify, to be treated as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended. Under such provisions, the Fund
will not be subject to federal income tax on such part of its net ordinary
income and net realized capital gains which it distributes to its shareholders.
Dividends and distributions are taxable to shareholders and subject to
federal income tax whether they are reinvested in additional Fund shares or
received in cash. Shareholders not subject to federal income tax on their income
generally will not be required to pay taxes on amounts being distributed to
them. Dividends and capital gain distributions may also be subject to state and
local taxes. Shareholders are urged to consult their own tax counsel or other
tax advisers regarding specific questions as to federal, state or local taxes.
PORTFOLIO TRANSACTIONS
The Fund has no obligation to execute any transactions in the Fund's
portfolio securities through any dealer or group of dealers. Subject to policy
established by the Directors of the Fund, the Investment Adviser is primarily
responsible for the portfolio decisions of the Fund and the placing of the
Fund's portfolio transactions. In placing orders, the policy of the Fund is to
obtain the best execution so that the resultant price to the Fund is as
favorable as possible under prevailing market conditions. Factors which may be
considered include the price of the security being offered (including the
applicable dealer spread), the size, type and difficulty of the transaction
involved, the firm's general execution and operational facilities, the risk in
position in the securities involved and, where such transactions are executed
with brokers on an agency basis, the provision of supplemental investment
research, market and statistical information and other research services and
products. While the Investment Adviser generally seeks reasonably competitive
spreads or commissions, the Fund may not necessarily pay the lowest spread or
commission available.
INVESTOR SERVICES
The Fund offers a number of services to its shareholders which are
designed to facilitate investment in its shares at no extra cost. A description
of such services is set forth below. Full details as to each such service and
copies of the various plans described below can be obtained from the Fund.
Investment Account. Every shareholder has an investment account and
receives transaction reports from the Transfer Agent after each share
transaction and dividend reinvestment. After the end of each year, each
shareholder receives federal income tax information regarding dividends and
capital gains distributions.
Automatic Investment Plan. A shareholder may make additions to his or her
investment account at any time by purchasing shares at the applicable purchase
price either
12
<PAGE>
through a securities dealer who has entered into a Selected Dealers Agreement
with the Principal Underwriter or by mail directly to the Transfer Agent.
Voluntary accumulation can also be made through a service known as the Automatic
Investment Plan whereby the Transfer Agent is authorized through pre-authorized
checks of $50 or more to charge the regular bank account of the shareholder on a
monthly basis to provide systematic additions to the investment account of such
shareholder.
Reinvestment of Dividends and Capital Gains Distributions. Unless specific
instructions are given on the Account Application form as to the method of
payment of dividends and capital gains distributions, such payments are
automatically reinvested in additional shares of the Fund. Reinvestment of
dividends and capital gains distributions is calculated at the net asset value
of the shares of the Fund as of the close of business on the day on which the
dividend or distribution is paid. Shareholders may elect in writing to receive
either their dividends or capital gains distributions, or both, in cash, in
which event payment is mailed by the Transfer Agent within seven days after the
payment date.
A shareholder may, at any time, notify the Transfer Agent in writing that
the shareholder no longer wishes to have his or her dividends and/or capital
gains distributions reinvested in shares or vice versa and, immediately upon the
receipt by the Transfer Agent of such notice, those instructions will be
effected.
Systematic Withdrawal Plan. Quarterly or monthly withdrawals from the Fund
are available for shareholders who have acquired shares having a value, based
upon the current offering price, of $10,000 or more.
At the time of each withdrawal payment, sufficient shares are redeemed
from those on deposit in the shareholder's account to provide the withdrawal
payment specified by the shareholder. The shareholder may specify either a
dollar amount or a percentage of the value of his or her shares. Redemptions are
made at net asset value as determined at the close of business on the NYSE on
the 25th day of the last month of each quarter in the case of quarterly
distributions and on the 25th day of the month in the case of monthly
distributions. If the NYSE is not open for business on such date, the shares are
redeemed at the close of business on the preceding business day. The check for
the withdrawal payment is mailed on the next business day following redemption.
If and when a shareholder is making systematic withdrawals, dividends and
distributions on all shares in the Investment Account are automatically
reinvested in shares of the Fund. A shareholder's Systematic Withdrawal Plan may
be terminated at any time, without charge or penalty, by the shareholder, the
Fund, the Transfer Agent or the Principal Underwriter.
Withdrawal payments should not be considered as dividends, yield or
income. Each withdrawal is a potentially taxable event. If periodic withdrawals
continuously exceed reinvested dividends, the shareholder's original investment
may be correspondingly reduced.
SHAREHOLDER SERVICING AND MARKETING PLANS
The Fund has adopted two plans pursuant to Rule 12b-1 promulgated under
the 1940 Act, a Shareholder Servicing Plan for the provision of shareholder
services and a Marketing Plan to reimburse the Administrator for the costs of
printing prospectuses and other promotional activities.
13
<PAGE>
The Shareholder Servicing Plan between the Fund and Midvale Securities
Corporation ("Midvale"), an affiliate of the Investment Adviser, provides that
Midvale will be reimbursed by the Fund for the actual expenses incurred by
Midvale or a sub-agent in furnishing the Fund with services which include: (i)
sending periodic information to service organizations that track investment
company information; (ii) answering shareholder inquiries regarding shareholder
account status and history; (iii) collecting information from shareholders
regarding changes in option and account designation and addresses and
transmitting the same to the Transfer Agent; (iv) collecting the same type of
information from independent account executives and brokers and transmitting it
to the Transfer Agent; (v) supplying other information to the Transfer Agent so
that the Transfer Agent can properly maintain shareholder account records; (vi)
providing facilities, equipment and personnel in connection with the provision
of such services; and (vii) performing such additional shareholder services as
may be agreed upon by the Fund and Midvale, which shall be approved in
accordance with the 1940 Act, provided that any such additional shareholder
services constitute a permissible non-banking activity. Under the Shareholder
Servicing Plan, the Fund will reimburse the actual expenses incurred by Midvale
up to a maximum annual rate, equal to 0.25% of the Fund's average daily net
assets, accrued daily and paid monthly.
The Marketing Plan between the Fund and its Administrator provides that
the Administrator will be reimbursed by the Fund for its costs incurred in
connection with, among other things, the printing, distribution and mailing of
advertisements, brochures, other sales materials, prospectuses, statements of
additional information, and annual and semi-annual reports to potential
investors and selected dealers and the filing of such materials with appropriate
securities regulatory authorities. The Marketing Plan provides that
reimbursements must be limited to actual costs incurred by the Administrator, as
the marketing agent, subject to a maximum reimbursement of 0.03% of the Fund's
average daily net assets.
Both the Shareholder Servicing Plan and the Marketing Plan provide that
all reimbursements shall be accounted for within the fiscal year of the Fund in
which such expenditures were made and will not be carried forward into
subsequent fiscal years of the Fund. Both the Shareholder Servicing Plan and the
Marketing Plan contain reporting, renewal, termination and amendment provisions
as required by the 1940 Act. See the Statement of Additional Information section
entitled "Shareholder Servicing Plan and Marketing Plan" for more information.
Banking Law. The Glass-Steagall Act prohibits banks and their affiliates
from engaging in certain securities-related activities, including the offering,
sale or distribution of securities. None of the service providers to the Fund
believes that the services which it provides the Fund violate the Glass-Steagall
Act or any other applicable banking statute or regulation. However, future
changes in federal or state statutes or regulations or in judicial or
administrative interpretations of present or future statutes or regulations
might prevent certain of the Fund's service providers from performing their
duties under the applicable agreement. If such a change should occur, the Fund's
Board of Directors will consider appropriate action, including the possible
retention of another service provider.
14
<PAGE>
ADDITIONAL INFORMATION
Yield Calculations. From time to time, the Fund advertises its "yield" and
"effective yield." Both yield figures are based on historical earnings and are
not intended to indicate future performance. The "yield" of the Fund refers to
the income generated by an investment in the Fund over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The "effective yield" is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.
Description of Shares. The authorized capital stock of the Fund consists
solely of 500,000,000 shares of Common Stock having a par value of $0.01 per
share. Each of the Fund's issued and outstanding shares has equal dividend,
distribution, liquidation and voting rights. Each issued and outstanding share
is entitled to one vote and is entitled to participate equally in dividends and
distributions declared by the Fund and in net assets of the Fund remaining after
satisfaction of outstanding liabilities upon liquidation or dissolution. The
shares of the Fund, when issued, are fully paid and non-assessable, have no
preference, preemptive, conversion, exchange or similar rights, and are freely
transferable. Shares do not have cumulative voting rights and the holders of
more than 50% of the shares of the Fund voting for the election of Directors can
elect all of the Directors of the Fund if they choose to do so, and in such
event the holders of the remaining shares would not be able to elect any
Directors. The Fund does not normally hold annual meetings of shareholders
except when required by the 1940 Act. See the Statement of Additional
Information section entitled "Management of the Fund" for more information.
Custodian and Dividend Disbursing Agent. Star Bank is the Fund's
Custodian.
Transfer and Dividend Disbursing Agent. American Data Services, Inc. is
the Fund's Transfer Agent, Dividend Disbursing Agent, and maintains the Fund's
accounting records.
Counsel and Auditor. The validity of the shares of beneficial interest
offered by this Prospectus will be passed on by Heller, Ehrman, White &
McAuliffe. Tait, Weller & Baker, independent certified public accountants, are
the auditors of the Fund.
Miscellaneous. The Fund issues to its shareholders semi-annual reports
containing unaudited financial statements and annual reports containing
financial statements examined by auditors approved annually by the Board of
Directors.
This Prospectus does not contain all the information included in the
Registration Statement with the Securities and Exchange Commission under the
Securities Act of 1933. Certain portions of the Fund's Registration Statement
have been omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. The Registration Statement, including the exhibits filed
therewith, may be examined at the office of the Securities and Exchange
Commission in Washington, D.C.
15
<PAGE>
No person has been authorized to give any information
or to make any representations, other than those
contained in this Prospectus and in the Statement of
Additional Information, in connection with the offer
made by this Prospectus, and, if given or made, such
other information or representations must not be
relied upon as having been authorized by the Fund,
its investment Adviser or its Principal Underwriter.
This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy by the Fund or
by the Principal Underwriter in any State in which
such offer to sell or solicitation of any offer to
buy may not lawfully be made.
INVESTMENT ADVISER
RNC Capital Management Co.
11601 Wilshire Boulevard
25th Floor
Los Angeles, California 90025
CUSTODIAN
Star Bank
P.O. Box 1118
Cincinnati, Ohio 45201-1118
TRANSFER AGENT
American Data Services, Inc.
24 West Carver Street, 2nd Floor
Huntington, New York 11743
LEGAL COUNSEL
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
AUDITORS
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, PA 19102
<PAGE>
-----------------------------------
PART B
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
RNC LIQUID ASSETS FUND, INC.
11601 WILSHIRE BOULEVARD, 25TH FLOOR
LOS ANGELES, CALIFORNIA 90025
FOR GENERAL INFORMATION AND PURCHASES CALL
(800) 877-7624
RNC Liquid Assets Fund, Inc. (the "Fund") is a professionally
managed diversified open-end management investment company. The Fund invests in
a diversified portfolio of short-term money market securities with the objective
of obtaining as high as possible current income consistent with preservation of
capital and liquidity. Shares of the Fund may be purchased at their net asset
value with no sales load.
This Statement of Additional Information of the Fund is not a
prospectus and should be read in conjunction with the Prospectus of the Fund
dated February 1, 1996, as may be amended from time to time (the "Prospectus"),
which has been filed with the Securities and Exchange Commission and is
available upon written request without charge. The Prospectus provides the basic
information a prospective investor should know before purchasing shares of the
Fund and may be obtained by calling or by writing the Fund at the above
telephone number or address. This Statement of Additional Information is not a
prospectus and should be read in conjunction with the Prospectus. This Statement
of Additional Information has been incorporated by reference into the
Prospectus.
The date of this Statement of Additional Information is February 1,
1996.
TABLE OF CONTENTS
Page
----
The Fund and Its Objective and Policies.....................................B- 2
Management of the Fund......................................................B- 4
Investment Advisory and Other Services......................................B- 6
Portfolio Transactions......................................................B- 8
Purchase of Shares..........................................................B- 8
Redemption of Shares........................................................B- 9
Taxes.......................................................................B-10
Dividends...................................................................B-12
Shareholder Servicing Plan and Marketing Plan...............................B-13
Principal Underwriter.......................................................B-15
Financial Statements........................................................B-15
Appendix....................................................................B-16
B-1
<PAGE>
THE FUND AND ITS OBJECTIVE AND POLICIES
Reference is made to "The Fund and its Objective and Policies"
in the Prospectus for a discussion of the investment objectives and policies of
the Fund.
The Fund is a diversified open-end management company, which
was organized as a Maryland corporation on April 9, 1985.
INVESTMENT RESTRICTIONS. In addition to the investment restrictions set forth in
the Prospectus, the Fund has adopted the following eleven investment
restrictions, none of which may be changed without the approval of a majority of
the Fund's outstanding shares, which for this purpose means the vote of (i) 67%
or more of the Fund's shares 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 Fund's outstanding shares, whichever is less. The Fund
may not:
(1) Make investments for the purpose of exercising control or
management.
(2) Purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization.
(3) Invest in oil, gas or other mineral exploration or development
programs, commodities or commodity contracts, except that the Fund may
invest in securities of issuers which invest or deal in any of the
above.
(4) Invest in real estate or in interests in real estate, but the Fund
may purchase readily marketable securities of companies holding real
estate or interests therein.
(5) Purchase any securities on margin, except for use of short-term
credit necessary for clearance of purchases and sales of portfolio
securities.
(6) Make short sales of securities or maintain a short position or
write, purchase or sell puts, calls, straddles, spreads or combinations
thereof.
(7) Make loans to other persons, provided that (a) the Fund may
purchase debt obligations in accordance with its investment objective
and policies, (b) the Fund may make loans of portfolio securities
provided, among other things, that the value of the securities loaned
does not exceed 10% of the value of the Fund's net
B-2
<PAGE>
assets and (c) the Fund may enter into repurchase agreements as
disclosed in the Prospectus. (The Fund does not presently loan
portfolio securities.) The acquisition of bonds, debentures or other
corporate debt securities which are not publicly distributed is
considered to be the making of a loan under the Investment Company Act
of 1940 (the "1940 Act").
(8) Mortgage, pledge, hypothecate or in any manner transfer as security
for indebtedness any securities owned or held by the Fund except as may
be necessary in connection with borrowings mentioned in (9) below, and
then such mortgaging, pledging or hypothecating may not exceed 10% of
the Fund's total assets, taken at market value. In order to comply with
certain state statutes, the Fund will not, as a matter of operating
policy, mortgage, pledge or hypothecate its portfolio securities to the
extent that at any time the value of pledged securities will exceed 10%
of the net assets of the Fund.
(9) Borrow in excess of 10% of the total assets of the Fund, taken at
market value, and then only from banks as a temporary measure for
extraordinary or emergency purposes. Usually only "leveraged"
investment companies may borrow in excess of 5% of their assets;
however, the Fund will not borrow to increase income but only to meet
redemption requests which might otherwise require untimely dispositions
of portfolio securities. In addition, the Fund will not purchase
securities while borrowings are outstanding.
(10) Act as an underwriter of securities, except to the extent that the
Fund may technically be deemed an underwriter when engaged in the
activities described in (7) above or insofar as the Fund may be deemed
an underwriter under the Securities Act of 1933 in selling portfolio
securities.
(11) Invest in securities of any one issuer with a record of less than
three years of continuous operation, including predecessors, except
obligations issued or guaranteed by the United States Government or its
agencies.
Bank money instruments in which the Fund invests must be
issued by depository institutions with total assets of at least $500 million or
capital surplus and undivided profits in excess of $100 million.
The Fund's commercial paper investments will be rated at the
time of purchase in the top rating category as determined
B-3
<PAGE>
by the requisite number of nationally recognized statistical rating
organizations ("NRSROs") or be of "comparable quality" as determined by the
Board of Directors if unrated. The Fund's investments in corporate bonds (which
must have maturities at purchase of one year or less) must be rated at least
"AA" by Standard & Poor's Corporation ("Standard & Poor's") or "Aa" by Moody's
Investors Service ("Moody's"). For further information regarding various
corporate debt ratings, see the Appendix.
FORWARD COMMITMENTS. The Fund may purchase money market securities on a forward
commitment basis at fixed purchase terms. The purchase will be recorded on the
date the Fund enters into the commitment and the value of the security will
thereafter be reflected in the calculation of the Fund's net asset value. The
value of the security on the delivery date may be more or less than its purchase
price. A segregated account of the Fund will be established with its custodian
consisting of cash or liquid money market securities having a market value at
all times at least equal to the amount of the forward commitment.
FOREIGN SECURITIES. As noted in the Prospectus, the Fund may in the future
invest in securities of foreign issuers. Investments in foreign securities,
particularly those of non-governmental issuers, involve considerations which are
not ordinarily associated with investing in U.S. issuers. These considerations
include changes in currency rates, currency exchange control regulations, the
possibility of expropriation, the unavailability of financial information or the
difficulty of interpreting financial information prepared under foreign
accounting standards, less liquidity and more volatility in foreign securities
markets, the impact of political, social or diplomatic developments and the
difficulty of assessing economic trends in countries outside the United States.
If it should become necessary, the Fund could encounter greater difficulties in
invoking legal processes abroad than would be the case in the United States.
Transaction costs in foreign securities may be higher. These and other factors
will be considered before investing in foreign securities, unless such
investments will meet the Fund's standards and objectives. The Fund will not
concentrate its investments in any particular foreign country and will only
purchase securities denominated in U.S. Dollars.
MANAGEMENT OF THE FUND
The Board of Directors is responsible for the overall
management of the Fund, including general supervision and review of its
investment activities. None of the Fund's current Directors is an "interested
person" (as defined in the 1940 Act) of the Fund or any adviser, administrator
or principal underwriter of the Fund. The officers, who administer the Fund's
daily operations, are appointed by the Board of Directors. The
B-4
<PAGE>
current Directors and officers of the Fund, their addresses, and their principal
occupations for the past five years are set forth below.
ERIC M. BANHAZL -- President, Treasurer and Secretary of the
Fund, 2025 E. Financial Way, Suite 101, Glendora, California 91741: Currently,
Mr. Banhazl (age 38) is Senior Vice President of Robert H. Wadsworth &
Associates, Inc., Vice President of Investment Company Administration
Corporation, the Fund's administrator and First Fund Distributors, Inc., the
Fund's principal underwriter. Mr. Banhazl is also the President of E.M. Banhazl
& Associates, Inc., a mutual fund consulting firm, the Treasurer of
Professionally Managed Portfolios, an investment company unaffiliated with the
Fund, the Treasurer of Guinness Flight Investment Funds, Inc., an investment
company unaffiliated with the Fund, and President, Secretary and Treasurer of
Target Income Fund, Inc., an investment company unaffiliated with the Fund.
BRUCE B. STUART -- Director; 3198 C. Airport Loop, Costa Mesa,
California 92626. Since 1991, Mr. Stuart (age 53) has been the president of
Nu-Ceramic Technology, Inc., a company involved in the research and development
of advanced ceramic metallization for the semiconductor and hybrid industry.
From 1984 to 1991, Mr. Stuart was a partner of the Richmar Group, a management
consulting firm.
DEVERE W. McGUFFIN, II -- Director; 1441 East Chevy Chase,
Glendale, California 91206. Mr. McGuffin (age 52) is the owner and principal
executive officer of the Meadow Grove Group, a finance and investment firm with
which he has been associated since 1974. Mr. McGuffin is also the Chief
Executive Officer of California Adventist Federal Credit Union. Mr. McGuffin
also heads up First Interurban Development Corporation a non-profit financial
corporation which he founded in 1981. Mr. McGuffin is also currently licensed as
a securities representative and as a commodities futures principal.
The Directors receive an annual retainer plus fees and
expenses for each Board meeting and Audit Committee meeting attended (for the
latest fiscal year, the Directors each received $4,500 for their attendance at
Board meetings and Audit Committee meetings). Pursuant to the terms of the
Administration Agreement, the Fund's Administrator pays all compensation of
officers of the Fund, and no person receives any compensation directly from the
Fund for acting as an officer of the Fund. However, such officers may be deemed
to receive remuneration indirectly from the Fund because the Administrator is
paid an administrative fee by the Fund.
As of January 12, 1996, the following persons held of record
5% or more of the outstanding shares of the Fund: Repub &
B-5
<PAGE>
Co., c/o Imperial Trust, 727 W. 7th Street, Suite 400, Los Angeles, California
90071 (77%); and RNC Capital Management Co., 11601 Wilshire Boulevard, 25th
Floor, Los Angeles, California 90025 (19%).
As of such date, the number of outstanding shares of the Fund
owned by the officers and Directors of the Fund as a group was less than 1% of
the outstanding shares of the Fund.
While the Fund is not required and does not intend to hold
annual meetings of shareholders, such meetings may be called by the Directors in
their discretion, or upon demand by the holders of 10% or more of the
outstanding shares of the Fund for the purpose of electing or removing
Directors. Shareholders may receive assistance from the Fund in communicating
with other shareholders, in connection with the election or removal of
Directors, pursuant to the provisions contained in Section 16(c) of the 1940
Act.
INVESTMENT ADVISORY AND OTHER SERVICES
The Fund has entered into an Investment Advisory Agreement
with RNC Capital Management Co. (the "Investment Adviser"). The principal
business address of the Investment Adviser is 11601 Wilshire Boulevard, 25th
Floor, Los Angeles, California 90025. The Investment Adviser is an indirect
subsidiary of Bank Austria Aktiengesellschaft (the "Bank"), a banking
organization which is organized under the laws of and domiciled in the Republic
of Austria. Anteilsverwaltung-Zentralsparkasse owns a majority of the voting
securities of the Bank, and the Republic of Austria and Wiener Stadtische each
own more than 5% of the voting securities of the Bank. No other single entity
owns more than 5% of the issued and outstanding stock of the Bank.
The Directors and principal executive officers of the
Investment Adviser are: Daniel J. Genter, Jr., President, Chief Executive
Officer and Director; Thomas Pastore, Vice President/Assistant Secretary and
Director; James O'Neill, Vice President/Assistant Treasurer and Director;
Nicanor M. Mamaril, Senior Vice President, Treasurer and Secretary; Jan Kallik,
Senior Vice President and Director of Equities Research; A. Robert Blais, Senior
Vice President and Director of Fixed Income; Bruce A. Mandel, Senior Vice
President and Director of Marketing, and John G. Marshall, Senior Vice President
and Director of Equity.
Subject to supervision by the Fund's Board of Directors, the
Investment Adviser is responsible for the actual management of the Fund's
portfolio and constantly reviews the holdings of the portfolio in light of its
own research analysis and analyses from other relevant sources. The
responsibility for making decisions to buy, sell or hold a particular security
rests with the Investment Adviser. The Investment Adviser provides the portfolio
managers for the Fund, who consider analyses from
B-6
<PAGE>
various sources, make the necessary investment decisions and place transactions
accordingly.
Unless earlier terminated as described below, the Investment
Advisory Agreement will continue in effect for a one-year term which would
expire on December 31, 1996. The Agreement will continue in effect for
successive one-year periods thereafter if approved annually (a) by the Board of
Directors of the Fund or by a majority of the outstanding voting shares of the
Fund and (b) by a majority of the Directors who are not parties to such
contracts or interested persons (as defined in the Investment Company Act of
1940) of any such party. The Agreement terminates upon assignment and may be
terminated without penalty upon 60 days' written notice at the option of either
party thereto or by the vote of the shareholders of the Fund.
In the event the operating expenses of the Fund (including the
fees payable to the Investment Adviser but excluding taxes, interest, brokerage
and extraordinary expenses and the fees paid under the Fund's Distribution and
Shareholder Servicing Plan) for any fiscal year exceed the expense limitations
applicable to the Fund imposed by state securities laws or any regulations
thereunder, the Investment Adviser will reduce its fee by the extent of such
excess and, if required pursuant to any such laws or regulations, will reimburse
the Fund in the amount of such excess. At present the most restrictive expense
limitation would require the Investment Adviser to reimburse the Fund if, during
any fiscal year of the Fund, ordinary operating expenses exceed 2.5% of the
Fund's first $30 million of average net assets, 2.0% of the next $70 million of
average net assets and 1.5% of the remaining average net assets. The Investment
Adviser undertakes to pay or refund to the Fund any amount by which such
expenses exceed this expense limitation. The payment of the management fee at
the end of any month is reduced so that there is no accrued but unpaid liability
under this expense limitation. In addition, from time to time the Investment
Adviser may voluntarily reduce its fee or reimburse all or a portion of the
Fund's other expenses, which reimbursement will have the effect of lowering the
overall net expense ratio of the Fund and of increasing its yield or return to
investors for the period for which such expenses were payable.
For the years ended September 30, 1993 , 1994 and 1995 total
fees payable by the Fund to the Investment Adviser were $61,195 , $64,897 and
$106,810, respectively. The amount of the management fee paid by the Fund
reflects a voluntary fee reduction by the Investment Adviser which is
anticipated to continue for the current fiscal year. In the absence of this fee
reduction, the rate of management fee payable under the Investment Advisory
Agreement would be 0.41%.
B-7
<PAGE>
LICENSE OF INITIALS. The Investment Adviser has granted the Fund a non-exclusive
license to use the initials "RNC" in its name for so long as the Investment
Adviser serves as investment adviser to the Fund.
PORTFOLIO TRANSACTIONS
The cost of executing portfolio securities transactions of the
Fund will primarily consist of dealer spreads and underwriting commissions. The
money market securities in which the Fund invests are traded primarily in the
over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Fund
will deal directly with the dealers who make a market in the securities involved
except in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principal for their own accounts.
On occasion, securities may be purchased directly from the
issuer. Bonds and money market securities also are generally traded on a net
basis and do not normally involve either brokerage commissions or transfer
taxes. Therefore, the Fund rarely pays any brokerage commissions. During the
three fiscal years ended September 30, 1993 , 1994 and 1995, the Fund paid no
brokerage fees.
PURCHASE OF SHARES
As described in the Prospectus, the shares of the Fund are
offered on a continuous basis at a price equal to the net asset value per share
next determined after receipt of a purchase order in proper form.
NET ASSET VALUE. The value of the Fund's portfolio securities is determined on
each day the New York Stock Exchange ("NYSE") is open for trading. The NYSE is
open on business days other than certain holidays (New Year's Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day). The Fund uses the amortized cost method of valuation.
The amortized cost method of valuation involves valuing a security at its cost
on the date of purchase, and thereafter (absent unusual circumstances) assuming
a constant amortization to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by this method, is higher or lower than the
price the Fund would receive if it sold the instrument. During such periods the
yield to investors in the Fund may differ somewhat from that obtained in a
similar fund which uses other methods to
B-8
<PAGE>
determine the fair or market value of its portfolio securities. The Fund intends
to use its best efforts to maintain a constant net asset value of $1.00 per
share. If net unrealized gains or losses were to exceed $.005 per share, the
Fund's net asset value would deviate from $1.00 per share. The Fund endeavors to
reduce the amount of unrealized gains and losses which result from, among other
things, interest rate changes, by maintaining a dollar weighted average
portfolio maturity of less than 90 days.
INDIVIDUAL RETIREMENT ACCOUNTS. An investor desiring to purchase shares in the
Fund through an individual retirement account may establish such an account
through the Fund's custodian, Star Bank. Through such an account, investments
may be made in the Fund and certain of the other mutual funds sponsored by the
Investment Adviser. Star Bank charges an initial establishment fee and an annual
custodial fee for each account. Information with respect to these accounts is
available upon request from the Fund or First Fund Distributors, Inc., the
Fund's principal underwriter. The minimum investment for an individual
retirement account is $250.
Capital gains and income received in such an account are
generally exempt from federal income taxation until distributed from the
account. Capital gains and ordinary income may be taxable in whole or in part,
however, if the account has borrowed to purchase or carry Fund shares. Investors
considering participation in such an account should review specific tax laws
relating thereto and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of such an account.
REDEMPTION OF SHARES
Reference is made to "Redemption of Shares --Repurchase" in
the Prospectus for a discussion of the redemption and repurchase rights of
shareholders.
The right to redeem shares or to receive payment with respect
to any such redemption may be suspended for more than seven days only for
periods during which trading on the NYSE is restricted as determined by the
Securities and Exchange Commission or the NYSE is closed (other than customary
weekend and holiday closings), for periods during which an emergency exists as
defined by the Securities and Exchange Commission as a result of which disposal
of portfolio securities or determination of the net asset value of the Fund is
not reasonably practicable, and for such other periods as the Securities and
Exchange Commission may by order permit for the protection of the Fund's
shareholders.
B-9
<PAGE>
The Prospectus indicates when signature guarantees may be
required to effect a redemption. A signature guarantee is a widely accepted way
to protect stockholders and the Fund by verifying the signature on the request.
Signature guarantees should not be qualified in any way, whether by date or
otherwise. Signatures must be guaranteed by an "Eligible Guarantor Institution"
and not by a notary public or any other person or entity. An "Eligible Guarantor
Institution" means a bank, trust company, broker, dealer, municipal or
government securities broker or dealer, credit union, national securities
exchange, registered securities association, clearing agency or savings
association that is a participant in the Securities Transfer Agents Medallion
Program endorsed by the Securities Transfer Association.
Subject to the Fund's compliance with applicable regulations,
the Fund has reserved the right to pay the redemption or repurchase price,
either totally or partially, by a distribution in kind of securities (instead of
cash) from the Fund's portfolio. Such regulations would require, among other
things, that the Fund commit to pay in cash all requests for redemption by any
shareholder, limited in amount with respect to each shareholder during any
90-day period to the lesser of $250,000 or 1% of the net asset value of the Fund
at the beginning of such period. The Fund anticipates that it would make
redemptions in kind only if it received redemption requests with respect to a
substantial portion of its net assets at a time when disposition of a
substantial portion of its portfolio securities would be disadvantageous. The
securities distributed in such a distribution would be valued at the same price
as the price assigned to such securities in calculating the net asset value of
the Fund. If a shareholder receives a distribution in kind in securities, in
most instances he or she will incur brokerage charges when he or she converts
the securities received into cash.
TAXES
In all prior fiscal years the Fund has qualified for and
elected the special tax treatment afforded regulated investment companies under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The
Fund intends to continue to so qualify. Under such provisions, the Fund will not
be subject to federal income tax on that part of its net ordinary income and net
realized capital gains which it distributes to shareholders. To qualify for such
tax treatment the Fund must, among other things, pay to its shareholders in each
taxable year at least 90% of its investment company taxable income (consisting
of investment income and short-term capital gains) and derive less than 30% of
its gross income in each taxable year from gains (without deduction for losses)
from the sale or other disposition
B-10
<PAGE>
of securities held for less than three months. If in any taxable year the Fund
does not qualify as a regulated investment company, all its taxable income will
be taxed to the Fund at corporate rates and distributions will be taxed to the
shareholders as dividends to the extent of the Fund's current and accumulated
earnings and profits. The Code also imposes a non-deductible 4% excise tax on
the excess, if any, of the Fund's "required distribution" over its actual
distributions in any calendar year. Generally, the "required distribution" is
98% of a fund's ordinary income for the calendar year plus 98% of its capital
gain net income recognized for the one-year period ending on October 31 plus
undistributed amounts from prior years. The Fund anticipates that it will be
able to meet such distribution requirements and will not be subject to the 4%
excise tax.
Dividends paid by the Fund from its short-term investment
income, and distributions of the Fund's net realized capital gains, are taxable
to shareholders as ordinary income. Dividends and distributions are taxable as
described, whether received in cash or reinvested in additional shares of the
Fund.
Some shareholders may be subject to a 31% withholding tax on
reportable dividend distributions, capital gains distributions and redemption
payments ("backup withholding"). Generally, shareholders subject to backup
withholding will be those for whom taxpayer identification numbers are not on
file with the Fund or who, to the Fund's knowledge, have furnished an incorrect
number. When establishing an account, an investor must certify under penalties
of perjury that such number is correct and that he or she is not subject to
backup withholding. Foreign shareholders may also be subject to other
withholding requirements.
Fund shares are redeemable at the option of the Fund if, in
the opinion of the Fund, ownership of the shares has or may become concentrated
to an extent which would cause the Fund to be deemed a personal holding company
within the meaning of the Code, except in the event the value of a shareholder's
shares falls below $750 ($250 for individual retirement accounts) as the result
of shareholder redemptions. In the event of such concentration, the Fund may
compel the redemption of, reject any order for, or refuse to give effect on the
books of the Fund to the transfer of, Fund shares in an effort to maintain the
ownership of Fund shares so as to prevent that consequence. The Fund, however,
assumes no responsibility to compel redemptions or to reject any orders.
Depending upon the extent of the Fund's activities in those
states and localities in which its offices are maintained or in which its agents
or independent contractors are located, the Fund may be subject to the tax laws
of such states or localities. In addition, the treatment of the Fund and its
B-11
<PAGE>
shareholders under applicable state and local tax laws may differ from their
treatment under the federal income tax laws. For example, distributions of net
investment income (including capital gains) may be taxable to shareholders as
dividend income. Shareholders are advised to consult their tax advisers
concerning the application of state and local taxes.
The foregoing is a general and abbreviated summary of certain
provisions of the Code and Treasury Regulations currently in effect. For
complete provisions, reference should be made to the pertinent Code sections and
Treasury Regulations promulgated thereunder. The Code and Treasury Regulations
are subject to change by legislative or administrative action. Heller, Ehrman,
White & McAuliffe has expressed no opinion on the tax matters discussed herein.
DIVIDENDS
All of the Fund's net investment income is declared as
dividends daily. Dividends are paid monthly and automatically reinvested in
additional Fund shares at net asset value and credited to the shareholder's
account or, at the shareholder's option, paid in cash.
The Fund's net investment income for dividend purposes is
determined daily. Such determination will be made as of 4:00 p.m. Eastern time
and, on days when the Fund's net asset value is determined, immediately prior to
such determination. Immediately after each determination of net asset value, the
Fund will declare a dividend (with respect to one or more days) payable to
shareholders of record as of 2:00 p.m. Eastern time on such day. Each day's
dividend will be declared and paid with respect to shares effectively purchased
at or before 2:00 p.m., but will not be declared or paid with respect to shares
effectively redeemed at or before 2:00 p.m. Net income of the Fund (from the
time of the immediately preceding determination thereof) will consist of (i)
interest accrued or discount earned (including both original issue and market
discount), (ii) plus or minus all realized gains and losses, if any, on the
portfolio securities of the Fund, (iii) less the estimated expenses of the Fund
applicable to that dividend period.
The Fund intends to use its best efforts to maintain its net
asset value at $1.00 per share. As a result of a significant expense or realized
or unrealized loss, it is possible that the Fund's net asset value may fall
below $1.00 per share. See "Purchase of Shares -- Net Asset Value."
Should the Fund incur or anticipate any unusual or unexpected
significant expense or loss which would affect disproportionately the Fund's
income for a particular period, the
B-12
<PAGE>
Board of Directors would at that time consider whether to adhere to the present
dividend policy described above or to revise it in the light of the
then-prevailing circumstances in order to ameliorate, to the extent possible,
the disproportionate effect of such expense or loss on then existing
shareholders. Such expenses or losses may nevertheless result in a shareholder's
receiving no dividends for the period during which he or she held his or her
shares and in his or her receiving upon redemption a price per share lower than
that which he or she paid.
Shareholders may receive their dividends in cash monthly by
completing the appropriate section of the Account Application. Such cash
distributions will be paid by check within seven days after the end of each
month. The election to receive cash distributions may be made at the time of
purchase of Fund shares or at any time subsequent thereto by giving written
notice to the Transfer Agent. Dividends and distributions are taxable to
shareholders whether distributed in cash or reinvested in additional shares. See
"Taxes."
The Transfer Agent will send each shareholder a monthly
statement showing the total number of shares owned as of the last business day
of the month, as well as the current month's and year-to-date dividends paid in
terms of total cash distributed and, for those shareholders which have dividends
reinvested, the number of shares acquired through the reinvestment of dividends.
SHAREHOLDER SERVICING PLAN AND MARKETING PLAN
The Fund has adopted a Shareholder Servicing Plan and a
Marketing Plan pursuant to Rule 12b-1 promulgated under the Investment Company
Act of 1940 (the "1940 Act").
Both the Shareholder Servicing Plan and the Marketing Plan
require annual renewal by a vote of the Fund's Board of Directors including
those Directors who are not "interested persons," as defined in the 1940 Act, of
the Fund, and who have no direct or indirect interest in either plan or any
related agreements (referred to herein as "disinterested Directors"). Either
plan may be terminated by the Fund at any time if so voted by a majority of the
disinterested Directors or by holders of a majority of the Fund's outstanding
shares.
Neither the Shareholder Servicing Plan nor the Marketing Plan
may be amended to increase materially the amounts payable to Midvale Securities
Corporation and Investment Company Administration Corporation, respectively,
unless approved by a majority of the outstanding voting shares of the Fund, as
defined in the 1940 Act, and may not be amended in any other material respect
unless approved by a majority of the disinterested Directors. The Shareholder
Servicing Plan and the Marketing Plan
B-13
<PAGE>
both require that quarterly reports be made to the Board of Directors detailing
the payments made under each plan and the expenses for which reimbursement is
being sought. The Shareholder Servicing Plan contemplates that Midvale may
delegate its shareholder servicing functions for certain shareholder accounts to
other persons and compensate such persons accordingly. No payments were made by
the Fund under the Shareholder Servicing Plan or the Marketing Plan during the
fiscal year ended September 30, 1995.
The Board of Directors, including the disinterested Directors,
in approving the Plans for another year concluded that, in the exercise of their
business judgment and in light of their fiduciary duties, there is a reasonable
likelihood that both the Shareholder Servicing Plan and the Marketing Plan could
be of value to benefit the Fund and its shareholders, and could be used to
increase shareholder satisfaction, and preserve and expand the Fund's existing
shareholder base. Among the possible benefits considered by the disinterested
Directors was the increased potential of a continuous cash flow arising out of
the retention of current shareholders and the expansion of the fund to include
new shareholders, enabling the Fund to meet redemptions and to take advantage of
buying opportunities without having to make unwarranted liquidations of
portfolio securities. Another benefit anticipated by the disinterested Directors
is the potential for increasing the size of the Fund and thereby reducing the
Fund's operating costs on a per share basis.
Yield Calculation
- -----------------
The Fund quotes current yield and for this purpose the yield
quoted is the net average annualized yield for the most recent 7-day period. The
yield quoted is computed by assuming that an account is established with one
share (the "one-share account") on the first day of the period. To arrive at the
quoted yield, the net change in the value of the one-share account for the 7-day
period (which includes interest accrued and original issue discount earned, and
is less premium amortized and expenses accrued, but does not include any
realized gains or losses or unrealized appreciation or depreciation) is
multiplied by 365 and then divided by 7 (the number of days in the period), with
the resulting figure carried to the nearest one hundredth of one percent. The
Fund also furnishes a quotation of effective yield that assumes the reinvestment
of dividends for a 365-day year and a return for the entire year equal to the
average annualized yield for the period, which is computed by adding 1 to the
net change in the value of the one-share account during the period, raising the
sum to a power equal to 365 divided by 7, and then subtracting one from the
result.
Yields for the seven-day period ended September 30, 1995 were
as follows:
B-14
<PAGE>
Current yield........................................ 4.82%
Effective yield ..................................... 4.94%
The Fund may also quote the average dollar-weighted portfolio
maturity for the corresponding seven-day period. At September 30, 1995 this
average was 55 days.
PRINCIPAL UNDERWRITER
First Fund Distributors, Inc. is currently the principal
underwriter of the Fund's shares pursuant to an underwriting agreement with the
Fund. The Fund's shares are sold to the public on a best efforts basis in a
continuous offering without a sales load or other commission. For each of the
fiscal years ended September 30, 1993 , 1994 and 1995, the Fund's principal
underwriter received no underwriting commission. The Fund's principal
underwriter is under common control with Investment Company Administration
Corporation, the Fund's administrator and the marketing agent under the Fund's
Marketing Plan.
FINANCIAL STATEMENTS
The Fund's 1995 Annual Report (the "Report") to Shareholders,
including audited financial statements for the fiscal year ended September 30,
1995, has been previously sent to shareholders. The financial statements and
independent auditors' report in the Report are incorporated in this Statement of
Additional Information by reference to the Report, which has been filed with the
Securities and Exchange Commission. Additional copies of the Fund's 1995 Annual
Report to Shareholders may be obtained at no charge by writing or telephoning
the Fund at the address or telephone number appearing on the front page of this
Statement of Additional Information.
The Fund's independent certified public accountants and
auditors for the fiscal year ending September 30, 1995 are Tait, Weller & Baker,
whose address is Two Penn Center Plaza, Philadelphia, Pennsylvania 19102. The
Fund's custodian is Star Bank, P.O. Box 1118, Cincinnati, Ohio 45201-1118.
B-15
<PAGE>
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE COMMERCIAL PAPER RATINGS
Moody's Investors Service commercial paper ratings are
opinions of the ability of issuers to repay punctually promissory obligations
not having an original maturity in excess of nine months. Moody's employs three
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers. The first of these three designations,
representing the securities in which the Fund may invest, is "Prime-1." Issuers
rated "Prime-1" (or related supporting institutions) have a superior capacity
for repayment of short-term promissory obligations.
STANDARD & POOR'S COMMERCIAL PAPER RATINGS:
A Standard & Poor's Corporation commercial paper rating is a
current assessment of the likelihood of timely payment of debt having an
original maturity of no more than 365 days. Ratings are graded into four
categories, ranging from "A" for the highest quality obligations to "D" for the
lowest. Ratings are applicable to both taxable and tax-exempt commercial paper.
The highest category is described as follows:
A. Issues assigned this highest rating are regarded as having
the greatest capacity for timely payment. Issues in this
category are further refined with the designation 1, 2 and 3
to indicate the relative degree of safety.
A-1. This designation indicates that the degree of safety
regarding timely payment is very strong.
DESCRIPTION OF CORPORATE BOND RATINGS
MOODY'S CORPORATE BOND RATINGS
Moody's corporate bond ratings are opinions of the relative
investment qualities of bonds. Moody's employs nine designations to indicate
such relative qualities, ranging from "Aaa" for the highest quality obligations
to "C" for the lowest. Issues are further refined with the designation 1, 2 and
3 to
B-16
<PAGE>
indicate the relative ranking within designations. The highest two designations
are described as follows:
Aaa. Bonds in this category are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of
such issues.
Aa. Bonds in this category are judged to be of high quality by
all standards. Together with the Aaa group they comprise what
are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be
as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risks somewhat
larger than in Aaa securities.
STANDARD & POOR'S CORPORATE DEBT RATINGS
A Standard & Poor's corporate debt rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. Ratings are graded into ten categories, ranging from "AAA" for the
highest quality obligation to "D for debt in default. Issues are further refined
with a "Plus" or "Minus" sign to show relative standing within the categories.
The highest two categories are described as follows:
AAA. Issues having this rating indicate that capacity
to pay interest and repay principal is extremely
strong.
AA. This debt has a very strong capacity to pay
interest and repay principal and differs from the
higher rated issues only in small degree.
B-17
<PAGE>
-----------------
PART C
OTHER INFORMATION
-----------------
RNC LIQUID ASSETS FUND, INC.
----------------
FORM N-IA
PART C
----------------
Item 24. Financial Statements and Exhibits
------- ---------------------------------
(a) Financial Statements
(1) Investment Portfolio as of September 30, 1995; Statement
of Assets and Liabilities as of September 30, 1995; Statement of Operations for
the year ended September 30, 1995; Statement of Changes in Net Assets for the
years ended September 30, 1994 and 1995; Condensed Financial Information
- -Financial Highlights for the years ended September 30, 1991 through September
30, 1995; related notes; and the Report of Independent Certified Public
Accountants for the RNC Liquid Assets Fund, Inc. (the "Fund") dated October 27,
1995 are incorporated by reference to the Annual Report to Shareholders of the
Fund for the fiscal year ended September 30, 1995.
(b) Exhibits:
1. Articles of Incorporation are incorporated herein by
reference to:
Filing: Registration Statement
File No.: 2-99009
2. By-Laws are incorporated herein by reference to:
Filing: Registration Statement
File No.: 2-99009
3. Not Applicable
4. Specimen Certificate is incorporated herein by
reference to:
Filing: Pre-Effective Amendment No. 1
File No.: 2-99009
Approximate Filing Date: August 1985
C-1
<PAGE>
5(a). Investment Advisory Agreement is incorporated herein
by reference to:
Filing: Post-Effective Amendment No. 7
File No.: 2-99009
Approximate Filing Date: November 29, 1991
5(b). Form of Administration Agreement is incorporate
herein by reference to:
Filing: Post-Effective Amendment No. 5
File No.: 2-99009
Filing Date: November 8, 1990
6(a). Form of Underwriting Agreement is incorporated
herein by reference to:
Filing: Post-Effective Amendment No. 5
File No.: 2-99009
Filing Date: November 8, 1990
6(b). Form of selected Dealers Agreement is incorporated
herein by reference to:
Filing: Post-Effective Amendment No. 5
File No.: 2-99009
Filing Date: November 8, 1990
7. Not Applicable
8. Custody Agreement
9. Not Applicable
10. Opinion and consent of counsel as to the legality of
shares is incorporated herein by reference to:
Filing: Pre-Effective Amendment No. 1
File No.: 2-99009
Approximate Filing Date: August 1985
11. Consent of Tait, Weller & Baker (filed herewith)
12. Not Applicable
13. Investment Letter of Roley Nichols Capital Group,
Inc. is incorporated herein by reference to:
Filing: Pre-Effective Amendment No. 1
C-2
<PAGE>
File No.: 2-99009
Approximate Filing Date: August 1985
14. Not Applicable
15(a). Form of Shareholder Servicing Plan with related
agreement is incorporated by reference herein to:
Post-Effective Amendment No. 7
File No.: 2-99009
Approximate Filing Date: November 29, 1991
15(b). Form of Marketing Plan is incorporated by reference
herein to:
Post-Effective Amendment No. 5
File No.: 2-99007
Filing Date: November 8, 1990
16. Schedule of Yield Computation is incorporated herein
by reference to:
Filing: Post-Effective Amendment No. 6
File No.: 2-99007
Filing Date: December 24, 1990
17. Fund Accounting Service Agreement
18. Transfer Agency and Service Agreement
Item 25. Persons Controlled by or under
Common Control with Registrant
Not Applicable.
Item 26. Number of Holders of Securities
-------------------------------
Number of Record
Holders as of
Title of Class January 12, 1996
-------------- ------------------
Common Stock, par value 127
$0.01 per share.
C-3
<PAGE>
Item 27. Indemnification
---------------
Reference is made to Article VI, Section 4 of Registrant's
Articles of Incorporation, Article VI of Registrant's By-Laws, Section 2-418 of
the Maryland General Corporation Law and Section 16 of the Underwriting
Agreement.
Insofar as the conditional advancing of indemnification monies
for actions based upon the Investment Company Act of 1940 may be concerned, such
payments will be made only on the following conditions: (i) the advances must be
limited to amounts used, or to be used, for the preparation or presentation of a
defense to the action, including costs connected with the preparation of a
settlement; (ii) advances may made only upon receipt of a written promise by, or
on behalf of, the recipient to repay that amount of the advance which exceeds
that amount to which it is ultimately determined he is entitled to receive from
the Registrant by reason of indemnification; and (iii)(a) such promise must be
secured by a surety bond, other suitable insurance or an equivalent form of
security which assures that any repayments may be obtained by the Registrant
without a delay or litigation, which bond, insurance or other form of security
must be provided by the recipient of the advance; or (b) a majority of a quorum
of the Registrant's disinterested, non-party directors, or an independent legal
counsel in a written opinion shall determine, based upon a review of readily
available facts, that the recipient of the advance ultimately will be found
entitled to indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the 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 controlling person of the Registrant
in connection with the successful defense of any action, suit or proceeding) is
asserted by the director, officer or controlling person in connection with
shares 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 expressed in the Act and will be governed by the final
adjudication of such issue.
C-4
<PAGE>
Item 28. Business and other Connections of Investment Advisor
- -------- ----------------------------------------------------
RNC Capital Management Co. (the "Investment Adviser") acts as
the investment adviser to various individuals and institutions.
A list of each director and principal officer of the
Investment Adviser is set forth below indicating each business, profession,
vocation or employment of a substantial nature in which each such person has
been engaged during the past two fiscal years for his or her own account or in
the capacity of director, officer, partner or trustee:
Other Substantial
Position with Business, Profession,
Name Investment Adviser Vocation or Employment
- ------------------- ------------------ ----------------------
James O'Neill Vice President/ First Vice President
Assistant Treasurer and Controller of Bank
and Director Austria (New York)
Thomas Pastore Vice President/ Senior Vice President
Assistant Secretary of Bank Austria (New
and Director York)
Daniel J. Genter, President, Chief President
Jr. Executive Officer of Midvale
and Director Securities
Corporation*
Nicanor M. Mamaril Senior Vice Vice President and
President, Treasurer Controller of RNC
and Secretary Capital Group, Inc.*,
Treasurer and
Secretary of Midvale
Securities
Corporation*
Jan F. Kallik Senior Vice None
President and
Director of Equities
Research
C-5
<PAGE>
A. Robert Blais Senior Vice None
President and
Director of Fixed
Income
Bruce A. Mandel Senior Vice None
President and
Director of Marketing
John G. Marshall Senior Vice None
President and
Director of Equity
- --------------------------
* The address of RNC Capital Group, Inc. and Midvale Securities
Corporation is 11601 Wilshire Boulevard, 25th Floor, Los Angeles,
California 90025
Item 29. Principal Underwriters
- -------- ----------------------
(a) The Fund's principal underwriter also acts as principal
underwriter for Professionally Managed Portfolios; PIC Investment Trust;
Guinness Flight Investment Funds, Inc.; Brandes International Fund; Hotchkis &
Wiley Funds; Jurika & Voyles Fund Group; and Rainier Investment Management
Mutual Funds; and does not otherwise act as principal underwriter, depositor or
investment adviser to any other investment company.
(b) First Fund Distributors, Inc., acts as the principal
underwriter for the Registrant. Information is set forth below concerning each
director and officer of the principal underwriter. The principal business
address of each such person is 4455 East Camelback Road, Suite 261E, Phoenix,
Arizona 85018.
Position and
Offices Position and Offices
Name with Underwriter with Registrant
- -------------------- ----------------- --------------------
Robert H. Wadsworth President, None
Treasurer and
Director
Eric M. Banhazl Vice President Chief Executive
and Director Officer, Chief
Financial Officer,
President and
Secretary
Steven J. Paggioli Secretary and None
Director
C-6
<PAGE>
(c) The principal underwriter received no commissions or other
compensation from the Registrant during the Registrant's last fiscal year.
Item 30. Location of Accounts and Records
--------------------------------
All accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder will be maintained either at the offices of Star Bank, P.O. Box 1118,
Cincinnati, Ohio, 45201-1118 or the office of the Registrant.
Item 31. Management Services
-------------------
Inapplicable.
Item 32. Undertakings
------------
All Undertakings Satisfied.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Post-Effective Amendment pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Francisco and State
of California on the 26th day of January 1996.
RNC LIQUID ASSETS FUND, INC.
(Registrant)
By Eric M. Banhazl*
-------------------------------
Eric M. Banhazl
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Signature Title Date
--------- ------ ----
DeVere W. McGuffin, II*
- --------------------------
DeVere W. McGuffin, II Director January 26, 1996
Bruce B. Stuart*
- --------------------------
Bruce B. Stuart Director January 26, 1996
Eric M. Banhazl*
- --------------------------
Eric M. Banhazl Principal January 26, 1996
Executive Officer,
Principal
Financial and
Accounting Officer
* By: /s/ Julie Allecta
--------------------------------------------
Julie Allecta, Attorney-In-Fact
Pursuant to Power of Attorney previously filed.
<PAGE>
Exhibit(s) Index
Exhibit No.
No. Document Page
- ----------- -------- ----
(8) Custody Agreement
(11) Independent Auditors' Consent
(17) Fund Accounting Service Agreement
(18) Transfer Agency and Service Agreement
(27) Financial Data Schedule
C-9
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of the_____ day of
January, 1996 by and between RNC Liquid AssetsFund, Inc. (the "Fund"), an
open-end diversified investment business trust organized under the laws of
Maryland and havingits office at 11601 Wilshire Boulevard, 25th Floor, Los
Angeles, CA 90025 and Star Bank, National Association, (the "Custodian"), a
national banking association having its principal office at 425 Walnut Street,
Cincinnati, Ohio, 45202.
WHEREAS, the Fund and the Custodian desire to enter into this Agreement
to provide for the custody and safekeeping of the assets of the Fund as required
by the Investment Company Act of 1940, as amended (the "Act").
WHEREAS, the Fund hereby appoints the Custodian as custodian of all the
Fund's Securities and moneys at any time owned by the Fund during the term of
this Agreement (the "Fund Assets").
WHEREAS, the Custodian hereby accepts such appointment as Custodian and
agrees to perform the duties thereof as hereinafter set forth.
THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
ARTICLE I
Definitions
-----------
The following words and phrases, when used in this Agreement, unless
the context otherwise requires, shall have the following meanings:
Authorized Person - the Chairman, President, Secretary, Treasurer,
Controller, or Senior Vice President of the Fund, or any other person, whether
or not any such person is an officer or employee of the Fund, duly authorized by
the Board of Trustees of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund, and listed in the Certificate annexed hereto
as Appendix A, or such other Certificate as may be received by the Custodian
from time to time.
Book-Entry System - the Federal Reserve Bank book-entry system for
United States Treasury securities and federal agency securities.
Depository - The Depository Trust Company ("DTC"), a limited purpose
trust company its successor(s) and its nominee(s) or any other person or
clearing agent
Dividend and Transfer Agent - the dividend and transfer agent
appointed, from time to time, pursuant to a written agreement between the
dividend and transfer agent and the Fund
Foreign Securities - a) securities issued and sold primarily outside of
the United States by a foreign government, a national of any foreign country, or
a trust or other organization incorporated or organized under the laws of any
foreign country or; b) securities issued or guaranteed by the government of the
United States, by any state, by any political subdivision or agency thereof, or
by any entity organized under the laws of the United States or of any state
thereof, which have been issued and sold primarily outside of the United States.
Money Market Security - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or their equivalent
on the same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
Officers - the Chairman, President, Secretary, Treasurer, Controller,
and Senior Vice President of the Fund listed in the Certificate annexed hereto
as Appendix A, or such other Certificate as may be received by the Custodian
from time to time.
Oral Instructions - verbal instructions received by the Custodian from
an Authorized Person (or from a person that the Custodian reasonably believes in
good faith to be an Authorized Person) and confirmed by Written Instructions in
such a manner that such Written Instructions are received by the Custodian on
the business day immediately following receipt of such Oral Instructions.
Prospectus - the Fund's then currently effective prospectus and
Statement of Additional Information, as filed with and declared effective from
time to time by the Securities and Exchange Commission.
Security or Securities - Money Market Securities, common stock,
preferred stock, options, financial futures, bonds, notes, debentures, corporate
debt securities, mortgages, and any certificates, receipts, warrants, or other
instruments representing rights to receive, purchase, or subscribe for the same
or evidencing or representing any other rights or interest therein, or any
property or assets.
Written Instructions - communication received in writing by the
Custodian from an Authorized Person.
ARTICLE II
Documents and Notices to be Furnished by the Fund
-------------------------------------------------
A. The following documents, including any amendments thereto, will be
provided contemporaneously with the execution of the Agreement, to the Custodian
by the Fund:
1. A copy of the Articles of Incorporation of the Fund certified by the
Secretary.
2. A copy of the By-Laws of the Fund certified by the Secretary.
3. A copy of the resolution of the Board of Trustees of the Fund
appointing the Custodian, certified by the Secretary.
4. A copy of the then current Prospectus.
5. A Certificate of the President and Secretary of the Fund setting
forth the names and signatures of the Officers of the Fund.
B. The Fund agrees to notify the Custodian in writing of the
appointment of any Dividend and Transfer Agent.
ARTICLE III
Receipt of Fund Assets
----------------------
A. During the term of this Agreement, the Fund will deliver or cause to
be delivered to the Custodian all moneys constituting Fund Assets. The Custodian
shall be entitled to reverse any deposits made on the Fund's behalf where such
deposits have been entered and moneys are not finally collected within 30 days
of the making of such entry.
B. During the term of this Agreement, the Fund will deliver or cause to
be delivered to the Custodian all Securities constituting Fund Assets. The
Custodian will not have any duties or responsibilities with respect to such
Securities until actually received by the Custodian.
C. As and when received, the Custodian shall deposit to the account(s)
of the Fund any and all payments for shares of the Fund issued or sold from time
to time as they are received from the Fund's distributor or Dividend and
Transfer Agent or from the Fund itself.
ARTICLE IV
Disbursement of Fund Assets
---------------------------
A. The Fund shall furnish to the Custodian a copy of the resolution of
the Board of Trustees of the Fund, certified by the Fund's Secretary, either (i)
setting forth the date of the declaration of any dividend or distribution in
respect of shares of the Fund, the date of payment thereof, the record date as
of which Fund shareholders entitled to payment shall be determined, the amount
payable per share to Fund shareholders of record as of that date, and the total
amount to be paid by the Dividend and Transfer Agent on the payment date, or
(ii) authorizing the declaration of dividends and distributions in respect of
shares of the Fund on a daily basis and authorizing the Custodian to rely on a
Certificate setting forth the date of the declaration of any such dividend or
distribution, the date of payment thereof, the record date as of which Fund
shareholders entitled to payment shall be determined, the amount payable per
share to Fund shareholders of record as of that date, and the total amount to be
paid by the Dividend and Transfer Agent on the payment date.
On the payment date specified in such resolution or Certificate
described above, the Custodian shall segregate such amounts from moneys held for
the account of the Fund so that they are available for such payment.
B. Upon receipt of Written Instructions so directing it, the Custodian
shall segregate amounts necessary for the payment of redemption proceeds to be
made by the Dividend and Transfer Agent from moneys held for the account of the
Fund so that they are available for such payment.
C. Upon receipt of a Certificate directing payment and setting forth
the name and address of the person to whom such payment is to be made, the
amount of such payment, and the purpose for which payment is to be made, the
Custodian shall disburse amounts as and when directed from the Fund Assets. The
Custodian is authorized to rely on such directions and shall be under no
obligation to inquire as to the propriety of such directions.
D. Upon receipt of a Certificate directing payment, the Custodian shall
disburse moneys from the Fund Assets in payment of the Custodian's fees and
expenses as provided in Article VIII hereof.
ARTICLE V
Custody of Fund Assets
----------------------
A. The Custodian shall open and maintain a separate bank account or
accounts in the United States in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Agreement, and shall
hold all cash received by it from or for the account of the Fund, other than
cash maintained by the Fund in a bank account established and used by the Fund
in accordance with Rule 17f-3 under the Act. Moneys held by the Custodian on
behalf of the Fund may be deposited by the Custodian to its credit as Custodian
in the banking department of the Custodian. Such moneys shall be deposited by
the Custodian in its capacity as such, and shall be withdrawable by the
Custodian only in such capacity.
B. The Custodian shall hold all Securities delivered to it in
safekeeping in a separate account or accounts maintained at Star Bank, N.A. for
the benefit of the Fund.
C. All Securities held which are issued or issuable only in bearer
form, shall be held by the Custodian in that form; all other Securities held for
the Fund shall be registered in the name of the Custodian or its nominee. The
Fund agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold, or deliver in proper form for transfer, any Securities that
it may hold for the account of the Fund and which may, from time to time, be
registered in the name of the Fund.
D. With respect to all Securities held for the Fund , the Custodian
shall on a timely basis (concerning items 1 and 2 below, as defined in the
Custodian's Standards of Service Guide, as amended from time to time, annexed
hereto as Appendix C):
1.) Collect all income due and payable with respect to such
Securities;
2.) Present for payment and collect amounts payable upon all
Securities which may mature or be called, redeemed, or
retired, or otherwise become payable;
3.) Surrender Securities in temporary form for definitive
Securities; and
4.) Execute, as agent, any necessary declarations or
certificates of ownership under the Federal income tax laws
or the laws or regulations of any other taxing authority,
including any foreign taxing authority, now or hereafter in
effect.
E. Upon receipt of a Certificate and not otherwise, the Custodian
shall:
1.) Execute and deliver to such persons as may be designated in
such Certificate proxies, consents, authorizations, and any
other instruments whereby the authority of the Fund as
beneficial owner of any Securities may be exercised;
2.) Deliver any Securities in exchange for other Securities or
cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation, or
recapitalization of any trust, or the exercise of any
conversion privilege;
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in connection with
the reorganization, refinancing, merger, consolidation,
recapitalization, or sale of assets of any trust, and
receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to evidence
such delivery;
4.) Make such transfers or exchanges of the assets of the Fund
and take such other steps as shall be stated in said
Certificate to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund; and
5.) Deliver any Securities held for the Fund to the depository
agent for tender or other similar offers.
F. The Custodian shall promptly deliver to the Fund all notices, proxy
material and executed but unvoted proxies pertaining to shareholder meetings of
Securities held by the Fund. The Custodian shall not vote or authorize the
voting of any Securities or give any consent, waiver or approval with respect
thereto unless so directed by a Certificate or Written Instruction.
G. The Custodian shall promptly deliver to the Fund all information
received by the Custodian and pertaining to Securities held by the Fund with
respect to tender or exchange offers, calls for redemption or purchase, or
expiration of rights.
ARTICLE VI
Purchase and Sale of Securities
-------------------------------
A. Promptly after each purchase of Securities by the Fund, the Fund
shall deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, Written Instructions, and (ii) with
respect to each purchase of Money Market Securities, Written Instructions or
Oral Instructions, specifying with respect to each such purchase the;
1.) name of the issuer and the title of the Securities,
2.) principal amount purchased and accrued interest, if any,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable, and
6.) name of the person from whom, or the broker through which,
the purchase was made.
The Custodian shall, against receipt of Securities purchased by or for the Fund,
pay out of the Fund Assets, the total amount payable to the person from whom or
the broker through which the purchase was made, provided that the same conforms
to the total amount payable as set forth in such Written Instructions or Oral
Instructions, as the case may be.
B. Promptly after each sale of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, Written Instructions, and (ii) with respect to each
sale of Money Market Securities, Written Instructions or Oral Instructions,
specifying with respect to each such sale the;
1.) name of the issuer and the title of the Securities,
2.) principal amount sold and accrued interest, if any,
3.) date of sale and settlement,
4.) sale price per unit,
5.) total amount receivable, and
6.) name of the person to whom, or the broker through which, the
sale was made.
The Custodian shall deliver the Securities against receipt of the total amount
receivable, provided that the same conforms to the total amount receivable as
set forth in such Written Instructions or Oral Instructions, as the case may be.
C. On contractual settlement date, the account of the Fund will be
charged for all purchased Securities settling on that day, regardless of whether
or not delivery is made. Likewise, on contractual settlement date, proceeds from
the sale of Securities settling that day will be credited to the account of the
Fund, irrespective of delivery.
D. Purchases and sales of Securities effected by the Custodian will be
made on a delivery versus payment basis. The Custodian may, in its sole
discretion, upon receipt of a Certificate, elect to settle a purchase or sale
transaction in some other manner, but only upon receipt of acceptable
indemnification from the Fund.
E. The Custodian shall, upon receipt of a Written Instructions so
directing it, establish and maintain a segregated account or accounts for and on
behalf of the Fund. Cash and/or Securities may be transferred into such account
or accounts for specific purposes, to-wit:
1.) in accordance with the provision of any agreement among the
Fund, the Custodian, and a broker-dealer registered under
the Securities and Exchange Act of 1934, as amended, and
also a member of the National Association of Securities
Dealers (NASD) (or any futures commission merchant
registered under the Commodity Exchange Act), relating to
compliance with the rules of the Options Clearing
Corporation and of any registered national securities
exchange, the Commodity Futures Trading Commission, any
registered contract market, or any similar organization or
organizations requiring escrow or other similar arrangements
in connection with transactions by the Fund;
2.) for purposes of segregating cash or government securities in
connection with options purchased, sold, or written by the
Fund or commodity futures contracts or options thereon
purchased or sold by the Fund;
3.) for the purpose of compliance by the fund with the
procedures required for reverse repurchase agreements, firm
commitment agreements, standby commitment agreements, and
short sales by Act Release No. 10666, or any subsequent
release or releases or rule of the Securities and Exchange
Commission relating to the maintenance of segregated
accounts by registered investment companies; and
4.) for other corporate purposes, only in the case of this
clause 4 upon receipt of a copy of a resolution of the Board
of Trustees of the Fund, certified by the Secretary of the
Fund, setting forth the purposes of such segregated account.
F. Except as otherwise may be agreed upon by the parties hereto, the
Custodian shall not be required to comply with any Written Instructions to
settle the purchase of any Securities on behalf of the Fund unless there is
sufficient cash in the account(s) at the time or to settle the sale of any
Securities from an account(s) unless such Securities are in deliverable form.
Notwithstanding the foregoing, if the purchase price of such Securities exceeds
the amount of cash in the account(s) at the time of such purchase, the Custodian
may, in its sole discretion, advance the amount of the difference in order to
settle the purchase of such Securities. The amount of any such advance shall be
deemed a loan from the Custodian to the Fund payable on demand and bearing
interest accruing from the date such loan is made up to but not including the
date such loan is repaid at a rate per annum customarily charged by the
Custodian on similar loans.
ARTICLE VII
Fund Indebtedness
-----------------
In connection with any borrowings by the Fund, the Fund will cause to
be delivered to the Custodian by a bank or broker requiring Securities as
collateral for such borrowings (including the Custodian if the borrowing is from
the Custodian), a notice or undertaking in the form currently employed by such
bank or broker setting forth the amount of collateral. The Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to each such
borrowing: (a) the name of the bank or broker, (b) the amount and terms of the
borrowing, which may be set forth by incorporating by reference an attached
promissory note duly endorsed by the Fund, or a loan agreement, (c) the date,
and time if known, on which the loan is to be entered into, (d) the date on
which the loan becomes due and payable, (e) the total amount payable to the Fund
on the borrowing date, and (f) the description of the Securities securing the
loan, including the name of the issuer, the title and the number of shares or
the principal amount. The Custodian shall deliver on the borrowing date
specified in the Certificate the required collateral against the lender's
delivery of the total loan amount then payable, provided that the same conforms
to that which is described in the Certificate. The Custodian shall deliver, in
the manner directed by the Fund, such Securities as additional collateral, as
may be specified in a Certificate, to secure further any transaction described
in this Article VII. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it.
The Custodian may, at the option of the lender, keep such collateral in
its possession, subject to all rights therein given to the lender because of the
loan. The Custodian may require such reasonable conditions regarding such
collateral and its dealings with third-party lenders as it may deem appropriate.
ARTICLE VIII
Concerning the Custodian
------------------------
A. Except as otherwise provided herein, the Custodian shall not be
liable for any loss or damage resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its own gross
negligence or willful misconduct. The Fund shall defend, indemnify and hold
harmless the Custodian and its directors, officers, employees and agents with
respect to any loss, claim, liability or cost (including reasonable attorneys'
fees) arising or alleged to arise from or relating to the Fund's duties
hereunder or any other action or inaction of the Fund or its Trustees, officers,
employees or agents, except such as may arise from the negligent action,
omission, willful misconduct or breach of this Agreement by the Custodian. The
Custodian may, with respect to questions of law, apply for and obtain the advice
and opinion of 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 conformity with
the advice or opinion of counsel. The provisions under this paragraph shall
survive the termination of this Agreement.
B. Without limiting the generality of the foregoing, the Custodian,
acting in the capacity of Custodian hereunder, shall be under no obligation to
inquire into, and shall not be liable for:
1.) The validity of the issue of any Securities purchased by or
for the account of the Fund, the legality of the purchase
thereof, or the propriety of the amount paid therefor;
2.) The legality of the sale of any Securities by or for the
account of the Fund, or the propriety of the amount for
which the same are sold;
3.) The legality of the issue or sale of any shares of the Fund,
or the sufficiency of the amount to be received therefor;
4.) The legality of the redemption of any shares of the Fund, or
the propriety of the amount to be paid therefor;
5.) The legality of the declaration or payment of any dividend
by the Fund in respect of shares of the Fund;
6.) The legality of any borrowing by the Fund on behalf of the
Fund, using Securities as collateral;
C. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from any Dividend and
Transfer Agent of the Fund nor to take any action to effect payment or
distribution by any Dividend and Transfer Agent of the Fund of any amount paid
by the Custodian to any Dividend and Transfer Agent of the Fund in accordance
with this Agreement.
D. Notwithstanding Section D of Article V, the Custodian shall not be
under any duty or obligation to take action to effect collection of any amount,
if the Securities upon which such amount is payable are in default, or if
payment is refused after due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate and (ii) it shall be
assured to its satisfaction (including prepayment thereof) of reimbursement of
its costs and expenses in connection with any such action.
E. The Fund acknowledges and hereby authorizes the Custodian to hold
Securities through its various agents described in Appendix B annexed hereto.
The Fund hereby represents that such authorization has been duly approved by the
Board of Trustees of the Fund as required by the Act. The Custodian acknowledges
that although certain Fund Assets are held by its agents, the Custodian remains
primarily liable for the safekeeping of the Fund Assets.
In addition, the Fund acknowledges that the Custodian may appoint one
or more financial institutions, as agent or agents or as sub-custodian or
sub-custodians, including, but not limited to, banking institutions located in
foreign countries, for the purpose of holding Securities and moneys at any time
owned by the Fund. The Custodian shall not be relieved of any obligation or
liability under this Agreement in connection with the appointment or activities
of such agents or sub-custodians. Any such agent or sub-custodian shall be
qualified to serve as such for assets of investment companies registered under
the Act. Upon request, the Custodian shall promptly forward to the Fund any
documents it receives from any agent or sub-custodian appointed hereunder which
may assist trustees of registered investment companies fulfill their
responsibilities under Rule 17f-5 of the Act.
F. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
the Fund are such as properly may be held by the Fund under the provisions of
the Articles of Incorporation and the Fund's By-Laws.
G. The Custodian shall treat all records and other information relating
to the Fund and the Fund Assets as confidential and shall not disclose any such
records or information to any other person unless (i) the Fund shall have
consented thereto in writing or (ii) such disclosure is required by law.
H. The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian such compensation as shall be determined pursuant to
Appendix D attached hereto, or as shall be determined pursuant to amendments to
such Appendix D. The Custodian shall be entitled to charge against any money
held by it for the account of the Fund, the amount of any of its fees, any loss,
damage, liability or expense, including counsel fees. The expenses which the
Custodian may charge against the account of the Fund include, but are not
limited to, the expenses of agents or sub-custodians incurred in settling
transactions involving the purchase and sale of Securities of the Fund.
I. The Custodian shall be entitled to rely upon any Oral Instructions
and any Written Instructions. The Fund agrees to forward to the Custodian
Written Instructions confirming Oral Instructions in such a manner so that such
Written Instructions are received by the Custodian, whether by hand delivery,
facsimile or otherwise, on the same business day on which such Oral Instructions
were given. The Fund agrees that the failure of the Custodian to receive such
confirming instructions shall in no way affect the validity of the transactions
or enforceability of the transactions hereby authorized by the Fund. The Fund
agrees that the Custodian shall incur no liability to the Fund for acting upon
Oral Instructions given to the Custodian hereunder concerning such transactions.
J. The Custodian will (i) set up and maintain proper books of account
and complete records of all transactions in the accounts maintained by the
Custodian hereunder in such manner as will meet the obligations of the Fund
under the Act, with particular attention to Section 31 thereof and Rules 31a-1
and 31a-2 thereunder and those records are the property of the Fund, and (ii)
preserve for the periods prescribed by applicable Federal statute or regulation
all records required to be so preserved. All such books and records shall be the
property of the Fund, and shall be open to inspection and audit at reasonable
times and with prior notice by Officers and auditors employed by the Fund.
K. The Custodian shall send to the Fund any report received on the
systems of internal accounting control of the Custodian, or its agents or
sub-custodians, as the Fund may reasonably request from time to time.
L. The Custodian performs only the services of a custodian and shall
have no responsibility for the management, investment or reinvestment of the
Securities from time to time owned by the Fund. The Custodian is not a selling
agent for shares of the Fund and performance of its duties as custodian shall
not be deemed to be a recommendation to the Fund's depositors or others of
shares of the Fund as an investment.
M. The Custodian shall take all reasonable action, that the Fund may
from time to time request, to assist the Fund in obtaining favorable opinions
from the Fund's independent accountants, with respect to the Custodian's
activities hereunder, in connection with the preparation of the Fund's Form
N-1A, Form N-SAR, or other annual reports to the Securities and Exchange
Commission.
N. The Fund hereby pledges to and grants the Custodian a security
interest in any Fund Assets to secure the payment of any liabilities of the Fund
to the Custodian, whether acting in its capacity as Custodian or otherwise, or
on account of money borrowed from the Custodian. This pledge is in addition to
any other pledge of collateral by the Fund to the Custodian.
ARTICLE X
Termination
A. Either of the parties hereto may terminate this Agreement for any
reason by giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than ninety (90) days after the date
of giving of such notice. If such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Board of Trustees of the Fund,
certified by the Secretary of the Fund, electing to terminate this Agreement and
designating a successor custodian or custodians. In the event such notice is
given by the Custodian, the Fund shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of the Board of Trustees of the
Fund, certified by the Secretary, designating a successor custodian or
custodians to act on behalf of the Fund. In the absence of such designation by
the Fund, the Custodian may designate a successor custodian which shall be a
bank or trust company having not less than $100,000,000 aggregate capital,
surplus, and undivided profits. Upon the date set forth in such notice this
Agreement shall terminate, and the Custodian, provided that it has received a
notice of acceptance by the successor custodian, shall deliver, on that date,
directly to the successor custodian all Securities and moneys then owned by the
Fund and held by it as Custodian. Upon termination of this Agreement, the Fund
shall pay to the Custodian on behalf of the Fund such compensation as may be due
as of the date of such termination. The Fund agrees on behalf of the Fund that
the Custodian shall be reimbursed for its reasonable costs in connection with
the termination of this Agreement.
B. If a successor custodian is not designated by the Fund, or by the
Custodian in accordance with the preceding paragraph, or the designated
successor cannot or will not serve, the Fund shall, upon the delivery by the
Custodian to the Fund of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and moneys then owned
by the Fund, be deemed to be the custodian for the Fund, and the Custodian shall
thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the Book-Entry
System, which cannot be delivered to the Fund, which shall be held by the
Custodian in accordance with this Agreement.
ARTICLE XI
MISCELLANEOUS
-------------
A. Appendix A sets forth the names and the signatures of all Authorized
Persons, as certified by the Secretary of the Fund. The Fund agrees to furnish
to the Custodian a new Appendix A in form similar to the attached Appendix A, if
any present Authorized Person ceases to be an Authorized Person or if any other
or additional Authorized Persons are elected or appointed. Until such new
Appendix A shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the then current Authorized Persons as set forth in the last delivered Appendix
A.
B. No recourse under any obligation of this Agreement or for any claim
based thereon shall be had against any organizer, shareholder, Officer,
Director, past, present or future as such, of the Fund or of any predecessor or
successor, either directly or through the Fund or any such predecessor or
successor, whether by virtue of any constitution, statute or rule of law or
equity, or be the enforcement of any assessment or penalty or otherwise; it
being expressly agreed and understood that this Agreement and the obligations
thereunder are enforceable solely against the Fund, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
organizers, shareholders, Officers, Trustees of the Fund or of any predecessor
or successor, or any of them as such. To the extent that any such liability
exists, it is hereby expressly waived and released by the Custodian as a
condition of, and as a consideration for, the execution of this Agreement.
C. The obligations set forth in this Agreement as having been made by
the Fund have been made by the Board of Trustees, acting as such Trustees for
and on behalf of the Fund, pursuant to the authority vested in them under the
laws of the State of ___________, the Articles of Incorporation and the By-Laws
of the Fund. This Agreement has been executed by Officers of the Fund as
officers, and not individually, and the obligations contained herein are not
binding upon any of the Trustees, Officers, agents or holders of shares,
personally, but bind only the Fund.
D. Provisions of the Prospectus and any other documents (including
advertising material) specifically mentioning the Custodian (other than merely
by name and address) shall be reviewed with the Custodian by the Fund prior to
publication and/or dissemination or distribution, and shall be subject to the
consent of the Custodian.
E. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at Star
Bank Center, 425 Walnut Street, M. L. 6118, Cincinnati, Ohio 45202, attention
Mutual Fund Custody Department, or at such other place as the Custodian may from
time to time designate in writing.
F. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given when
delivered to the Fund or on the second business day following the time such
notice is deposited in the U.S. mail postage prepaid and addressed to the Fund
at its office at __________________________________ or at such other place as
the Fund may from time to time designate in writing.
G. This Agreement, with the exception of the Appendices, may not be
amended or modified in any manner except by a written agreement executed by both
parties with the same formality as this Agreement, and authorized and approved
by a resolution of the Board of Trustees of the Fund.
H. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund or by the Custodian, and no
attempted assignment by the Fund or the Custodian shall be effective without the
written consent of the other party hereto.
I. This Agreement shall be construed in accordance with the laws of the
State of Ohio.
J. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized as of the day
and year first above written.
ATTEST: RNC Liquid Assets Fund, Inc.
By:
- ----------------------------- --------------------------------
Title:
--------------------------------
Star Bank, N.A.
ATTEST:
By:
- ----------------------------- --------------------------------
Title:
--------------------------------
<PAGE>
APPENDIX A
Authorized Persons Specimen Signatures
Chairman:
------------------ -------------------
President:
------------------ -------------------
Secretary:
------------------ -------------------
Treasurer:
------------------ -------------------
Controller:
------------------ -------------------
Adviser Employees:
------------------ -------------------
------------------ -------------------
------------------ -------------------
Transfer Agent/Fund Accountant
Employees:
------------------ -------------------
------------------ -------------------
------------------ -------------------
------------------ -------------------
<PAGE>
APPENDIX B
The following agents are employed currently by Star Bank, N.A. for securities
processing and control . . .
The Depository Trust Company (New York)
7 Hanover Square
New York, NY 10004
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
16 Wall Street
New York, NY 10005
(For Foreign Securities and certain non-DTC eligible
Securities)
<PAGE>
APPENDIX C
Standards of Service Guide
<PAGE>
APPENDIX D
Schedule of Compensation
Star Bank, N.A.
Mail Location #6118,
425 Walnut Street,
Cincinnati, OH 45202
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the references to our Firm in Post-Effective Amendment No.11
to the Registration Statement on Form N-1A of RNC Liquid Assets Fund, Inc., and
to the use of our report dated October 27, 1995 on the financial statements and
financial highlights. Such financial statements and financial highlights appear
in the 1995 Annual Report to Shareholders which are incorporated by reference in
the Registration Statement and Prospectus.
TAIT, WELLER & BAKER
/s/TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 18, 1996
FUND ACCOUNTING SERVICE AGREEMENT
between
RNC LIQUID ASSETS FUND, INC.
and
AMERICAN DATA SERVICES, INC.
<PAGE>
INDEX
1. DUTIES OF ADS.
2. COMPENSATION OF ADS.
3. LIMITATION OF LIABILITY OF ADS.
4. REPORTS.
5. ACTIVITIES OF ADS.
6. ACCOUNTS AND RECORDS.
7. CONFIDENTIALITY.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
9. ASSIGNMENT.
10. NEW YORK LAWS TO APPLY
11. AMENDMENTS TO THIS AGREEMENT.
12. MERGER OF AGREEMENT
13. NOTICES.
SCHEDULE A
(a) FUND ACCOUNTING SERVICE FEE:
FEE WAIVER
FEE INCREASES
(b) EXPENSES.
(c) SPECIAL REPORTS.
(d) SECURITY DEPOSIT.
(e) CONVERSION CHARGE.
SCHEDULE B:
<PAGE>
FUND ACCOUNTING SERVICE AGREEMENT
AGREEMENT made the 1st. day of July, 1995 by and between RNC LIQUID ASSETS FUND,
INC., a Maryland corporation, (the "Fund") and AMERICAN DATA SERVICES, INC., a
New York corporation ("ADS").
BACKGROUND
WHEREAS, the Fund is a non-diversified open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, ADS is a corporation experienced in providing accounting services to
mutual funds and possesses facilities sufficient to provide such services; and
WHEREAS, the Fund desires to avail itself of the experience, assistance and
facilities of ADS and to have ADS perform for the Fund certain services
appropriate to the operations of the Fund, and ADS is willing to furnish such
services in accordance with the terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the Fund and ADS hereby agree as follows:
1. DUTIES OF ADS.
ADS will perform the following services for the Fund:
(a) Timely calculate and transmit to NASDAQ the Fund's daily
net asset value and communicate such value to the Fund and its transfer agent;
(b) Maintain and keep current all books and records of the
Fund as required by Rule 31a-1 under the 1940 Act, as such rule or any successor
rule may be amended from time to time ("Rule 31a-1"), that are applicable to the
fulfillment of ADS's duties hereunder, as well as any other documents necessary
or advisable for compliance with applicable regulations as may be mutually
agreed to between the Fund and ADS. Without limiting the generality of the
foregoing, ADS will prepare and maintain the following records upon receipt of
information in proper form from the Fund or its authorized agents:
o Cash receipts journal
o Cash disbursements journal
o Dividend record
o Purchase and sales - portfolio securities journals
o Subscription and redemption journals
o Security ledgers
o Broker ledger
o General ledger
o Daily expense accruals
o Daily income accruals
o Securities and monies borrowed or loaned and collateral therefore
o Foreign currency journals
o Trial balances
(c) Provide the Fund and its investment adviser with daily
portfolio valuation, net asset value calculation and other standard operational
reports as requested from time to time.
(d) Provide all raw data available from our fund accounting
system (PAIRS) for management's or the administrators preparation of the
following:
1. Semi-annual financial statements;
2. Semi-annual form N-SAR;
3. Annual tax returns;
4. Financial data necessary to update form N-1a;
5. Annual proxy statement.
6. Financial data necessary to calculate all dividends
and capital gains distributions in accordance with
Subchapter M of the Internal Revenue Code.
ADS shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
2. COMPENSATION OF ADS.
In consideration of the services to be performed by ADS as set forth
herein for each portfolio listed in Schedule B, ADS shall be entitled to receive
compensation and reimbursement for all reasonable out-of-pocket expenses. The
Fund agrees to pay ADS the fees and reimbursement of out-of-pocket expenses as
set forth in the fee schedule attached hereto as Schedule A.
3. LIMITATION OF LIABILITY OF ADS.
(a) ADS may rely upon the advice of the Fund, or of counsel for the
Fund and upon statements of the Fund's independent accountants, brokers and
other persons reasonably believed by it in good faith to be expert in the
matters upon which they are consulted and for any actions reasonably taken in
good faith reliance upon such statements and without gross negligence or
misconduct, ADS shall not be liable to anyone.
(b) ADS shall be liable to the Fund for any losses arising out of any
act or omission in the course of its duties, the gross negligence, misfeasance,
bad faith of ADS or breach of the agreement by ADS or disregard of ADS's
obligations and duties under this agreement or the willful violation of any
applicable law.
(c) Except as may otherwise be provided by applicable law, neither ADS
nor its shareholders, officers, directors, employees or agents shall be subject
to, and the Fund shall indemnify and hold such persons harmless from and
against, any liability for and any damages, expenses or losses incurred by
reason of the inaccuracy of information furnished to ADS by the Fund or its
authorized agents. ADS shall promptly notify the Fund of the assertion of a
claim for which the Fund may be required to indemnify ADS and shall keep the
Fund advised with respect to all developments regarding such claim. The Fund
shall have the option to participate in the defense of such claim. ADS in no
case shall confess any claim or make any compromise in any case in which the
Fund may be required to indemnify ADS except with the Fund's prior written
consent.
4. REPORTS.
(a) The Fund shall provide to ADS on a quarterly basis a report of a
duly authorized officer of the Fund representing that all information furnished
to ADS during the preceding quarter was true, complete and correct in all
material respects. ADS shall not be responsible for the accuracy of any
information furnished to it by the Fund or its authorized agents, and the Fund
shall hold ADS harmless in regard to any liability incurred by reason of the
inaccuracy of such information.
(b) Whenever, in the course of performing its duties under this
Agreement, ADS determines, on the basis of information supplied to ADS by the
Fund or its authorized agents, that a violation of applicable law has occurred
or that, to its knowledge, a possible violation of applicable law may have
occurred or, with the passage of time, would occur, ADS shall promptly notify
the Fund and its counsel of such violation.
5. ACTIVITIES OF ADS.
The services of ADS under this Agreement are not to be deemed
exclusive, and ADS shall be free to render similar services to others so long as
its services hereunder are not impaired thereby.
6. ACCOUNTS AND RECORDS.
The accounts and records maintained by ADS shall be the property of the
Fund, and shall be surrendered to the Fund promptly upon request by the Fund in
the form in which such accounts and records have been maintained or preserved
(including the electronic or computerized format in which such accounts and
records have been maintained). ADS agrees to maintain a back-up set of accounts
and records of the Fund (which back-up set shall be updated on at least a weekly
basis) at a location other than that where the original accounts and records are
stored. ADS shall assist the Fund's independent auditors, or, upon approval of
the Fund, any regulatory body, in any requested review of the Fund's accounts
and records. ADS shall preserve the accounts and records as they are required to
be maintained and preserved by Rule 31a-1.
7. CONFIDENTIALITY.
ADS agrees that it will, on behalf of itself and its officers and
employees, treat all information obtained pursuant to, and all transactions
contemplated by this Agreement, and all other information germane thereto, as
confidential and not to be disclosed to any person except as may be authorized
by the Fund.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three (3) years, provided however, that both
parties to this Agreement have the option to terminate the Agreement, without
penalty, upon ninety (90) days prior written notice.
Should the Fund exercise its right to terminate, all expenses incurred
by ADS associated with the movement of records and material will be borne by the
Fund. Such expenses will include all out-of-pocket expenses and all time
incurred to train or consult with the successor fund accounting agent with
regard to the transfer of fund accounting responsibilities. The charge for all
time incurred by ADS will be calculated in accordance with the rates specified
in Schedule A paragraph (c).
9. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the prior written consent
of ADS, or by ADS without the prior written consent of the Fund.
10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
12. MERGER OF AGREEMENT
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.
13. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To the Administrator:
Mr. Mark D. Beckerman Michael Miola
President President
RNC LIQUID ASSETS FUND, INC. American Data Services, Inc.
26 Broadway 24 West Carver Street
New York, NY 10004-1790 Huntington, New York 11743
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
RNC LIQUID ASSETS FUND, INC. AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Mark D. Beckerman, President Michael Miola, President
SCHEDULE A
(a) FUND ACCOUNTING SERVICE FEE:
For the services rendered by ADS in its capacity as fund accounting
agent, as specified in Paragraph 1. DUTIES OF ADS, the Fund shall pay ADS,
within ten (10) days after receipt of an invoice from ADS at the beginning of
each month, a fee equal to:
CALCULATED FEE WILL BE BASED UPON PRIOR MONTH AVERAGE NET ASSETS:
(No prorating partial months)
THE MINIMUM FEE:
$1,000 per month for Fund Group (1)
OR,
NET ASSET CHARGE: (1)
On first $12 million of average monthly
net assets ........................................ 1/12th of 17.00 basis points
On all assets in excess of $12 million ............ 1/12th of 2.50 basis points
(1) The Fund Group consists of The 44 Wall Street Equity Fund and the
Progressive Portfolio Series. The Net asset charge is based upon the average
aggregate monthly net assets of the Fund Group.
FEE WAIVER
ADS shall waive all service fees due and payable under this Agreement during the
first two (2) months this Agreement is in effect. Out of pocket expenses are not
considered service fees and will be charged to the Fund during the fee waiver
period.
FEE INCREASES
On each annual anniversary date of this Agreement, the fees enumerated above
will be increased by the lesser of, the change in the Consumer Price Index for
the Northeast region (CPI), or the overall inflation rate for the twelve month
period ending with the month preceding such annual anniversary date.
(b) EXPENSES.
The Fund shall reimburse ADS for any out-of-pocket expenses, exclusive of
salaries, advanced by ADS in connection with but not limited to the printing of
confirmation forms and statements, proxy expenses, quotation services, travel
requested by the Fund, telephone, facsimile transmissions, stationery and
supplies (related to Fund records), record storage, postage (plus a $0.07
service charge for all mailings), telex and courier charges authorized by the
Fund, incurred in connection with the performance of its duties hereunder. ADS
shall provide the Fund with a monthly invoice of such expenses and the Fund
shall reimburse ADS within fifteen (15) days after receipt thereof.
(c) SPECIAL REPORTS.
All reports and /or analyses requested by the Fund, its auditors, legal counsel,
portfolio manager, or any regulatory agency having jurisdiction over the Fund,
that are not in the normal course of Fund administrative activities as specified
in Paragraph 1 of this Agreement or are not required to clarify standard reports
generated by ADS, shall be subject to an additional charge, agreed upon in
advance and in writing, based upon the following rates:
Labor:
Senior staff - $100.00/hr.
Junior staff - $ 50.00/hr.
Computer time - $45.00/hr.
(d) SECURITY DEPOSIT.
The Fund will remit to ADS upon execution of this Agreement a security deposit
equal to one (1) month's minimum fee under this Agreement, computed in
accordance with the number of portfolios listed in Schedule B of this Agreement
without giving effect to any fee waivers that may be in effect. The Fund will
have the option to have the security deposit applied to the last month's service
fee, or applied to any new contract between the Fund and ADS.
(e) CONVERSION CHARGE.
None.
<PAGE>
SCHEDULE B:
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
RNC LIQUID ASSETS FUND, INC.
TRANSFER AGENCY AND SERVICE AGREEMENT
between
RNC LIQUID ASSETS FUND, INC.
and
AMERICAN DATA SERVICES, INC.
<PAGE>
INDEX
-----
1. TERMS OF APPOINTMENT; DUTIES OF ADS.........................................
2. FEES AND EXPENSES...........................................................
3. REPRESENTATIONS AND WARRANTIES OF ADS.......................................
4. REPRESENTATIONS AND WARRANTIES OF THE FUND..................................
5. INDEMNIFICATION.............................................................
6. COVENANTS OF THE FUND AND ADS...............................................
7. TERMINATION OF AGREEMENT....................................................
8. ASSIGNMENT..................................................................
9. AMENDMENT...................................................................
10. NEW YORK LAWS TO APPLY.....................................................
11. MERGER OF AGREEMENT........................................................
12. NOTICES....................................................................
FEE SCHEDULE....................................................................
- ------------
(a) ACCOUNT MAINTENANCE CHARGE:.................................................
FEE WAIVER:.................................................................
----------
(b) TRANSACTION FEES:...........................................................
(c) IRA PLAN FEES:..............................................................
FEE INCREASES...............................................................
-------------
(d) EXPENSES:...................................................................
(e) SPECIAL REPORTS:............................................................
(f) SECURITY DEPOSIT:...........................................................
(g) CONVERSION CHARGE:..........................................................
SCHEDULE A......................................................................
- ----------
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made the____day of _____, 1995, by and between RNC LIQUID ASSETS FUND,
INC. A Maryland Corporation, having its principal office and place of business
at 26 Broadway, New York, NY 10004-1790 (the "Fund"), and American Data
Services, Inc., a New York corporation having its principal office and place of
business at 24 West Carver Street., Huntington, New York 11743 ("ADS").
WHEREAS, the Fund desires to appoint ADS as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and ADS desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF ADS
1.01 Subject to the terms and conditions set forth in this agreement,
the Fund hereby employs and appoints ADS to act as, and ADS agrees to act as its
transfer agent for the Fund's authorized and issued shares of its common stock,
$0.001 par value, ("Shares"), dividend disbursing agent and agent in connection
with any accumulation, open-account or similar plans provided to the
shareholders of the fund ("Shareholders") set out in the currently effective
prospectus and statement of additional information ("prospectus") of the Fund.
1.02 ADS agrees that it will perform the following services:
(a) In accordance with the Fund's Registration Statement,
which describes how sales and redemptions of Shares shall be made, ADS shall:
(i) Receive for acceptance, orders for the purchase of Shares, and promptly
deliver payment and appropriate documentation therefore to the Custodian of the
Fund authorized by the Board of Directors of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of full and
fractional Shares and hold such Shares in the appropriate Shareholder account;
(iii) Receive for acceptance redemption requests and redemption directions and
deliver the appropriate documentation therefore to the Custodian;
(iv) At the appropriate time as and when it receives monies paid to it by the
Custodian with respect to any redemption, pay over or cause to be paid over in
the appropriate manner such monies as instructed by the redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners thereof upon receipt of
appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions declared by
the Fund, and effect dividend and capital gains distribution reinvestments in
accordance with Shareholder instructions;
(vii) Serve as a record keeping transfer agent for the Fund, and maintain
records of account for and advise the Fund and its Shareholders as to the
foregoing; and
(viii) Record the issuance of shares of the Fund and maintain pursuant to SEC
Rule 17Ad-10(e) a record of the total number of shares of the Fund which are
authorized, based upon data provided to it by the Fund, and issued and
outstanding. ADS shall also provide the Fund each business day with the
following: (I) the total number and dollar amount of Shares issued and
outstanding as of the close of business on the preceding business day; (ii) the
total number and dollar amount of Shares sold on the preceding business day;
(iii) the total number and dollar amount of Shares redeemed on the preceding
business day; (iv) the total number and dollar amount of Shares sold on the
preceding business day pursuant to dividend and capital gains distribution
reinvestments; and (v) the total number and dollar amount of Shares which are
authorized and issued and outstanding as of the opening of business on such day.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), ADS shall:
(i) Perform all of the customary services of a transfer agent, dividend
disbursing agent, including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all purchases redemptions of
Shares and other confirmable transactions in Shareholder accounts as prescribed
in the federal securities laws or as described in the Fund's Registration
Statement, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system and reports
which will enable the Fund to monitor the total number of Shares sold in each
State.
(c) In addition, the Fund shall (i) identify to ADS in writing those
transactions and shares to be treated as exempt from blue sky reporting for each
State and (ii) monitor the daily activity for each State, as provided by ADS.
The responsibility of ADS pursuant to this Agreement for the Fund's blue sky
State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established
from time to time by agreement between the Fund and ADS.
2. FEES AND EXPENSES
2.01 For performance by ADS pursuant to this Agreement, the Fund agrees
to pay ADS an annual maintenance fee for each Shareholder account and
transaction fees for each portfolio or class of shares serviced under this
Agreement (See Schedule A) as set out in the fee schedule attached hereto. Such
fees and out-of pocket expenses and advances identified under Section 2.02 below
may be changed from time to time subject to mutual written agreement between the
Fund and ADS.
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse ADS for out-of-pocket expenses or advances incurred by ADS
for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by ADS at the request or with the consent of the Fund,
will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within
five days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to ADS by the Fund at least seven (7)
days prior to the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF ADS
ADS represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of The State of New York.
3.02 It is duly qualified to carry on its business in The State of New
York.
3.03 It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.06 ADS is duly registered as a transfer agent under the Securities
Exchange Act of 1934 and shall continue to be registered throughout the
remainder of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to ADS that;
4.01 It is a corporation duly organized and existing and in good
standing under the laws of Maryland.
4.02 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Articles of
Incorporation and By-Laws have been taken to authorize it to enter into and
perform this Agreement.
4.04 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is
currently or will become effective and will remain effective, and appropriate
state securities law filings as required, have been or will be made and will
continue to be made, with respect to all Shares of the Fund being offered for
sale.
5. INDEMNIFICATION
5.01 ADS shall not be responsible for, and the Fund shall indemnify and
hold ADS harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a) All actions of ADS or its agents or subcontractors required to be taken
pursuant to this Agreement, provided that such actions are taken in good faith
and without negligence, willful misconduct, or in reckless disregard of its
duties under this Agreement..
(b) The Fund's refusal or failure to comply with the terms of this Agreement, or
which arise out of the Fund's lack good faith, gross negligence or willful
misconduct or which arise out of the breach of any representation or warranty of
the Fund hereunder.
(c) The reliance on or use by ADS or its agents or subcontractors of
information, records and documents which (i) are received by ADS or its agents
or subcontractors and furnished to it by or on behalf of the Fund, and (ii) have
been prepared and/or maintained by the Fund or any other person or firm on
behalf of the Fund.
(d) The reliance on, or the carrying out by ADS or its agents or subcontractors
of any written instruction signed by an officer of the Fund, or any legal
opinion of counsel to the Fund.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 ADS shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to any action or failure or
omission to act by ADS as a result of ADS's lack of good faith, gross negligence
or willful misconduct or the breach of any warranty or representation of ADS
hereunder.
5.03 At any time ADS may apply to any officer of the Fund for
instructions, and may consult with the Fund's legal counsel with respect to any
matter arising in connection with the services to be performed by ADS under this
Agreement, and ADS and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. ADS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided ADS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Fund. ADS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Fund, and
the proper countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6. COVENANTS OF THE FUND AND ADS
6.01 The Fund Shall promptly furnish to ADS a certified copy of the
resolution of the Board of Directors of the Fund authorizing the appointment of
ADS and the execution and delivery of this Agreement.
6.02 ADS hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 ADS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, ADS agrees that all such records prepared or maintained by
ADS relating to the services to be performed by ADS hereunder are the property
of the Fund and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the Fund on and
in accordance with its request.
6.04 ADS and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, ADS will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. ADS reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person, and shall
promptly notify the Fund of any unusual request to inspect or copy the
shareholder records of the Fund or the receipt of any other unusual request to
inspect, copy or produce the records of the Fund.
7. TERMINATION OF AGREEMENT
7.01 This Agreement shall become effective as of the date hereof and
shall remain in force through and shall automatically terminate on June 30,
1998, provided however, that both parties to this Agreement have the option to
terminate the Agreement, without penalty, upon ninety (90) days prior written
notice.
7.02 Should the Fund exercise its right to terminate, all expenses
incurred by ADS associated with the movement of records and material will be
borne by the Fund. Such expenses will include all out-of-pocket expenses and all
time incurred to train or consult with the successor transfer agent with regard
to the transfer of shareholder accounting and stock transfer responsibilities.
The charge for all time incurred by ADS will be calculated in accordance with
the rates specified in the Fee Schedule paragraph (e).
8. ASSIGNMENT
8.01 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective successors and assigns.
9. AMENDMENT
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Directors of the Fund.
10. NEW YORK LAWS TO APPLY
10.01 The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect and the applicable provisions of the 1940 Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. MERGER OF AGREEMENT
11.01 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.
12. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To the Administrator:
Mr. Mark D. Beckerman Michael Miola
President President
RNC LIQUID ASSETS FUND, INC. American Data Services, Inc.
26 Broadway 24 West Carver Street
New York, NY 10004-1790 Huntington, New York 11743
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
RNC LIQUID ASSETS FUND, INC. AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Mark D. Beckerman, President Michael Miola, President
<PAGE>
FEE SCHEDULE
------------
For the services rendered by ADS in its capacity as transfer agent, the
Fund shall pay ADS, within ten (10) days after receipt of an invoice from ADS at
the beginning of each month, a fee, calculated as a combination of account
maintenance charges and transaction charges as follows:
(a) ACCOUNT MAINTENANCE CHARGE:
The Greater of:
(1) Minimum maintenance charge per fund - $555.55/month (No prorating partial
months);
OR,
(2) Based upon the total of all open/closed accounts in the Fund upon the
following annual rates (billed monthly):
Equity Fund ....................... $ 8.00 per account
Fixed Income Fund.................. $12.00 per account
Money Market Fund ................. $16.00 per account
Closed accounts ................... $ 2.00 per account***
** All accounts closed during a calendar year will be considered as open
accounts for billing purposes until all 1099's and 5498's have been sent to
shareholders and reported (via mag media) to the IRS.
PLUS,
(b) TRANSACTION FEES:
Trade Entry (purchase/liquidation) ..................... $ 1.35 each
New account set-up ..................................... $ 2.50 each
Customer service calls ................................. $ 1.00 each
Correspondence/ information requests ................... $ 1.25 each
Liquidations paid by wire transfer ..................... $ 3.00 each
Omnibus accounts ....................................... $ 1.25 per transaction*
ACH charge ............................................. $ .30 each
SWP .................................................... $ 1.25 each *
* Not included as a Trade Entry.
FEE REDUCTION:
-------------
As consideration for entering into a three year contract, ADS will reduce the
above fees as follows:
While the net assets of the Fund to be serviced under this Agreement (see
Schedule A) are below $15 million, account maintenance fees will be reduced
by 40% and transaction fees will be reduced by 50%.
While the net assets of the Fund are between $15 million and $18 million,
account maintenance fees will be reduced by 20% and transaction fees will
be reduced by 30%.
Once the net assets of the Fund exceed $18 million, the fee schedule above
will be in force without any fee reduction.
Out of pocket expenses are not subject to the fee reduction and will be
charged to the Fund as incurred.
(c) IRA PLAN FEES:
The following fees will be charged directly to the shareholder account:
Annual maintenance fee ................................. $12.00 /account *
Incoming transfer from prior custodian ................. $12.00
Distribution to a participant .......................... $15.00
Refund of excess contribution .......................... $15.00
Transfer to successor custodian ........................ $12.00
Automatic periodic distributions ....................... $15.00/year per account
* Includes Star Bank N.A. $8.00 Custody Fee.
FEE INCREASES
-------------
On each annual anniversary date of this Agreement, the fees enumerated above
(except for the IRA Plan fees) will be increased by the lesser of, the change in
the Consumer Price Index for the Northeast region (CPI), or the overall
inflation rate for the twelve month period ending with the month preceding such
annual anniversary date.
(d) EXPENSES:
The Fund shall reimburse ADS for any out-of-pocket expenses, exclusive of
salaries, advanced by ADS in connection with but not limited to the printing of
confirmation forms and statements, proxy expenses, quotation services, travel
requested by the Fund, telephone, facsimile transmissions, stationery and
supplies (related to Fund records), record storage, postage (plus a $0.07
service charge for all mailings), telex and courier charges authorized by the
Fund, incurred in connection with the performance of its duties hereunder. ADS
shall provide the Fund with a monthly invoice of such expenses and the Fund
shall reimburse ADS within fifteen (15) days after receipt thereof.
(e) SPECIAL REPORTS:
All reports and /or analyses requested by the Fund, its auditors, legal counsel,
portfolio manager, or any regulatory agency having jurisdiction over the Fund,
that are not in the normal course of fund stock transfer activities as specified
in Paragraph 1 of this Agreement and are not required to clarify standard
reports generated by ADS, shall be subject to an additional charge, agreed upon
in advance and in writing, based upon the following rates:
Labor:
Senior staff - $100.00/hr.
Junior staff - $ 50.00/hr.
Computer time - $45.00/hr.
(f) SECURITY DEPOSIT:
The Fund will remit to ADS upon execution of this Agreement a security deposit
of equal to one (1) month's shareholder service fee. The security deposit
computation will be based either on the total number of shareholder accounts
(open and closed) of the Fund or the minimum fee, whichever is greater on the
date above written. The Fund will have the option to have the security deposit
applied to the last month's service fee, or applied to any new contract between
the Fund and ADS.
(g) CONVERSION CHARGE:
NOTE: FOR EXISTING FUNDS ONLY (new funds please ignore):
There will be a charge to convert the Fund's shareholder accounting records on
to the ADS stock transfer system (ADSHARE). In addition, ADS will be reimbursed
for all out-of-pocket expenses, enumerated in paragraph (b) above and data media
conversion costs, incurred during the conversion process.
The aforementioned conversion charge will not exceed $2,000.00.
<PAGE>
SCHEDULE A
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
RNC LIQUID ASSETS FUND, INC.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 31,049,765
<INVESTMENTS-AT-VALUE> 31,049,765
<RECEIVABLES> 139,244
<ASSETS-OTHER> 55,302
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,244,311
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 178,269
<TOTAL-LIABILITIES> 178,269
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,066,042
<SHARES-COMMON-STOCK> 31,066,042
<SHARES-COMMON-PRIOR> 43,685,960
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 31,066,042
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,214,527
<OTHER-INCOME> 0
<EXPENSES-NET> 306,633
<NET-INVESTMENT-INCOME> 1,907,894
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,907,894
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,907,894
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 107,322,974
<NUMBER-OF-SHARES-REDEEMED> 120,228,423
<SHARES-REINVESTED> 285,531
<NET-CHANGE-IN-ASSETS> 12,619,918
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 106,810
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 306,633
<AVERAGE-NET-ASSETS> 38,278,874
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.800
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
